76: Are assurances from HS2 Ltd worth the paper they are written on?
Petitioners seeking to negotiate safeguards with HS2 Ltd will probably all be aware of the Government’s Information Paper B4 (compliance with undertakings and assurances, the current version being 1.2, dated 28 July 2014). They are also likely to be familiar with HS2 Ltd’s oft-repeated statement that written assurances given by or on behalf of the Secretary of State are quite sufficient to protect interested parties and can be relied upon as such. However, whether such assurances are or are not adequate and sufficient is quite a complicated issue which, quite rightly, causes many petitioners considerable concern. This blog entry examines that question in more detail.
INFORMATION PAPER B4
Information Paper B4 indicates that commitments will be categorised by party and by type, the two type categories identified being:
- undertakings, which are binding (usually contingent) agreements set out in legal documents or given by another means to the Select Committee itself or to Parliament
- assurances, which are unilateral written commitments made by the Promoter in a letter or other document, or in petition responses (see 2.2)
Whilst no doubt intended to be clear and helpful (and in fact also modelled on the equivalent Information Paper for Crossrail), this is perhaps not as clear as it could be. For example, undertakings are described in the Information Paper as agreements when it seems clear that the term is here used to describe commitments which may or may not take the form of an agreement.
Furthermore, in ordinary parlance, undertakings may be and often are unilateral promises rather than agreements between two or more parties. Also somewhat confusingly, assurances are described as unilateral written commitments when, at least in ordinary parlance, undertakings can be just that. It would seem however that the categorisation is really just for the purpose of the promoters’ register of undertakings and assurances and is probably intended to create a distinction between those which are binding in their own right and those which will only become binding commitments by virtue of undertakings to be given to Parliament by the Secretary of State. That seems to accord with what Tim Mould QC , speaking for the Government, told the Select Committee on 22 October when he sought to explain the meaning of assurances and undertakings and offered to arrange for someone with practical experience of their operation to come and speak to the Committee. He also then suggested that there have been things being said on the blogosphere on the subject, and which are not terribly helpful about past experience, so it will be interesting to see whether this contribution becomes so categorised!
Information Paper B4 goes on to indicate that:
- any nominated undertaker appointed by the Secretary of Sate to undertake HS2 will be contractually obliged, via the requirements set, to comply with all relevant undertakings and assurances (see 4.1)
- it is expected that the Secretary of State will give an undertaking to Parliament that he will take such steps as he considers reasonable and necessary to secure compliance with the Environmental Minimum Requirements. This includes all relevant undertakings and assurances, insofar as they are not directly enforceable against any person appointed as a nominated undertaker. In other words, the Secretary of State is not obliged to enforce an undertaking if the recipient has a means of enforcing it itself (see 4.2)
DOES IT MATTER?
As long as what is promised, whether by agreement, assurance, undertaking or other commitment is binding, as HS2 Ltd insists they all will be (at least insofar as they eventually get included in the register of undertakings), does any of this matter? The answer is that it does. This is because framing intended commitments as assurances has a number of deficiencies so far as those who seek to rely upon them are concerned.
