London Bus Services Ltd v Tramtrack Croydon Ltd [2006] EWCA Civ 1743

Case No 2006 0748 A3

[2006] EWCA Civ 1743

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

[2006] EWHC 531 (Comm)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION (COMMERCIAL COURT)

Hon Mr Justice Tomlinson

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Tuesday 19th December 2006

Before

LORD JUSTICE SEDLEY

LORD JUSTICE LONGMORE

LADY JUSTICE HALLETT

Between

LONDON BUS SERVICES LtdAppellant

TRAMTRACK CROYDON LtdRespondent

(Transcript of the Handed Down Judgment of

WordWave International Ltd

A Merrill Communications Company

190 Fleet Street, London EC4A 2AG

Tel No: 020 7421 4040 Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

STEPHEN MALES Esq QC and THOMAS RAPHAEL Esq

(instructed by FIELD FISHER WATERHOUSE) for Appellant

RICHARD WILMOT-SMITH Esq QC and SEAN WILKEN Esq

(instructed by ASHURST) for Respondent

Judgment

[1]This appeal relates to the tram system in Croydon. A dispute has arisen concerning the question upon whom, if anyone, the responsibility lies to deal with overcrowding. Since the tram system is operated by a private company, the defendant, pursuant to a concession granted by London Regional Transport, the predecessor in title of the claimant, the answer is to be found in the contract whereby the concession was granted. The relationship between the claimant and the defendant is essentially one of regulator and operator. In describing the background to the dispute I can adopt, and gratefully acknowledge, the first part of Tomlinson J’s judgment in the Commercial Court

[2006] EWHC 531 (Comm)

[2]The Croydon Tramlink reuses some pre-existing railway routes, but it is essentially a new light railway. It required public subsidy, but it was built and is now operated by a private sector concessionaire pursuant to a Private Finance Initiative which provided public subsidy in the construction phase only. It is one of the earlier Private Finance Initiatives. The concession granted was for ninety nine years. Subject to the funding provided in the construction phase, the agreement required the Defendant to maintain and operate the Tramlink in accordance with the terms of the agreement at its own risk and without recourse to London Regional Transport, Government or other public funds. For its part the Defendant has the exclusive right to the revenue stream generated by operation of the tram system. Pursuant to powers contained in the Greater London Authority Act 1999 the setting of fare levels is now the prerogative of the Mayor of London. However in exercising the task he is bound to act in accordance with requirements very similar to those which bound London Regional Transport in exercising the same function under the London Regional Transport Act 1984 as it stood when the concession was first granted. London Regional Transport acquired the power to grant the concession by means of amendments to that latter Act introduced by the London Regional Transport Act 1996.

[3]The Concession Agreement was first made on 21st November 1996 between London Regional Transport (the “Corporation”) and the Defendant Tramtrack Croydon Limited (the “Concessionaire.”) It is a substantial document consisting of 112 pages. It is accompanied by an even more substantial document running to 190 pages. This latter document is the Performance Specification for the purposes of the Concession Agreement of which it forms part. The Concession Agreement which now binds the parties is the “Amended and Restated Concession Agreement” dated 29th June 2000. The parties thereto are the same. This document is 141 pages long. It is common ground that the provisions governing the capacity of the system and creating such obligations as there may be concerning enhancement of the same are unchanged as between the two agreements. The Performance Specification is also unchanged. All three documents have on their Title Pages the imprimatur, “Freshfields”. We were told that Messrs Freshfields were, for this purpose, acting for the Corporation.

[4]The reason for the amendment and restatement of the Concession Agreement was the proposed shift in transport functions from London Regional Transport to the Greater London Authority and Transport for London as provided in the Greater London Authority Act 1999. The claimant London Bus Services Limited is a sub-sub-subsidiary of Transport for London and has, as a result of a vesting order, inherited the rights and obligations of London Regional Transport under the Amended and Restated Concession Agreement.

[5]I shall hereafter refer to the parties as “LBSL” and “TCL” respectively, to the former sometimes as “the Corporation” and to the latter sometimes as “the Concessionaire” and to the Amended and Restated Concession Agreement as “the ARCA.”

[6]Although LBSL sought to rely on a much more complicated summary of the contractual scheme for this appeal I am satisfied that the contractual scheme was adequately summarised in TCL’s skeleton argument for the hearing in the court below as follows: - “The Contractual Scheme 24. TCL was to design, construct and operate the tram system in Croydon (ARCA clause3.1 ). In so doing, TCL had to comply with the Performance Specification (ARCA Clause

3.2 ). 25. There are two phases; first the construction phase (see ARCA clause 13), which is spent; second, the Operations Phase (see Part 5 of the ARCA) which has now 89 years to run, since it expires at midnight on 21st November 2095. 26. Clause 25 of the ARCA provides that TCL shall comply with the parameters for the Service Levels set out in the Performance Specification and in accordance with the Timetable. 27. Those service levels and the timetable can be changed pursuant to TCL’s proposals (see clause 25.2) and pursuant [to] a Change Order made by LBSL (see clause 25.3). These Change Orders may lead to the payment of compensation to TCL (see clause 25.5). 28. Further, Change Orders can be instructed by LBSL (see clause 28) and, in those circumstances, paid for by LBSL (see clause 33). Where Change Orders are by TCL with LBSL’s permission, those Change Orders are at TCL’s own cost (clause 34). 29. The scheme therefore is that TCL runs trams of a certain capacity to a timetable specified by the Performance Specification. TCL receives revenue from various forms of travel passes (including Travelcards, Bus Passes, Concessionary Permits and Pre-paid Stored Value tickets), cash fares and compensation pursuant to complex formulae. It is……not necessary to go into the detail of revenue receipt. It is enough to know that the more passengers the more revenue is received. 30. As stated above, the period of the agreement is 99 years (clause 7) unless terminated. 31. Termination can be pursuant to clauses 60 (LBSL default), 61 (Construction Phase Force Majeure, now irrelevant), 62 (Operations Phase Force Majeure) and 64 (Default of TCL). Clause 64 allows TCL’s concession to be terminated if it fails to operate and maintain Tramlink in accordance with Part 5 of the ARCA and Part 5 sets out the obligations of TCL in the Operations Phase. 32. The system had to be designed and built to meet certain physical characteristics. Rolling stock is dealt with in Section 5 of the Performance Specification (D1 182). Fleet size and capacity is dealt with in Section 5 of the Performance Specification at clause 3.11. The system had to perform to a minimum timetable and an upper limitation on trams in each hour – clauses 1.2 and 1.4 of Section 9 with maximum journey times (Clause 1.5 of Section 9 of the Performance Specification).”

