FTT calls again for proportionate and reasonable cost claims in the negotiation of UK Code agreements

The First-tier Tribunal (FTT), in a recent decision concerning the Electronic Communications Code, has again reinforced its and the Upper Tribunal's view on the unhelpful pattern of increasing and disproportionate costs that site providers are seeking when negotiating a Code agreement for a multi-skilled visit (MSV).

The case, Cornerstone Telecommunications Infrastructure Limited v The Timberyard Plot 2 Nominee No1 Limited and The Timberyard Plot 2 Nominee No2 Limited, examined the legal and professional costs sought by Timberyard following the negotiation and imposition of an MSV agreement permitting Cornerstone, a licensed operator under the Code, to undertake an MSV of the Kingswood Apartments, Grove Street, London.

Decision on costs

While the parties were able to agree on the terms of an MSV agreement following a hearing, they were unable to agree on costs due to the significant and disproportionate sums claimed by Timberyard for the negotiation of the MSV agreement.

Timberyard sought legal and professional costs of £64,759.03, which the tribunal described as "unreasonable," particularly due to Timberyard's failure "over an extended period of time to co-operate and engage fully" with Cornerstone in the negotiation of the MSV agreement.

The FTT declined to award Timberyard the sums claimed and ordered significantly reduced costs, amounting to just 22% of the total sums claimed, totalling only £14,000.

Proportionality and reasonableness

The tribunal echoed the clear warnings already given to site providers in earlier Upper Tribunal and FTT cases, calling for site providers to seriously consider the proportionality and reasonableness of the costs they are seeking and the reasonableness of their engagement in the negotiation of the MSV agreement required.

The tribunal emphasised the importance of conducting the negotiation of MSV agreements within a reasonable budget and engaging productively with operators to avoid frustrating the objectives of the Code. Key points highlighted by the tribunal include:

Proportionality

Parties should consider the proportionality of fee earners tasked with aspects of the negotiation. The tribunal noted that Timberyard's exclusive use of Grade A fee earners throughout the transactional phase, charged at hourly rates exceeding London Band 2 Grade A hourly guidelines, was unreasonable.

Reasonableness

Timberyard exhibited unreasonable behaviour throughout the negotiation of the MSV agreement, including:

• Failing to provide documents despite repeated requests for over a year.
• Failing to participate in negotiations for over five months.
• Raising objections to works that Cornerstone did not want to carry out and did not ask to carry out. 

The tribunal concluded that such behaviour was unreasonable, which was reflected in its award of costs.

Agent's costs 

Despite clear guidance from the FTT and Upper Tribunal in earlier cases, Timberyard sought the costs of appointing a specialist telecommunications agent in this matter. 
The tribunal found no evidence that the specialist telecommunications agent undertook work "over and above what the specialist lawyers could be expected to carry out." Consequently, the tribunal deemed the appointment of such an agent unreasonable, and the costs incurred by the agent were deemed unrecoverable. 

Osborne Clarke comment

This is a welcome decision and another clear victory for operators in the unconstructive-cost battleground which has developed with site providers.

We hope that site providers, their agents and professional advisors will take note of this decision and engage in proportionate, constructive and reasonable negotiations moving forward for Code agreements.

Josephine Endacott, a paralegal at Osborne Clarke, contributed to this Insight.