Did GTR fulful their contractual obligations in respect of the GTR brand collective claim?

[paul1609]

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My heart bleeds for the poor TOCs.
The GTR Brands one (although I won't be eligible for it most likely) is particularly egregious - they had decades to sort that one out.

The GTR brands one liability sits firmly with the the holder of the revenue risk for the management contracts (the government since 2008). GTR themselves seem to have fulfilled all the requirements required under the contracts. The implications of sucess seem to suggest that in future passengers will be paying hgher fares that will start off south of London and then ripple up the MML on to the Intercity operators followed by the WCML be careful what you wish for.

 

[yorkie]

The GTR brands one liability sits firmly with the the holder of the revenue risk for the management contracts (the government since 2008). GTR themselves seem to have fulfilled all the requirements required under the contracts.

That's not correct; GTR have not carried out their contractual responsibilities, which would clearly include complying with the Ticketing Settlement Agreement (TSA), which clearly didn't happen.

All franchise operators are obligated to adhere to the TSA, which has no provision for brand restricted fares. GTR are deemed to be the creator of such fares and cannot use the excuse that they "inherited" them.

The implications of sucess seem to suggest that in future passengers will be paying hgher fares that will start off south of London and then ripple up the MML on to the Intercity operators followed by the WCML be careful what you wish for.

If you feel you know what the counterfactual fares are, feel free to provide them.

However, are you aware that GTR have actually carried out some fares harmonisation? And if you are aware of that, can you confirm if this always resulted in fares going up, rather than down?

While it is absolutely true that the absolute lowest priced fares would not be retained, these absolute cheapest fares e.g. London to Brighton "Thameslink Only", always required "splitting" when travelling beyond the specific section of track to which they were introduced to cover, i.e. a passenger travelling from Brighton to Leicester would not have benefited from such fares unless they split in London anyway.

 

[Egg Centric]

The GTR brands one liability sits firmly with the the holder of the revenue risk for the management contracts (the government since 2008). GTR themselves seem to have fulfilled all the requirements required under the contracts. The implications of sucess seem to suggest that in future passengers will be paying hgher fares that will start off south of London and then ripple up the MML on to the Intercity operators followed by the WCML be careful what you wish for.

Firstly, as I've put my fish supper claim in and other passengers mostly haven't, I'm very likely coming out ahead on average.

Secondly, you're absolutely right that regulation imposes a cost that is ultimately born by the consumer, but compared to other regulations this is miniscule. I have often wondered how cheap railways could be if we allowed them to have the same safety record as the roads. But that is for another thread.

Thirdly, not everything is about money. There's doing the right thing. I agree that it shouldn't have come to this - the TOCs should have done the right thing without having to be sued - but they didn't and it has. So what is the alternative?

 

[Tazi Hupefi]

That's not correct; GTR have not carried out their contractual responsibilities, which would clearly include complying with the TSA, which clearly didn't happen.

The TSA is not a contract between a TOC and the passenger. It is not (and was not) intended for passengers to rely upon. It is not referenced in consumer contracts like the National Rail Conditions of Travel, and it is not clear that customers can attempt to rely on it's contents, let alone enforce against it's contents. That is for the court to work out.

Compliance with it was written into franchise agreements, so the contractual arrangement was between DfT and the TOC. If the DfT were satisfied (or indeed likely instructed GTR to take action that was not compliant or in-line with the TSA) - I'm not sure there is any "breach" at all.

The DfT, Government Legal Service and HM Treasury certainly does not agree with your position, nor the TOCs. However, they have all been wrong before.

One for a Judge!

 

[yorkie]

The TSA is not a contract between a TOC and the passenger

Irrelevant; they are still obliged to adhere to it.

. It is not (and was not) intended for passengers to rely upon.

Perhaps you can detail all of the intentions of the TSA? Not that it's relevant, but if you have that information, I would be interested to hear it, and your source for it.

It is not referenced in consumer contracts like the National Rail Conditions of Travel, and it is not clear that customers can attempt to rely on it's contents, let alone enforce against it's contents. That is for the court to work out.

Which is indeed going to happen.

Compliance with it was written into franchise agreements,

Compliance with the TSA absolutely is a franchise commitment.

Have you read the TSGN Franchise Agreement document? Do you deny that it references the TSA?

https://assets.publishing.service.gov.uk/media/5ca4d8c7ed915d0c4b5e8730/tsgn-franchise-agreement.pdf

“Ticketing and Settlement
Agreement”
means the Ticketing and Settlement
Agreement dated 23 July 1995 between RSP,
the Franchisee and the other Train Operators
named therein, as amended from time to time
with the approval of the Secretary of State;

Obligation to Sell
(a) The Franchisee shall sell to any person wishing to travel on the Passenger
Services, on any other railway passenger services or both, the Fare he
requires and which the Franchisee is entitled to sell under the Ticketing
and Settlement Agreement.