[7]I must now set out some of the key provisions. Words beginning with a capital letter either bear the meaning attributed to them in the Interpretation section of the ARCA or are Defined Terms the meaning of which is to be found in a Glossary at the end of the Performance Specification. I shall begin with the Performance Specification.

The Performance Specification

[8]Under the rubric (a heading for convenience of reference only – see ARCA clause 1.7) “CARDINAL REQUIREMENTS” paragraphs2.1 and

2.2 of Section 1 provide:- “2.1 The Concessionaire will undertake the Project so as to comply with the detailed requirements of the Performance Specification. It shall also comply with and satisfy the cardinal requirements set out below:

(a) the Tramlink System shall be constructed and operated so that it is safe, reliable, efficient and environmentally friendly and accessible to all irrespective of mobility impairments, as far as is reasonably practicable;

(b) the Concessionaire shall take account of the need to react safely and quickly to emergencies in all aspects of its design and construction of the Tramlink System;

(c) once operating, the Tramlink System shall be capable of achieving the levels of service set out in Section 9 of this Performance Specification;

(d) the operation of the Tramlink System shall reflect a high standard of presentation and public image. The Tramlink System shall be operated efficiently with minimum disturbance to the public and minimum delay to passengers;

(e) the Tramlink System shall be designed, constructed, installed, commissioned, operated and maintained so as to satisfy all appropriate standards and codes as is consistent with Good Industry Practice. f) the Tramlink System shall comply with all relevant Laws and regulations in place at, or imposed after, the date of this agreement including, without limitation, the Railways and Other Transport Systems (Approval of Works, Plant and Equipment) Regulations 1994, the Railways (Safety Critical Works) Regulations 1994, the Management of Health and Safety at Work Regulations 1992, the Railways (Safety Case) Regulations 1994, the Construction (Design and Management) Regulations 1994, the Noise Insulation (Railways and Other Guided Transport Systems) Regulations 1996 and other relevant legislation. 2.2 The Tramlink System will operate as an integral part of the public transport network in Greater London. The Corporation is subject to a statutory duty to co-ordinate public transport services and their operations which includes the Tramlink System. The Concessionaire shall co-operate with the Corporation in this respect and shall comply with the Corporation’s reasonable requirements in relation to ensuring co-ordination of public transport services in those areas affected by the Tramlink System.” It is noteworthy that although there is reference to minimum disturbance to the public and minimum delay to passengers, there is no express mention of or the desirability of avoiding over-crowding. (a) the Tramlink System shall be constructed and operated so that it is safe, reliable, efficient and environmentally friendly and accessible to all irrespective of mobility impairments, as far as is reasonably practicable; (b) the Concessionaire shall take account of the need to react safely and quickly to emergencies in all aspects of its design and construction of the Tramlink System; (c) once operating, the Tramlink System shall be capable of achieving the levels of service set out in Section 9 of this Performance Specification; (d) the operation of the Tramlink System shall reflect a high standard of presentation and public image. The Tramlink System shall be operated efficiently with minimum disturbance to the public and minimum delay to passengers; (e) the Tramlink System shall be designed, constructed, installed, commissioned, operated and maintained so as to satisfy all appropriate standards and codes as is consistent with Good Industry Practice. f) the Tramlink System shall comply with all relevant Laws and regulations in place at, or imposed after, the date of this agreement including, without limitation, the Railways and Other Transport Systems (Approval of Works, Plant and Equipment) Regulations 1994, the Railways (Safety Critical Works) Regulations 1994, the Management of Health and Safety at Work Regulations 1992, the Railways (Safety Case) Regulations 1994, the Construction (Design and Management) Regulations 1994, the Noise Insulation (Railways and Other Guided Transport Systems) Regulations 1996 and other relevant legislation.

[9]Under the rubric “DESIGN”, paragraphs5.1 and

5.2 provide: - “5.1 The Concessionaire shall design the Tramlink System so that once built it satisfies all of the Performance Requirements and shall also comply with the following principles:

(a) to ensure that unless otherwise required by relevant standards, the design of the Tramlink System accommodates the reasonably predictable extremes of the local climatic conditions;

(b) the design and construction of the Tramlink System shall ensure that the appearance of both equipment and infrastructure is attractive and reduces visual intrusiveness as far as is reasonably practicable. The Tramlink System shall be landscaped in order to maintain the character of the areas through which it passes and to mitigate any adverse visual impact (some of which landscaping is to be done by the Council in accordance with the provisions of the Tramlink General Agreement);

(c) the vehicles operated on the Tramlink System are to be designed to a high modern standard in terms of passenger comfort and ride quality. In addition, the vehicles shall be configured using modular construction allowing components to be used which are well proven and reliable. The Concessionaire shall provide a safe, reliable, attractive, energy efficient and environmentally friendly vehicle;

(d) the Tramlink System is to be designed as an integrated system to provide the level of safety and reliability by this Performance Specification;

