The Upper Chamber of the Lands Tribunal imposes an agreement on a site provider allowing operators to carry out non-intrusive investigative works and offers useful commentary regarding the involvement of superior landlords in litigation, the timing of intrusive surveys, compensation clauses and professional fees.
8 October 2021
In this decision, Cornerstone Telecommunications Infrastructure Limited (the "Operators"), were seeking an order for the imposition of interim rights under paragraph 26 of the Electronic Communications Code (the "Code") to access the roof of 1 London Bridge, London SE1 (the "Building") in order to carry out a multi-skilled visit ("MSV ") to determine if the Building was suitable to accommodate electronic communications apparatus for a replacement site. The interim rights sought were to carry out both intrusive and non-intrusive surveys at the Building, as part of the MSV. The Tribunal imposed an agreement (the "Interim Rights Agreement") on the site provider for a non-intrusive MSV for six months
Background
The Operators served notices under paragraph 26 of the Code, seeking rights to carry out both intrusive and non-intrusive surveys at the Building as part of the MSV, on both the leasehold proprietor of the Building, St. Martins Property Investments Limited (the "Site Provider") and on the freehold proprietor of the Building, The Mayor and Commonalty and Citizens of the City of London (the "Freeholder"). The intrusive surveys would involve taking up parts of the roof of the Building in order to investigate its structure and suitability to host the proposed electronic communications apparatus. Whilst neither party opposed the principle that the Operators should be allowed access to the Building to carry out its surveys, the Site Provider opposed the carrying out of what the Tribunal referred to as "destructive investigative works". The Freeholder did not object to the rights being sought.
The Operators proceeded to commence litigation against both the Site Provider and the Freeholder. The Operators' justification for including the Freeholder was the existence of a covenant in the headlease between the Freeholder and the Site Provider which prohibited the Site Provider from modifying or doing any works that would interfere with the structure of the Building. The Operators believed the Site Provider would breach this covenant if it agreed to an MSV.
The Judgment
Should the Freeholder be bound by interim rights?
In this hearing, the Tribunal dismissed the claim brought by the Operators against the Freeholder and decided that the Freeholder had been "dragged into this reference unnecessarily", on the following grounds:
- The Freeholder had not objected to the Code rights being sought by the Operators; and
- A Freeholder would have no grounds to state that a lessee is in breach of a restrictive covenant where the offending rights were being imposed by the Tribunal. There would be no cause of action in such a circumstance, because the lessee would have no control over the imposition of the agreement.
The Tribunal also confirmed that it would not be necessary for other freeholders in the same position to be made parties to references under paragraph 26 of the Code (at least where the only rights sought are to carry out an MSV).
Should a right to carry out intrusive investigations be granted at the first hearing?
In relation to the proposed intrusive investigations, the Operators did not provide any specific detail as to what their proposed investigative works would involve. The Site Provider's concern was that the Operators were asking for "unrestricted rights to do undefined works, constrained only by the purpose for which they were to be undertaken" and the Tribunal determined that the Operators' request was vague, with no details having been provided as to the expected level of structural intrusion to the Building, which had specific structural sensitivities.
Rather than give the Operators carte blanche to carry out investigative works, the Tribunal imposed a right for the Operators to carry out non-intrusive surveys at the Building, commenting that these should be carried out prior to the imposition of rights to carry out intrusive surveys. The Tribunal indicated that it is possible for a right to carry out intrusive works to be granted at the first hearing, however this is largely dependent on the type of building in question . The Tribunal made it clear that the Operators would be entitled to go back to the Tribunal to apply for a right to intrusive works, at a later stage, if required, however, the Tribunal would expect the Operators to be able to say in more detail what works they wish to carry out.
Terms of the agreement
The Operators had asked for the period of the Interim Rights Agreement to be extended while they carried out investigative works, even if that would prolong the Interim Rights Agreement beyond the long-stop date of six months. The Site Provider however did not want the uncertainty of a potentially indeterminate period of access. The Tribunal decided that a term of six months would be adequate for the Interim Rights Agreement, to commence from the date it is imposed, and that access may be taken during any period of two months within those six months. The Tribunal noted that this period would be subject to the possibility of an extension if intrusive investigative works were then found to be required.
Should there be a contractual mechanism for statutory compensation?
Whilst the parties had agreed in principle to include a compensation clause in the Interim Rights Agreement to provide the mechanism by which compensation claims could be made by the Site Provider, the Tribunal decided that the Interim Rights Agreement did not need contractual compensation provisions at all. The Tribunal's view was that this would be "unnecessary and counter-productive", as the parties could rely on the statutory compensation procedure set out in paragraph 25 of the Code, supplemented by paragraph 84 . The Tribunal noted that, had the wording of a compensation clause been agreed, it would have "happily imposed it", but as the wording in this case remained in dispute, they decided that "if they [the parties] cannot reach agreement, they can make use of the statutory compensation procedure and come to the Tribunal for it to determine compensation".
Expenses, fees and costs
Supervision Costs - the Site Provider requested that the Operators pay for their telecommunications agent to supervise access to the Building. The Operators had no objection to its visits to the Building being accompanied, but objected to paying the fees of a professional telecommunications agent to accompany its own contractors. The Tribunal noted that under paragraph 84(2)(a) of the Code, a site provider has the right to compensation for expenses which it has incurred including reasonable legal and valuation expenses and where a building is of a sensitive nature, or has a restricted access policy, such compensation may include the cost of the building owner supervising access . The Tribunal concluded that in principle, at least where non-intrusive investigations are being undertaken, professional supervision of other professionals is not something which operators should be expected to pay for, as this does not seem necessary or appropriate.
Professional Fees - the Site Provider also requested payment of their legal and agent's fees in obtaining advice on the Code and negotiating the Interim Rights Agreement itself. There was much discussion in relation to fees, and whilst it was noted that this matter was not straightforward, the Tribunal pointed out that a site provider is entitled to recoup all of its legal expenses, provided that they are reasonable. The Tribunal noted that this matter was not straightforward and related to a "particularly valuable building", so hence it awarded the site provider the higher figure in terms of costs. The Tribunal commented that these costs are not to be "regarded as setting a norm", which suggests that in more straightforward cases a similar sum would not be awarded.
Comment
The key points to take away from this case are that:
- A site provider would not be in breach of restrictive covenants in favour of a superior landlord where Code rights are imposed by the Tribunal – there would be no cause of action. Therefore, operators need not include superior landlords as a party to paragraph 26 proceedings where only MSV rights are sought and if operators do so, the Tribunal is highly likely, based on Martin Rodger QC's comments in this decision, to award costs against them.
- Operators must be able to specify the details of any intrusive investigative works that they are requesting rights in relation to; otherwise, the Tribunal seems to be leaning towards granting rights for non-intrusive surveys in the first instance, with a right for operators to come back to the Tribunal at a later stage, if more extensive rights are required.
- Where an agreement is imposed, statutory compensation is not required to be covered in the contractual documentation, as operators can rely on their statutory rights to compensation under paragraph 84 of the Code.
- A site provider will be entitled to recover their legal and professional fees incurred in connection with the rights being sought by the operators, but those fees must be reasonable and "proportionate to the matters in issue" .
Written by Felicity Cinnamon