On or before the date of transfer to the Franchisee of the Passenger
services described in paragraph (b) of the definition of TGN Franchise
Services (the “LSER Passenger Services”) the Franchisee shall
undertake the process under the Ticketing and Settlement Agreement for
changing the identity of the Lead Operator in relation to the Compulsory
Inter-available Flows comprised in the LSER Passenger Services, such
that the Franchisee becomes the Lead Operator, at least, in respect of
those flows where the Franchise is the principal revenue earner.

(I could go on, but those quotes should suffice to make my point!)

so the contractual arrangement was between DfT and the TOC. If the DfT were satisfied (or indeed likely instructed GTR to take action that was not compliant or in-line with the TSA) - I'm not sure there is any "breach" at all.

If the DfT are found to be allowing the TOCs to be in breach of the TSA, this could have serious implications for the DfT.

We have been warning of this for many years on this forum. The DfT read this forum. They can't claim to be unaware of the issue.

The DfT, Government Legal Service and HM Treasury certainly does not agree with your position, nor the TOCs.

If the case wasn't extremely strong, it wouldn't have funding, would it?

However, they have all been wrong before.

Indeed.

One for a Judge!

Indeed.

 

[Joe Paxton]

The TSA is not a contract between a TOC and the passenger. [...]

This is the point that makes me rather less certain than others are on this issue. As has been said, thankfully there will be a court ruling that will hopefully settle the matter.

 

[yorkie]

This is the point that makes me rather less certain than others are on this issue. As has been said, thankfully there will be a court ruling that will hopefully settle the matter.

Why? It doesn't have to be a contract between the TOC and the passenger; this apparent suggestion is something that one or two people appear to have made up!

 

[Tazi Hupefi]

The fact that specialist litigation finance is available to bankroll proceedings isn't really a particular strong indicator of how strong a case is. The finances involved here in the scheme of things are negligible to these financials organisations, it's like insurance, they know they will lose many times, but they hedge that when they win, it covers their losses. It's necessary to support the weaker cases as you don't want to be seen to have no appetite for risk and deter other potentially profitable groups from seeking funding.

You don't address the point though, if GTR and DfT agree that it was agreed that fares that don't meet the TSA should be made available, and therefore GTR hasn't breached their franchise agreement (as there was mutual consent to a change) - what exactly do you think is the cause of action here? Why do you say that it has serious implications for the DfT? It's their contract at the end of the day, if they want to vary it, and the other party is satisfied to do so too, then everyone is happy on that front. There is no statutory requirement for external consultation. DfT/GTR can demonstrate that it actually made cheaper fares available to the benefit of a consumer by these arrangements.

Are you also not concerned that, assuming this matter is successful, that these allegedly non-compliant fares must surely then be removed if they should not exist- which means fare increases, some substantial.

 

[Joe Paxton]

Why? It doesn't have to be a contract between the TOC and the passenger; this apparent suggestion is something that one or two people appear to have made up!

It's not a question of something that people have 'made up', it's a question of contract law and legal process - matters that I freely concede are not my domain of expertise. So I await the outcome with interest!

 

[yorkie]

It's not a question of something that people have 'made up'...

Yes it is; the (implied) suggestion that it is somehow relevant / detrimental to the case is made up.

it's a question of contract law and legal process - matters that I freely concede are not my domain of expertise. So I await the outcome with interest!

Indeed, people who don't have the relevant knowledge have mentioned an irrelevant factor, in order to erroneously spread doubt regarding the claim.

 

[maniacmartin]

I'm not a lawyer and this is not legal advice, however it is not "made up" that contracts only bind those who are party to it, and only parties to a contract can suffer damages from a breach of contract. It's a basic legal premise. The parties to the TSA are the TOCs and Rail Settlement Plan Ltd, as its primary objective is to make sure that revenue is divided up between them in a predictable and fair way. I think the case if almost certain to fail on this basis.

Even if another TOC were to bring a court case, I still think it is likely to fail, because what loss has another TOC suffered? These Thameslink Fares compete with Any Permitted fares where GTR's Southern brand is the only other operator, so they're only stealing ORCATS revenue from themselves. Also, even if there was revenue abstraction from other TOCs, since COVID all TOCs are on management contracts so the TOCs still do not really still suffer any damage as it is effectively just moving DfT-bound fare money from travelling via one TOC to via another so surely they would have to claim for whatever losses they suffered prior to Covid.

I guess that it could be argued that the DfT could enforce the breach of the TSA as a breach of the franchise, given that the franchise contract states that the the TOC has to sign up to the TSA. Even then it is tenuous - GTR signed up to the TSA, and other parties the the TSA are free to bring a case if they wish after all.