(e) the Tramlink System shall be capable, without the need to make Significant Changes to the fixed infrastructure, including the power supply and signalling system, of providing for a 33% increase in passengers carrying capacity above that initially required by paragraph 1.2 of Section 9 and paragraph 3.11 of Section 5 of this Performance Specification. The increase in passenger carrying capacity shall be calculated by applying 33% to the product of: (i) the passenger carrying capacity (at 5pax/m²) of the largest type of Tram initially introduced to operate on the Tramlink System; and (ii) the number of journeys that are scheduled to pass East Croydon Station in both directions during the busiest hour of the week as set out in the table in paragraph 1.2 of Section 9 of this Performance Specification. This increase in passenger carrying capacity may be achieved either by operating more services (subject to the limits set out in paragraph 1.4 of Section 9 of this Performance Specification) and/or by employing longer Trams (subject to the limits set out in Section 5 of this Performance Specification). 5.2 The Tramlink System shall be designed, built and maintained, including the renewal of subsystems and components as necessary, to a standard that will ensure that it will be capable of continued operation for a period of at least forty years without the need for a Significant Change more frequently than once every five years.” “Tramlink System” means “the system of light rail transit to be designed, constructed and operated in certain parts of the London Boroughs of Merton, Sutton, Croydon and Bromley as described in this Performance Specification” and LBSL regards as significant the inclusion of the word “operated.” “Performance Requirement” means a requirement in this Performance Specification.” “Significant Change” means a change which would require the interruption of the Services for longer than one operating day. It is noteworthy that “passenger comfort” is expressly referred to in paragraph 5(1)(c) and that the argument in the court below revolved, to some extent round paragraph 5(1)(e) since it was said by LBSL that TCL were obliged to increase capacity by up to 33% once overcrowding was shown to exist or to be likely. (a) to ensure that unless otherwise required by relevant standards, the design of the Tramlink System accommodates the reasonably predictable extremes of the local climatic conditions; (b) the design and construction of the Tramlink System shall ensure that the appearance of both equipment and infrastructure is attractive and reduces visual intrusiveness as far as is reasonably practicable. The Tramlink System shall be landscaped in order to maintain the character of the areas through which it passes and to mitigate any adverse visual impact (some of which landscaping is to be done by the Council in accordance with the provisions of the Tramlink General Agreement); (c) the vehicles operated on the Tramlink System are to be designed to a high modern standard in terms of passenger comfort and ride quality. In addition, the vehicles shall be configured using modular construction allowing components to be used which are well proven and reliable. The Concessionaire shall provide a safe, reliable, attractive, energy efficient and environmentally friendly vehicle; (d) the Tramlink System is to be designed as an integrated system to provide the level of safety and reliability by this Performance Specification; (e) the Tramlink System shall be capable, without the need to make Significant Changes to the fixed infrastructure, including the power supply and signalling system, of providing for a 33% increase in passengers carrying capacity above that initially required by paragraph 1.2 of Section 9 and paragraph 3.11 of Section 5 of this Performance Specification. The increase in passenger carrying capacity shall be calculated by applying 33% to the product of: (i) the passenger carrying capacity (at 5pax/m²) of the largest type of Tram initially introduced to operate on the Tramlink System; and (ii) the number of journeys that are scheduled to pass East Croydon Station in both directions during the busiest hour of the week as set out in the table in paragraph 1.2 of Section 9 of this Performance Specification. This increase in passenger carrying capacity may be achieved either by operating more services (subject to the limits set out in paragraph 1.4 of Section 9 of this Performance Specification) and/or by employing longer Trams (subject to the limits set out in Section 5 of this Performance Specification).

[10]In Section 4 of the Performance Specification it is provided that the maximum service train length is to be 45 metres. The train length currently used is 30.2 metres, configured in three sections which might, because of their length, be described as two and a half tram cars. The design of the tram is such that train length could be increased to 43 metres by insertion of a fourth section. The design capacity of a three car unit is 242 passengers including and assuming 5 “standees” per square metre of standing space. The capacity of a four car unit would on the same basis be 360 passengers.

[11]Paragraph 1.1 of Section 5 which is entitled “Rolling Stock” makes provision in relation to rolling stock. Later paragraphs relate to other requirements of the system such as the trams themselves, driver cabins and the braking system.

[12]Critical to the dispute are paragraphs 3.11 and 3.12 of Section 5 of the Performance Specification. They provide:- “3.11 Fleet Size and Tram capacity For the purposes of fleet size determination, at least 30% of the passengers shall be capable of being seated and standing passengers shall not exceed 4 pax/m² standing (except in the hour of greatest daily passenger demand in the morning and evening when up to 5 pax/m² will be acceptable). [Pax/m² is the abbreviation for “passengers per square metre”.] In addition the Concessionaire shall ensure that:(i) the maximum number of seats per Tram (including tip-up seats) shall be 74 and the total passenger capacity with 5 standees per metre shall be 242; and

(ii) the usable floor area for standees per Tram shall be not less than 33m². The passenger area layout of the Tram shall be generally as shown on the Concessionaire’s Drawing Ref. No. TC-95-3526 Issue C in Appendix 5.1 Part 2. 3.12 Future Expansion The design of the Tram shall be such that an additional saloon section, together with power bogie, can be incorporated to make up a Tram of 43.3m in length, having a minimum seating capacity of 109 and a total capacity of 361 including 252 standees of 5 pax/m². This shall be generally as shown in the Concessionaire’s drawing number TC-95-3527 Issue C in Appendix 5.1 Part 2.” For the purposes of fleet size determination, at least 30% of the passengers shall be capable of being seated and standing passengers shall not exceed 4 pax/m² standing (except in the hour of greatest daily passenger demand in the morning and evening when up to 5 pax/m² will be acceptable). [Pax/m² is the abbreviation for “passengers per square metre”.] In addition the Concessionaire shall ensure that: (i) the maximum number of seats per Tram (including tip-up seats) shall be 74 and the total passenger capacity with 5 standees per metre shall be 242; and (ii) the usable floor area for standees per Tram shall be not less than 33m². The passenger area layout of the Tram shall be generally as shown on the Concessionaire’s Drawing Ref. No. TC-95-3526 Issue C in Appendix 5.1 Part 2. The design of the Tram shall be such that an additional saloon section, together with power bogie, can be incorporated to make up a Tram of 43.3m in length, having a minimum seating capacity of 109 and a total capacity of 361 including 252 standees of 5 pax/m². This shall be generally as shown in the Concessionaire’s drawing number TC-95-3527 Issue C in Appendix 5.1 Part 2.”

[13]The judge was told that the equivalent design parameter for trains used on the London Underground is that standing passengers should not exceed 6 per square metre. No one was prepared to hazard a guess as to the number of standing passengers per square metre typically encountered during the busiest times of the day on the busiest stretches of the busiest Underground lines.

[14]Section 9 of the Performance Specification contains Service Parameters, and provides that the Concessionaire shall ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5 to which I have already referred. Minimum standards are set out for frequency of services on different sections of the route. The Concessionaire may provide a higher frequency than the minimum stipulated up to the upper limits specified. An upper limitation on trams in each hour per direction passing along critical sections of route is specified as follows:- “Section of Route Maxima (at any time) Addiscombe Road, Croydon 26tph Crossing Kingston Road, Merton Park 8tph.” Addiscombe Road, Croydon 26tph Crossing Kingston Road, Merton Park 8tph.”

Addiscombe Road, Croydon 26tph

[15]The judge said that trams operated on three routes. Route 1 was Wimbledon to Elmers End via Church Street, West Croydon and Sandilands. Between Central Croydon, Church Street, West Croydon and Wellesey Road trams travelled in only one direction around a clockwise loop. Trams on Route 2 travelled from Beckenham Junction to Central Croydon and then around the loop before returning to Beckenham Junction. Trams on Route 3 began at New Addington, proceeded to Central Croydon and thence again around the loop before returning to New Addington. It followed from the foregoing that all services called at Church Street. All services also passed between East Croydon and Sandilands, in whichever direction it might be. That section of the track passed along Addiscombe Road. The maximum frequency of trams along that part of the route was a limitation imposed by the Highway Authority. Insofar as there might currently be overcrowding on the system at peak times, however overcrowding or peak time may be defined and as to which there was no analytical evidence, it was likely to be occurring between Sandilands and East Croydon, East Croydon Station of course being a major railway interchange.

