Introduction
[1] The applicants (“CTIL”) seek code rights under para. 20 of the Electronic Communications Code (“the Code”) contained in Schedule 3A to the Communications Act 2003. They are operators within the meaning of para. 2 of the Code. At the time of the application they were owned in equal shares by the Telefonica Group of Companies and by Vodafone Limited. We have been informed that Vodafone recently sold its shareholding in the applicants to Central Tower Holding Company BC, a member of the Vantage Towers Group. The first respondents are the owners and occupiers of No. 59 Princes Street, Edinburgh and tenants of No. 60 Princes Street which is owned by the second respondent.
Procedure
[2] The applicant served para. 20 notices on both respondents on 28 July 2020. Application was made to the Tribunal for Code rights on 11 December 2020. Only the first respondents have lodged Answers so except where the context requires otherwise, we shall refer to “the respondents” as meaning the first respondents. The Tribunal imposed an interim agreement under para. 26 of the Code in terms of an Opinion dated 14 April 2021. We were informed that the applicants had not however commenced on site.
[3] The applicants now seek full Code rights. The hearing was due commence on 26 May 2021 but following slippage in the timetable, parties agreed that the case could be determined on the basis of written submissions, subject to the evidence of one witness being examined via WebEx. We held a site visit on 26 May and received two rounds of written submissions, on 31 May and 4 June respectively.
[4] The applicants produced affidavits by Mr John McCrea, Mr Daniel Savage, Mr Sean McHenry, and Mr Ralph Freemantle. Mr McCrea is a regional manager of the Radio Planning and Optimisation teams within the north region for Telefonica UK Limited. Mr Savage is head of engineering for the applicants. Mr McHenry is employed by the applicants as a national planning and community manager and has a background in planning. Mr Freemantle is a structural engineer employed by the applicants. He produced two affidavits and his evidence was taken via WebEx on 3 June 2021. The applicants also produced a report by Mr Jonathan Stott of Gateley Hamer Limited. He is a chartered surveyor. His report deals with valuation matters and matters relating to the terms and conditions of the proposed agreement. The applicants were represented by Mr David Thomson, QC, who drafted their written submissions.
[5] The respondents lodged affidavits by Mr Colin Bailey, Ms Rebecca Claricoats, Mr Stan Darge, Mr Richard Murray and Mr Daryl Thomson. Mr Bailey is a chartered surveyor employed by the respondents. Ms Claricoats is a surveyor and associate director of Telemaster Limited, a telecoms specialist contracted by the respondents. Mr Darge is a chartered building surveyor employed by Project Management and Building Consultancy Limited based in George Street, Edinburgh. He spoke to a report dated 5 November 2020. Mr Murray spoke to a report by MP Consulting Engineers dated 25 May 2021. Mr Thomson is employed by Sigma based in West Yorkshire and is qualified in construction management. The respondents also produced a report by Mr Philip Morris of 4M Properties Group Ltd. Mr Morris is a chartered surveyor and reports on the terms of the agreement and valuation matters. The first respondents were presented by Mr Michael Upton, Advocate who drafted their written submissions.
[6] We should point out that para. 97 of the Code makes reference to reg 3(2) of the Electronic Communications and Wireless Telegraph Regulations 2011 which imposes an obligation to determine applications within six months of receipt. The respondents dispute that the requirement applies to applications such as the present. However, without going into detail, Tribunal decisions north and south of the border have held that the requirement applies to Tribunal applications for new sites such as the present. The effect of this is that the deadline for determination was 11 June. We did not manage to determine the case by then. We make no comment as to whether there are statutory consequences in failing to beat the deadline.
[7] We should also record here that this case has been more difficult than usual to manage. The respondents conceded the principle of the application at the time of the interim Order. On 21 April 2021, being the last day of an adjustment period before the full hearing anticipated on 26 May, the respondents introduced numerous issues in their pleadings including a challenge to the principle of the application. These have had to be dealt with. The Tribunal’s timetable had provided for a “travelling draft” of the Code agreement and dates for certain communications to try and narrow the issues. Our impression is the issues were not much narrowed. The travelling draft “agreement” shows disputed terms on most of the main provisions, and many of the minor terms. Even the use of a benign looking ADR clause was disputed without apparent sense of bathos. While testament to the ability of the legal profession to make formidable arguments on both sides of an issue, this maximum approach to litigation makes it difficult for us to infer how much of the dispute is “real.” It is doubtful the Ofcom Code of Practice (“parties should make every effort to reach voluntary agreement first”) was uppermost in parties’ minds. The “joint” statement of the valuation experts contains hardly any agreement at all and has been used by both witnesses to add in new matters to support their positions. Therefore, if we conclude that a Code agreement should be imposed, we will require to settle the terms by going through the travelling draft, clause by clause. Parties themselves are best able to judge where the real dispute lies, and it would be preferable in future cases if they were to restrict themselves, where possible, to seeking a determination on the particular issues which they think would be likely to unlock everything else.
[8] The revised timetable provided for final closing submissions on 4 June. At this point we received two supplementary affidavits on behalf of the respondents, namely by Mr Daryl Thompson and Mr Richard Murray, an annex to Mr Murray’s report and a supplementary report and valuation by Mr Morris. The applicants objected to part of Mr Thompson’s second supplementary affidavit and to the entirety of Mr Morris’ report. It seemed to us that the new material by Mr Thompson and Mr Murray arose fairly out of certain questions which we had circulated to parties earlier that week, and we allowed it to be received. However, the revised timetable did not provide for any supplementary or rebuttal reports from the valuation experts and, as we have said, both of them had already added to their positions in the ‘joint’ statement. If we were to allow the new report by Mr Morris, we would require to give Mr Stott the opportunity to respond; there would thus require to be another round of reports. It should be borne in mind that Code cases are not like normal litigation whereby delays can sometimes be compensated for by awards of expenses on the notion “the laggard pays”. As our website states, there is a requirement to avoid delay in Code cases due to the six month time limit, which would not be well served if we were to allow the new report. Accordingly we refuse to allow Mr Morris’s supplementary report to be received.
Legislation
Cases
Others
Background facts and circumstances
[9] Telefonica previously occupied a site on the roof of the Ernst & Young building at 10 George Street, Edinburgh. The site provided coverage for that area of the city centre which includes Waverley Station. In December 2016 Telefonica received a Notice to Quit and the site was decommissioned in January 2018. This led to a deterioration in coverage in this part of the city which continues to this day. As a result, the subjects of this application have been identified as a suitable replacement site because, amongst other things, of their heightened location within the city centre.
[10] The site is identified by means of eight plans annexed to the draft agreement as appended to the Code notices. The plans propose two specific areas for the “equipment space” or “communications site.” There are other areas designated as equipment air space, access space, set down space, proposed internal access, proposed transmission supply and proposed AC supply. The equipment space comprises two flat roofs, namely a lower roof and an upper roof. The lower roof is essentially a large balcony on the fifth floor of No. 60, overlooking the south face of Rose Street South Lane and a link bridge. The upper roof pertains to No. 59 building. It adjoins No. 60 and is accessed from the roof of No. 60 (itself described in the papers as the “intermediate” roof). The intermediate roof is accessed via a ladder from the lower roof. The upper roof is part of a building which houses the machinery for two service lifts. There is a large roof area to the east of the lift building pertaining to No.59 which is accessed separately. The roof space contains a large amount of air conditioning and refrigeration equipment used to support the respondents’ retail operation below. Apart from one or two small antennae, the lower and upper roofs do not contain any equipment.
[11] The building layout is fairly complex. It includes links under and over Rose Street South Lane so that the applicants have frontage both on Princes Street and Rose Street. There are sales areas on the basement, ground, first and second floors, and ancillary uses on the third, fourth and fifth floors. The Food Hall is accessed from a staircase running down from the Princes Street pavement, and extends as a basement under the lane.
[12] The antennae would be placed on the upper roof, which is situated well back from Princes Street. These would be screened from Princes Street and the Gardens by the top floor of a hotel, itself above the retail areas as they face Princes Street. Detailed design drawings for the applicants show three antennae and two dishes and certain other equipment being placed upon the upper roof. Their engineering report indicates loads being transferred through the main supporting walls’ steel beams so as not to add additional loads onto the roof structures. The antennae are to be fixed to the parapet wall with new reinforced concrete plinths being cast over the main supporting walls and the use of steel braces to limit deflection or movement of the antennae. The drawings show the equipment being designed for use by Telefonica. As we understood it, the design has been future proofed to enable certain upgrades for more equipment. The plans show grillage being imposed upon one section of the lower roof, with capacity for two cabinets, one being a power cabinet and the other being an operator’s cabinet. Mr Freemantle indicated that there was enough space in the grillage area to rearrange the site so as to place a second operator’s cabinet there, based on current technology. He also mentioned that technology was fast moving and more processing type equipment could be placed adjacent to the antennae on the upper roof.
[13] We now turn to parties’ contentions. The written submissions alone totalled well over 250 pages and referred to about 70 authorities. We mean no disrespect to the diligence of counsel when we do not attempt to summarise the submissions in more than outline. Our Opinion shall also assume the reader has an understanding of the Code. We should highlight that three Upper Tribunal (Lands Chamber) cases featured large in the submissions. These are the second EE Limited & Another v Islington Borough case (“Islington”), Cornerstone v University of the Arts London (“University of the Arts London”) and Cornerstone v London & Quadrant Housing Trust (“Maple House”). Each case concerned Code rights for a building’s rooftop; the first case concerned a 10-storey block of flats in London, the second a large 15 floor university building in London, and the third an 8 storey building containing offices on the lower floors, flats on the upper floors and a large number of solar panels on the roof, also in London. We are grateful for the Upper Tribunal’s detailed reasoning and analysis in these hard fought cases.
The principle of the application
[14] Paragraph 20 makes provision for the court imposing a Code agreement. Paragraph 21 provides:-
“What is the test to be applied by the court?
21 (1) Subject to sub-paragraph (5), the court may make an order under paragraph 20 if (and only if) the court thinks that both of the following conditions are met.
(2) The first condition is that the prejudice caused to the relevant person by the order is capable of being adequately compensated by money.
(3) The second condition is that the public benefit likely to result from the making of the order outweighs the prejudice to the relevant person.
(4) In deciding whether the second condition is met, the court must have regard to the public interest in access to a choice of high quality electronic communications services.
(5) The court may not make an order under paragraph 20 if it thinks that the relevant person intends to redevelop all or part of the land to which the code right would relate, or any neighbouring land, and could not reasonably do so if the order were made.”
[15] The applicants highlighted their evidence to the effect that their neighbouring sites were at full capacity and without the replacement site there would continue to be performance issues and degradation in service. The replacement service needed to be of sufficient height. The planning authority were unwilling to allow the erection of street furniture due to the fact the area is a World Heritage Site and Conservation Area. Telecommunications were particularly important given the location in central Edinburgh with bus, train and tram services running from Waverley Station as well as services for local shops, hotels, offices and tourist attractions. Sharing sites was encouraged by government policy and would otherwise lead to a proliferation of sites.
[16] The respondents did not seriously dispute that there was a manifest public benefit and interest in terms of the test in para. 21(3) and (4). Rather, the respondents maintained that the prejudice which they would suffer was open ended, unknown and unquantifiable and thus could not be adequately compensated by money, in terms of sub-para. (2). It was contended that there were a number of factors which would lead to the proposed works hobbling the respondents’ business without there being a practical way of assessing the financial consequences. These factors related to (i) structural considerations and the goods lifts, (ii) the electrical supply, (iii) electro-magnetic field exclusion zones, (iv) loadings on Rose Street Lane South, and (v) access and security. A theme of the submissions was that there was an absence of information meaning that the applicants had not discharged the onus of establishing the matters in para. 21.
[17] In particular, it was contended (i) that service lifts 1 and 2, whose machinery is housed by the upper roof building, would be shut down for an indeterminate period, estimated at between seven to ten weeks. The concrete roof of the lift housing required investigation due to the presence of moisture, in order to determine that it was strong enough to take the presence of the antennae and other structures. The works would break through the weathering of the housing and thus the lift motor equipment required to be fully protected against water ingress. Propping might be required for the duration of the works over the lift shafts.
[18] These lifts were the only lifts serving all floors of the building. If the lifts were out of operation it might be necessary to employ a minimum of 20 casual employees in substitution for the goods lifts, estimated at a cost of £15,000 per week. The disruption included the fact that all refrigerated delivery vehicles would have to wait until manual unloading and removal of the entire delivery to store had been completed, so as to utilise the vehicle’s own temperature controlled environment for the time which that process would take. Carriers would pass on the cost to the respondents. It was for the applicants to undertake the necessary site investigations in order to produce specifications and programmes of works identifying the consequences for the lift motors but they had not done so. Such an unknown amounted to prejudice in the necessary sense.
[19] The respondents also pointed out that the applicants had not addressed the wind loadings as would be transmitted to the concrete planks forming the roof of the motor room and the supporting masonry or the capacity of those elements to resist the forces. This was an issue concerning global stability of the mast bases and did nothing to induce confidence in the proposed structural works. It was paradoxical that the applicants sought an express right of support for the site.
[20] If an order were to be made, as a minimum there should be an obligation for the applicants to supply structural calculations, a prohibition from overloading the building or making it unsafe, a requirement for the respondents’ approval for physical work to the structure of the building, and a prevention of anything which would place the respondent in breach of its tenancy agreement.
[21] The respondents referred to factor (ii) potential electrical shutdown. Mr Daryl Thompson indicated that if the applicants took power from the switch room on level 3, it was assumed a power shutdown for the retail operation would be required to facilitate the works. This in turn would require careful planning and the likely removal of chilled and frozen goods from the store. There was a lack of information, and important questions could only be resolved by the respondents’ proposed wording of the agreement.
[22] Under factor (iii) the respondents referred to the International Commission on Non-Ionizing Radiation Protection (ICNIRP) operational exclusion zones. It was submitted that it was absolutely necessary for a categorical guarantee that these zones would not impede access for the respondents’ staff and contractors to any of its operating plant on the roof. There were both occupational and public exclusion zones. Mr Thompson had pointed out that there is a hotel within the building complex with areas in use at a similar height to the proposed telecommunications equipment. Despite repeated requests the applicant had not produced a plan showing the public exclusion zones. The Tribunal could not make an Order for accommodating the apparatus known to constitute a health and safety hazard without absolute guarantees that it would not present a hazard to persons in the surrounding premises.