- assurances will not be directly enforceable by the petitioner but only by the Secretary of State
- the petitioner will have no say over (or probably even sight of) the contractual arrangements between the Secretary of State and the nominated undertaker which render the assurances binding
- it will be up to the Secretary of State to decide what is reasonable and necessary to secure compliance with commitments
- other than to the extent that the HS2 Complaints Commissioner can become involved (whose role, as explained below, is intended to be more limited), there is no guarantee that a process and resources will be put in place and maintained by nominated undertakers and the Secretary of State to deal with concerns over, and disputes on, assurances given to petitioners, and to ensure that these are determined fairly and promptly
- any enforcement action by the Secretary of State will have to be considered by him and his Department in the context of their overall relationship with the relevant nominated undertaker at the time – as such, it may be influenced by wider considerations (eg cost or programme over-runs or other matters needing to be agreed by the Secretary of State with the nominated undertaker) rather than simply having regard to whether the assurance has been complied with
- assurances provide no basis for referral of anything to arbitration or other form of dispute resolution, as is often needed in complex commitments respecting works affecting property
HS2 COMPLAINTS COMMISSIONER
So far as the role of the HS2 Complaints Commissioner is concerned, Information Paper G3 (v.1.1, dated 1 August 2014) makes clear that this person’s role is to consider complaints from any quarter during construction that cannot be resolved through the nominated undertaker’s own complaints process and to mediate between the nominated undertaker and complainants. Complaints relating to property compensation issues or concerning claims for more than £7,500 are however expressly excluded from the Complaints Commissioners remit. Furthermore, recourse to a public mediator is hardly a substitute for legal rights to secure the determination of disputes and enforcement of rights, particularly in relation to fast-moving construction works.
Nobody involved in or affected by ordinary building or other construction works and relying on commitments made in relation to them would normally expect to, or ever be advised to accept, commitments on the basis of assurances as offered by HS2 Ltd. That being so, it may be asked why should petitioners be expected to or HS2 Ltd and the Government want them to?
There is certainly no advantage to the petitioner in doing so other than the consideration that HS2 Ltd and the Government (who hold an overwhelmingly stronger negotiating position than any petitioner) may not be prepared to proceed otherwise. There are however significant advantages for HS2 Ltd and the Government, not least the following:
- there is no risk then of the petitioner being able to take legal action in relation to any perceived failure to comply, either directly against a nominated undertaker or against the Secretary of State
- HS2 Ltd can keep proposed commitments in very general high-level terms, rather than being driven into specific detailed commitments
- phrases can be adopted in the assurances which are either quite imprecise or leave enormous discretion to the Secretary of State
- the precise interpretation of the assurances will be a matter for the Government and incapable of being tested independently
Whilst not commonly known, the House of Lords does have a specific procedure for adjudicating upon differences arising on arrangements between parties and undertakings given, where these have been accepted by a hybrid bill select committee in that House. Private Business Standing Order 130 [HL] provides for these to be determined by the Chairman of Committees in that House. But there is nothing similar in the Commons.
CHOICE FOR THE PETITIONER
So where does this all leave petitioners in the House of Commons, faced as they may be with an HS2 Ltd negotiating team asserting that assurances are perfectly sufficient, have been acceded to by others and maybe even then going on to ask of a petitioner how dare anyone suggest (not that this is the point nor necessarily even being suggested at all) that a future Secretary of State will not honour these assurances or that Parliament would not enforce them? The answer is in a difficult place.
Plainly, assurances do not confer the same protection as could reasonably be included in a legal written agreement and would normally form the basis for protection of property interests affected by construction works. We at Bircham Dyson Bell therefore believe and will continue to advise that protection negotiated with HS2 Ltd should be translated into a formal legal agreement where this is practicable (or, in those limited circumstances where only provision included in the Bill itself can bind future Secretaries of State, by amendment to the Bill).
However, if HS2 Ltd will not offer an agreement, or even negotiate one that could then be placed before the select committee, petitioners must either just accept the assurances offered or face up to the considerable trouble, expense and uncertainty of appearing before the select committee to demand that a proper legal agreement be entered into. Given that the select committee has a lot to do, is not well placed to adjudicate between parties on detailed terms of a legal agreement and may well be minded to give significant weight to the fact that assurances have been used as a basis for commitments on previous hybrid bills and accepted by a number of petitioners already on this one, the prospects of doing so must be at best uncertain. Petitioners are however perfectly entitled to expect commitments made to them to be appropriately detailed, reliable and enforceable. Where that means seeking a full legal agreement, then they should not be put off doing so. Let us hope that, should any petitioner be driven to arguing this before the select committee, their reasonable concerns will be carefully listened to and the real limitations of assurances fully understood.
28 October 2014