The Amended and Restated Concession Agreement

[16]I have already referred to the obligation cast upon the Concessionaire by clause 3.1 of the ARCA to develop, finance, construct, operate and maintain the Tramlink System according to the terms of the agreement which the Concessionaire, subject or as otherwise provided in the ARCA, is to do at its own risk and without recourse to the Corporation, Government or other public funds or guarantees. That obligation is reiterated in clause 19 which provides:- “PART 5 OPERATIONS PHASE Operation and Maintenance in respect of the Service 19 The Operation and Maintenance Phase shall commence on the Actual Opening Date. The occurrence of the Actual Opening Date shall be determined in accordance with the Performance Specification. The Concessionaire shall in operating and maintaining or securing the operation and maintenance of the Tramlink System:(a) comply with the terms of this agreement;

(b) comply with Good Industry Practice; and

(c) comply with the Performance Specification.” So far as relevant Good Industry Practice means “the exercise of that degree of skill, diligence, prudence, foresight and practice which would reasonably and ordinarily be expected from …. (b) during the Operation and Maintenance Phase, a skilled and experienced operator of light rail systems for public transport use responsible for all aspects of operations and maintenance of a light rail system, over a period of 99 years, in each case engaged in the same undertaking as the Concessionaire.” OPERATIONS PHASE Operation and Maintenance in respect of the Service (a) comply with the terms of this agreement; (b) comply with Good Industry Practice; and (c) comply with the Performance Specification.”

Operation and Maintenance in respect of the Service

[17]Clause 25 of the ARCA is important. It begins thus: - “SERVICES AND SERVICE CHANGE 25.1 The Concessionaire shall operate the Tramlink System:(a) so as to comply with the parameters for the Service Levels set out in the Performance Specification; and

(b) in accordance with the Timetable (which shall constitute a Public Timetable published for use by the public together with a Working Timetable (including scheduled non-passenger journeys)) made available to and approved by the Corporation in accordance with the Performance Specification, in both cases, as varied by or with the consent of the Corporation from time to time.”

[18]Pausing there, it should be noted that Service Levels means “the level (including passenger carrying capacity and journey times) pattern and frequency of services.” It is interesting to note that this definition does not speak in terms of numbers of passengers actually carried or the density of passengers standing at any given time. It speaks in terms of passenger carrying capacity. This is not surprising. The parameters for the Service Levels are set out in Section 9 of the Performance Specification which is concerned with operation of the Tramlink System. Where in that Section there is reference to accommodation limits and standards it is a reference back to Sections 1 and 5 which are, so far as relevant, concerned with passenger carrying design capacity. Section 5 of the Performance Specification requires the Concessionaire to provide a sufficient number of Trams, to be not less than 21, to satisfy the service and maintenance requirements set out in Sections 9 and 11 of the Performance Specification. Section 9 sets out service parameters. It is not suggested that TCL is failing on the score of frequency of service or journey times. However Section 9 also provides that the Concessionaire must ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5. Section 1 sets out the cardinal requirements and the design capability. Section 5 deals with Rolling Stock. The critical paragraph therein is paragraph 3.11, introduced by the words “for purposes of fleet size determination.” There are then references to capacity. The total passenger capacity with 5 “standees” per square metre shall be 242. Given the provisions as to the minimum percentage of passengers who must be capable of being seated, and the minimum number of seats per tram, this obviously has an impact on the design, layout and size of the trams. Like the judge, I cannot read paragraph 3.11 as intended to secure the result that if at any time during service standing passengers exceed 5 per square metre then the Concessionaire is in breach of the agreement. This is a paragraph dealing with the number of trams required to comply with the requirements as to frequency and journey times and with capacity, not with conditions actually encountered in service. The judge thought that if it were intended to deal with conditions actually encountered in service, detailed criteria would be provided by reference to which it could be determined whether or not the Concessionaire was in breach of contract. It cannot sensibly be intended that, if on one or two occasions standing passengers can be shown to exceed a density of 5 per square metre, then the Concessionaire is without more in breach of contract and/or obliged to provide enhancement to the system. The very absence of determinative criteria is at least an indication that this paragraph is dealing with the planning and design stage, not providing a trigger mechanism for the imposition of an obligation to provide enhanced capacity. It is fair to add that, by the time the matter came to be argued in this court, Mr Stephen Males QC for LBSL did not argue that there was a breach of contract on the part of TCL every time more than 5 standing passengers occupied any square metre of floor space.

[19]Returning to the ARCA, as has been seen clause25.1 specifically envisages that the Service Levels, the parameters for the Service Levels and the Timetable may be varied by or with the consent of the Corporation from time to time. Sub-clauses

25.2 to 25.5 then provide:- “25.2 The Concessionaire may from time to time make written proposals to the Corporation for changes to the Service Levels and the Timetable.

(a) If the proposal is for a change within the parameters for the Service Levels set out in the Performance Specification (a Service Change), the Corporation shall not unreasonably withhold its consent to the same.

(b) If the proposal is for a change to or outside the parameters for the Service Levels set out in the Performance Specification ( a Service Parameters Change), the Concessionaire shall supply to the Corporation written reasons for its proposals, together with the anticipated effects of such proposals on matters such as the interest of passengers, the interest of the Concessionaire, the impact on adjacent modes of transport and on sales and use of Travelcard on the Tramlink System and adjacent modes of transport and the impact on anticipated levels of Off-Tram Revenue.

(c) In either case, the Corporation shall consider the proposal and notify the Concessionaire in writing whether the proposal is accepted or rejected and if the proposal is rejected, it shall supply reasons to the Concessionaire as to why the proposal is rejected. In the case of a Service Change, the Corporation shall provide such notification promptly to the Concessionaire but in any event shall respond within 28 days of receipt of any such proposal.

25.3 The Corporation may from time to time effect a Service Change or a Service Parameters Change by giving notice in writing to the Concessionaire and Concessionaire shall comply with any such Service Change or Service Parameters Change (and any consequential obligations to produce new Timetables) within the time specified in the notice. The Concessionaire shall not be obliged to comply with a Service Parameters Change if it demonstrates to the Corporation’s reasonable satisfaction that compliance with such Service Parameters Change is not possible to achieve by reason of the physical layout of the highway network or the system of traffic priorities operating in the area in which the Tramlink System is located.

