Network Rail Infrastructure Ltd v Conarken Group Ltd

Where negligence causes physical damage to a claimant’s property, consequential loss of use, profit or revenue may be recovered if causation is established and the loss is demonstrably consequential upon, and closely associated with, the physical damage and reasonable remedial work. The loss remains recoverable where the claimant’s liability to a third party arises under contract. The precise contractual machinery by which the loss is calculated need not have been foreseeable if the general type of loss was reasonably foreseeable. In an established category of physical-damage liability, a general appeal to policy, justice or fairness does not justify restricting recovery.

Network Rail brought two claims against employers of negligent heavy goods vehicle drivers. One vehicle damaged overhead electrical equipment at a level crossing; another collision damaged a bridge over railway tracks. Liability for the physical damage and reasonable remedial costs was admitted.

The dispute concerned sums Network Rail had paid or allowed train operating companies under Schedule 8 of its track access agreements for disruption while the railway lines were unavailable. The central questions were whether those sums were recoverable consequential loss or pure economic loss, whether they were too remote or outside the scope of the drivers’ duty, and whether equivalent claims arose in trespass or nuisance.

1. Negligence. Network Rail’s Schedule 8 payments were recoverable. They represented the contractual price of the loss of use or availability of the railway tracks during the periods reasonably required to assess, clear, repair and replace the damaged property.
2. Loss of use, profit or revenue may be recovered in a physical-damage negligence case where it is caused by, demonstrably consequential upon, and closely associated with the physical damage and the necessary remedial work. A claimant’s payment to a third party under contract does not prevent recovery.
3. The relevant loss was Network Rail’s loss, not the losses which the train operating companies might themselves have suffered or recovered. The drivers’ negligence directly caused the physical damage, the remedial works, the closure of the lines and the resulting Schedule 8 liabilities. The causative connection was stronger than a bare but for connection.
4. It was reasonably foreseeable that serious damage to a bridge or railway electrical cable would disrupt railway services and cause loss of use and revenue while repairs were undertaken. It was unnecessary to foresee the precise payment mechanism, contractual formula or composition of the Schedule 8 sums. The payments were not penalties, unreasonable sums or losses too remote from the physical damage.
5. The claims in nuisance failed. The drivers were using the public highway and level crossing, and the alleged interference did not fall within the relevant conception of private nuisance. A negligent, voluntary incursion onto and damage to another’s property can constitute trespass, but there was no material difference in the recoverable damages on the facts.
6. Judgment was entered for Network Rail against Conarken for £293,742.32, comprising the Schedule 8 loss and remedial costs. Judgment was entered against Farrell Transport for £1,017,144.66 in respect of the Schedule 8 loss; the remedial costs had already been paid.

First-instance judgment in two claims heard together. No earlier decision is stated in the judgment.