[23] The respondents also pointed out Mr Thompson’s evidence (iv) to the effect that the proposed works would require the use of a crane which would be located on Rose Street Lane South. The respondents’ retail space and café were effectively a basement beneath the carriageway. Any overloading of what was in effect a functional roof could cause unquantifiable losses, so it would need to be a condition of any imposed agreement that there was an absolute guarantee against overloading.
[24] The respondents further pointed out (v) access and security concerns. If an agreement were imposed, the applicants’ staff and contractors and potentially unlimited numbers of sharing operators would have access. Once someone was admitted to the building in practical terms, that person had access to the entire building. Security supervision was thus necessary. The security issue was another example of unquantifiable prejudice. An unnecessary access issue was that the application sought the use of a lift for access, but the relevant drawing made it clear that the internal access was to be a staircase.
[25] Finally, the respondents made reference to sub-para. (5) of para. 21 of the Code in that Mr Thompson’s evidence indicated they now had an intention to redevelop the lower roof to the extent of the installation of a new staircase in substitution for the existing hooped “cat ladder”. This would appear to reduce the amount of space available for allowing general access as well as potentially the applicants’ equipment. We did not however relate this part of the submission to the respondents’ objection to the principle of the development, rather they sought a finding whereby parties could be invited to agree the necessary details for the new staircase.
[26] The applicants objected to Mr Thompson’s evidence on the basis that he appeared to be proffered as an expert witness. His experience related to construction projects and judging their viability, design and implications on trading environments which, it was submitted, did not entitle him to give opinion evidence on the matters addressed in his affidavits. The respondents perhaps sensing a difficulty described his evidence as primarily factual and addressing facts and circumstances at the respondents’ building from the perspective of his engagement by the respondent as a construction consultant who is familiar with the building. It was maintained his opinions were uncontroversial and not materially different from those of Mr Freemantle. For our part we think that Mr Thompson was adequately qualified to speak to the matters he refers to. However, we cannot ignore the fact that his affidavits were prepared late in the proceedings and do not have the ring of an independent report prepared for the benefit of the court. However, as the affidavits are largely factual we shall admit them.
[27] On factor (i) the applicants referred to the evidence of their structural engineer Mr Freemantle. He dealt with all the structural issues referred to by Mr Murray of MP Consulting Engineers. He points out that none of the issues are said to render the building incapable of supporting the equipment. He refers to the applicants’ practise of holding a pre-start meeting between applicants and site providers, contractors and consultants to discuss the works which are to be carried out, including identifying any remedial works to the structure which are required. If remedial works are required, they would cooperate with the site provider to try and ensure the works could be done as one package, along with the installation of the applicants’ equipment, thus minimising disruption to both parties. This part of his evidence was in the context of certain defects in the building such as deterioration of the waterproofing, flashings and copings and water ingress into the building identified by Mr Murray. In the context of the lift motor room, the applicants had stated they would maintain waterproofing and provide risk assessments and method statements (“RAMS”) relating to the installation of temporary works to support the roof and lift motor room. The RAMS would seek to minimise any downtime in the operation of the lift. Mr Freemantle accepted that design changes might come about as a result of pre-start meetings. He also pointed out that his calculations had taken account of wind loadings. He accepted further calculations were required to demonstrate the capability of the concrete panels of the roof to carry the imposed load, but this in turn was dependent on concrete integrity testing which would be carried out at a later date. More generally, work to lift motor rooms was not precluded in his experience. Lift rooms were favoured for roof antennae due to their inherent strength, since lift shafts required to be load bearing and it could be seen that there was a lifting beam in the room for the heavy machinery. The works were designed to be external as far as possible.
[28] The applicants submitted that there was no evidence for parts of the respondents’ submission. There was no evidence, for example, to support the suggestion that the lifts would be non-operational for seven to ten weeks. This was not put to Mr Freemantle. All Mr Freemantle had said was to accept that he did not know how long the lifts might be non-operational during the works.
[29] Turning to the issue (ii) of potential electrical shutdown, the applicants pointed out that the right to connect to a power supply was a Code right under para. 3(g). Clause 3.4.1 of the Agreement provided for the site provider to agree wayleaves with third party suppliers on reasonable terms. In any event Mr Freemantle’s evidence indicated there was switch gear on the fifth floor closer to the site than the third floor switch room, which had spare capacity.
[30] Referring (iii) to the ICNIRP guidelines we were advised that there were two exposure limits to electro-magnetic fields. These were occupational limits which apply to individuals who are exposed in the course of their work and the general public for non-work related exposure. Occupational limits were prescribed under the Control of Electro Magnetic Fields at Work Regulations 2016 (CEMFAW) which limits were the same as the ICNIRP occupational limits. In practice the occupational exclusion zone was an area a short distance in front of and around the antennae whereby the high frequency electro-magnetic field (“EMF”) might exceed the CEMFAW limits.
[31] The occupational exclusion zone was indicated on site drawings and had been voluntarily disclosed. The drawings indicated that the occupational exclusion zones exist in free space and that personnel, including the respondents’ staff and contractors, could undertake work tasks at normal roof standing level without entering into the occupational exclusion zone.
[32] With regard to the public exclusion zones it was submitted that since the responsibility for public exposure compliance rests entirely with the operator of the radio equipment, there was no health and safety reason to disclose the public zone to other stakeholders. There was concern that if both public and occupational zones were indicated on the site drawings, this could create confusion for workers using the drawings. It was also a requirement that a certificate of ICNIRP compliance was provided to the local planning authority as part of the planning application for the site. It was submitted that this certificate from the operator was considered adequate by national government as an attestation that the site had been designed to be in conformance with the ICNIRP public exposure limits in locations accessible to the general public. The proposed agreement required the applicant to comply with the ICNIRP recommendations and all health and safety laws and regulations. It was also pointed out that in University of the Arts London the Upper Tribunal declined to affirm any general principle that exclusion zone drawings should be provided.
[33] Turning to (iv) the loadings on Rose Street Lane South, the respondents had acknowledged that it was an adopted public road and any abnormal use of it would require to be subject to the approval of the roads authority. It would be necessary for a crane survey which, as Mr Freemantle indicated, was the applicants’ normal process. Such a survey would identify the space required for any outriggers, parking and overswing. It would also take account of the ground on which the crane would be located and the need to avoid damage to anything below. Mr Freemantle pointed out that if it were necessary to replace the concrete roof of the motor room as was suggested might be required, then the respondents themselves would also require to use a crane to lift the materials to the roof and equally take account of the load bearing capacity of the lane. It was also difficult to understand how any ensuing loss could not be quantified or compensated by money.
[34] Turning to the issue (v) of access and security, it was submitted that it was wrong to assume that the applicants’ operatives or those of any sharer or contractors would act deliberately in an unlawful manner such as by resorting to theft.
[35] In conclusion, the applicants submitted that at best all the respondents had done was raise a series of questions rather than establish there were technical problems which might prevent the development.
Discussion on the principle
[36] Paragraph 21 has now received a good deal of analysis in the increasing number of reported Code cases. We cannot improve upon the Upper Tribunal’s analysis in University of the Arts London at paras 51 and 52:-
“It is clear that Parliament in enacting the Code intended private landowners to participate in the provision of telecommunications sites for the public good by suffering the use of their land for that purpose, being compensated for any damage caused but for consideration calculated on a basis that prevents them from making a profit out of the deal as they could under the Code statutory predecessor. The test for the imposition of such rights is quite a stiff one; for the respondent to escape this public duty, unless it is itself going to redevelop the site, it must show either that it will suffer loss that cannot be compensated in money, or that the prejudice it will suffer is so great that it outweighs the public benefit derived from the use of the site. The level of prejudice must be very high indeed to outweigh the public benefit, in the light of the public demand for, and dependence upon, the availability of electronic communications. The benefit is perhaps even higher today than it was when the Code was enacted and certainly in the current circumstances we are all keenly aware of it … But the very fact that Parliament provided, in paragraph 21(2), a way out for the land owner who will suffer prejudice that cannot be compensated, or in paragraph 21(3) contemplated a level of prejudice so great that it would outweigh the public benefit, points to the fact that Parliament did not intend a landowner to comply with this public duty at all costs. There comes a point when it is too much to ask.”
[37] With this in mind we deal with the factors relied upon by the respondents in turn. As the applicants point out under factor (i), there is no evidence that the building cannot structurally support the proposed works and equipment. There was no scenario which came anywhere near a conclusion that the project, if bound by the standard provision in the agreement (clause 6.1.6) that the operator shall not overload the building, was likely to fail. On the contrary, the upper roof had been chosen because the structural support was likely to contain sufficient load bearing quality. Having said that, we do accept there is a case for the applicants to provide design information as part of its obligation to carry out the works with as little inconvenience to the site provider as is reasonable practicable (clause 6.1.4 of agreement), to take all reasonable steps to ensure the building is not made unsafe (clause 6.1.5) and not to overload the building (clause 6.1.6), which we shall address later in this Opinion.
[38] We understood that service lifts 1 and 2 are the only good lifts which serve all storeys in the building. We are not sure whether the applicants concede that the lifts will necessarily be prevented from running during the initial works. We interpret Mr Freemantle’s evidence that some shutdown is likely to be required. In general terms it seems that the full extent of loss of use of the lifts will depend on final designs, which will require to take account of integrity testing of the lift room walls and roof, and potentially the need to install temporary works to support the roof. But having looked at all the evidence we cannot find any broad estimate as to the duration of lift downtime. Both sides had the evidence of engineers, but neither was asked if it was possible to provide a rough estimate. Try as we might, we cannot find a passage in the evidence to support or infer respondents’ counsel’s assertion that a period of 7 to 10 weeks would be reasonable. Mr Morris has produced a table assuming the initial works disturbance will last for 2 weeks, but this figure has not been explained or tested. We do think it is likely that the lifts will be out of commission for a period or periods, but whether this be a matter of hours, days or weeks, we cannot say. But we do accept Mr Freemantle’s evidence that the applicants would seek to minimise downtime in the operation of the lift by means of RAMS which would be provided to the respondents for discussion.
[39] Mr Daryl Thompson provided a list of uses for lifts 1 and 2, stating that alternatives were available for some but not all of the operations. He refers, for example, to “return of overs” namely worked frozen products where the unshelved goods were brought back up to the frozen cold room on the third floor in a timely manner. He states this was one of a number of operations whereby alternative lifts may or may not be available. Counsel’s submissions referred to delays for refrigerated delivery vehicles. Again we struggled to find the evidence for this apparent assertion. As we pointed out to parties following their initial submissions, lifts 1 and 2 do not access Rose Street Lane South. Other lifts on the north side of the Lane do so, and can transport frozen goods deliveries to the basement trading floor. As was apparent at the site visit, those lifts also bring up goods to the third floor whereby they cross the bridge link and can be stored either in a warehouse area in the third floor or the cold storage area. So the “return of overs” described by Mr Thompson is an operation which is not solely dependent upon lifts 1 and 2. And we can find no support for the suggestion that refrigerated delivery vehicles would be delayed, since other lifts would be used in the unloading process for frozen goods. We must point out that in this respect we find the respondents have overstated their case and this somewhat colours our judgement as to the extent of disruption which the temporary loss of use of lifts 1 and 2 is likely to entail.
[40] Having said that we accept that it is likely there will be some increased handling operations required as a result of the lifts being out of operation. This is a form of disturbance. We think that such disturbance can lead to losses capable of being adequately compensated by money. Disturbance loss is a well established head of claim in the field of compulsory purchase. The respondents are professionally represented and would no doubt be made aware of the familiar issue of the need for contemporaneous records to support a claim. A claim would be quantifiable, subject only to the rules of causation, remoteness and mitigation. A time and motion study could estimate additional time spent by existing staff in finding workarounds, if significant. Temporary staff could be employed to carry goods up the stairs if necessary, and their charges recorded. Management time dealing with CTIL related issues can be contemporaneously recorded. Additional or wasted overheads can be quantified.
[41] Although the matter was not discussed, concern has been expressed elsewhere whether compensation under para. 25(1) of the Code is restricted to the three heads mentioned in para. 84(2), namely expenses, diminution in value of land and reinstatement. We agree with the provisional view of the Upper Tribunal in Islington (para. 117) that para. 25(1) of the Code providing for compensation for any loss and damage, should not be given a restricted meaning on account of para. 84(2).
[42] There is a further disturbance matter which the Tribunal raised with parties. The main roofs resemble a small industrial site due to the large amount of mechanical and electrical equipment situated there. The maintenance of this equipment is essential to the respondents’ operation. Much of the equipment is fairly old and requires regular maintenance by staff and contractors. There will also be times when emergency access is required to remedy some fault. The consequences could be serious – the failure to remedy a fault in one of the refrigeration units can very quickly result in the loss of costly frozen food. We were advised there has been a recent instance of this occurring. So the respondents require access to the main parts of their roof at all times. Mr Freemantle accepts that access will be restrained for a period during crane operations which require to maintain a clear drop zone. Another example is the replacement of the cat ladder (now proposed by both parties) on the lower roof which would prevent access to the intermediate roof (but not the east roof where the majority of the refrigeration units are situated). Mr Freemantle indicated that these operations would be discussed in advance by parties to minimise disruption. There would likely be other access issues for the duration of the works, but he believed there would be workarounds which would be discussed between parties.
[43] It follows that there can be no guarantee that the respondents would not sustain losses as a result of the initial works. We accept that there is a risk of a loss, should there be a coincidence between temporary denial of roof access and an equipment emergency. However, it seems to us that such a scenario is foreseeable, it has been foreseen and, if it materialises despite best efforts to avoid it, would be compensable under the Code.