The DfT of course doesn't have to bring a court case, it could make these fares disappear very quickly if it wanted to, as it has the revenue risk in the new management contract style franchise and has a lot of influence. I don't think GTR would really care - it doesn't affect their bottom line after all. But the DfT want the fares to continue to exist, because it would be a big political issue if they were withdrawn. Cast your mind back to 2015 when the TSGN franchise was formed. As I understand it, there was a plan to abolish the old FCC ONLY fares but many people wrote to their MPs, concerned that the withdrawal of FCC ONLY fares would result in huge hikes in their commuting costs. My own MP at the time was forced to put out a statement at the time saying that they would lobby th DfT to ensure that TL-only fares remained. Political pressure caused the powers that be to change the plan to that of keeping the fares and slowly harmonise the fares over time. For whatever reason, that hasn't happened though.

Finally, what are you trying to achieve with the court case? The case is literally arguing that GTR should have been forced to charge the more expensive Any Permitted fare? If these Thameslink Only fares are forced to be removed, many peoples' fares for commuting will rise substantially. It'd be a very anti-passenger outcome. Commuters would write to their MPs en masse demanding the TL-only fares remain, and I think the political pressure would cause a formal amendment to the TSA to permit these fares anyway, because they aren't going to just lower the Any Permitted fare unless they're absolutely forced to.

PS: How will GTR be compensated by the court for the 9 years that everyone's been buying these Thameslink Only fares instead of the Any Permitted that they should have been charging us? Maybe we could have an additional levy on GTR-priced tickets for the next decade, to compensate them for erroneously depriving themselves of income by the mistake they made as the fare setter Or not, as looping back to my original argument, we aren't party to the TSA and have no obligations or rights under it.

 

[JonathanH]

How will GTR be compensated by the court for the 9 years that everyone's been buying these Thameslink Only fares instead of the Any Permitted that they should have been charging us?

Isn't the hope of the claimant that it is the other way round, that people who have paid the 'Any Permitted' fare since the establishment of GTR are able to claim back the difference between that and the 'Thameslink only' fare via some sort of class action?

 

[Tazi Hupefi]

Isn't the hope of the claimant that it is the other way round, that people who have paid the 'Any Permitted' fare since the establishment of GTR are able to claim back the difference between that and the 'Thameslink only' fare via some sort of class action?

The legal argument relies on the premise that the cheaper, TOC specific fares are not lawful and should not be available, because GTR is allegedly unable to offer brand specific fares.

It's a very bizarre claim, I can't see how there are any winners out of it in the long term.

 

[takno]

I'm not a lawyer and this is not legal advice, however it is not "made up" that contracts only bind those who are party to it, and only parties to a contract can suffer damages from a breach of contract. It's a basic legal premise. The parties to the TSA are the TOCs and Rail Settlement Plan Ltd, as its primary objective is to make sure that revenue is divided up between them in a predictable and fair way. I think the case if almost certain to fail on this basis.

I'm also not a lawyer, but from my understanding of contract law that's almost exactly the opposite of correct. There's a reason why virtually all contracts have a clause along the lines of:

Third-party rights
A person who is not a party to this agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement, but this does not affect any right or remedy of a third party which exists, or is available, apart from that Act.

 

[Tazi Hupefi]

I'm also not a lawyer, but from my understanding of contract law that's almost exactly the opposite of correct. There's a reason why virtually all contracts have a clause along the lines of:

It's quite difficult (and rightly so) to make that case though, with or without that clause.

You have to meet a test:

1) That the contract explicitly says you can enforce a particular term as third party (which the TSA doesn't in relation to the matter at hand) or;

2) Reading the contract as a whole, you must be able to prove that the parties to the contract intended for that term to be enforceable by a third party

AND

3) Whatever term is being disputed, must provide a benefit to that third party.

1 and 2 are difficult enough barriers to cross here, but the third point is very relevant and puts the nail in the coffin, in my view.

Given that the whole arguement is that these cheaper, brand specific fares allegedly should not and cannot exist - what benefit does the third party have here? Is only having access to more expensive fares a benefit? The third party is arguably better off as a result of the alleged breach, making the whole claim a nonsense.

 

[takno]

It's quite difficult (and rightly so) to make that case though, with or without that clause.

You have to meet a test:

1) That the contract explicitly says you can enforce a particular term as third party (which the TSA doesn't in relation to the matter at hand) or;

2) Reading the contract as a whole, you must be able to prove that the parties to the contract intended for that term to be enforceable by a third party

AND

3) Whatever term is being disputed, must provide a benefit to that third party.

1 and 2 are difficult enough barriers to cross here, but the third point is very relevant and puts the nail in the coffin, in my view.

