Cornerstone Telecommunications Infrastructure Ltd v London & Quadrant Housing Trust (ELECTRONIC COMMUNICATIONS CODE : roof top site on residential building : compensation)

Factual and Procedural Background

This opinion concerns a reference under Part 4 of the Electronic Communications Code (the Code), found in Schedule 3A to the Communications Act 2003, relating to the imposition of rights for a telecommunications site on the roof of a residential building in South London. The claimant, a joint venture company formed by two major telecommunications operators (hereafter "Plaintiff"), seeks the right to install electronic communications apparatus on the roof of an eight-storey building owned by a registered social housing provider (hereafter "Defendant"). The building contains offices and residential flats with varied tenures.

The Plaintiff already has an interim Code agreement imposed by the Tribunal and has begun installing apparatus. The dispute concerns the terms of the final Code agreement, particularly relating to equipment limits, upgrading, sharing rights, and the level of consideration and compensation payable. The Defendant objects to certain terms on grounds including building safety obligations anticipated under forthcoming legislation and concerns about burdens imposed by unrestricted equipment use and sharing.

The hearing involved submissions and expert evidence from both parties, with the Tribunal tasked to impose an agreement where terms remain disputed.

Legal Issues Presented

1. Whether an equipment cap limiting the Plaintiff's right to install electronic communications apparatus should be imposed.
2. The extent to which the Plaintiff's rights to upgrade electronic communications apparatus should be restricted, particularly the application and interpretation of paragraph 17 of the Code.
3. The scope of sharing rights for the installed apparatus and whether these should be limited by paragraph 17 conditions.
4. The determination of appropriate consideration payable under paragraph 24 of the Code and any compensation payable under paragraph 25.
5. The relationship between consideration and compensation in the context of Code agreements imposed by the Tribunal.

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff seeks unrestricted rights to install, upgrade, and share electronic communications apparatus on the site to accommodate technological advances such as 5G and to enable efficient network operation.
• The Plaintiff argues that paragraph 17 of the Code sets a minimum floor of rights for upgrading and sharing, and the Tribunal should grant rights beyond these minimum conditions to avoid delays and additional costs.
• The Plaintiff contends that an equipment cap is unnecessary because safeguards and agreed terms provide sufficient control over installations and that restrictions could impede the public benefit of improved network infrastructure.
• Regarding consideration, the Plaintiff proposes a nominal figure based on previous Tribunal decisions for rooftop sites with no credible alternative use, supplemented by a modest contribution towards professional fees as compensation.
• The Plaintiff emphasizes the importance of flexibility in upgrading and sharing rights to meet future technological needs and regulatory obligations.

Defendant's Arguments

• The Defendant seeks to impose an equipment cap to provide a baseline for measuring the impact of upgrades and sharing, citing concerns about structural integrity and building safety obligations under anticipated legislation.
• The Defendant argues that upgrading and sharing rights should be limited by the conditions in paragraph 17 of the Code, which restrict upgrades or sharing that cause more than a minimal adverse impact on appearance or impose additional burdens.
• The Defendant emphasizes its responsibilities under the forthcoming Building Safety Bill and the need to minimize loss and damage caused by the exercise of Code rights, advocating terms that impose the least possible burden on the building and its occupiers.
• On valuation, the Defendant's expert proposes a significantly higher combined figure for consideration and compensation based on market evidence and a compulsory purchase claim structure, including allowances for managing access, disturbance, and other burdens.
• The Defendant suggests that unrestricted upgrading and sharing rights would increase burdens and costs, and that any rights beyond paragraph 17 should be negotiated or imposed with additional compensation or by new agreements.

Table of Precedents Cited

Court's Reasoning and Analysis

The Tribunal began by clarifying the statutory framework under the Electronic Communications Code, emphasizing the distinction between the code rights sought by the operator and the terms on which those rights are exercisable. It rejected the Plaintiff’s submission that the Tribunal should start from the operator’s proposed terms and place the burden on the site provider to justify departures, instead affirming the Tribunal’s wide discretion to impose terms deemed appropriate, consistent with the Code’s purpose.