[44] The respondents’ arguments (ii) about potential electrical shutdown seems to us to be something of a makeweight submission in the context of the principle of the application. The submissions essentially went to the question of terms and conditions as to who would have authority to instruct physical works to the fabric of the building owned or leased by the respondents and how disruption could be mitigated. We accept that if the third floor switch room was required to be used, it could well be problematic for the reasons given by Mr Daryl Thompson. However, it did not appear to us that Mr Thompson had made a particular study the applicants’ plans proposing that power could be taken from the fifth floor. There is no evidence before us which suggests this could not more conveniently be done by using the respondents own supply there and by inserting a meter and establishing a billing mechanism, for which the respondents would be compensated.
[45] Turning to (iii) the ICNIRP exclusion zones, the applicants accept an obligation (clause 7.3.1 of draft agreement) that they will ensure the equipment complies with and is operated in accordance with the ICNIRP recommendations. The proposed obligation does not distinguish between occupational exclusion zones and public exclusion zones.
[46] The applicants have produced occupational exclusion zone plans which do not appear to show any potential for hindrance of the respondents’ operations. None was pointed out to us. In the interests of transparency and trust we think that there should be an obligation upon the applicants to produce the occupational exclusion zone plans from time to time, as they have accepted in other cases. But we think the respondents’ position requiring a “categorical guarantee” that access will be never be impeded anywhere goes too far.
[47] The respondents have not produced ICNIRP public exclusion zone plans. As the respondents will not have control of the communications site or equipment, it is difficult to see how a breach of the recommendations could lead to them being legally responsible. No mechanism for liability was suggested to us. However, we were not persuaded by the applicants’ arguments that disclosure of the public exclusion zones would result in confusion for workers using the drawings. The applicants emphasise elsewhere their need to employ specialist contractors whom, it might be thought, would be less likely to be confused by the drawings than members of the public. We were not clear why employees of the respondents would need to use the drawings. We are pointed to the decision in University of the Arts London where the Upper Tribunal did not require the disclosure of public exclusion zone plans, but there the equipment was to be fixed on the 15th floor of a building. Here, it was drawn to our attention that the antennae are in direct line and height with a hotel, at a fairly short distance – perhaps 20 to 30 metres away. So it is likely members of the public will be in the vicinity of the operator’s equipment. Apart from anything else, we think an organisation such as the respondents’ could not risk reputational damage by “accepting” a consideration, no matter how small, for the use of their premises which does not demonstrably comply with the exclusion zones. Equally, we think the respondents’ position seeking refusal of the application without “absolute guarantees” goes too far. We will require the applicants to furnish both occupational and public exclusion zone plans in Part 7 of the agreement.
[48] Turning to the matter (iv) of crane loadings on the lane, under which lie the respondents premises, the Code agreement will contain an obligation on the operator not to overload any part of the building. The “Building” includes all the respondents’ property. We are not persuaded that any breach of this provision causing damage would not be compensable. Mr Freemantle’s evidence that a crane survey would be carried out prior to the works gives comfort. We would also observe that this is the sort of precaution which the respondents themselves would require to take should they need to carry out remedial works involving lifting materials upon the building.
[49] Finally, turning to issue (v) of access and security, we recognise that there will be a burden on the respondents in administering the access provisions of the agreement. As we shall discuss later, we do not underestimate the inconvenience of the issue to the respondents. But again, no convincing argument has been made that this aspect cannot be made the subject of consideration or compensation. We agree that the plans tendered with the application require a certain amount of interpretation as to the route of the access, but cannot conclude that they fail to show that the applicants would have a right to use the service lifts. This can be seen in the notes to drawing 105 attached to the notice.
[50] So to conclude, the applicants have made a persuasive case that there would be significant public benefit in the making of an order. With regard to para. 21 we are not persuaded that the prejudice caused to the respondents is not capable of being adequately compensated by money or that the prejudice which they will suffer is so great that it outweighs the public benefit. We accept that the respondents will sustain a degree of disturbance and disruption to their operation, including degree of increased risk of losses during the period of the initial and subsequent works. In principle these are all losses for which the Code provides compensation. The exercise in quantifying losses is no doubt inconvenient, but not of overwhelming difficulty. Accordingly we will impose an agreement under para. 20.
The Terms of the Agreement
[51] Our approach to terms of agreement requires to be as follows. Paragraph 23(2) of the Code requires the agreement to “contain such terms as the court thinks appropriate” including (5):-
“(5) The terms of the agreement must include the terms the court thinks appropriate for ensuring that the least possible loss and damage is caused by the exercise of the Code right to persons who –
(a) occupy the land in question,
(b) own interests in that land, or
(c) are from time to time on that land.”
[52] The above wording is not, as has been observed elsewhere, a prohibition on the imposition of rights which may cause loss and damage to site providers. It is a direction to the Tribunal to incorporate terms intended to minimise loss and damage as part of an agreement which will also include terms as to consideration and compensation. More generally, for reasons given in CTIL v Keast para. 28 we think the same draft which was used in the para. 20 notice is a practical starting point for the Tribunal reference, always bearing in mind the provisions of para. 25 give no presumption in favour of the operator’s preferred terms. We agree with the Upper Tribunal in University of the Arts, London at para. 70 that it is important not to duplicate the safeguards; not to generate requirements for the transmission of information where that would be of little or no practical benefit to either party; and to give due respect to the professionalism of both parties.
[53] Bearing in mind the latter point we accept the tenor of Mr Freemantle’s evidence that the applicants would engage with the respondents on matters such as the timing of the works, there would be a pre-start meeting with the site providers, contractors and consultants and the use of RAMS to minimise inconvenience to the respondents. Mr Freemantle struck us as a man who sought to find practical solutions. The agreement should not undermine such intent. It is the case that lawyers drafting detailed agreements tend to seek to provide their clients with belt and braces support for every eventuality. When both sides take this approach too far, there can be no agreement or, if there is, a highly complex agreement will ensue containing detailed mechanisms likely to engender cost, mistrust and poor working relations.
[54] We now turn to the main disputed terms as highlighted by the travelling draft and respondents’ written submissions. There are other more minor disputes within the terms of the travelling draft agreement which we think are not appropriate to set out in detail here. Our view of these will be largely consequential on how we propose to resolve the main matters of dispute. Accordingly we shall produce our own revised version of the Code agreement which, once it has been finalised, will be appended to this Opinion as an appendix so as to be a public document.
[55] In assessing the terms and conditions the applicants took exception to large amounts of Mr Morris’s report which, they said, contained matters which were irrelevant and went beyond his skill as a valuer. Mr Morris is however an experienced surveyor in the field of telecoms, and is well qualified to advise clients on the terms and conditions of a Code agreement, so we are not prepared to rule his evidence as generally inadmissible. We note some passages of his report touch on, for example, the possibility of alternative sites. This is an area of dubious relevance, and respondents’ counsel did not attempt to make a case based on alternative sites, so we do not think anything turns on the objection. That said we think parts of his valuation evidence to be unconventional and lacking in merit, which colours our judgement about some of his other evidence.
Suspensive Condition
[56] The first respondents propose a suspensive condition in the draft as would require landlord’s consent to the grant of the agreement, which if not obtained by a long stop date would entitle parties to resile. The second respondents are landlords of No. 60 Princes Street. Code notices have been served upon them, including a proposed agreement, and although named as parties they have not entered the present process. The applicants seek an Order which would bind these landlords.
[57] Paragraph 9 of the Code provides that a Code right may only be conferred on an operator by an agreement between the occupier of the land and the operator. Para. 10(4) further provides that Code rights bind any other person with an interest in the land who has agreed to be bound by it. Paragraph 20 provides for notices to be given to a “relevant person” to agree to a code right to be conferred on the operator, or to be otherwise bound by a code right. Thus a “relevant person” appears to be a wider category of person than “occupier” alone. If therefore the occupier cannot confer full Code rights in respect of its interest, the Code provides a remedy in that an owner, for example, can also be bound, and that by voluntary agreement or agreement imposed under para. 20. If the first respondents are saying there are matters to which they cannot “agree” because of certain obligations owed to the second respondents, such as a provision in a lease requiring landlord’s consent to subletting or similar, provisionally we think it would be appropriate for the second respondents to be named as parties to the Code agreement for their interest as landlords. But as this point was not debated we shall allow parties to make representations on the terms of the final agreement.
Part 1: Site payment, Taxes and Expenses
Grantor’s Costs and Expenses
[58] The applicants have proposed a clause whereby the Grantors would be entitled to solicitors’ and other professionals’ costs and expenses, if reasonable, proportionate and properly incurred in connection with the entering into of a wayleave agreement with third party suppliers. The respondents have added to this a large list of other matters to which they would seek recoupment of expenses.
[59] We do not attempt to set out the list here but, as the applicants point out, many of the items relate to notices where the applicants or guarantors may be in breach of the agreement and, therefore, the wording would precipitously convert a potentially disputed obligation into a debt. We think there is force in this criticism. Other items are not relevant since we do not agree to the clauses under which the relevant notices would be provided. For example, we will not be allowing the provision relating to a building surveyor’s report and associated suspensive condition. There are exceptions at clause 1.5.1.6 for interference notices and clause 1.5.1.9 for lift & shift notices, the provision for the latter we will be allowing in substantially modified form. So we will allow these two matters in at clause 1.5.
Part 3: Cables, Electricity and Wayleaves
3.1 Electricity supply
[60] Clause 3.1.1 of the proposed agreement provides that the Operator should have the right to:
“3.1.1.1 Procure at its own cost the installation of its own electricity supply to the Communications Site (including the installation of an associated electricity meter cabinet) either directly or via the Regional Electricity Company on a route to be agreed between the parties acting reasonably or
3.1.1.2 connect into and use the Grantor’s electricity supply in the event that the Operator is not able to reasonably procure the installation of its own electricity supply.”
[61] The respondents propose a more elaborate clause 3.1.1.2 whereby the Operator would only be entitled to connect to the Grantor’s supply having first used reasonable endeavours to procure their own supply; that the route for the new supply would require to be agreed by the parties acting reasonably and that if any upgrade to the Grantor’s supply was required, the Grantor would have the right to procure the upgrade work and that associated costs would if possible be agreed and reimbursed to the grantor. The respondents also sought duplicate wording at 3.3.1 giving the Grantor authority (acting reasonably) to approve cable routes, but we understood this provision to be agreed. They further sought provisions requiring their authority to instruct the work through the fabric of the building, and to mitigate disruption to the respondents’ operation, which we deal with later.
[62] The applicants point out that they cannot accept an obligation to use reasonable endeavours to install their own electricity supply since, for example, the cost of installing their own supply may be prohibitive as compared with connecting to the respondents’ supply. Moreover the applicants have the requisite knowledge as to what upgrades to the supply would be required. If the respondents had the right to decide to do the works themselves or to “licence” the applicants to do so, it would turn an unqualified right into a conditional right leading to delay and potential disputes.
[63] Under para. 3(g) of the Code, the right to connect to a power supply is a code right. The point where the electricity company’s cable ends and the respondents’ apparatus begins is in the third floor switch room. Our impression from the evidence (and see paragraphs 21 and 44 above) is that for the applicants to procure their own supply at this point would potentially be a good deal more difficult for both parties than from the fifth floor which is what the applicants propose. We think the respondents’ proposed wording makes it too difficult for the applicants to use the potentially easier solution. The respondents are already protected by clauses 6.1.2 (works carried out in a good and workmanlike manner); 6.1.4 (works to be carried out with as little inconvenience to the grantor as reasonably practicable); and a bespoke restitution / compensation clause at 3.3.2. We had also understood Mr Freemantle to indicate that the supply of electricity on the fifth floor was adequate for the applicants’ purposes. Any ancillary works permitted under the agreement would be subject to the safeguards in clauses 3 and 6.
[64] The applicants also seek a provision at clause 3.1.3 allowing them the temporary use of a power generator. The respondents propose a more elaborate provision for a “suitable” (taking account of the nature of the building) generator, for use as little as reasonably practicable, the use of reasonable endeavours to procure reinstatement of the electrical supply and reasonable endeavours to mitigate of noise vibration and other nuisance.
[65] In this connection we note the issue was thoroughly debated in University of the Arts, London. Noise reducing shields can be used. Risk assessments are required prior to use. The use of the word “suitable” can be problematic. We would adapt the wording settled at para. 170 and would determine accordingly:
“The Operator shall have the right to install, keep, refuel and operate a power generator on the Communications Site and Set-Down Area together with associated fuel, sockets and cables in the event of a loss of power to the Equipment and provided that (i) the installation of any generator shall be temporary; (ii) the generator shall be removed forthwith following reinstatement of the electricity supply and (iii) the operator shall use reasonable endeavours to reduce any noise and disruption caused to the Grantor’s property when installing and operating a generator.”
3.2 Paying for electricity
[66] The applicants disputed a provision at clause 3.2.2 entitling the respondents to charge an electricity administration fee. This provision would be relevant if, as seems likely, the applicants need to take a connection from the respondents’ supply and set up a meter, leaving the respondents to bill the applicants for the amount taken. We think the administrative effort in doing so can be subsumed within the consideration and/ or compensation provisions elsewhere.
3.3 Cables
[67] Parties have agreed a provision at clause 3.3.1 entitling the Grantor to approve cable routes, acting reasonably and without delay. The draft also provides alternative wordings for the Operator to make good any damage in installing etc. cables as soon as reasonably practicable and to the reasonable satisfaction of the Grantor. In paragraphs 15 and 16 of our interim decision we imposed a wording (favoured by the respondents) on the basis that apart from the rooftop site itself, cables through the building would be the principal enduring alteration which the applicants seek to impose on the fabric of the respondents’ property.
[68] The applicants propose a wording which would not make them liable where the work was carried out by third parties under a wayleave agreement with the respondents. They say the respondents would have sufficient recourse against the third parties under the relevant wayleave agreement.
[69] We think there is some force in the applicants’ proposed wording in that without it the applicants would in effect be indemnifying the respondents for poor workmanship carried out by third parties instructed by the respondents. Only the respondents would have recourse under the wayleave agreement, not the applicants, and the respondents may have little incentive to hold defaulting contractors to account if they have ready recourse against the applicants. So we would add at the end the words “and the Grantor has not taken reasonable steps to secure satisfaction for the damage or compensation from the third party supplier.”
