Lands Tribunal for Scotland

OPINION

Cornerstone Telecommunications Infrastructure Limited (Applicants)
v
Thomas Steuart Fothringham (Respondent)

Gelly Wood, Murthly Estate, Muir of Thorn, Perthshire

1. This is an application for interim code rights under para 26 of the new Electronic Communication Code (“the Code”) enacted as Schedule 3A to the Communications Act 2003 (“the Act”) by sec 4(2) of, and Schedule 1 to, the Digital Economy Act 2017.

2. The applicants are Cornerstone Telecommunications Infrastructure Limited, a joint venture between the Telefonica group of companies and Vodafone Limited. They are operators within the meaning of para 2 of the Code, holding a direction from OFCOM under sec 106 of the Act, and serve the statutory purpose of providing an infrastructure system, in terms of para 4(b) of the Code. The respondent is the heritable proprietor of Murthly Estate, Perthshire.

3. Since 2000 Vodafone Limited have had apparatus for mobile phone services on an area of the respondent’s land extending to 100 sq metres in terms of an agreement between them and the respondent’s father, entered into at that time. However the present site has now been compulsorily acquired by the Scottish Ministers in connection with the dualling of the A9 Perth to Inverness trunk road. The contractors doing that work must get possession of the site by May 2020, so the apparatus has to be relocated. The applicants have identified a suitable site, also on the respondent’s land and only 20 metres or so east of the existing site.

4. Negotiations in that regard have been going on for some years and were well advanced when the new Code came into force on 28 December 2017 and radically changed the balance of power between the parties. Heads of Agreement had been drafted including a rent of £5,000 per annum but Cornerstone refused to go further down that route and resorted to their new rights under the Code instead. That is how we come to be where we are.

5. Two applications have been lodged. The present one is for interim rights under para 26 of the Code. The other one is for long-term rights under para 20.

6. A procedural hearing was held on 27 January 2020 as a result of which, at the invitation of Mr Malcolm Thomson QC for the applicants with the agreement of Mr MacEwan, solicitor for the respondent, we decided, gratefully and respectfully, to adopt the procedure followed by the UK Upper Tribunal in the case of EE Limited and Hutchison 3G UK Limited v The Mayor and Burgesses of the London Borough of Islington [2018] UKUT 361 (LC); that is to say, to decide the application for interim orders by way of a summary hearing at which evidence would not be heard, although affidavits could be considered, and we would hear, instead, only the submissions of the lawyers. That hearing was put down for two days, Monday 24 and Tuesday 25 February, but parties decided, with our permission, to devote the Monday to further negotiations. Happily, these negotiations progressed so well that by Tuesday morning only three issues remained for decision by us. Having heard the same representatives for parties on these matters, we deal with them as follows.

What consideration should be payable during the interim period?

7. As was to be expected, parties were wildly apart on this question, with the respondent claiming £4,200 per annum and the applicants offering only £252.70. But they were at one in saying that, in a sense, it does not matter what figure, at or between these extremes, we chose, because it will be subject to corrective back-dating once the para 20 application has been decided. Accordingly, although valuation reports had been lodged, we heard no analysis of those although we should record that Mr MacEwan offered to address us on his expert’s report. Mr Thomson’s position was that we should simply take his clients’ figure and, if need be, it could be corrected later.

8. Our starting point is to note that the most fundamental change which the Code has brought about is to exclude from the reckoning the fact that the transaction relates to the provision or use of an electronic communications network; the “no network” assumption introduced by para 24(3)(a) of the Code. That in itself is likely almost always to lead to a reduction of rents from previous levels. On the other hand, the fact that there is, in reality, no demand for this site from anyone other than the applicants does not mean that the rental payable is only nominal, or little more than; see the second EE Limited v Islington decision ([2019] UKUT 53 (LC)) at para 84.

9. To go beyond more or less splitting the difference at this stage may suggest to parties that we have formed a view as to where we are eventually heading, which would be wrong: we have no such view. So, for interim purposes, we have fixed the consideration at £2,500 per annum, which is nearly enough the mid-point of the range.

Indemnity

10. The draft agreement being adjusted between the parties contains the following provision as to indemnity, the first sentence of which is a revisal sought by the respondent:

7.5 Indemnity

7.5.1 [Without prejudice to the Grantor’s claims or claims for compensation in terms of the Code, t]The Operator shall indemnify the Grantor in respect of all claims and proceedings brought against the Grantor in its capacity as Grantor of the Communications Site (including associated costs and expenses) ("Proceedings") arising directly from any unlawful act or omission by the Operator in the exercise of the Rights and/or use of the Communications Site and/or the Equipment provided that:

7.5.1.1 the Grantor shall promptly notify the Operator of any Proceedings and the Grantor will not compound, settle or admit those Proceedings without the consent of the Operator except by an order of a court of competent jurisdiction;

7.5.1.2 the Operator shall be entitled at its own cost to defend or settle any Proceedings subject to the Grantor’s prior written consent.

