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West Somerset Railway General Discussion

Discussion in 'Heritage Railways & Centres in the UK' started by gwr4090, Nov 15, 2007.

  1. 61624

    61624 Well-Known Member

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    . it
    You are perhaps being over-harsh here. I suspect that the management who entered into the agreement were fully intending to honour it, but they are no longer in post and the new lot don't seemed to have been issued their full complement of scruples at birth.
     
  2. Kje7812

    Kje7812 Member

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    Ah, I wondered out loud a bit ago how the WSR's services were doing but no-one bothered to respond. Hopefully things will pick up, though I suspect that will be after the reopening to Minehead.
     
  3. Mel Hillman

    Mel Hillman Member

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    Not a regular contributor, but I can give some details on current ops.
    Yes, the trains could be better loaded.
    I have been on museum guide duties at BL for the past three Sundays. The numbers recorded in the museum on each day were 67, 49 and 102. I make that a total of 218. Yesterday there were families queued back along the platform waiting to get in. Not one negative comment received. Two positives to note from volunteers on other heritage lines on holiday in the area - both impressed:
    One a signaller and director on the K&ESR (Not RMW)
    One a station volunteer on the East Lancs.
    People are interested and trains are running.....volunteers in all department working hard to give a positive experience.

    Now wait for the prophets of doom to respond.............
     
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  4. Lineisclear

    Lineisclear Member

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    The problem is also that "use now pay later " contracts can be a snare and delusion. They seem to be a good idea at the outset. The owner doesn't have to budget for overhaul costs it may struggle to afford and the railway gets immediate free use. Under accounting conventions it can't double count as a charge against profits both depreciation and creation of a sinking fund to cover future overhaul costs. So the temptation is to see them as tomorrow's problem with the result that, when overhaul becomes due, no one has accumulated enough money in the kitty. It's been a problem for other heritage railways too.

    It's unethical and distasteful but if a board concludes that honouring a contract,entered in good faith by its predecessor members, exceeds its financial capability, and it's cheaper to break it, then their duty may well be to do the latter. The remedy of specific performance ( i.e. you must undertake the overhaul) is unlikely where damages can provide compensation. The difficulty is that those can be difficult to quantify, are subject to dispute about who may have been responsible for unusual/extra damage etc. Any damages awarded may well be less than the true overhaul cost and there's the cost of court proceedings to consider.

    Use now and pay later contracts are best avoided.
     
  5. Monkey Magic

    Monkey Magic Part of the furniture

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    Out of interest, how does that compare with pre-covid numbers?
     
  6. Kje7812

    Kje7812 Member

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    That was going to be my question.
    Also what are the WSR's typical busy and quiet days? I suspect the type of traffic is a bit different to what we have on the SVR and thus a different answer will result.
     
  7. 30854

    30854 Resident of Nat Pres

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    Contract
    • n.
      An agreement between two or more parties, especially one that is written and enforceable by law.
    • n.
      The writing or document containing such an agreement.

    Have contracts ceased to be, or is this more a simple reflection of reality? If directorial duty now outweighs the provisions of a contract entered into in good faith, one surely has to question the legal status of any contract, in the event of board changes anywhere. Where, for instance, would outstanding obligations under such as a fixed-term locomotive operating contract fall in the pecking order of creditors, should the hiring company fail?

    Although verbal contracts have only ever been worth the paper they're written on, t'would seem the days of the "Gentlemens' Agreement", when a chap's word was his bond, are truly a thing of the past.
     
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  8. 35B

    35B Nat Pres stalwart

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    I am involved in writing and managing contracts in my day job, and "what if something goes wrong" is always high in my mind when working on them. Although I have no specific experience of heritage railway contracting, my guiding principle when working on a deal is to try to set it up so that the incentives on both parties align towards delivering according to the contract, and to make it painful to walk away from that contract. A deal that gives significant benefit to one side up front, and then leaves that side with the costs at the end, creates any number of incentives to break the contract, and leaves the wronged party with very difficult choices about how to respond.

    For that reason, the contracts I deal with have long sections around termination clauses, and the consequences of termination. One common part of those sections is about what happens if one of the parties goes bust, or looks like going bust - because the lawyers who advise me, my customers and my suppliers are aware that there are times when things get tough enough in a company that there does come to be a choice between ending one or more contracts and the viability of the company.

    I don't for a moment condone the behaviour of WSR plc regarding 53808 (my language would be rather saltier than @Lineisclear's "unethical and distasteful", but I think we'd both agree that deals should be adhered to), but I do agree strongly with him that use now, pay later contracts are an invitation to trouble, and should be avoided wherever possible. If charitably inclined, I'd agree with @Jamessquared that they reflect the mutual interest of locomotive owner and railway; being rather less charitably inclined, I'd suggest that they're actually a form of unsecured loan by rolling stock owner to the railway - if the justification is that there isn't enough free cash to pay steaming fees, then where is that cash going to come from?
     
  9. Mel Hillman

    Mel Hillman Member

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    Prior to the Steam Heritage Trust taking over and the recent revamp, there was no regular staffing in the museum - it was open and just browse. Therefore the numbers you seek are not recorded anywhere. I used the museum office as my base most Wednesdays when I was the New Volunteer Co-ordinator from 2009 until 2016 and rarely saw any visitors. Friday has always been a quiet day which is probably why trains are not running on Fridays at the moment.
     