3.4 Wayleaves and/or Code agreements
[70] The wording requires the applicants to use reasonable endeavours to enter into wayleaves or other agreements with third party suppliers and on reasonable terms. Parties are in dispute whether such agreements should be entered into within 28 days or three months from receipt of the draft agreement. The applicants also propose a wording whereby the respondents should not be permitted to demand a fine or premium in respect of such agreements. We think a period of three months is too long and a period of 28 days somewhat optimistic, so we shall allow a period of 6 weeks. Otherwise we think the wording proposed by the respondents is a reasonable protection against a ransom demand. Accordingly we prefer the applicants’ wording on the latter.
Part 4: Access
4.1 Access for the Grantor
[71] The pro forma agreement understandably provides the Grantor with only limited rights to access the Communications Site. However, in this case the wording has become bogged down because the “Communications Site” – namely the area delineated in red in the site plans, includes most or all of the lower roof. This roof would be part of a shared access. Anyone be it the applicants or respondents needing to travel to the intermediate roof and beyond require to take access from the lower roof via the cat ladder. Only a portion of the lower roof would be occupied by the applicants’ grillage and cabinets. Therefore the applicants’ proposed wording attempts to set out the purposes for which the respondents may use this part of their own buildings, and the respondents wish wider terms. There are also detailed provisions in clause 4.1.2 where the Grantor has to give notice before taking access to the Communications Site which is potentially inconvenient if all the respondents want to do is pass through for access elsewhere.
[72] The problem has been compounded because the respondents are now saying they require to replace the cat ladder with a new external staircase. According to an initial drawing, the combination of the access step to the applicants’ proposed grillage and the new staircase would not sit well in relation to the door/window access onto the lower roof. There does not appear to be enough space for the access in the light of the applicant’s equipment and the staircase combined, at least as currently designed. At this point we should say there is something of a dispute whether a staircase is in fact required in order to replace the cat ladder. Mr Thompson’s concern with the cat ladder was that it was attached to the wall rather than bearing directly on to the balcony, rather than the fact it was a ladder per se. The fall arrest ladder proposed by the applicants could no doubt take Mr Thomson’s concern into account, although staff would presumably need to be shown how to use it.
[73] It seems to us that these arguments, potentially involving para. 21(5) of the Code, could be avoided. Rather than by attempting ever more convoluted wording in the agreement as to who has rights to the Communications Site and when, there is the simple expedient of reducing the “Communications Site” to the area which the applicants actually need for their equipment on the lower roof, with the remainder being a joint access area. As we suggested to parties, the plans could be modified so as to show the relevant Communications Site as the area to be occupied by the applicants’ equipment (as their grillage is shown on drawing 400). Whichever party then wants to replace and redesign the ladder or equivalent can do so with a clear parameter as to the extent of the Communications Site and the joint access area. We will therefore give leave to the applicants to produce a replacement plan or plans. We recognise there may need to be consequential amendments marking access space, set down space and the like. The wording of clause 4.1 will then require to be reassessed.
B The access route
[74] The definition of the “access route” was considered in paragraphs 12 and 13 of our decision on interim rights. We restricted the access route to a specific route through the building “or such other materially practicable route for the operator that may be agreed by the parties from time to time each acting reasonably.” We considered it too wide to allow “access through and on the building including the right to use any common parts to and from the communications site and to and from the equipment.” The building is busy retail premises which includes all the working adjuncts necessary to support the main shopping area. It is too much to ask the respondents to accept visitors being given a wide discretion as to where they can and cannot go. The applicants however are trying again. Firstly, on the basis that they need to guard against the possibility that the building becomes separately tenanted so that access to common parts cannot be unilaterally permitted by the grantor, and secondly on the basis that there may be occasions where it is not practicable to restrict the route of access, e.g. to inspect the electricity room for power failure.
[75] We think there are genuine issues for the respondents in losing control their building, as we discuss below. We think that restrictions are required, and as far as the access route is concerned we think the interim wording would be more or less sufficient. We do not think that the respondents would be entitled unilaterally to limit access by means of subsequently granting exclusive rights to a tenant or sub-tenant without reference to the subsisting Code agreement. Successors of an occupier are bound by Code rights under para. 10(2) of the Code. If the applicants require access to a new or unexpected area, both parties are still protected by the existing formula “such other materially practical route that may be agreed by the parties from time each acting reasonably”. We are however persuaded to add the words “and without undue delay” to the definition.
4.2 Access for the Operator
[76] The applicants seek a right for access both with and without vehicles in clause 4.2.1.1 whereas the respondents wish to prevent access by vehicles. The applicants say they may need a cherry-picker or crane to access the roof. They clearly could not drive vehicles within the building; the respondents say that if a right to oversail a crane jib is required then the agreement should say so. We think that the original wording, prior to either party’s amendments, for “full and free access at all times and for all purposes with plant and machinery over and along the access route …” is sufficient to include use of the plant which the applicants have in mind.
[77] In clause 4.2.1.1.2 the respondents propose not less than 5 working days prior written notice for access save in the case of an emergency, whereas the applicants propose not less than 48 hours written notice (which may be by electronic means) save in the case of emergency or operational urgency. The applicants point to the fact that often they require specialist engineers who are in high demand and thus restriction on working times and periods of notice will risk the agreements becoming unworkable.
[78] In these circumstances we accept there is a case for a relatively short period of notice to be given in many if not most cases. But as we shall discuss later, there is also a case for extending the notice period for works likely to impact upon the respondents. We will discuss this later in a broader context.
[79] Clause 4.2.1.2 provides for the applicants to use the set down area on a temporary basis. The respondents wish to include the words “and for no longer than reasonably necessary”. The applicants point out that this is a qualification to a Code right, the area is accessed infrequently and that it would not be in the applicants’ interests to use the set down area for any longer than they need.
[80] The set down area shown on the plans covers certain parts of the roof which the respondents require to use for access to their equipment. So for example the overflying by a crane on the access route will have the potential to restrain the respondents’ own access. We have already described circumstances where ready access to the respondents’ equipment is vital. Accordingly we accept the respondents’ proposed wording.
[81] Clause 4.2.1.3 provides for access “to any other parts of the grantor’s property as may be reasonably required in order to exercise any right contained in this agreement …” The respondents propose to restrict this right to areas adjoining the communication site or the access route, and also introduce a provision requiring their approval, not to be unreasonably withheld or delayed. The applicants point out that access will be needed to other parts of the building in order to run cables, connect to a power supply and check and maintain the lightning tape. They have accepted a provision requiring not less than 14 days written notice save in emergency or operational urgency.
[82] It should be appreciated that the detailed plans already provide for an access route and access space. The definition refers to access to cables and the agreement provides for other access routes subject to reasonable agreement. Accordingly the respondents’ wording seeking their approval is consistent with other parts of the agreement, which we think is reasonable. On the other hand we do not think it would be wise to restrict any additional access to areas adjoining the Communications Site or access route.
[83] In a clause 4.2.2 the respondents propose a large number of additional terms qualifying access rights. These include:-
4.2.2.1.1 - Entry for works reasonably likely to cause excessive noise or other disruption to be exercised outwith normal trading hours; and to be carried out in accordance with a programme of work and methodology to be approved by the Grantor (not to be unreasonably withheld or delayed);
- Entry for other purposes, the rights to be exercised during normal trading hours and in accordance with a programme of work and methodology, similarly to be approved by the Grantor;
4.2.2.1.2 - The Operator to comply with the Grantor’s reasonable security requirements including where appropriate the attendance of a member of the grantor’s staff;
- Grantor’s staff being responsible for keys passcodes etc.; The Operator not being entitled to keys, passcodes,
4.2.2.1.3 - In general the rights not to be exercised in January, November or December or for four weeks around Easter, save in cases of emergency.
4.2.2.1.4 - No scaffolding to be erected during the above periods;
4..2.2.2.1 - Prior to access being taken a risk assessment and method statement to be provided by Operator.
[84] The respondents submitted that these terms were practical and legal necessities. It was reasonable, for example, to exclude non-emergency work outwith peak trading periods. Mr Bailey refers to the problems which unrestricted access would present. Staff, customers and stock are ordinarily present in the buildings. Out of hours access would require security and alarm systems to be dealt with. Notice would be required as to when and why access is taken and by whom. The reception area is in a busy customer facing part of the shop. Mr Morris refers to access to non-public parts of the store being permitted only by pre-arrangement in accordance with the respondents’ access policies and safety rules which, according to the Head of Property Legal, Ms Carolyn Lock, were tightly controlled. Mr Stott for example may have had a seamless and unaccompanied visit, but this is because he was attending as a pre-approved contractor.
[85] The applicants highlighted their evidence suggesting there should be little disruption to the respondents as a result of access being taken. Amongst other things the applicants were under a duty to carry out the words with as little inconvenience to the respondents as possible and would require to make good any damage as soon as reasonably practicable. The applicants required unrestricted access to their equipment and restricted hours could mean specialist contractors would be unavailable to undertake the works. They should not have to give out unnecessary information. It was not feasible to try and restrict the months when the applicants could operate, but they were prepared to oblige themselves not to erect scaffolding at the Princes Street entrance during the busy periods in question.
[86] Moreover, the applicants could not agree to provisions which required programmes of work etc. to be agreed by the respondents. This would present a level of bureaucracy which was unnecessary and, in any event, obligations relating to health and safety rested with the applicants and not the respondents. Reference was made to Islington at para. 141 and it was emphasised that it was the applicants and their contractors who had the requisite expertise to undertake the risk assessments, method statements and so on. The applicants were already under obligations to comply with, for example, the CDM Regulations and to carry out the works in a good and workmanlike manner.
[87] The applicants pointed to their evidence that there was no reason why access should be supervised and it was noted in Islington (para. 141) that the operators were entitled to unsupervised access and that “Costs incurred by the respondents in shadowing the claimants compliance with their own obligations, to the extent they exceed the management function already taken into account in the assessments of consideration, are not loss and damage recoverable under paragraph 25”. There was concern that “security requirements” imposed by the respondents could be subjective and highly restrictive. Mr Stott was not vetted when he visited the site and it seemed that the staff were very used to allowing external contractors on the roof.
[88] This part of the dispute relates to the nature of the use of the access, rather than the access route itself. As to the use of the access, subject to one point (below) we think clauses directed at the provision of technical works information should properly be dealt with in Part 6 of the agreement which deals with works and maintenance. We shall deal with that aspect later.
[89] As we understood it, normal visitor access is initially taken via Princes Street to a reception area in the Food Hall, thence through a back area to the staircase or lifts. Once a visitor is checked in it will be possible to arrange further access to the roof via back areas of the premises, including via Rose Street South Lane if necessary. The route is not straightforward and may appear labyrinthine to the uninitiated. It can for example involve crossing the link bridge on the third floor to reach the lifts or stairs in a warehouse area, thence to the roof. But more so than the London cases involving self-contained secure residential flats, we are dealing here with a very much interconnected operational building. Staff move around between retail, office, warehouse, equipment, training and rest areas. More than 18 staff regularly attend the roof alone. Valuable stock is present in warehouse areas. Vital equipment is in operation on the roof and elsewhere. Once a visitor is accepted into the back areas, there is little to prevent him moving about freely, because the building needs to be functional. Therefore no-one other than the respondents’ staff and pre-approved contractors may attend these restricted areas. We accept that the respondents have a strong interest to control who enters the back areas and roof in these circumstances, and this interest is inherent in the nature of the building which the respondents have chosen for their site. We reject Mr Stott’s inference that there is a laissez faire approach to third party access.
[90] However, this leads to a difficult and genuine issue. The applicants need to use specialist contractors whom we were told are busy and in short supply. There is no suggestion these are persons of anything other than of good character. It would not be expeditious to entitle the respondents to exercise any sort of veto or delaying procedure as to who exercises Code access on behalf of the applicants, if this is inherent in the words “Grantor’s reasonable security requirements.” But it would be naïve to expect the respondents to accept new third parties within their building without some form of identification process.
[91] A compromise needs to be found. We note that in Islington, the Upper Tribunal rejected the idea of “supervised” attendance. On the other hand in Maple House (para. 142) the Tribunal accepted it was reasonable for the site provider’s representative to be present when access to the roof was being taken, where there was an existing solar array. Also it was reasonable for the site provider to be informed of the work being done and the identity of those doing it. As we discuss later, a factor in making this requirement was pending stricter legislation on building safety for high rise residential buildings. But equally here, the respondents need to know the nature of certain proposed works because of the potential for works to affect their building and operations by impeding access. This may occur, we think, even where the applicants do all they can to minimise disturbance. On balance we propose to take a roughly similar course. We shall allow a provision whereby the grantor is entitled to be given the identity of persons visiting the building and their employers. We shall also allow a provision in the notice procedure allowing seven days’ notice for works likely to impede access, including a statement outlining the nature of those works in the notice. This would assist the grantor to decide if it should seek more technical information (under later provisions in Part 6) as to works to be done on the building. The period for such notice will expressly be a minimum period since, in furtherance of the obligation to minimise disturbance, we consider a longer period for some works may be appropriate on a case by case basis. Notice for “normal” access will be 48 hours. We also think it is reasonable, depending on the circumstances, for the grantor’s representative to be present during the operator’s access to the restricted areas in order to shadow the latter’s obligations. But we do not think it is necessary for there to be an express provision so entitling the grantor, since the grantor is entitled to advance notice of visits and will require to be on hand to let the operator into the building; and there would be no reason to prevent the grantor from being present in areas where the operator does not have exclusive possession. We regard this as a cost issue for assessing the consideration.
[92] A related question relates to the hours of access. We do not think the applicants can be given free out of hours access to the building for the above reasons. There are also practical security issues about gaining entry to the building raised by Mr Bailey. It follows that we do not think the applicants should be entitled to retain keys, fobs etc. unless agreed otherwise. But in principle the applicants will need out of hours access from time to time – particularly if they are to minimise disturbance. So we do not think there should be any form of express restriction on hours of access. There are however cost implications in managing the access which we shall deal with later.
[93] We do not think it would be reasonable to restrict access or works to particular times of the year. The works will be taking place outwith the public shopping areas. Apart from the act of checking in, no example was given how workmen might impede shoppers or impact upon the latter’s shopping experience. We have not permitted a wide definition of the access route. The agreement requires the operator to minimise disturbance, and we would expect busy times if relevant to be taken into account in devising method statements and risk assessments.