Regarding the equipment cap, the Tribunal found no justification for limiting the Plaintiff’s right to install apparatus by reference to a fixed list or cap. Existing safeguards, including requirements for notice, provision of consents, and prohibitions against overloading or unsafe installations, were sufficient to protect the Defendant’s interests. The Tribunal noted practical and legal limits on the amount of equipment that could be installed and concluded that an equipment cap would likely cause disputes and hinder the Plaintiff’s ability to provide services.

On upgrading and sharing rights, the Tribunal analyzed paragraph 17 of the Code, which permits upgrading and sharing subject to conditions that changes have no more than a minimal adverse impact on appearance and impose no additional burden on the site provider. The Tribunal acknowledged the complexity and ambiguity of paragraph 17 but concluded that it sets a minimum floor of rights. The Plaintiff’s request for unrestricted upgrading rights was accepted as appropriate given the 10-year term and the need to accommodate technological developments such as 5G.

However, the Tribunal found that unrestricted sharing was incompatible with the requirement to minimize loss and damage to occupiers and the site provider’s obligations under new building safety legislation. It imposed a limit permitting sharing with up to two other operators without restriction, with additional sharing permitted only if it met paragraph 17 conditions.

In assessing consideration and compensation, the Tribunal adopted a structured approach influenced by the framework from Vodafone v Hanover Capital, involving:

1. Assessment of the alternative use value of the site (nominal in this case).
2. Consideration of benefits conferred on the operator by the agreement, such as building maintenance and insurance.
3. Adjustment for any greater adverse effect on the site provider than the alternative use.

The Tribunal distinguished between consideration, which reflects the overall value of the agreement under paragraph 24, and compensation, which addresses loss or damage under paragraph 25. It emphasized the need to avoid double counting and noted that compensation claims can be made prospectively.

The Tribunal found the Plaintiff’s valuation lacking transactional evidence, while the Defendant’s expert presented extensive but partially unreliable evidence, including pre-Code agreements. The Tribunal gave most weight to recent comparable new lettings under the Code, particularly a similar residential rooftop site nearby (Brookstone Court), which supported a higher site payment than previously awarded in Islington.

After detailed consideration, the Tribunal determined that an annual consideration of £5,000 was appropriate, reflecting nominal site value, benefits to the operator, and allowances for managing access, sharing, and upgrading. Compensation was awarded solely for the Defendant’s reasonable legal expenses (£3,068), with other claimed costs deemed speculative or more appropriately pursued as future compensation claims if incurred.

Holding and Implications

The Tribunal's final decision is to IMPOSE a Code agreement on the parties with the following key terms:

• No equipment cap limiting the Plaintiff’s right to install electronic communications apparatus.
• Unrestricted rights to upgrade apparatus without reference to paragraph 17 conditions.
• Sharing rights limited to unrestricted sharing with up to two other operators, with additional sharing subject to paragraph 17 conditions.
• Annual consideration payable by the Plaintiff to the Defendant set at £5,000.
• Compensation payable to the Defendant for reasonable legal expenses incurred in advising on and completing the agreement, fixed at £3,068.

This decision balances the statutory purpose of the Code to facilitate network expansion and infrastructure sharing with the need to minimize loss and damage to site providers and occupiers, particularly in the context of multi-occupied residential buildings subject to evolving safety regulations. The Tribunal provided guidance indicating that the market value for rooftop sites on residential buildings in similar locations is unlikely to vary significantly from the figure awarded, offering a benchmark for future cases.

No new legal precedent was established beyond the application and interpretation of existing statutory provisions and prior case law. The ruling clarifies the Tribunal’s approach to upgrading and sharing rights under paragraph 17 of the Code and the valuation methodology for consideration and compensation in imposed Code agreements.