Firms hit by £1m bill over track damage disruption

Conarken Group Ltd and Farrell Transport Ltd were sued by Network Rail Infrastructure Ltd over two accidents affecting rail lines in Howden, East Yorkshire and Bathley Lane, Newark, Notts – a key section of the East Coast Main Line.

Lord Justice Pill – who yesterday gave judgment on the vexed legal issues thrown up by the cases – said Conarken had been ordered to pay £293,732 compensation to Network Rail, while Farrell Transport had to pay £1,017,144.

The judge, sitting in London’s Appeal Court with Lord Justice Moore-Bick and Lord Justice Jackson, said the bulk of Network Rail’s compensation claim was for disruption to train scheduling, and the resulting loss caused to train operators with whom Network Rail had binding contracts.

The cost of repairs was minimal, the court heard – being less than £5,000 in the Newark case – but Network Rail “claimed damages calculated on the basis agreed in contracts between them and train operating companies…”

Describing the two incidents which sparked the costly litigation he told the court: “In July 2002 the negligence of Conarken’s driver at Howden caused damage to the parapet walls of a railway bridge and rubble was strewn on the railway tracks.

“The line was closed for five days while repairs were carried out.

“On 10 May, 2003 the negligence of Farrell’s driver at Bathley Lane, Newark, resulted in the detachment of overhead electric cables which affected the use of the East Coast Main Line for about seven hours.”

The two companies’ lawyers went to the Appeal Court challenging a High Court decision of Mr Justice Akenhead in July last year when he found in favour of Network Rail.

The cases were brought as test cases, said Lord Justice Pill – “accidents of this kind being regrettably quite frequent”.

Lawyers argued the two companies were not liable for the service disruption because they were not “party” to the “track access agreements” binding Network Rail and the various train operators.

In the Howden case much of the compensation was payable to Arriva, while GNER was the major recipient in the Newark case.

But after trawling through intricate legal arguments and case law, Lord Justice Pill rejected the companies’ appeals, ruling that it was “plainly foreseeable” that Network Rail would suffer a loss of revenue if railway lines were damaged.

He concluded: “If the main line running from London King’s Cross to the north of England and Scotland is put out of action for most of the day it is hardly surprising that Network Rail suffers a loss of revenue of about £1m.

“Nor is it surprising that if a smaller rail line is put out of action for five days Network Rail suffers a loss of revenue of about £127,000.”

Neither of the firms ordered to pay compensation was available to give their reaction to the ruling last night.

A Network Rail spokesperson said: “These incidents caused massive disruption for passengers and huge costs to Network Rail and train operators. It’s right that the rail industry, which is funded by both taxpayers and fare-payers, does not bear the brunt of costs imposed by the actions of others.”

The East Coast Main Line is no longer operated by GNER while new franchisee East Coast was unwilling to comment. Arriva said its settlement with Network Rail was not affected by the court hearing.