[94] There is no realistic scenario for the use of scaffolding on Princes Street, and think a clause about preventing this is unnecessary.
Part 5: Equipment
[95] The respondents’ detailed wording at 5.1.2 et seq seeks details of working methodology for the initial installation for the Grantor’s (reasonable etc.) approval, including risk assessments method statements and installation dates and estimated durations. “Works” is widely defined (“any works reasonably necessary in the exercise of the rights …”) and, as we have indicated, the provision of works information and similar would more properly be addressed in Part 6 of the agreement.
[96] The respondents have tabled clauses at 5.1 which would require the initial complement of equipment to be recorded and that upgrades should be limited. We shall deal with this matter under the heading of sharing in Part 8 below.
Part 6: Works and Maintenance
[97] The respondents in their final submissions (not the travelling draft) seek a wording which would require their written approval (such approval not to be unreasonably withheld or delayed) of full details as to how the operator will carry out the Works and that there should be a set procedure for a site meeting between the parties to discuss these. They had sought similar wordings in Parts 4 and 5 of the agreement about access and equipment, but we think it more appropriate the matter is dealt with under “Works and Maintenance” in Part 6.
[98] Against this it can be seen that the agreement already contains many safeguards in clause 6.1 in the form of Operator’s obligations, namely obtaining consents (6.1.1), compliance with consents and Works to be carried out in a good and workmanlike manner (6.1.2), compliance with CDM regulations (6.1.3), Works carried out with as little inconvenience to Grantor as reasonably practicable (6.1.4), all reasonable steps to ensure building plant or machinery do not become unsafe (6.1.5), not to overload the building (6.1.6) and to make good physical damage as soon as reasonably practicable and to the reasonable satisfaction of the Grantor (6.1.7). In addition, Mr Savage for the applicants states that in practice method statements and risk assessments are provided shortly prior to the commencement of an initial build or major work such as an upgrade. We were also struck by Mr Freemantle’s professional approach in holding pre start meetings to discuss working methodology and to resolve site issues.
[99] We think the agreement should make express provision for the furnishing of design information and methodology, given the practical importance of these matters to the respondents. The respondents need to be able to understand the potential effects of the Works upon their building and operations. We recognise that Maple House was influenced by the likelihood of stricter safety legislation for multi-occupied residential buildings rendering it necessary for landlords to have knowledge of works undertaken at their building. However given the propensity for works to affect the respondents’ operations directly – e.g. by preventing access to the roof, preventing use of lifts etc. we think that the furnishing of such information is important. More generally we think that the respondents are entitled to know what stresses are being placed upon their building. But we think the provision of a requirement to gain Grantor’s express approval for Works design, method etc. goes too far, since in practice it could risk operating as a veto and cause delay by providing an opportunity for dispute, and thus undermine the working of the agreement. We did moot the idea of an express obligation upon the applicants to consult prior to finalising their works programme. On reflection we think this is unnecessary in the light of the evidence. The holding of pre-start meetings occurs as a matter of the applicants’ practice, and is intended amongst other things to find ways to minimise disruption. In some circumstances the need for such a meeting may be implicit in clause 6.1.4. And in any event the applicants have every motivation to avoid disruption should compensation still require to be assessed for the initial or upgrade works.
[100] So, again agreeing with the solutions agreed or adopted in University of the Arts, London (paras 195-199) and Maple House (para. 56) we are reluctant to impose too many formalities in the agreement. Instead we think a reasonable balance is for the following:-
“6.1.8 The Operator shall provide copies to the Grantor of all necessary statutory permissions, licenses and approvals for the Works on request. The Operator shall provide a construction phase plan, method statements and risk assessments and any structural calculations for its works on reasonable request.”
[101] The respondents propose a clause 6.1.8 which would prevent the operator from carrying out any works which adversely affect the energy rating, efficiency, environmental performance or sustainability characteristics of the building including the energy performance certificate as defined in the Energy Performance of Buildings (Scotland) Act Regulations 2008. The applicants object to this on the basis that it is unclear how they could comply with this obligation. We were left in some doubt how such a clause would work in practice, or what the potential outcome would be should a rating be adversely affected. We are not persuaded that it is necessary to protect the respondents’ interests.
6.2 Repair and maintenance
[102] There is a general provision at 6.2.1 whereby the Operator is obliged to keep the equipment in good repair and condition. The applicants seek a qualification to the effect they should not be liable for any breach of this provision that results from any matter beyond the Operator’s reasonable control. We do not think this is a fair qualification. If, for example, there are sharers on site, those sharers will have no contract with the respondents, but whose actings are independent of the applicants’ actings. Separately we agree there should be a provision to keep the communications site clean and tidy, since the sites, and particularly the lower roof, are both adjacent to accesses used by the respondents.
6.4 Access Route
[103] The respondents propose a clause 6.4.2 entitling them to alter or close any access route so long as a suitable alternative is provided. We think this clause is unnecessary since the definition of the access route includes “such other materially practicable route for the operator that may be agreed by the parties from time to time each acting reasonably”. If the respondents had good reason to alter or close an existing access, the applicants would risk being seen to act unreasonably in terms of the main definition by not agreeing to a practicable alternative route.
6.5 Right of Support
[104] The applicants propose a clause 6.5 entitling them to an express right of support for the Communications Site and Equipment from the Building. It is no doubt the case in an agreement such as this that it is implicit the site provider does nothing to undermine the rights being granted. However, we think an express right of support goes too far. The applicants require to take the site as they find it and we do not think it would be right to pass on the risk of any inherent or unknown defect in the structure to the respondents where they are making no profit out of the compulsory transaction.
Suspensive Condition
[105] The travelling draft contains another suspensive condition to the agreement at the respondents’ instance. It would require a satisfactory building surveyor’s report assessing the suitability of the building to bear the load imposed by the equipment and ensuring the methodology of the works would have no adverse impact on the property. We were uncertain the extent to which the respondents still insisted on such a provision, which we did not uphold at the hearing for interim rights. We bear in mind Mr Freemantle’s evidence that the upper roof was chosen because of its likely inherent load bearing capabilities, and that there is no evidence that the site is unlikely to be incapable of supporting the equipment. We also bear in mind the other provisions of the agreement, particularly the provisions requiring the building not to be overloaded and for the works to be carried out in a way not to make any of the building, plant and machinery unsafe (clauses 6.1.5 and 6.1.6.). We have made further requirements as to the provision of information, so in these circumstances we do not think such a clause is appropriate. As we have said, clauses requiring express approval of designs etc. is likely to risk dispute and delay. At best, the respondents wrought a concession from Mr Freemantle that certain design changes might be required once tests into the integrity of the roof had been carried out, but this does not in our view justify the need for a suspensive condition.
Part 7: General Obligations
7.2 Compliance with legislation
[106] Clause 7.2 contains an obligation for the Operator to comply with all laws from time to time relating to the Communications Site, the Works and the Equipment. The respondents have added a clause 7.2.2 entitling the respondents themselves to do what they consider reasonably necessary to remedy any breach of the foregoing. We think this goes far. Whether or not there is a breach say of a regulatory law will lie in the mouth of a public body, not the respondents. The provisions include matters relating to the use of the Communications Site and the Equipment. These are matters requiring specialist knowledge which the applicants, and not the respondents, possess. So we do not think it would be prudent to insert such a clause.
7.3 Health and Safety
[107] The proposed wording requires the operator to ensure (1) that the equipment complies and is operated in accordance with recommendations by the ICNIRP and (2) complies with “all applicable health and safety laws and regulations …” The applicants seek a revision to clarify that they need only comply with laws and regulations “to the extent they apply to the Operator and relate to the operation of the equipment …”. We do not think this clause is necessary in the sense that if the laws do not apply to the Operator they cannot be “applicable” as the word is first used. The matter is put beyond doubt by clause 7.3.2 whereby the Operator is not liable for any breach or non-compliance beyond its control.
[108] The respondents propose a clause 7.3.3 requiring the applicants to procure that any Code operators will comply with all legislation relating to onsite safety signs and exclusion zones and that there is sufficient labelling on equipment with emergency contact details. The applicants propose a provision whereby the Operator would provide adequate on-site safety signs at the Grantor’s property.
[109] We do not think that the respondents’ revision is necessary. The definition of “equipment” is wide and includes all telecoms equipment on the roof. Thus the applicants are already obliged in 7.3.1 (1) to ensure that all the equipment complies with the ICNIRP recommendations, in terms of clause 7.3.1, no matter who is using it. We agree, however, that there should be an express obligation for the operator to provide adequate onsite safety signs, and think that the applicants’ proposed wording is sufficient.
[110] We have already determined that there should be a requirement on the applicants to produce ICNIRP exclusion zone plans.
7.4 Indemnity
[111] The applicants propose an indemnity in favour of the respondents in respect of third party proceedings arising from any unlawful act or omission of the applicants. They propose a cap of £10 million. The respondents seek an indemnity against “all loss” – i.e. not just in respect of third party claims – as well as further wider wordings, and an unlimited cap. The respondents refer to EE v Manston Forests and CTIL v Fothringham and submit that an indemnity is necessary since they should not be required to suffer any of the risks inherent in the applicants’ operation.
[112] The applicants point out that the indemnity clause is solely for the regulation between two contracting parties of third party claims made against one of them as a consequence of the unlawful activities of the other. The respondents are already protected against loss or damage under the various terms of the agreement, and could claim damages for any breach of the terms. Moreover if loss and expense were caused as a result of the lawful exercise of Code rights, the Code makes provision for compensation under paragraphs 25 and 84 of the Code. None of these routes to recovery is subject to any cap. As far as the level of indemnity being offered is concerned, the applicants referred to other rooftop agreements and the Ofcom Code of Practice which suggested that £10 million was at the top end of an industry standard. There was no obligation under the Code for the applicants to agree to an indemnity in any event.
[113] We prefer the applicants’ submissions on this matter. As the Tribunal said in the interim decision CTLI v Fothringham, the wording should not mix 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 the proposed indemnity against “all loss” is to be interpreted as a standalone provision, it would be a very far reaching provision covering both scenarios. At the very least, the respondents’ proposed wording would provide indemnity for all losses arising out of unlawful acts by the operator, not limited to third party claims. In this respect the indemnity provision should be seen as a mechanism for regulating and managing third party claims, not a catch-all protective provision covering every conceivable loss whatever the cause and regardless of the other provisions of the agreement: University of the Arts, London at para. 225 et seq. In EE v Manston Forests the Tribunal was dealing with a different situation, namely an attempt by the operator to cap its liability in respect of any losses, not just third party claims, which we found was incompatible with para. 23(5). Here we emphasise that the indemnity cap would not limit the respondents’ ability to recover losses from the applicant for loss and damage caused by unlawful act by the applicants, whether directly or as a result of an action brought by a third party.
[114] For the reasons given by the Upper Tribunal in University of the Arts, London, we agree it is difficult to find an obvious rationale for a particular limit upon the level of the indemnity. However, on the basis of the applicants’ evidence, we shall impose a figure of £10 million, noting that there is no proposed limit in the event of death or personal injury.
7.6 Notification from the Grantor
[115] The draft agreement provides for reasonable notice to the Operator in respect of any action the Grantor intends to undertake “that would potentially affect the continuous operation of the equipment including (but not limited to) causing an interruption to any power supply to which the equipment is connected …”. The respondents propose additional wording that the parties shall “each use reasonable endeavours to cooperate in order to minimise disruption and to preserve health and safety.” We do not think these potentially disputatious words are necessary since elsewhere the agreement has made provision for use of a temporary generator which could be set up in the notice period.
Part 8: Assigning and Sharing, including Equipment Upgrading (Part 5)
Assignation and Transfer
[116] Clause 8.1 proposes that the applicants may without the respondents’ consent assign or transfer the agreement to any Code operator. The respondents seek the right to require the applicants as assignors to enter into a guarantee agreement for the performance of the assignee’s obligations. The applicants wish to limit the need for the guarantee “if it is reasonable to do so on an objective assessment of the assignee’s ability to pay the sums due under the Code agreed and otherwise perform the operator’s obligations in the Code agreement …”
[117] Paragraph 16 of the Code provides amongst other things that any agreement is void to the extent that it prevents assignment of the agreement to another Code operator, but this provision does not apply to a term that requires the assignor to enter into a guaranteed agreement. The Code thus makes provision for assignations, but as the applicants point out, the Code does not provide an obligation on a Code operator to provide a guarantee in every circumstance.
[118] The respondents point out that the Upper Tribunal did require a guarantee agreement in University of the Arts London on the basis (para. 253) “It is not to be assumed that another operator will have the ability to meet all the relevant obligations under the agreement merely because it is regulated by Ofcom.” The claimants in that case had proposed, unsuccessfully, a not dissimilar wording to that proposed by the applicants. In the present case, due to the nature of the existing use of the building, we think the applicants’ rights need to be guarded fairly jealously. So we agree that the Upper Tribunal’s approach is applicable here and shall permit assignation or transfer to another Code operator subject to a guarantee agreement by the applicants.
Upgrading Equipment
[119] The draft provides the applicants with a right to “upgrade” equipment in clause 5.1.1. The proposed definition of “Equipment” is generic. But the respondents propose a wording at 5.1.2 that the initial compliment of equipment shall be as shown on drawings and a specification. The respondents further propose:-
“5.1.5 The Operator shall be permitted to upgrade the equipment subject to the following conditions:
5.1.5.1 That any changes as a result of the upgrading or sharing the equipment have no adverse impact or no more than a minimal adverse impact on its appearance.
5.1.5.2 That the upgrading or sharing imposes no additional burden (including anything that (a) has an additional adverse effect on the Grantor’s enjoyment of the Grantor’s property); and/or (b) causes additional loss, damage or expense to the Grantor.”