7.5.2 This indemnity does not extend to:

7.5.2.1 any Proceedings to the extent that they are in respect of consequential losses and/or losses that would not otherwise be recoverable at common law;

7.5.2.2 any Proceedings to the extent that they result from any negligence, wilful act, default or omission of the Grantor, its employees, servants, contractors, agents or Operators or any other person outside the Operator's control;

7.5.2.3 any Proceedings to the extent that the Grantor has failed to take any action that it ought reasonably and properly to have taken to mitigate any liabilities, costs and expenses that it may suffer;

7.5.2.4 claims under this indemnity shall be capped at a level of ten million pounds (£10,000,000) whether in respect of a single claim or a series of claims arising from the same incident (except in the event of death or personal injury where there shall be no limit); and

7.5.3 Nothing in this Agreement shall restrict or interfere with the Operator's rights against the Grantor or any other person in respect of contributory negligence.”

11. Mr Thomson opposed the revisal. In the first place the Code imposed no obligation on the applicants to agree an indemnity clause at all. It had been offered here as a gesture of good will. Secondly, the suggested revisal was inappropriate because it was mixing up two things: compensation for lawful things done by the applicants under the Code, for which the Code provided redress, and indemnity for the consequences of illegal acts or omissions, which was the point of the proffered indemnity. If we were sympathetic to the respondent’s revisal, the applicants would prefer the whole clause to be deleted.

12. Mr MacEwan explained that the purpose of the revisal was simply clarity. But he accepted that there was no obligation to include an indemnity provision in a Code agreement and, as he put it, “if it’s their way or no way, then it’s their way”, they being the applicants.

13. We have some difficulty in understanding the applicants’ trenchant opposition to the proposed revisal. It seems a fairly innocuous provision. On the other hand, we don’t think it serves any useful purpose. The distinction between rights under the Code and rights under the indemnity clause is clear enough, so we have deleted the proposed addition.

Tree-lopping

14. The third issue is the right to lop or cut back any tree or other vegetation that interferes, or may interfere, with electronic communications apparatus. This is a specific code right provided for at item (i) of para 3. In the present case the clause takes the following form, as slightly amended by Mr Thomson at the bar:

7.4 Tree lopping

7.4.1 In the event that any trees or other vegetation on the Grantor's Property obstruct or interfere or may obstruct and interfere with the operation of the Equipment (including obstructing the line of sight of the Equipment) the Operator shall (having first notified the Grantor) have the right at its own cost to access the necessary parts of the Grantor’s Property in order to trim, lop and/or cut back such trees or other vegetation to the extent necessary to remove such obstruction or interference and in order to prevent any re-occurrence of such interference or obstruction. The Operator will must ensure all statutory consent is obtained prior to such works.

7.4.2 All cut timber and trimmings are to remain the property of the Grantor unless otherwise directed.”

15. Such a right is sought in this case over all of the respondent’s land, so it was opposed as too wide by Mr MacEwan. Moreover, the fact that the new site was to be at a slightly higher elevation and the new mast was to be five metres taller than the old one ought to mean that this right was not necessary. Further, although there was an obligation to notify of any intention to exercise the right, there was no prescribed period of notice.

16. Mr Thomson explained that the impact of trees on the signals being transmitted and received by the new apparatus would not be known until trialling had been carried out. Whilst it was not apprehended that there would be interference of this kind, it would be highly inconvenient if a problem became apparent and work had to stop so that this additional right could be applied for and obtained: better to have it granted at the outset. As to extent, he referred to the “inbuilt limitation” of necessity. He would agree to a provision that the work had to be carried out by a qualified tree surgeon, or similar.

17. We are satisfied that we should grant this right so that if interference from trees or vegetation becomes apparent in the course of trialling, or, for that matter, later, it can be dealt with expeditiously and without interruption of service. The heightened mast of the new apparatus should minimise the likelihood of the right having to be exercised but it is a right which the applicants should have in the interests of maintaining good quality telecommunication services to the surrounding area. No argument of prejudice was advanced by Mr MacEwan – such as the risk of damage to particularly valuable woodland or particular species of trees – and we therefore have no doubt that the public interest should prevail. As to notice, work of this kind, if necessary at all, may have to be done quickly, so we have not imposed a period of notice. As to the need to employ tree surgeons, we assume the applicants can be trusted to act responsibly in the exercise of this right, so we have not thought that necessary.

Duration

18. This order continues in force until the applicants’ para 20 application has been determined.

The form of the order

19. The form an interim order should take was the subject of comment by the Deputy Lands Chamber President in the first EE case, at para 48, where he said this:

“As to the terms of the agreement, the claimant seeks the imposition on an interim basis of an agreement in the same terms as it seeks under paragraph 20. In principle I do not think that is the right way to go about it. The claimants’ proposed agreement under paragraph 20 is an elaborate document, but it need not be if it is only going to be of 3 or 4 months duration.”

He then went on to give parties an opportunity of being heard, or considering between themselves, what form an interim agreement should take and we do not know what the result of that was.

20. The applicants here have taken the same approach as the claimant in EE and we are prepared to go along with it, although it may be for consideration in other cases whether something simpler is appropriate. For present purposes, though, what we have done is amend the clauses in the draft agreement affected by our foregoing decisions and subscribed that revised document as relative to our order. The draft agreement, as so amended, is, therefore, the agreement which is being imposed.

Expenses

21. Parties were agreed that expenses should be reserved meantime. Mr Thomson moved for certification of the case as suitable for the employment of senior counsel. Mr MacEwan opposed this on the basis that he was a solicitor and that the case was within a solicitor’s competence. We have reserved both matters until determination of the paragraph 20 application.