London Bus Services Ltd v Tramtrack Croydon Ltd

Contractual provisions specifying passenger capacity and standing density may constitute design criteria rather than operational limits. A court should not imply an overcrowding trigger where the contract supplies no objective criteria for measuring when the trigger occurs or what remedial capacity must be provided. Capacity enhancement obligations arise only through the contractual change mechanisms, including an instruction by the regulator. The financial consequences are governed by the agreement’s compensation provisions. A general declaration that the operator must enhance capacity whenever required by the contract is unhelpful and will be refused.

The claimant, as successor to London Regional Transport and regulator of the Croydon Tramlink, sought declarations concerning the defendant concessionaire’s responsibility for overcrowding and capacity enhancement under an Amended and Restated Concession Agreement. The claimant contended that passenger-density provisions created an obligation to provide additional capacity, including a possible 33% increase, and that the defendant bore the cost.

The dispute concerned the proper construction of the Performance Specification and the provisions governing service changes, specification changes, compensation and termination.

1. Construction of the capacity provisions. Paragraph 3.11 of Section 5 of the Performance Specification, including the references to passenger capacity and standing density, was concerned with fleet-size determination, design and planning capacity. It did not establish an absolute operational limit or a contractual trigger requiring enhancement whenever standing density exceeded four or five passengers per square metre.
2. The proposed overcrowding trigger was incapable of contractual application. The agreement contained no objective criteria identifying the relevant period, the part of the system to be measured, the number of affected journeys, or the extent of enhancement required. It would be commercially unworkable to treat an isolated incident as automatically creating an enhancement obligation, and the court could not invent criteria which the parties had not agreed.
3. Paragraph 5.1(e) of Section 1 reinforced that the initial capacity requirement and the 33% enhancement capability were design requirements. The 33% figure was distinct from the greater expansion capability described in paragraph 3.12 of Section 5. Measures to achieve the 33% increase would involve a change to or outside the Service Level parameters.
4. The agreement contained machinery for dealing with overcrowding and capacity changes. Under clauses 25.3 and 28.1(b), the regulator could require a Service Change, Service Parameters Change or Specification Change. The operator’s financial entitlement was governed by clause 25.5 and clause 33. The operator was therefore obliged to implement capacity enhancements only insofar as those contractual mechanisms required it.
5. The court declined the declarations sought. It stated that a material and serious failure to operate and maintain the system in accordance with Part 5, including clauses 19(b) and 25.1(a), could engage the termination remedy in clause 64, but that observation did not create the general enhancement obligation alleged by the claimant.

Not stated in the judgment.