Counting the costs of telecoms references

Posted: 21/12/2022

In July of this year, the Upper Tribunal (Lands Chamber) issued its judgment in EE Ltd and another v HSBC Bank Plc [2022] UKUT 174 (LC) and, in doing so, revisited the question of costs and compensation. The case will be of use to all site providers looking to have their actual reasonable costs of agreeing a multi-skilled visit reimbursed by an operator where the same is reluctant to pay for some or all of the expense.

The decision

The matter came before the court following an application by the operator for an order allowing it to exercise code rights over a shopping centre in Stratford-upon-Avon so that it could survey the premises for suitability for an installation.

The advice “beware… of entrance to a quarrel” would surely here apply, because, in determining the costs and compensation issues, the operator was ordered to pay the site provider’s costs of the MSV application. The order, made under paragraphs 25 and 84 of the Elecronic Communications Code, was that the site provider was entitled to its “reasonable transaction costs” to be determined by the tribunal if not agreed, and to a payment on account for the same, in the sum of £12,500 plus VAT.

Further, the site provider was also entitled to its costs of the reference to the tribunal, summarily assessed on the standard basis in the sum of £15,000.

In giving judgment, the deputy president held that, in the absence of an agreement, “the Tribunal’s usual order is that the operator should pay the site provider’s costs” – usually on a summary assessment.

In principle, it was held that costs should not fall on the site provider. Keen followers of the Code might remember the wrist slapping by the tribunal in the case of Cornerstone Telecommunications Infrastructure Ltd v Central Saint Giles General Partner Ltd [2019] UKUT 183 (LC); [2019] PLCS 106. There, the tribunal said all parties had incurred completely disproportionate costs. As a result, while the freeholder and long lessee, Clarion, were both entitled to some of their costs of the proceedings, these were limited to £5,000 each.

A similar decision was seen in Cornerstone Telecommunications Infrastructure Ltd v St Martins Property Investments Ltd and another [2021] UKUT 262 (LC); [2021] EGLR 44, concerning 1 London Bridge, where the respondent successfully obtained a costs order for its full transactional costs, but was only allowed £12,500 of its costs of the reference, having incurred something in excess of £60,000.

It would be fair to speculate that the costs of the transaction in HSBC easily exceeded the sum of £12,500, the amount of the payment on account. In total then, the site provider – fairly – racked up circa £30,000 (and perhaps even more) of costs in relation to the MSV and successfully established a right to full reimbursement of reasonable costs. The case will be important in establishing that such a number will be reasonable in the circumstances. Pertinently, the UT will allow much higher costs to be incurred where warranted.

In that respect the case builds on the position established by EE Ltd and another v Hackney London Borough Council [2021] UKUT 142 (LC); [2021] PLSCS 106, which demonstrated the usual rule is indeed, no costs. That case also concerned an MSV, but the site provider held out for an indemnity in its favour in the same which was not limited to “all third-party costs expenses damages”, etc, arising out of in or connection with the MSV (among other things).

The site provider was unsuccessful in its argument, with the UT holding that it was appropriate to limit the indemnity to claims by third parties, even where, under paragraph 23(5), the Code imposed an obligation on the tribunal to fashion terms which will ensure the least possible loss and damage. In doing so, the UT relied on (i) the wording of paragraph 25, which deals with compensation; and (ii) the model form of Code agreement issued by OFCOM, which the tribunal held it should “have regard to”. However, there was no order as to costs, even though the decision disposed of the matter at the case management stage.

Costly mistakes

In EE Ltd and another v 100 Nox SARL [2022] UKUT 130 (LC); [2022] PLSCS 92, the operator had to count the cost of an unsuccessful application. It sought rights to undertake an MSV of 100 New Oxford Street, but had its application dismissed. The respondent, the owner of the building, was seemingly unaware of the application. The operator was unsuccessful principally because it did little more than send an incorrect paragraph 26 notice by tracked international delivery to the company registered address for the freeholder. The tribunal held, applying the test in Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd [1997] AC 747; [1997] PLSCS 150, that the recipient would have been misled by the notice, which was wrongly given to an unconnected entity.

Further, there was no signed proof of delivery, and as a result the tribunal was unwilling to exercise its discretion in the operator’s favour, notwithstanding that technically good service would have been service on the company’s registered office. The tribunal was critical that the operator had failed to send a representative who could have simply “walked past the property and looked upwards to ascertain whether there is any other telecommunications apparatus on its roof”, which might enable contact through another operator, or made enquiries of any of the tenants to find out how they contact their landlord.

This article was published in Estates Gazette in August 2022.

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