  10. 61624

    61624 Well-Known Member

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    I don't disagree that "run now, pay later" contracts are a recipe for disaster, but perhaps someone who has followed this disaster in the making could answer more give a more accurate answer to the question I'm about to pose: How long did the WSR Plc run 53808 for after the new chairman took charge. My impression is that it was run intensively for a season before the plug was effectively pulled on it and the cynic in me feels that the realisation of the decision to be announced probably came a lot earlier The loco owners were both effectively cheated of the opportunity of earning real income elsewhere whilst more wear was put into the loco with no payment so they lost out both ways, whilst the WSR benefitted from its use without payment.
     
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  11. Lineisclear

    Lineisclear Member

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    Almost certainly bottom of the heap with the other unsecured creditors, and only to the extent they could quantify their loss.

    A director's primary duty is to act in the best interests of the company. A reputation for honouring contracts may fall into that category but if there's no money to fulfill a contractual obligation, and it's cheaper to renege on the deal, then that may do so as well.
     
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  12. Matt37401

    Matt37401 Part of the furniture

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    Only perhaps in one part of Somerset, Certainly in my job we honour our contracts whether written or verbal, if a problem comes up on our end we’ll try and explain to the opposite party what it is and how we can work round it.
    Honesty and integrity are 2 things that are worth so much more than a monetary value, the current Plc board have yet to realise this in my opinion.
     
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  13. Jamessquared

    Jamessquared Nat Pres stalwart

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    Just for clarity, it is not specifically "use now, pay later" contracts that I think are subject to "mutual interest of locomotive owner and railway;" - I think nearly all loco hire contracts fall into that bracket, as evidenced by the fact that more or less regardless of fees, loco owners are always fundraising for their own locos over and above. Which suggests to me that railways under-pay for hired-in locos, but make up the difference by virtue of providing a location for loco owners to see their locos in operations - which is, after all, what most such groups wish to see.

    I would agree with you that a "use now, pay later" contract is as you describe, a form of unsecured loan to the railway operator. Equally though, I am not convinced that the "pay a hire fee to create a future maintenance pot" model is great either, in that it ties up cash worthlessly for many years and which decrease in value over time.

    If you work on the premise that a railway is a going concern and has a certain loco requirement (say five in operation at any one time) then you can think of budgeting in revenue terms to complete, say, one overhauls every two years. That would maintain a steady state loco provision, but is subject to various risks: that a loco fails early (leaving the operator short of motive power); that an economic downturn co-incides with "your" turn in the queue (requiring a cutback in revenue put into overhauls, and therefore a longer overhaul / loco shortage); or that an overhaul turns out substantially more expensive than is budgeted for on the steady state model.

    Loco owners are going to be busy raising cash for their locos for a while yet, I suspect.

    Tom
     
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  14. 35B

    35B Nat Pres stalwart

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    I agree with all that you write. Which is why, commercially speaking, I’d always prefer to be the railway operator and not the loco owner.


    Sent from my iPad using Tapatalk
     
  15. Jamessquared

    Jamessquared Nat Pres stalwart

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    Yes - up to a point. Loco owners don't generally have bridge repairs or track replacement to fund! ;)

    Tom
     
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  16. 35B

    35B Nat Pres stalwart

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    I would never suggest either side have it easy!
     
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  17. johnofwessex

    johnofwessex Part of the furniture

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    Firstly the 53808 agreement would always have been vulnerable to the wider economy, and in this case covid without any other issues.

    Secondly it comes back to the inability of (most) heritage railways to cover their costs from the farebox, the shortfalls crop up all over the place, in this case with loco owners.
     
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  18. Gladiator 5076

    Gladiator 5076 Well-Known Member

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    And of course not only when things go wrong, but when things change.
    I like you spent many hours of termination clauses and in house lawyers who would only ever "give advice" never a definitive statement always with the caveat it is of course down to you if you listen to this advice. But it is really the changes that are the numerous headaches, full termination far rarer.
    But changes are many even before Covid as shafted everything. For example we ordered a number of B787's and A380's and I contracted for the economy and premium economy seats. Firstly we lent on the supplier to improve on delivery to meet the aircraft delivery, then spent the next couple of years delaying deliveries as the airframe manufacturers ran in to their many well known issues with the build and hence delivery of these airframes. A far too common occurrence in avaiation.
    Looking closer to home look at how rail franchising as was has been through a couple of iterations due to Covid and now does not exist in the form originally contracted.
    The difference I perceive here is that in my case and rail franchising discussions were held, and financial arrangements were either amended or agreed, I am unsure that has happened in the case of 53808 from what has been discussed here, which just seemed to be "this is the world a we see it".

    Of course in the Heritage world unlike shipping or aviation you cannot really slap a writ on your asset and get the defaulting party to pay up before you release it.
    As was all said to me, but rarely achived, the best contract is the one you sign, stick in a drawer and forget about.
     
  19. Bayard

    Bayard Part of the furniture

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    However, if the money is not there, it is not there and any litigation is only going to make things worse. The problem is not that the board found themselves in a position where they thought they would be unable to fulfil their side of the contract, but the way that it was announced and the general modus operandi of the board. There is a world of difference between, "there simply isn't the money to overhaul your loco and there is no way we can see that it will be available in the near future after the due date, but we will do what we can" and "You are a cuckoo in the nest and we are evicting you and by the way, we haven't got the money to overhaul your loco either".
     
  20. 61624

    61624 Well-Known Member

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    Quite so, and then there are the wider ramifications. When figures of £0.5M to overhaul a loco are bandied around, a lot of the expenditure is for labour. If much of the "routine" work is carried out by the railway's workshop staff that cost is in reality covered by the existing wage bill. If the WSR can't afford to overhaul 53808 is is more or less telegraphing to its staff that their jobs are under threat. If I was one of them and had a family and mortgage to support I'd be looking to jump before being pushed.
     

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