25.4 Prior to issuing a notice specifying a Service Parameters Change or a Service Change, the Corporation shall supply to the Concessionaire written reasons for its proposals, together with details of the anticipated effects of such proposals and shall consult with and take account of any representations made by the Concessionaire concerning the effect of the proposed Service Parameters Change or Service Change.

25.5 If as a result of a Service Parameters Change the Concessionaire would suffer or incur actual and verifiable arm’s length increases in capital costs and/or actual and projected reductions in Net Operational Revenues it may submit a claim to the Corporation to be compensated by payment of an amount equal to such increases in capital costs (after taking into account any increase in Net Operational Revenues which will result) or actual or projected reductions in Net Operational Revenues. The claim shall be made no later than 28 days following the notification by the Corporation of the Service Parameters Change. The Corporation may request (and if requested the Concessionaire shall provide) an estimate of such amount from the Concessionaire prior to making the Service Parameters Change and as part of the consultation process under clause 25.4. The Concessionaire shall also make proposals as to the reasonable steps which it could take in order to minimise the increases in capital costs or actual or projected reductions in Net Operational Revenues which it would otherwise suffer or incur as a result of the Service Parameters Change and shall, if required by the Corporation, undertake such steps and any other mitigation measures which the Corporation may reasonably require after consultation with the Concessionaire, subject to the Corporation being obliged to reimburse the Concessionaire for the costs of such mitigation action (other than normal business overheads). The provisions of clause 46 shall also apply to the payment of compensation under this clause 25.5 as if such payment constituted the payment of a Compensation Amount under that clause.” Paragraph 25.7 then contains provisions intended to apply if ARCA ever ceases to be a regulated Agreement. That event has not happened. (a) If the proposal is for a change within the parameters for the Service Levels set out in the Performance Specification (a Service Change), the Corporation shall not unreasonably withhold its consent to the same. (b) If the proposal is for a change to or outside the parameters for the Service Levels set out in the Performance Specification ( a Service Parameters Change), the Concessionaire shall supply to the Corporation written reasons for its proposals, together with the anticipated effects of such proposals on matters such as the interest of passengers, the interest of the Concessionaire, the impact on adjacent modes of transport and on sales and use of Travelcard on the Tramlink System and adjacent modes of transport and the impact on anticipated levels of Off-Tram Revenue. (c) In either case, the Corporation shall consider the proposal and notify the Concessionaire in writing whether the proposal is accepted or rejected and if the proposal is rejected, it shall supply reasons to the Concessionaire as to why the proposal is rejected. In the case of a Service Change, the Corporation shall provide such notification promptly to the Concessionaire but in any event shall respond within 28 days of receipt of any such proposal.

[20]Further provision for Change Orders during the Operations and Maintenance Phase is made by clause 28. They deal, inter alia, with changes to the specification and the financial consequences of any such changes.

[21]There are then provisions pursuant to which the Corporation may terminate the agreement in the event of a material and serious failure by the Concessionaire to operate and maintain the Tramlink System in accordance with Part 5 of the ARCA – see clause 64.1(c). Part 5 of the ARCA includes the express obligation in clause 19 to comply with Good Industry Practice and the Performance Specification. The detailed provision which is particularly relevant is that which refers to remedial action reasonably acceptable to the Corporation not being commenced within a period of ninety days, presumably running from service of a relevant notice.

[22]Finally, it should be noted that the ARCA has at clause 75 and Schedule 13 an elaborate provision for Expert determination, arbitration and, if necessary, action in the High Court in the event of dispute.

The Claim

[23]The claimant’s Particulars of Claim read, in part:- “7 . . . . disputes have arisen between the parties as to whether on a proper construction of the Concession Agreement it is the Defendant and/or the Claimant who is responsible for the cost of providing for a 33% increase in passenger carrying capacity above that initially required. 8 In particular the Claimant seeks the assistance of the Court to resolve these disputes and the Claimant seeks declarations that on a proper construction of the Concession Agreement:(a) the Defendant is obliged to provide for the implementation of capacity enhancement

(b) capacity enhancements include providing for a 33% increase in passenger carrying capacity above that initially required

(d) the Defendant is obliged to implement such capacity enhancements as and when required by the Concession Agreement.” (a) the Defendant is obliged to provide for the implementation of capacity enhancement (b) capacity enhancements include providing for a 33% increase in passenger carrying capacity above that initially required (c) the Defendant has financial responsibility for such capacity enhancements (d) the Defendant is obliged to implement such capacity enhancements as and when required by the Concession Agreement.”

[24]The judge said that these propositions were very broadly expressed and, in the case of sub-paragraph (d), virtually meaningless other than as a statement of the obvious. The parties produced to him what was introduced as an Agreed List of Issues although by the end of the hearing the defendant had doubted whether the judge could supply useful answers. That List of Issues read: - “1 On the proper construction of the Amended and Restated Concession Agreement:(a) Is the Defendant obliged under the Amended and Restated Concession Agreement to implement capacity enhancements (including making provision for a 33% increase in passenger carrying capacity)?

(b) In any event, is the Defendant obliged to pay for or bear the costs of the implementation of such capacity enhancements?

(c) If the Defendant is obliged to implement capacity enhancements and/or pay for or bear the costs of them, then under what circumstances does that obligation arise?” (a) Is the Defendant obliged under the Amended and Restated Concession Agreement to implement capacity enhancements (including making provision for a 33% increase in passenger carrying capacity)? (b) In any event, is the Defendant obliged to pay for or bear the costs of the implementation of such capacity enhancements? (c) If the Defendant is obliged to implement capacity enhancements and/or pay for or bear the costs of them, then under what circumstances does that obligation arise?”

[25]By the time the matter came to this court, the Notice of Appeal asked for yet different declarations from those canvassed in either the Particulars of Claim or the Agreed List of Issues while the Skeleton Argument had reverted to the declarations asked for in the original pleading. Mr Males agreed this was not satisfactory and agreed to produce a final set of claimed declarations.

[26]The judge was encouraged by counsel appearing before him (not Mr Males) to think that the real question was whether the ARCA prescribes circumstances in which there is cast upon the Concessionaire an obligation to provide the 33% increase in passenger carrying capacity over and above that initially required by paragraph 1.2 of Section 9 and paragraph 3.11 of Section 5 of the Performance Specification, an ability to absorb which without Significant Changes was an inherent element in its obligation to design and build the system. The judge answered that question in the negative largely because he did not regard the existence of overcrowding as a breach of contract for the reasons set out in paragraph 18 above. He therefore held that the accommodation limits and standards defined in Sections 1 and 5 of the specification to which reference was made in Section 9 were design criteria not standards which it would be a breach of contract to fail to achieve in operation of the system.