It will be seen that the respondents’ wording closely follows the wording in para. 17 of the Code which permits upgrades and sharing to the same limited extent, and whereby under sub-para. (5) it is not possible to contract out of such minimum upgrading and sharing rights. The respondents emphasised passages in Tribunal decisions to the effect that the onus is on the party wishing to depart from the “floor” of para. 17 rights to justify its request. It was necessary to bear in mind that the terms of the agreement must include terms thought appropriate for ensuring that the least possible loss and damage is caused by the exercise of the Code right. It was submitted, under reference to para. 74 of Maple House, that any rights beyond those provided by para. 17 “should be the subject of negotiation and an additional payment of consideration at a rate set by the market”.
[120] The applicants emphasised that the right to upgrade is a Code right under para. 3(c) and (e) of the Code. There were strong policy reasons for allowing upgrade rights beyond para. 17 and the limitations of para. 17 would have an adverse effect on the provision of services. There were no good reasons to impose restrictions. Reference was made to Maple House at para. 73 where the Upper Tribunal had accepted there was a very tenable construction to para. 17 which set the threshold for lawful change at a low level of change in the equipment. The applicants had set out detailed evidence of rapidly developing technology making it difficult to predict the nature and extent of additional equipment and upgrades during the 10 year term of the proposed agreement. It was not necessarily the case that upgrading would mean additional apparatus but in any event the respondents would be protected by other provisions in the agreement, and any additional loss or expense which might be caused by an upgrade would be compensable in due course under paragraph 25(2) of the Code. Reference was made to Maple House where the Tribunal said:-
“82. We do not regard the minimal rights conferred by paragraph 17 as appropriate for an agreement between an infrastructure provider and a site provider for a term of 10 years. Both the duration of the agreement and the nature of CTIL’s business are relevant considerations.
83. As far as upgrading is concerned, it is not possible to know how communications technology will develop in the next 10 years, but it is reasonable to expect that improvements will occur. One such improvement which is already being deployed is 5G; it is likely that there will be others although what form they will take is speculative. Any improvement will arguably involve ‘upgrading’ within the meaning of the Code. Upgrading is a Code right in itself, and the facilitation of new technology is one of the objectives of the Code. For those reasons it would not be appropriate to impose terms which may significantly impede upgrading. To do so would diminish the public benefit which is the object of the agreement and which justifies its imposition on financial terms significantly less value than the market would demand. In our judgement paragraph 17 conditions would be likely to have that effect, making it necessary for CTIL to negotiate for each new item of equipment it wished to install, slowing down delivery and increasing costs with CTIL and ultimately for the consumer. The elaborate workaround suggested by Mr Calland, with the agreement having to be terminated and replaced by a new agreement on different terms, is a most unattractive prospect, given the number of sites at which that exercise would have to be repeated and the risks it would create of incurring professional fees out of all proportion to the benefits achievable for either party.”
[121] We agree with the above passage in Maple House and that the reasoning is applicable to the present case. The applicants have made a persuasive case to permit unrestricted upgrading. We think that a requirement to provide a specification of all the initial equipment on site would serve no useful purpose. A photographic record can be kept after the initial installation for the purposes of para. 17 sharing rights. As we have indicated, the roof of the building resembles something of an industrial site. The apparatus is not likely to be visible from anywhere along Princes Street or Princes Street Gardens. So we think the prejudice which the respondents might sustain from upgrades is not aesthetic, but more likely to relate to the carrying out of more works and the likelihood of a greater number of people needing to go through their building and upon the roof for this purpose. These are matters which can be compensated for one way or another, but it is necessary for us to bear in mind some sense of proportion alongside the linked issue of sharing, to which we now turn.
[122] We should add that we think respondents’ counsel’s reference to para. 74 of Maple House as to a market based approach for additional rights was taken out of context. The passage is referable to the Law Commission Report whereby, as the Tribunal noted in subsequent paragraphs of their decision, the Commission did not have in mind that Parliament would subsequently substitute the no network assumption for the open market approach to which the Commission was referring.
Sharing
[123] The applicants seek wide-sharing rights including with providers of electronic communications networks who are not Code operators. The respondents’ wording at 5.1.5 above would restrict sharing to the level permitted by para. 17 of the Code and additionally at 8.1.2 they seek a wording which would require the identities of sharers and lengths of sharing agreements to be notified to them. In their Answers the respondents seek that any agreement should limit the number of third party sharers to two, and this approach was supported by Mr Bailey’s affidavit.
[124] The respondents adopted and commended the Upper Tribunal’s reasoning in Maple House at para. 84 et seq. The Tribunal considered the appropriate terms to be those which permitted upgrading without limit, but which cause the least possible loss and damage (consistent with the achievement of the purpose of the agreement) by curtailing the number of persons entitled to make use of CTIL’s passive infra-structure. The way to do that was by restricting the number of persons with whom the use of that infra-structure may be shared without satisfying the para. 17 conditions.
[125] The respondents also submitted that the right to share should not include parties who were not Code operators. The policy of the Code extended its benefits to operators only. It was not the policy of the legislation that persons who did not qualify as Ofcom approved operators should be able to obtain sites through the use of compulsory powers and discounted rents.
[126] The applicants submitted that the Code itself encouraged sharing and referred to the fact that when granting Code operator status under s.106 of the 2003 Act, Ofcom was required to consider under s107(4) “(c) The need to encourage sharing of the use of electronic communications apparatus”. Reference was also made to Regulation 3(4) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 which provided: “A Code operator, where practicable, shall share the use of electronic communications apparatus...”
[127] The applicants pointed out that in On Tower UK Limited v Green Limited the Upper Tribunal had disagreed with a passage in CTIL Ltd v Fothringham (para. 20) that it would require “pretty compelling evidence” to go beyond what was provided in para. 17 of the Code. Para. 17 was merely a useful starting point. Nevertheless it was submitted that Upper Tribunal decisions were incorrect to approach sharing on the basis that it was not a Code right and merely the term of an agreement under para. 23(5). It was submitted that limiting sharing to two Code operators or just Code operators would make the statutory purpose for Code rights “completely unworkable”, and would lead to repercussions identified by Mr McHenry. Mr McHenry refers to a limitation on sharing as having the potential to cause environmental impact through proliferation of additional sites, to exclude a proportion of the applicants’ customers from the ability to operate, to stifle competition, to limit the choice of high quality services and to fail to allow for flexibility.
[128] It was also emphasised that the applicants were a “neutral host” and following the transfer of shares from Vodafone to Central Tower Holding Company BC, the business had increased focus on the provision of passive infra-structure and sites to third parties including but not limited to Telefonica and Vodafone. It was also emphasised that sharing commonly involves sharing both of equipment and the land.
[129] The applicants also rejected the proposed requirement for the identities of Code operators sharing the equipment to be notified. The Code in para. 16(5) only required the identity of any assignee to be notified, not a sharer. The applicant was assuming all the obligations in the agreement notwithstanding the fact that there might be third party sharers present.
[130] As the increasing number of Tribunal decisions has identified, the relationship between paragraphs 3, 17 and 23(5) is perplexing. “Upgrading” is an express Code right under para. 3, but this is not the case for “sharing”. Nevertheless para. 17 provides a “floor” of basic rights to upgrade or share so long as no additional burden is imposed upon the site provider. This implies a basic right to upgrade or share to a limited extent. Although (as this case demonstrates) it is possible to get into lengthy debates about whether Parliament meant sharing to be a “right” as opposed to an adjustable “term” of an agreement there is no real doubt about the import of the provisions. In setting the terms of the agreement under para. 23 the Tribunal can set wider rights than those provided under para. 17, but must bear in mind sub-paragraph (5) for ensuring the least possible loss and damage is caused to the site provider and others. In seeking to strike this balance, Tribunals have to bear in mind the object of the agreement namely the public benefit in having the infrastructure made available. The cases have shown some difference in emphasis to the weight to be given to the starting point of para. 17, but we do not think the above analysis is controversial.
[131] The applicants are an infrastructure provider hosting apparatus belonging to others. Although they are Code operators, they do not operate a telecoms network. Thus they require to share their rights with others who do operate a network. Their “passive” infrastructure is available for the “active” equipment of the sharer. So on any view the agreement cannot work without at least one sharer. We are attracted to the approach of the Upper Tribunal in Maple House at para. 85 where the appropriate balance between site provider and operator lies in terms permitting upgrading without limit, but by restricting the number of sharers who may use the infra-structure without satisfying the para. 17 conditions. We think the reasoning at para. 88 is applicable in that the unrestricted sharing of electronic communications apparatus on the roof the building is not compatible with the direction in paragraph 23(5) to include terms appropriate for ensuring the least possible loss and damage is caused to the occupiers of the building.
[132] According to detailed plans and schedules, the initial equipment will be operated by Telefonica (e.g. drawing 500). Mr Freemantle indicated that with some rearrangement there was enough space to place a second “active” operator’s cabinet on the grillage on the lower roof, but accepted that the proposal was self-limiting on account of the amount of space available. The technology could of course change and solutions could be developed. The applicants’ engineering report indicates that the relevant designs are sufficient to allow for upgrades. We are conscious that the site is not open land which may be more sensitive visually to additional equipment. We also think there is force in the public benefit arguments in favour of sharing, particularly to avoid proliferation of further mast sites in this aesthetically important part of central Edinburgh.
[133] On the other hand additional sharers will involve more inconvenience to the site provider. There will need to be more works, potentially involving craneage and temporary loss of access, and the coming and going of additional contractors who, as we have said, will need to proceed through a working retail building to reach the roof. As in Maple House, the more users of the apparatus there are, the more traffic there will be and the more checks the respondents will reasonably wish to make on the suitability of those passing through its building and working on its roof. We think a fair balance can be achieved in a ten year term by permitting sharing over and above para. 17 rights to not more than two “active” equipment operators, which number is likely to equate to the natural capacity of the site at least in the short to medium term. This is in addition to unlimited upgrades as discussed above. We shall determine accordingly.
[134] While it is the case that the applicants are assuming obligations in the agreement relating to the operation of the equipment, we think the respondents are entitled to know the identities of those operators who will be using their building and for how long. We would accept the respondents’ clause to this effect. We also think that sharing should be restricted to Code operators, which as Ofcom approved operators should give the respondents some additional comfort in this sensitive area.
Part 9: Ending the Agreement
[135] There was a dispute at clause 9.5.2 whether the applicants should be required to use “reasonable endeavours to procure the removal of equipment of third party suppliers” at the end of the agreement, or whether this should take the form of “reasonable assistance in the form of following up (a notice of removal)”. In cases where, for example, fibre connections are supplied by third parties under wayleaves, the applicants themselves have no right to remove the equipment. But as the Tribunal said in Fothringham, it does not seem unreasonable that the applicants should take responsibility for clearing the site and yielding it up with vacant possession, to the extent of using best endeavours, but not requiring them to do the legally impossible. In these circumstances we prefer the respondents’ wording which is more consistent with this approach.
Part 10: General Conditions
10.1 Temporary lift & shift
[136] The draft provides for a notice whereby should the Grantor require to carry out works, it is entitled to require the Operator to relocate or temporarily remove once given a “lift & shift notice”. The wording proposed by the respondents refers to “reasonably necessary works of repair, redevelopment, refurbishment” and so on and would require the applicants to relocate at their own expense. On the other hand the applicants’ wording provides for lift and shift only in respect of essential works of repair and maintenance and requires the Grantor to pay the operator’s reasonable and properly incurred costs.
[137] The respondents submitted that their terms were essential for the proper maintenance of the building and for giving effect to any legitimate interest they might have for the building’s redevelopment, improvement or alteration. The idea that the respondents should have to pay for the applicants to remove equipment was contrary to para. 23(5) of the Code.
[138] The applicants explained that a lift & shift notice could be very disruptive and could be open to abuse. They referred to Evolution (Shinfield) LLP v British Telecommunications plc where the Tribunal had observed that the continuing right to request removal of apparatus under the old Code is ordinarily exercisable only at the expense of the landowner.
[139] We do not think Evolution (Shinfield) LLP is inpoint at least in relation to works of essential repair and maintenance. Para. 20 of the old Code related to proposed improvements by a landowner. In the present circumstances, if the respondents require to carry out essential works of repair, but are prevented from doing so by reason of the presence of the applicants’ apparatus, then assuming there is nothing to the contrary in the agreement, they would likely sustain a loss entitling them to compensation under para. 25 of the new Code. It is an example of lawful use of Code rights resulting in loss to the landowner. So in principle it does not seem right that the landowner should have to pay for lift and shift where necessary works are required for some reason inherent in the nature or condition of the building.
[140] On the other hand we agree with the applicants that any lift and shift is likely in practise to be most inconvenient and burdensome for the operator. If the rights to the grantor are too wide, they could subvert the agreement. The time for testing whether the landowner intends to redevelop the land under para. 21(5), in the context of granting Code rights, is necessarily at the time of making the order. Those rights would be subverted if at some point during the term the site provider could point to a new proposed development requiring the operator to remove. As the term of the agreement is 10 years, we think the right to require lift and shift should be restricted to essential works of repair and maintenance. In these circumstances we think it is reasonable that the applicants should bear the cost of lift and shift.
10.3 Site Payment Suspension
[141] The respondents provide detailed wording at clause 10.3 as to the circumstances when the site payment should fall to be reimbursed, whereby the Communications Site is inoperable for reasons outwith the operator’s control. The applicants reject this clause and would prefer parties’ positions to be governed by the Code and general law and not by a clause which attempts to foresee all potential situations and which might operate as some kind of cap or limitation on parties’ rights and obligations. It seems to us that the wording was generally conceived in favour of the applicants so if the applicants do not want it, it would be better to delete it.
10.4 Dispute resolution
[142] The respondents propose detailed provisions requiring an attempt to resolve disputes first by ADR, failing which by arbitration. The respondents indicate that the wording is in terms of the standard Greater London Authority wording for Code agreements.
[143] The applicants do not wish a mandatory ADR clause and point out that there are some disputes where the Tribunal has exclusive jurisdiction under the Electronic Communications Code (Jurisdiction) Regulations 2017. Also some disputes would need to be dealt with swiftly since they could have a detrimental impact on the provision of services and the process envisaged could be cumbersome. On the other hand, if the clause does not preclude an application to the court or tribunal it would appear to be pointless.