Given that the whole arguement is that these cheaper, brand specific fares allegedly should not and cannot exist - what benefit does the third party have here? Is only having access to more expensive fares a benefit? The third party is arguably better off as a result of the alleged breach, making the whole claim a nonsense.

I don't disagree at all in respect of this contract. I was just questioning the specific claim that contract law discounted third party rights and action as a matter of principle.

 

[redreni]

The court doesn't have the power to set future train fares and will only look backwards, I expect.

It will not automatically accept, on the respondent's say-so, that the most expensive fare was the right one and the cheaper ones were some sort of special discount. If the case turns on that point (which I've no idea if it will or not), would it not be open to the court to find the respondents wanted to charge a premium for trains painted a certain colour, so added the premium to the Any Permitted fare then created fake 'TOC-restricted' fares (which were actually impermissible brand restricted fares) at the level of the old fare? Surely that will in turn depend on the history of the relevant fares.

As for what will happen to the fares if the respondents lose, keeping only the most expensive fare would be a choice rather than a necessity. The choice to increase fares is always there - if that route is taken, even in a fit of peak after losing a legal case, that would be the responsibility of whoever did it rather than the claimants, wouldn't it?

 

[bcarmicle]

I'm also not a lawyer, but from my understanding of contract law that's almost exactly the opposite of correct. There's a reason why virtually all contracts have a clause along the lines of:

In fact, the TSA appears to have a paragraph along those lines:

39.3 The Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement and no
rights or benefits expressly or impliedly conferred by it shall be enforceable under that Act
against the parties to it by any other person.

Presumably the solicitors involved are purusing the claim on different grounds.

 

[Tazi Hupefi]

In fact, the TSA appears to have a paragraph along those lines:


Presumably the solicitors involved are purusing the claim on different grounds.

I think we'd all like to know what grounds! I have a feeling these ligitation funding firms aren't interested at all in winning in court.

They hope/expect the respondents to want to settle out of court as early as possible, knowing full well that the respondent will incur costs and effort that can't be completely claimed back in defending the case, even if they're successful. Tie them up in paperwork, discovery exercises, hope that GTR/DfT have lost crucial emails etc.

The only real potential other grounds would be on some basis as to a breach of consumer rights - but that is surely a completely hopeless argument, because as above, GTR allegedly not following the TSA to the letter allowed them to offer (much) cheaper and more competitive fares than they otherwise could, and I suspect most passengers would say they have benefited from this arrangement substantially.

As for what will happen to the fares if the respondents lose, keeping only the most expensive fare would be a choice rather than a necessity. The choice to increase fares is always there - if that route is taken, even in a fit of peak after losing a legal case, that would be the responsibility of whoever did it rather than the claimants, wouldn't it?

The more expensive fares not restricted to a TOC are the "correct fares" and you are on another planet if you think GTR/DfT/GBR is going to reduce those perfectly lawful fares.

You can simply withdraw the allegedly non compliant fares entirely and point to whoever brought this dubious claim and say, sorry, this litigation firm sued us because we introduced cheaper fares, so unfortunately, they're now being withdrawn.

 

[redreni]

I think we'd all like to know what grounds! I have a feeling these ligitation funding firms aren't interested at all in winning in court.

They hope/expect the respondents to want to settle out of court as early as possible, knowing full well that the respondent will incur costs and effort that can't be completely claimed back in defending the case, even if they're successful. Tie them up in paperwork, discovery exercises, hope that GTR/DfT have lost crucial emails etc.

The only real potential other grounds would be on some basis as to a breach of consumer rights - but that is surely a completely hopeless argument, because as above, GTR allegedly not following the TSA to the letter allowed them to offer (much) cheaper and more competitive fares than they otherwise could, and I suspect most passengers would say they have benefited from this arrangement substantially.


The more expensive fares not restricted to a TOC are the "correct fares" and you are on another planet if you think GTR/DfT/GBR is going to reduce those perfectly lawful fares.

You can simply withdraw the allegedly non compliant fares entirely and point to whoever brought this dubious claim and say, sorry, this litigation firm sued us because we introduced cheaper fares, so unfortunately, they're now being withdrawn.

You can, but you don't have to. And if you do, nobody else is to blame.

 

[Tazi Hupefi]

You can, but you don't have to. And if you do, nobody else is to blame.

If you are successfully sued for having fares that are allegedly not permitted, the only reasonable course of action is to delete those fares, never to see them again.

They would lose £millions if they reduced the other fares to the same level as the TOC specific ones, and it would cause severe capacity issues. These fares exist primarily to balance demand and make the most of where the capacity exists.

It's completely illogical and very naive to think that fares won't rise substantially, if this claim succeeds.