[27]The judge then went on to express the view that measures intended to bring about an increase in passenger carrying capacity by 33% as envisaged by paragraph 5(1)(e) of Section 1 of the Performance Specification would involve a change to or outside the parameters for the Service Levels in the Specification and would therefore constitute a Services Parameter Change within paragraph 25 of ARCA. This constituted a considerable defeat for LBSL on a matter which we were told had been scarcely argued before the judge (it was apparently touched on only in reply) since the argument had concentrated on paragraph 5(1)(e) of Section 1 of the Specification rather than the detail of clause 25 of ARCA. Counsel then appearing sought to interrogate the judge by asking 3 separate questions about this single sentence in paragraph 34 of his judgment. As the judge ruefully observed:- “The fact that these questions have been asked bears out the danger of the court attempting to be helpful and going beyond answering the precise questions which actually fall for decision.” He nevertheless reiterated his expression of view in the following terms:- “It seems to me that for the Corporation to require the concessionaire either to provide longer trams or to provide a frequency of service in excess of that required by paragraph 1.2 of the Performance Specification, would involve, in the language of clause 25 of the Amended and Restated Concession Agreement, a proposal for a change to or outside the parameters of the service levels set out in the Performance Specification. That is what I had in mind in paragraph 34 of my judgment, because those are the measures which I thought are envisaged by paragraph 5(1)(e) of section 1 of the Performance Specification.”

[28]The result of all this is that there has been (through new counsel) a considerable shift in LBSL’s argument in this court. Reliance on paragraph 5(1)(e) appears to have been abandoned and there has been a more intense focus on paragraph 25 of ARCA. This is, no doubt, because LBSL have now perceived that if they can rely on paragraph 25 to deal with the question of over-crowding by effecting a Service Change (rather than a Service Parameters Change which may well have financial consequences for LBSL) they can neatly side-step the conclusion of the judge to the effect that TCL are not in breach of contractual obligations if they (TCL) fail to deal with overcrowding. Mr Males nevertheless did not wish to abandon his arguments on breach of contract entirely and he has now posed what he has called “five important questions which the court will need to resolve”. Together with his suggested answers in italics these questions are:

“(1) Do cl. 3.11 of Part III, section 5 and cl. 1.1 of Part IV, Section 9 of the PS impose a design obligation only, or both a design obligation and an ongoing performance obligation? They impose an ongoing performance obligation (as well as a design obligation). (2) Alternatively, is there any other on-going performance obligation in relation to overcrowding imposed by the terms of the ARA or PS? In the alternative, such an obligation is imposed by ARA, cl 19 and the Cardinal Requirements in the PS, Part 1, Section 1, cl. 2.1. (3) If these provisions impose an ongoing performance obligation, is TCL obliged to increase capacity on the trams in the event of overcrowding? Yes. (4) If TCL is obliged to remedy overcrowding by capacity increases, is LBSL obliged to compensate TCL? No, unless LBSL initiates a Service Parameters Change, which LBSL is not obliged to do. (5) Independently of overcrowding, if LBSL requires an increase in capacity, can this be a “Service Change” or must it be a “Service Parameters Change”

. It can be a Service Change, and will be if the change required is either (i) an increase in tram frequency within the limits set in Part IV, Section 9, cl. 1.4, or (ii) an increase in tram length by the addition of a saloon within the limits set by Part III, Section 5, cl. 3.12 and/or Part III, Section 5, cl. 2.3(ii).” They impose an ongoing performance obligation (as well as a design obligation). In the alternative, such an obligation is imposed by ARA, cl 19 and the Cardinal Requirements in the PS, Part 1, Section 1, cl. 2.1. Yes. No, unless LBSL initiates a Service Parameters Change, which LBSL is not obliged to do. It can be a Service Change, and will be if the change required is either (i) an increase in tram frequency within the limits set in Part IV, Section 9, cl. 1.4, or (ii) an increase in tram length by the addition of a saloon within the limits set by Part III, Section 5, cl. 3.12 and/or Part III, Section 5, cl. 2.3(ii).”

[29]It can readily be seen how different these issues are from the “Agreed List of Issues” before the judge as set out in paragraph 24 above. It is perhaps permissible to observe that, however anxious both the Commercial Court and this court are to help businessmen resolve their reasonable disputes, it is not easy to assist those who have such difficulty in even framing the questions to which they would like an answer. I would propose to concentrate on Questions 1, 2 and 5.

Ongoing Performance Obligation?

[30]I can say at once, for my part, I agree with the judge largely for the reasons he gave.

[31]If one expects to find operational obligations in a specification at all, one would expect, in relation to the Performance Specification with which we are here concerned, to find them in Part IV of the Specification and, in particular, Section 9 which is headed “Operation of Tramtrack System” rather than in Part III of the Performance Specification which deals with design, construction and establishment of such things as track (section 4), rolling stock (section 5), signalling (section 7) and a maintenance centre (section 8). The Corporation say that section 9 of Part IV does indeed contain the relevant operational obligations; they come in the last sentence of the first of a group of paragraphs headed “Services Parameters” which set out (among other things) minimum and maximum numbers of trams per hour on various parts of the route and maximum journey times. The first paragraph of clause 1.1 requires the Concessionaire to submit to the Corporation for its approval “the detailed level frequency and pattern of service and the Timetable . . . it proposes to operate within the parameters” and then, in a separate sub-paragraph, the clause provides:- “The Concessionaire shall ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5”. This, submit the Corporation, brings in the obligations in section 5 and makes them operating obligations during the currency of the concession. They also submit that the relevant obligation in section 5 (namely clause 3.11) is in any event itself a clause which, quite apart from clause 1.1 of section 9, imposes an obligation as to overcrowding on the Concessionaire for the duration of the concession.

[32]I repeat, for ease of reference, Clause 3.11 of section 5 which is headed “Fleet Size and Tram Capacity” and provides:- “For the purposes of fleet size determination, at least 30% of the passengers shall be capable of being seated and standing passengers shall not exceed 4 pax/m 2 standing (except in the hour of greatest daily passenger demand in the morning and evening when up to 5 pax/m 2 will be acceptable). In addition the Concessionaire shall ensure that:-(i) the minimum number of seats per Tram (including tip-up seats) shall be 74 and the total passenger capacity with 5 standees per metre shall be 242; and

(ii) the usable floor area for standees per Tram shall be not less than 33m 2.” The clause is split into two parts in order to reflect the dual concerns of the title; the first part is avowedly for the purpose of determining the size of the fleet, while the second part deals expressly with capacity in the sense of (1) the number of passengers which each tram is to be able to carry and (2) the floor space to be available to those who are standing.