[144] As ADR is essentially a voluntary process, we do not think there is much point in initially forcing a party to go to ADR against its will. Parties said nothing about the proposed alternative of arbitration. None of the familiar arguments – privacy and expertise vs time and expense – were rehearsed. In these circumstances, again, we do not think we should impose an essentially voluntary process upon at least one unwilling party, particularly where one party might require a quick decision. Subject to any statutory exclusive jurisdiction, parties can always agree to override the jurisdiction of the courts if they so wish. In these circumstances we shall not impose the suggested provisions.
10.3.4 Proof of service
[145] The respondents propose a detailed provision for proof of service but the applicants point out the wording is redundant since detailed procedures are provided under paragraph 91 of the Code. We agree.
Financial terms - Site Payment
Consideration and Compensation
[146] We would now determine the consideration in terms of the assumptions in para. 24 of the Code. In doing so under sub-para. (3) we require to assess market value on a “no network” assumption.
[147] Parties’ expert valuers agreed we should proceed upon the basis of the three stage approach adopted by the Upper Tribunal in Maple House paragraphs 134-137. Stage 1 is to find an existing or alternative use value for the site. The second step is to consider additional benefits which are conferred on the operator by the rights which may warrant additional payment. In particular, a grantor’s annual expenditure in repairing, maintaining and insuring the building upon which the operator can mount and operate its equipment is likely to benefit the operator. A contribution to such expenditure is a proper component in the consideration.
[148] The third stage requires any greater adverse effect on the site provider than the existing or alternative use to be reflected in a payment. The adverse effects could also be quantified under the “compensation” provisions. However, where these costs are likely to occur or recur, and are unlikely to be substantial, there is much to be said for subsuming them within “consideration” on the view that parties would wish to avoid the cost and uncertainty of repeated, possibly numerous, very small claims of compensation by agreeing a sum payable throughout the term to reflect any additional burdens upon the site provider: cf Maple House para. 144.
[149] Parties’ respective expert valuers sought the following in their reports:-
| Consideration per annum | Applicant’s Expert (Mr Stott) |
Respondent’s Expert (Mr Morris) |
||
|---|---|---|---|---|
| STAGE 1 | ||||
| Site rent | £50 | (a) 1st alternative | £13,950 | |
| (b) 2nd alternative | £10,272 | |||
| (c) 3rd alternative | £1,000 | |||
| STAGE 2 | ||||
| Insurance | £360 | £360 | ||
| Service charge | £790 | £790 | ||
| Additional access & temporary generator rights | £300 | |||
| Sinking fund | £1,510 | |||
| Stage 2 sub-total | £1,450 | £2,660 | ||
| STAGE 3 | ||||
| Access management (visits during normal working hours in excess of 20 per year charged at £100/visit) | £2,000 | |||
| Facilities management/disturbance for non-standard works (sharing & upgrading) | £2,429 | |||
| Out of hours access | £75/hr | |||
| Stage 3 sub-total | £0 | £4,429 | ||
| Total consideration | £1,500 | (a) | £21,039 | |
| (b) | £17,361 | |||
| (c) | £8,089 | |||
| Compensation | ||||
| Facilities management/disturbance - initial works | 14 days @ £1,000/day | £14,000 | ||
| Legal/valuation fees | £8,000 | |||
[150] For stage 1 Mr Stott considered there were no alternative uses for the roof and adopted a nominal value of £50 per annum. This was in accordance with the approach of the Upper Tribunal in Islington and Maple House.
[151] Mr Morris puts forward three alternative valuations for the first stage. He considered that the roof could be marketed for visitor access with panoramic views of Princes Street Gardens and Edinburgh Castle, as well as some advertising or promotional use. On the basis of a recent sale of No. 60 Princes Street he estimated the whole building to be worth a capital value of £527 per sq ft and by applying an investment yield this equates to an annual rental value of £20.90 per sq ft. Applying the latter to the area of equipment space (667 sq ft) equates to an annual site value of £13,950.
[152] Alternatively the site value could be assessed by apportioning a differently estimated rental value allocated to the whole building. Based upon a rent review in 2007 the current rental for the overall net internal area could be assessed at £15.40 per sq ft. Applying this to the site area of 667 sq ft equated to £10,272 per annum.
[153] As a third alternative, in the event of a nominal site value being adopted, Mr Morris advised a figure of £1,000 per annum. The Court of Appeal in Bocardo v Star Energy had found that a sum of £82.50 was the “correct” value of a compulsory transaction, but in reality this would be rounded up to £1,000 in a hypothetical negotiation.
[154] Mr Morris has produced no evidence to support his view that the site has some form of alternative use in the form of visitor attraction or promotional activity, we suspect for good reason. The upper roof does have some impressive views, but these are partly constrained to the important south. The upper roof is currently accessed by two vertical ladders. It is surrounded by items of industrial service plant. There is no shortage of panoramic viewpoints in the vicinity such as Edinburgh Castle, Calton Hill and the Scott Monument. Such a use does not sit comfortably with the respondents’ understandable concerns about access through the store and health and safety. The idea that this sort of alternative use could be realistic is not credible.
[155] Moreover we do not think there is any connection between an investment sale price of the building and the value of the rooftop site. The value of the investment will largely be driven by the unexpired lease term, the tenant covenant and the prospects for rental growth, none of which have any bearing on the site. Turning to the figure extrapolated from a rent review, namely the £15.40 per sq ft, it is not appropriate to aggregate the component values of a building to an overall or average rate and then selectively apply that overall rate to a specific part of the building. One has to consider the actual use of the specific part. If one applied the respondents’ logic to a hypothetical situation of the applicants’ wishing to install telecommunications cabinets in a prime retail space, they would only require to pay £15.40 per sq ft as opposed to say £255 per sq ft as found for zone A in the rent review. This approach cannot be right and has been of no assistance to the Tribunal.
[156] In these circumstances we require to resort to a nominal value for the site. We accept Mr Morris’ position that there should a stand back and look as part of the exercise to ensure that the outcome represents a market figure, but this requires to be carried out at the end of the exercise once the components of all 3 stages have been aggregated. The nominal value of £1,000 was set in Bocardo where in a hypothetical negotiation, parties would have agreed a one-off (not annual) sum of £1,000 (over 10 times the figure a court would have awarded as statutory compensation) in order to avoid costly legal wrangling. The factual situation was very different – Bocardo was a claim for damages for underground trespass as the rights would have been assessed in a hypothetical negotiation – and moreover, in the present case, the respondents are expressly entitled to reasonable legal expenses under para. 84(2) of the Code as compensation. So we do not find the attempted Bocardo analogy to be helpful. So to conclude we have no option but to determine a nominal rent of £50 per annum for the first stage.
[157] Turning to the second stage and the incidental benefits upon the operator, Mr Stott and Mr Morris were agreed that the applicants would benefit from the respondents’ insuring the property to the extent of £360 per annum, and for the latters’ repair and maintenance of the building to the extent of £790 per annum.
[158] In addition, Mr Stott noted that the draft agreement proposed wider rights of access through the building than most other tenants would generally expect, and also noted that the right to use a temporary generator was not something which other tenants or occupiers would generally expect as a typical benefit to their tenancy or license. Mr Stott made a rough and ready assessment of £300 per annum in respect of these two matters, and in the joint statement valued the right to use the temporary generator at £50 per annum.
[159] As matters have transpired, we have not agreed to the wider rights of access sought by the applicants. Accordingly the only other conceded additional benefit relates to the use of a temporary generator. We are content to apply Mr Stott’s figure of £50 per annum.
[160] Mr Morris however has also sought repairs and maintenance to be contributed to via a notional sinking fund. He takes the estimated rebuild cost of the entire building, and writes this down over a 50 year lifespan to an amount of £665,400 per annum. By applying a discount over 50 years and by applying the percentage of roof space to the whole building, he arrives at £2,300 per annum as an appropriate contribution to the sinking fund. He describes this as an additional cost for ensuring the building fabric, structure and facilities remain in good repair. He accepts that the £790 per annum (the total agreed insurance and repairs and maintenance applicable to the site) should not be double counted with this sum.
[161] Mr Stott does not accept there should be any contribution to a sinking fund and has not been provided with any evidence that a sinking fund exists. But even if a sinking fund does exist, it should only enable the respondents to have funds available to cover the cost of replacing wasting assets within the property. The only wasting asset which might be of use to the applicants is the service lift, but absent detailed evidence he has no basis on which to provide an opinion as to what the contribution should be.
[162] A sinking fund is essentially a fund for the purpose of reinstating a wasting capital asset, and can be used to set off depreciation of that asset over the years. The benefit of a replacement at the end of the lease will normally inure to the landlord, not the tenant. For that reason, for example, capital depreciation is not normally allowed under the revenue principle in fixing the net annual value of land under the statutory rating hypothesis. In the present case, there is no evidence that the operator as holder of rights for 10 years will be likely to obtain benefit from replacement of the building or any part of it. In these circumstances we do not think Mr Morris’ approach is a sound one.
[163] Turning to the third stage, Mr Morris considered that additional burdens which were likely to be incurred during the term should be subsumed within the site payment so that the site provider did not have to go to the trouble of making a claim each and every time there was some small incident which could be foreseen.
[164] In his view the site provider would require to be compensated for every time a visitor required access to the site. The advance notice for access would need to be processed. The visitor would be required to sign in and be processed at the administration desk. The store staff would need to be compensated for the time taken. In his experience it was reasonable for a single operator mast site to expect an average of at least 20 visits per year. He suggested the agreement might allow for say 20 visits per year during normal working hours for which a sum could be included. A separate sum might be triggered for any visits above 20 visits, at a rate of £100 per visit. A higher sum should be required if out of hours emergency access was required, and he considered the rate of £75 per hour not to be unrealistic. There were also security issues. He highlighted the fact that vetting those to be authorised to visit the site would come at substantial internal cost to the respondents. The work might involve checks with the police. He understood a charge of about £1,000 was made for each supplier to go through the respondents’ approval process, which was outsourced. He therefore considered a basic access management charge of £2,000 per annum, plus additional charges once a threshold number was reached, plus a separate out of hours hourly access charge, as well as an additional £1,000 per application for security vetting.
[165] Mr Morris considered there would be costs in dealing with the operator’s electricity supply being taken from the site provider’s supply, namely arranging for a separate meter to be read, making a periodical calculation, raising a periodic invoice, following up for payment and dealing with any enquiries.
[166] Mr Morris also considered that initial disturbance costs should be charged for at the rate of £1,000 per day for two weeks, a total of £14,000. We took this to be under the heading of compensation. There would be costs for the respondents associated with considering health and safety documentation such as RAMS. The initial disturbance included disruption to the click and collect access on Rose Street Lane South. He noted that one of the comparables used in Maple House, namely a Code agreement for a residential mast site at Brookstone Court, London allowed an annual payment for £1,000 for management of access over restricted areas and a further allowance of £22,000 (paid at £2,429 per annum) for future facilities management to allow for unrestricted upgrades and permitted sharing over a 10 year agreement once the initial works had been carried out. The Tribunal in Maple House had awarded similar amounts as consideration. He therefore sought the sum of £2,429 per annum over the period of the agreement in addition to the figure of £14,000 compensation for initial disturbance.
[167] Mr Stott for the applicants took the view there should be little in the access rights as would place an additional burden on the respondents. Mr Stott had already allowed approximately £1,000 per annum as a service charge under stage 2 and considered any further adjustment would risk double counting. He adopted the approach of the Upper Tribunal in Islington in which total consideration was determined at £1,000 per annum, which decision gave very clear directions for valuers. Turning to Maple House he felt that the component of £2,500 per annum as “an allowance to reflect the anticipated costs to the site provider of the operator’s rights to share the benefits of the agreement with up to two others and to upgrade the apparatus at the site” was primarily based upon the Brookstone Court agreement. The figures in Brookstone Court had been based on a series of site specific assumptions and expenses which might be incurred if and when upgrades took place. The assumptions included a cost of “£2000 per upgrade which was stated as being for temporary use of space during build. Crane / toilets / kit storeage etc. for use and management of residents etc.” In his opinion Maple House blurred the lines between consideration and compensation. Future expenses, loss and damages should be claimed as compensation if and when they are incurred so that they could be tested under the well known tests of reasonableness, remoteness and causation. He had no evidential basis to assess such costs in the present case.
[168] In his opinion the Maple House case was being used by site providers as setting a benchmark for consideration for all rooftop cases and in his opinion there were reasons why Maple House should be treated with caution. The Brookstone Court comparable which featured large in the Maple House decision was not a good comparable because one of the parties had been under significant commercial pressure to complete the agreement and this was known to the other party. The Upper Tribunal appeared to have been unaware of this context. Mr Stott produced transactional evidence in his Appendix 5 of pre-Maple House transactions which showed “the temperature of the market”. His evidence showed site payments (consideration plus foreseeable compensation, excluding professional fees) as mainly being within a range of £1,000 and £2,000 per annum. This is well below the headline figure of £5,000 per annum in Maple House. Moreover he did not see why the Tribunal should consider it necessary for the site provider to accompany the operator’s representatives every time access was taken, including when no works were being undertaken. This might be contrasted with residential buildings such as Brookstone Court, where in the light of the Hackett Report following the Grenfell disaster, landlords of high storey buildings were expected to have increased liability for works occurring on their property. But here operator was legally responsible for carrying out the works to a proper standard and there was no reason to anticipate costs of the order of £2,500 per annum for “facilities management.” Mr Stott also noted that because of concerns that CTIL’s apparatus would affect the structural integrity of the Maple House building, no apparatus has in fact been installed, thus there was no prospect of the upgrades ever happening but yet CTIL was left paying a consideration that represents expenses which would never occur.
[169] Mr Stott also included details of 12 transactions relating to rooftop sites. He paid particular attention to Albert Barnes House, Southwark where the consideration for accompanying access was agreed at £750 per annum, and could be contrasted with Maple House and Brookstone Court where the allowed figure was £1,000 per annum in each case. The contribution for facilities management for anticipated costs associated with anticipated future upgrades was £750 per annum at Albert Barnes House, and contrasted with Maple House where the figure was £2,500 per annum. We understood the Albert Barnes House agreement completed in April 2020, which is prior to the Maple House decision.
