Network Rail Infrastructure versus Conarken Group & Network Rail Infrastructure versus Farrell Transport (Queens Bench Division 21July2010)
These test cases established that contractual payments made by Network Rail to third-party train operating companies are recoverable losses in negligence (and trespass) and claims by NR against negligent motorists, which result from physical damage to NRs infrastructure.
Both claims were brought by NR against employers of HGV drivers (in effect, their motor insurers) who damaged NRs infrastructure. In the Conarken case, a bridge was seriously damaged (a so-called bridge strike) and the track remained closed while large-scale remedial works were carried out. In the Farrell case, a radio aerial came into contact with overhead cables at a level crossing, causing an explosion and the detachment of power cables. Again, services were suspended while repair works were undertaken.
Liability for the remedial works was admitted, however, the Defendants disputed whether NR was entitled in principle to recover contractual sums it had paid or credited to the train operating companies (TOCs) in relation to the periods when the track was unavailable. Under the railway system, TOCs paid to use the network but received contractually regulated compensation if the network is unavailable for reason other than the fault of the TOC.
The Defendants argued (a) these payments amounted to pure economic losses as they reflect future loss of custom, incentives and policy driven incentives; and (b) due to the complex way that they were calculated, they were not reasonably foreseeable. Mr Justice Akenhead rejected these arguments.
Applying established Case Law, he held that the payments were a genuine pre-estimate of the TOCs losses; repaid by NR as a direct consequence of physical damage to its property; and were a foreseeable type of loss. The fact that the payments might not match the TOCs actual losses was irrelevant.
The decision brings welcome clarity to the issue of recoverability of these losses from negligent motorists. The decision is also of wider interest as it focuses on circumstances where a Claimant can recover in respect of contractual liabilities that have been calculated using a complex formula to estimate the third partys loss.