In addition the Concessionaire shall ensure that:-

[33]It is noteworthy that the first part of the clause contemplates a number of passengers 30% of whom are to “be capable of being seated”. That means that there has to be room for 70% of that number who will be standing. For the purposes of determining the size of the fleet, it is important to know how tightly such passengers are ideally to be accommodated because that will determine the number of tramcars which go to make up the size of the fleet. If standing persons are tightly accommodated a lower number of tramcars have to be constructed than if standing persons are less tightly accommodated. It is thus a calculation intended to assist in determining how many tramcars will be necessary and correctly contained in a clause the purpose of which is “fleet size determination”. In this context I cannot read the word “shall” as imposing any obligation on TCL in relation to the number of persons who are to be allowed to stand at any given time or even over any particular period of time. It has already been agreed (paragraph 5.1(e) of Section 1) that the design will permit a 33% increase in passengers. Provided that design obligation is met, I cannot think there is the ongoing performance obligation for which LBSL is contending.

[34]One can perhaps test the matter in this way. If, in 1996 (or, indeed, 2000) either party had decided to instruct Messrs Freshfields that either the contract or the Specification should contain an obligation on TCL not to permit excessive overcrowding, would any draftsman hide the obligation away in that part of the Specification which dealt with design and rely on advocates at some late stage to argue that the ongoing obligation was to be spelled out from a single sentence at the end of a paragraph dealing with Service Parameters? In a contract of this detail and complexity, the answer must be in the negative.

[35]The judge was much impressed by the difficulty of defining the overcrowding obligation if there was one. He said (para. 27) that it would be absurd to suppose that, if the prescribed maximum standing density was exceeded on one occasion because eg a tram was unexpectedly delayed or there was a week-end sporting event, there was an automatic breach of contract. He then said (para. 31) that once that absurd construction was ruled out, one could not then read in further language to give the reference to standing passengers some meaning over and above a design criterion. Mr Males submitted that that was a “misplaced” suggestion because it was self-evident that overcrowding would have to be looked at over a reasonable period and by reference to the parts of the system where such overcrowding occurred. That he said could all be determined by the Expert under clause 75 and Schedule 13 of ARCA. He formulated his proposition in this way, that TCL would be in breach of contract “in the event of regular excess of 5 pax/m 2 over a defined part of the system, as determined by the Expert”. I agree with the judge that this is all too vague to persuade one to construe clause 3.11 as an ongoing performance obligation. Of course, if it was already clear that it was intended to impose such an obligation, the Expert would no doubt have to do his best. But the truth is that an ongoing obligation in relation to overcrowding is just not in the contract.

[36]Nor do I think Mr Males can get home under the more general provisions on which he relies viz the obligation to comply with Good Industry Practice, the Cardinal Requirements or the customer charter. Neither the Practice nor the Cardinal Requirements refer to overcrowding at all and the fact that the customer charter says that TCL “aim to make every journey a pleasant experience” cannot create an obligation in relation to overcrowding which the parties have not chosen to insert into the contractual arrangements made between them.

[37]Accordingly I would answer Question 1 by saying that the clauses relied on do not impose an ongoing performance obligation in relation to overcrowding and Question 2 by saying No. Questions 3 and 4 do not accordingly arise for decision.

Service Change or Service Parameters Change

[38]This raises the argument which was touched on in reply before the judge and was the subject-matter of interrogation after judgment. It is not an entirely easy matter to decide whether, if LBSL requires an increase in capacity in order to avoid overcrowding, that is a Service Change or a Service Parameter Change under clause 25 of the Agreement. It is significant that if the Corporation wish to effect a change of either kind, sub-clause 25.4 requires them to supply written reasons for their proposals together with details of the anticipated effects of the proposals. They are also required to consult with and take account of any representations made by the Concessionaire. Once reasons have been given together with the anticipated effects of the change and once consultation has occurred and any representations have been taken into account (but only then), the Corporation are entitled to effect a change by giving notice to the Concessionaire who is then required to comply with the change within the time specified in the notice. None of these events have as yet occurred. The court asked Mr Males to provide an outline of a draft notice which might, after the relevant contractual steps actually be served.

[39]At the beginning of his reply, Mr Males produced two such possible draft notices (one in relation to an increase in the frequency of services and one in relation to an increase in tram length). He also produced three new draft declarations which he was asking the court to make. It quickly became apparent that in order to achieve the third declaration sought (which related to the distinction between a Service Change and a Service Parameter change), he would have to amend his Particulars of Claim and, when this was pointed out, he produced draft amended Particulars of Claim to claim the new declaration in the following terms:- “the Defendant is obliged to implement and pay for such capacity enhancements when required to do so by the Claimant pursuant to the Service Change mechanism of clause 25.3 of the Amended and Restated Concession Agreement; in particular, an instruction by the claimant that the Defendant must increase capacity by(i) an increase in tram frequency up to the limits set in Part IV, Section 9, cl. 1.4 of the Performance Specification, or

(ii) an increase in tram length by the addition of a saloon up to the limit set by Part III, Section 5, cl. 3.12 of the Performance Specification. will be a “Service Change” and not a “Service Parameters Change” within the meaning of clause 25 of the ARCA.” (i) an increase in tram frequency up to the limits set in Part IV, Section 9, cl. 1.4 of the Performance Specification, or (ii) an increase in tram length by the addition of a saloon up to the limit set by Part III, Section 5, cl. 3.12 of the Performance Specification.

[40]By this stage Mr Wilmot-Smith QC for TCL had become distinctly restless. He pointed out that the present issue had only been trailed in a reply below and never fully argued; now once again the argument (together with the draft declaration sought) was only being fully formulated in reply for the first time. He pointed out that any Service Change which the court might consider that the Corporation were entitled to implement would have to be discussed with and eventually passed onto to TCL’s sub-contractors because new trams would have to be built or their length extended and that this was all a bit much to have to confront for the first time after his submissions had formally closed. Mr Males contended that the point had been sufficiently foreshadowed in his skeleton argument and would have to be confronted at some stage; it would be unsatisfactory to leave it as the judge had left it in paragraph 34 of his judgment and in the supplementary judgment since the judge was clearly wrong about it.

