Telecommunications – Electronic communications code – Consideration – Interim code rights – Appellant applying for permission to adduce expert evidence in claim for interim rights to permit an “MSV” survey – First-tier Tribunal refusing application – Appellant appealing – Whether refusal being proper exercise of case management power – Whether refusal of application making decision to award nominal consideration unjust – Appeal dismissed
The appellant owned an office building known as Alder Castle, 10 Noble Street, EC2, for which it paid more than £103m in 2019 and which it had since spent further substantial sums refurbishing. The respondent telecommunications company identified the building as a possible replacement site for telecommunications apparatus which it had been required to remove from another building in the vicinity. In November 2021, with the agreement of the appellant, it undertook an initial inspection (multi-skill visit).
In October 2023, the respondent made a formal request of the appellant for an agreement conferring interim rights under paragraph 26 of the Electronic Communications Code to enable access for a further MSV. When its request was ignored, the respondent referred the matter to the Upper Tribunal which transferred it to the First-tier Tribunal.
The appellant did not resist an agreement in principle. The respondent’s draft agreement proposed a nominal fee of £1 for the right to undertake non-intrusive surveys of the unlet parts of the building as often as might reasonably be required during a six-month period, on giving seven days’ notice. The appellant indicated that it would accept consideration of £2,000. The FTT refused the appellant’s application for permission to adduce expert evidence to support a claim for meaningful consideration assessed under paragraph 24 of the Electronic Communications Code. The FTT subsequently decided to award only nominal consideration. The appellant appealed.
Held: The appeal was dismissed.
(1) Paragraph 24(1) of the Code provided that the consideration payable by an operator to a site provider was an amount representing “the market value of the relevant person’s agreement to confer … the code right”. By paragraph 24(2), that amount was: “… the amount that at the date the market value is assessed, a willing buyer would pay a willing seller for the agreement” on certain assumptions listed in paragraph 24(3), including that the right the transaction related to did not relate to the provision or use of an electronic communications network (the “no-network” assumption).
Paragraph 26(6)(b) made the inclusion of a term for the payment of consideration a matter of discretion. But if there was a dispute, the FTT had to decide how to exercise that discretion and take all relevant matters into account including: if, in an open market, willing parties would agree an amount of consideration which was more than nominal. That was a question of valuation on which expert evidence was admissible. There was no principle that expert evidence could not be relied on in an interim rights claim concerning an MSV.
(2) Tribunals were not party to the negotiations which led litigants to reach agreements. Since the no-network assumption removed the commercial value of the rights to the operator as a relevant factor in the assessment of consideration, it was unsurprising that a nominal sum was routinely agreed. However, if a site provider wished to argue for substantial consideration it was entitled to do so and should be allowed to rely on expert evidence, unless there was a good reason not to permit it.
The FTT’s standard directions in interim rights cases reflected that approach. A party who wished to rely on expert evidence was required to apply for permission to adduce it because it was incumbent on every court or tribunal to limit expert evidence to what was necessary, and experience had shown that it was rarely necessary in interim rights cases. If an application was made too late for the production of expert evidence to be accommodated in the existing timetable, it might be refused.
(3) In this case, the FTT regarded the application for permission to rely on expert evidence as misconceived because it was an application for an MSV only and decisions of the Upper Tribunal and the FTT had consistently made nominal orders for consideration in cases involving rights to carry out an MSV survey.
The FTT’s refusal to permit reliance on expert evidence was not justified by the reasons it gave, which were based on a misunderstanding of law and practice and were procedurally irregular. But it did not follow that the FTT’s flawed procedural decision required that its substantive decision be set aside. Setting aside the procedural decision would be of no consequence unless the appellant could demonstrate that the substantive decision to require payment of only nominal consideration was rendered unfair by the earlier refusal to permit expert evidence.
The FTT was not obliged to award real as opposed to nominal consideration because, in an interim rights case, paragraph 26(6)(b) of the Code released it from the duty in paragraph 23(3) to include terms as to the payment of consideration. Whether it should include substantive consideration was a decision to be made on the basis of whether the FTT thought it appropriate to do so. In the absence of useful evidence, and in view of its experience of previous agreements, the FTT was entitled to decide that it was not appropriate to include more than nominal consideration.
(4) The only valid ground of complaint open to the appellant was that its application for permission to rely on expert evidence was refused for reasons which were not justified. But that irregularity, which amounted to an error on a point of law, did not automatically render the substantive decision unfair: it engaged the tribunal’s discretionary power, under section 12(2) of the Tribunals, Courts and Enforcement Act 2007, to set aside the decision.
The substantive decision was only unjust if the application to admit expert evidence ought to have succeeded. But the application was hopelessly late, was not accompanied by any indication of the substance of the evidence to be adduced, did not propose a realistic timetable for evidence in response and would disrupt the determination of the substantive interim rights application.
Although the judge’s reasons for refusing the application were flawed, it was overwhelmingly likely that a judge properly directing themselves on the law would have reached the same conclusion for purely practical case management reasons. There was no injustice in the FTT’s determination of the terms of the new Code agreement without permitting the appellant to rely on expert evidence.
David Holland KC (instructed by Concorde Solicitors) appeared for the appellant; Oliver Radley-Gardner KC and James Tipler (instructed by Osborne Clarke LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Covent Garden IP Ltd v Cornerstone Telecommunications Infrastructure Ltd
