UK Upper Tribunal dismisses appeal of Covent Garden and rules in favour of Cornerstone

In a recent decision by the Upper Tribunal (Lands Chamber) (UT) concerning the Electronic Communications Code, the appeal pursued by Covent Garden IP Ltd against Cornerstone Telecommunications Infrastructure Ltd was dismissed.

The case, Covent Garden IP Ltd v Cornerstone Telecommunications Infrastructure Ltd, principally concerned whether nominal or more than nominal consideration should be paid to a building owner, in return for allowing an operator access its building to undertake a multi-skilled visit (MSV) and whether expert valuation evidence should be permitted to support a claim for more than nominal consideration.

Appeal background

Cornerstone, a licenced operator under the Code, applied to the First-tier Tribunal (Property Chamber) (FTT) for the rights necessary to carry out an MSV at a high-value commercial property in central London, owned by Covent Garden.

Covent Garden sought permission very late in the MSV reference before the FTT to rely on expert valuation evidence to justify a departure from standard industry and market practice to agree £1 (nominal) consideration for MSV agreements. Such nominal consideration is paid by operators in addition to specific heads of compensation detailed in the relevant MSV agreement for foreseeable inconveniences to the building owner or landowner.

Covent Garden said consideration should be assessed at between £5,000 and £10,000 for the MSV agreement sought lasting only six months, due to the high value status of the building. This position was taken notwithstanding that full Code agreements generally ordered for a period of 10 years and which permit the installation and then use of electronic communication apparatus (ECA) on land and buildings attract consideration of around £1,750 to £4,500 per annum.

The FTT refused permission for Covent Garden to rely on expert evidence and awarded the MSV Agreement for £1 consideration. Covent Garden appealed the decision to the UT.

Nominal £1 consideration upheld

In its judgment dated 30 April, the Upper Tribunal dismissed the appeal and upheld the decision of the FTT to award nominal consideration of £1 for the MSV agreement granted. In doing so, it considered a number of elements including: the limited nature of MSV rights – Cornerstone was permitted only to undertake a survey of the building, it cannot install, keep and/or operate any ECA from the building; the specified elements of compensation payable to Covent Garden under the terms of the MSV agreement granted; the established practice and market standard of nominal consideration; the efficiency, cost-effectiveness and general case management considerations for what ought to be simple agreements; and the discretionary power of the FTT to determine consideration payable without needing to rely on expert evidence.

Tribunal reinforces established practice

The UT's decision to award nominal consideration of £1 aligns with established practice in cases involving interim rights to conduct MSVs under the Code. The established practice is in alignment with the value of the rights granted under MSV agreements, which are slight, transient and have limited impact to owners of land and buildings and, in respect of which specific heads of compensation for foreseeable inconveniences, are already accounted for and paid by operators under the relevant MSV agreements.

Accordingly, the UT's approach (as well as the earlier FTT decision) in this case reinforces the prevailing consensus that nominal consideration is appropriate for MSV agreements and expert valuation evidence is not required, ensuring that the process for securing an MSV agreement remains efficient, proportionate and cost-effective for all parties involved.

The costs outcome

Covent Garden equally sought to appeal the costs order made by the FTT at first instance. This order awarded costs in Cornerstone's favour, with no costs being awarded to Covent Garden which had at that juncture incurred costs of around £50,000. Covent Garden's application for permission to appeal the cost order was refused. Equally, during the appeal hearing, the UT again expressed concern over the sums incurred by parties seeking to frustrate what ought to be simple negotiations of a simple agreement for limited rights over a limited period.

This outcome is yet another helpful example of the UT and FTT's position on costs. Building and other landowners will not invariably be awarded their costs in references for MSV agreements, particularly where the building owners/landowners behaviour has been unreasonable.

Osborne Clarke comment

This is a helpful decision by the UT, reinforcing established practice that nominal consideration is appropriate for MSV agreements under the Code. Equally, it provides clear guidance on costs and emphasises that unnecessarily late applications or applications intended to frustrate the reference will not be enthusiastically received by the FTT or UT.

We hope this decision will further drive the streamlining of references to secure MSV agreements, avoiding all parties incurring unnecessary and disproportionate expense and becoming embroiled in lengthy litigation for what are simple and time limited rights.

Max Sakoschek, a paralegal at Osborne Clarke, contributed to this Insight.