[41]We permitted Mr Males to develop his argument and enquired whether the reasons, which the Corporation were obliged to give under clause 25.4 in relation to their proposals for a change, were reasons which could be challenged or whether they could be reasons which seemed good to the Corporation, however bad they might be in fact. Mr Males asserted that the Corporation’s reasons were essentially non-justicable unless (perhaps) they got to the realm of perversity. Lord Justice Sedley observed that that submission hardly put the matter beyond the reach of controversy.

[42]By this time it was becoming apparent that, however anxious this court might be to decide matters of principle to assist the parties in resolving their disputes, the ramifications of Mr Males’ proposed fifth question had not been fully thought through even by LBSL themselves and it would not be fair that TCL should address them in a hurry at the very end of oral submissions.

[43]For these reasons, I do not think it would be right to grant the new declaration sought. Although I would not wish to be prescriptive about it if it turns out the matter can be brought before the court in a more digestible form than it is at present, I would myself think it desirable that the legal issues should be resolved in a less hypothetical context. If the Corporation wish to take the matter further, there should be written reasons for their proposal with details of anticipated effects; if TCL wish to make representations they should be entitled to do so and consultation should be held. If the parties are still in genuine dispute at that stage, a written notice of change should be served under clause 25.3. Issues of law can then be debated in a real rather than hypothetical context.

[44]In deference to Mr Males’ arguments, I would, however, set aside those parts of the judge’s judgments which decide that measures intended to bring about an increase in passenger carrying capacity would involve a change to or a change outside the Service Parameters set out in Section 9 of Part 4 of the Specification. Mr Males has at least persuaded me that he has serious arguments on the question whether such a change would be a service change or service parameters change. Such arguments should ideally be dealt with once a formal notice of change has been served and I do not consider that, at this stage, it would be helpful to say more.

[45]Save to the extent indicated in the previous paragraph, therefore, I would dismiss this appeal.

[46]I have had the opportunity of reading the judgments of Sedley and Longmore LJJ in draft. I would answer the first two questions in the same way as Longmore LJ for the reasons given by him. I share his and Tomlinson J’s concerns about the imprecision of the term “overcrowding” as a contractual concept, on the facts of this case.

[47]As to paragraph 44 of Longmore LJ’s judgment, I was not initially attracted by Mr Males’ argument that measures intended to bring about an increase in passenger capacity would amount to a “Service Change” rather than a “Service Parameter Change”. I was inclined to the same view as Tomlinson J. However, I accept that the point is clearly arguable and can best be determined once a formal notice of change has been served. For those reasons, I, too, would be prepared to set aside the passages of Tomlinson J’s judgment to which Longmore LJ referred in his paragraph 44.

[48]Thus, I would answer Question 1: The clauses relied upon do not impose an ongoing contractual obligation in relation to overcrowding. I would answer Question 2 in the negative. I would dismiss the appeal save to the extent indicated.

[49]The puzzling thing about this carefully drawn contract is that it carries an unspoken and – to me at least - inscrutable assumption about the number of passengers the trams are expected to carry. The standing room for which the cars are to be designed contemplates a platonic ideal of a handful of passengers (I cannot bring myself to call them standees) standing in comfort, when everyone must have known that, if passenger demand was as buoyant as the parties no doubt hoped it would be, this number would be regularly and sometimes greatly exceeded.

[50]It is simply not possible to divine from the contract what was intended to happen in this event. On a tight reading, tighter in fact than Mr Males felt able to advance, any but an occasional and minor surplus of standing passengers would put TCL in breach unless, at great expense, it increased the capacity of its rolling stock to cope. On a generous reading, which is not far from TCL’s position in this appeal, the company was entitled without consequences (except beneficial ones for its revenue) to run trams packed with standing passengers day in and day out.

[51]This is why Mr Males wisely takes the middle course of arguing that overcrowding is undefined in the contract precisely because it is something which is intended to be gauged by an expert, pursuant to clause 75 and schedule 13, in the light of the extent and frequency of excesses of standing passengers above the design ideal. Subject to the agreed forms of recourse, the view of such an expert would be decisive. If it was that there was overcrowding of TCL’s trams, they would come under an obligation to enlarge capacity at their own expense because, in Mr Males’ contention, this would be a service change within the so-called service parameters of the Agreement and not a change to the parameters themselves.

[52]I am prepared to accept – indeed I can see no choice but to accept – that whether there is overcrowding is something which has to be determined by an expert. To this extent I am unable to adopt Tomlinson J’s reasoning, which was partly based on the difficulty of deciding whether there was overcrowding, or therefore to agree with as much of the reasoning of Longmore and Hallett LJJ as relies on the imprecision of overcrowding as a contractual concept. If it is found to be occurring, however, the question remains whether the expansion of the trains to cope with it is a change within or to the service parameters. If it is the former, it will be, as Mr Males contends, an ongoing performance obligation. In agreement with the other members of the court, I would set aside as much of the judgment as attempts to decide this issue as one of principle, in favour of awaiting a formal notice of change.

[53]It does, however, seem to me that the Agreement does not make overcrowding, in the sense of regular and substantial excesses of standing passengers above the design criteria, a determinant of performance. This is so even though clause 3.11, by prescribing a calculation based on numbers and proportions of passengers, requires a projection of numbers to be made. These criteria are explicitly introduced as a determinant of car design and fleet size. The high point of Mr Males’ case is the provision in IV.9.1.1 that TCL “shall ensure that the service provided continues to comply with the accommodation limits and standards defined in sections 1 and 5”. But, in agreement with the judge and Longmore LJ, I do not think this will bear the weight Mr Males places on it. It is not ideally expressed, but in the context of the Agreement, and more particularly in the light of its structure, it creates an obligation to keep the rolling stock up to the initial design standards. To read into it an ongoing obligation to adapt the rolling stock to meet an excess of demand over the ideal figures adopted for design purposes seems to me to be a bridge too far. It is not what the contract says and it is not, in my judgment, what it means or intends. I agree therefore that Mr Males’ first two questions should be answered “No”.

[54]This said, we have probably not decided a great deal. Mr Wilmot-Smith was prepared in argument to assert that there would be no breach of the service levels even if overcrowded trams were repeatedly leaving crowds of passengers standing at the halts. It would be open to either party, he submitted, to increase, or to require an increase in, the frequency or the capacity of the trams, but whoever decided on it would have to pay for it. It is a pretty unattractive scenario, but it cannot be excluded by adopting an incorrect answer to Mr Males’ hypothetical question. This and no doubt other issues will have to wait their turn.