[170] Mr Stott did not consider there was any requirement for the applicants to review, comment on or approve documents or drawings in connection with the installation, upgrading, operation or maintenance of the equipment.
[171] He also points out that Rose Street Lane South is capable of being accessed from either end so even though the erection of a crane may result in its not being possible for vehicles to drive the full length of the lane, access to any doors could remain accessible. He noted that the lane has been closed to traffic for some time as a result of other construction works. Moreover he noted that the click and collect facility at the store was not currently in use.
[172] In assessing an allowance for the additional burden of managing access to the roof, we have noted that the Upper Tribunal in Maple House fixed a sum of £1,000 per annum for the term. The Tribunal had permitted two “active” equipment sharers together with para. 17 sharers. The Tribunal thought it reasonable for a site provider’s representative to be present “when access to the roof was being taken, and we think that is reasonable in a residential building with solar panel array on the roof … L&Q will also wish to keep a careful record of work done on the building and the identity of those undertaking the work.” The Brookstone Court agreement referred to in that decision also allowed an annual sum of £1,000 for management of access, and the agreement was interpreted as allowing for similar sharing rights. As we have mentioned we were also referred to a transaction relating to Albert Barnes House, Southwark in which £750 per annum was allowed for the cost of managing unlimited access for a residential rooftop site, albeit agreed prior to the Maple House decision. We were not clear as to the assumed sharing rights for Albert Barnes House.
[173] The applicants suggest, at least in general terms, that there is a risk that access management in stage 3 could double count the “additional benefits” taken into account in stage 2. While we require to be vigilant to avoid double counting, we think it most unlikely that the Brookstone Court agreement could have double counted these matters since these were professionally agreed figures and were disclosed to the Tribunal in Maple House.
[174] Nevertheless it seems to us that the cost of managing access in the present case must fall at a considerably higher figure than the assessments made in the above cases. We do not agree with Mr Stott’s downplaying of the importance of the access issue to the respondents. The above cases involve access through parts of a residential block of flats where the individual flats will be secure and self-contained. The “sensitive” part of the access related to access upon the roofs themselves. To be workable, access in the present case requires access through the front and back areas of a sensitive and fairly complex working retail building of several floors, as well as the roof. The respondents have necessary access management policies in place, but will be required to accept the presence of hitherto unknown contractors over whom they will have no right of veto. The notices for access will require to be processed. The respondents will be entitled to know the identity and employer of visitors exercising access rights and in some cases the nature of the work being carried out. These are matters which staff will require to record and issue appropriate passes and the like. We consider it reasonable for the respondents’ staff to accompany visitors through their building and on their roof, all of which are restricted areas, at least in the short to medium term while relationships of trust with individuals and third parties are built up. We do not think an assessment of the order of £1000 per annum for dealing with this burden adequately reflects the reality of the situation.
[175] We bear in mind Mr Morris’ evidence that on average a site with a single operator will have at least 20 visits per year. We think this must be interpreted to mean a single operator along with any “host” provider. As presently advised, that would involve Telefonica and CTIL. We also think it is appropriate, given the applicants’ evidence of the importance of sharing, to assume that there will be a second “active” sharer requiring more access within the short to medium term. So it is likely there will be three parties’ visiting the site from time to time, namely the host providing the passive infrastructure and, in due course, two sharers with active equipment. We think it is reasonable to expect some coordination between these parties so as to avoid, as it were, a linear increase in the number of visits with the addition of a second sharer. We anticipate the need to accompany all visitors to diminish with time. We have some concern about the reasonableness of Mr Morris’s figure of £100 per visit, if it is intended to be in combination with a vetting charge of £1,000 per supplier. The latter charge appeared to be tenuous and, as he concedes, has not been fully investigated. We think a vetting charge in addition to a component to allow for accompanying visitors would risk double counting. Nor do we think it appropriate to apply an additional charge once visits have reached a certain number, since inevitably we must apply a broad axe in this exercise. So taking a broad and, we concede, a somewhat intuitive view, we assess an allowance for managing general access to be £2,500 per annum.
[176] We have indicated that we think an additional out of hours access charge to be reasonable. Unfortunately we have no evidence as to how likely it is that the applicants will wish to take access outwith the respondents’ normal trading hours. We therefore require to resort to a specific charge additional to the general access allowance discussed above. We think Mr Morris’s figure of £75 per hour is too high. The work of opening up the building in an out of hours emergency is likely to fall to security or janitor staff. The national living wage in Scotland is just under £10 per hour, although we anticipate overtime rates will be likely. There will be a certain amount of processing and administration and travel. We note Mr Morris’s comment that his figure would compare favourably to rates CTIL pay to other site providers for out of hours access. Again taking a broad view, we would consider a charge of £50 per hour for managing out of hours access to be more reasonable.
[177] We now turn to consider whether we should include at this stage a component in consideration to reflect an additional burden in providing facilities management for the initial installation works and future upgrades and/ or disturbance which this might cause. This is an area which may also be covered by compensation under para. 25 of the Code. In Maple House the Upper Tribunal took account of the fact that the operator was obliged to provide copies of all necessary statutory permissions, licenses and approvals for works being done on the building, together with plans, risk assessments and structural calculations if available. Recording, keeping and considering this material would incur costs for the site provider (para. 143). The initial installation works were being undertaken at the time of the decision and it was anticipated that costs associated with the work would be covered by compensation claims arising under the agreement for interim Code rights. However the Tribunal considered that costs associated with the future upgrades were not speculative and in order to avoid numerous future small claims could be assessed as consideration payable throughout the term. The Upper Tribunal assessed a sum of £2,500 per annum as “an allowance to reflect the anticipated costs to the site provider of the operators’ rights to share the benefits of the agreement with up to two others and to upgrade the apparatus at the site without restriction”. At para. 154 the Tribunal said that it did not think the market value of a site provider’s agreement for Code rights over a roof top site for different residential buildings would be much more or less than the £5,000 determined. This figure was made up of contribution to building maintenance and insurance of the order of £1500 per annum, access management of £1,000 per annum and the above figure of £2,500 per annum.
[178] The Upper Tribunal relied on the Brookstone Court comparable. CTIL were one of the parties to the agreement and agreed capital sums for £4,000 for the initial build and £22,000 as a provision for facilities management. These sums were annualised to £2,915 per annum for a 10 year term as payments to the site provider. According to the schedule produced to us, the initial payment expressly included, for example, a provision for the review of RAMS and “build monitoring”.
[179] In terms of the weight to be given to the Maple House decision, we were not impressed by Mr Stott’s criticisms of the decision itself. If CTIL had been forced to make concessions in the Brookstone Court agreement on account of an inordinately difficult bargaining position known to the other party, we would have expected them to have told the Tribunal at the time. The Upper Tribunal was assisted by email correspondence from agents involved in the negotiations and had more evidence about Brookstone Court than the single sheet schedule (itself referring to at least one other document) provided to us. The Tribunal overall had considered three helpful comparables, in which Brookstone Court was the most helpful. The Tribunal was also well aware of the risk that a consensual Code agreement could over-state compensation since, for the reasons given at paras 101 and 102, a purely contractual agreement without a para. 25 order requires to reflect the risk of loss and damage caused by the exercise of Code rights in the future. The Tribunal therefore stressed the importance of access to parties’ own analysis of the sum agreed in order to have a meaningful breakdown. As we have said, this appears to have been available in more detail than it is to us.
[180] Mr Stott sought for us to follow the valuation approach and reach the sort of figure arrived at in Islington. But we cannot ignore the comments (paras 91-92 Maple House) that the valuation evidence presented in Islington was rudimentary and that the Tribunal was in a stronger position to provide guidance in the subsequent case. It had received evidence focussing on residential buildings and the value attributed by professional advisers to obligations assumed by the site provider and benefits received by the operator. It may well be that a good number of Mr Stott’s comparables were themselves influenced by Islington, but the important difference is that in Maple House the Tribunal had valuation evidence setting out how parties behaved in the real market and, to take Brookstone Court as an example, included professionally estimated and broken down figures behind the assumed obligations.
[181] That said, we are dealing here with a different type of building with a different use in a different area. While there is much to be said for adopting a pragmatic approach by adopting or adjusting the figures in Maple House as comparables,on the evidence we feel doing so would be to make an assumption too far. No witness attempted to address the question whether the extent of additional facilities management and disruption is likely to be similar between the two types of building. Our impression is there are greater sensitivities at the respondents’ building, as discussed above. The engineering works, the design of which is still to be finalised, involve necessary strengthening of part of the building. Although the Brookstone Court agreement contains figures for the review of RAMS and the like, we do not know whether the amount of the work for the present respondents and their consultants is likely be broadly similar either for the initial or subsequent works. As we have said, both parties had engineering evidence available, but neither chose to present evidence as to how long the initial works were likely to last or, for example, how many hours’ work a design review process (which we think is reasonable) might be expected to take. As the initial works are intended to future proof the building for further upgrades and sharing, we would expect the initial works to be proportionately greater than the future works. That factor would assist us in gauging the reasonableness of an assessment for future facilities management, but as an assessment is presently denied to us for the former we are reluctant to make an assessment in respect of the latter.
[182] Furthermore, as we have indicated, the works are likely to involve some disturbance to the respondents’ operation. Although disturbance loss is in principle quantifiable and compensable, here it is too uncertain to quantify in advance. We do not have good supporting evidence to gauge whether Mr Morris’s estimate and quantification of initial disturbance costs (2 weeks at £1000 per day) is reasonable, and no attempt has been made to explain what lies behind his assumptions. Moreover the works are unlikely to be completely risk free from the respondents’ perspective – it is likely that the respondents will be denied access for an unquantified period to their essential rooftop equipment. At the very least it would be necessary for clarity as to whether any consideration or compensation allowed now would include a component to “buy off” the risk of a future costly incident, which is not a calculation we feel able to make.
[183] So we do not think it appropriate to attempt a view now, whether under the guise of consideration or compensation, as to the extent the additional burden of facilities management and disturbance arising out of the initial works or subsequent upgrades and sharing. It follows that we shall not attempt to assess an annual component within the consideration to reflect these matters. These are matters best left to compensation to be agreed or determined in due course.
[184] Finally under stage 3 there requires to be an allowance for the burden of billing work associated with the applicants’ using the respondents’ electricity supply. We think this is a much more likely scenario than the respondents obtaining their own supply. We infer that there will be quarterly charges, and therefore a quarterly administrative exercise. In the light of Mr Morris’s comments we shall quantify this at £100 per annum.
[185] Turning specifically to compensation it is important to note that when the Tribunal makes an order imposing an agreement under para. 20 of the Code, by para. 25(2)(b) it retains the power to order the payment of compensation at any time after imposing the agreement, and may do so by lump sum, by periodical payments, on the occurrence of an event, or otherwise as it determines under para. 25(5): Islington para. [111]. This is the import of the words “… at any time afterwards …” in para. 25(2)(b). The rights under para. 25 have been described as providing an open ended ability to apply for compensation for loss and damage: see CTIL v University of London para. 82; so long as there has been a para. 20 order.
[186] As applications for compensation are likely to be made in the future, it follows that the Tribunal require to take care to avoid double counting in the light of past consideration and compensation payments. We accordingly reserve any claims for additional facilities management and disruption in respect of initial or subsequent installation works, and failing agreement, for these to form the subject of separate compensation claims following upon this order. We seek to make it clear that the elements of stage 3 consideration which we have allowed for general access management is intended to reflect general access only, and is not intended to cover the specific installation or upgrade or sharing works and disruption caused thereby.
[187] The draft agreement proposes compensation of £1,500 towards the Grantor’s valuation fees and £1,500 towards the Grantor’s legal fees in advising and completing the agreement. Mr Morris reports a figure for legal and valuation agents’ fees in drafting and negotiating the agreement at £8,000. Mr Stott is unable to comment as he has not seen evidence of such costs.
[188] Given the skeletal amount of information before us, we are in no position to assess how much has reasonably been incurred by the respondents in terms of pre-litigation legal and valuation expenses. The inference is that more than £1,500 has been incurred under each head, and we see no reason to place an artificial cap. All we can do is reserve these matters under the agreement.
[189] Accordingly we would conclude as follows:
| STAGE 1 | ||
|---|---|---|
| Site rent | £50 | |
| Stage 1 sub-total | £50 | |
| STAGE 2 | ||
| Insurance | £360 | |
| Service charge | £790 | |
| Temporary generator rights | £50 | |
| Stage 2 sub-total | £1,200 | |
| STAGE 3 | ||
| General access management | £2,500 | |
| Electricity supply administration | £100 | |
| Out of hours access | £50/hr | |
| Stage 3 sub-total | £2,600 | |
| Total consideration | £3,850 | |
| Facilities management/disturbance - initial works | Reserved |
| Facilities management/disturbance for non-standard works - sharing & upgrading | Reserved |
| Legal & valuation fees | Reserved |
[190] We were asked to provide for a review provision of the relevant site payment. We think this is reasonable for a 10 year term agreement. We shall allow a review of the consideration on the fifth anniversary of the commencement date, for an increase by an amount equivalent to the percentage increase in the Consumer Prices Index for the preceding five year period.
[191] Finally the respondents submitted that the site payment should be back dated to the date of the grant of interim rights on 14 April 2021. While this would have been our normal course, the applicants have submitted they have been unable to proceed because the respondents have not granted a wayleave to BT. The fact there has been a somewhat belated challenge to the principle of the application will have done little to encourage the applicants to proceed on site. It follows we are unsympathetic to backdating in this case.
Mechanics
[192] Accompanying this decision will be a revised Code Agreement. This will take account of our determination on the above matters and will also deal with a number of consequential amendments and minor wording disputes. The draft Agreement cannot however be completed and made subject of an Order until the applicants provide a new plan or plans referred to in para. [73] above, and new wording is agreed or determined for clause 4.1. We also wish parties to advise on how the interest of the second respondents should be dealt with, such as whether they should be named as parties to the agreement in line with our provisional view. Parties should liaise with our clerk on these matters.
[193] Although we have not yet made a para. 20 Order, for the avoidance of doubt this Opinion is intended to be a decision within the meaning of section 11 of the Tribunals and Inquiries Act 1992 and Rule 27 of the Tribunal Rules.