Judgment handed down in first Code valuation case

Commercial web

The Upper Tribunal (Lands Chamber) has given judgment in (1) EE Limited (2) Hutchison 3G UK Limited v The London Borough of Islington [2019] UKUT 0053 (LC), the first case on valuation under the new Electronic Communications Code. The case has been eagerly anticipated as it has constituted the Upper Tribunal’s first opportunity to give guidance on questions of valuation, and in relation to whether a lease may be imposed on site owners. The judgment included the following conclusions:

  • The Tribunal does have jurisdiction to impose a lease on the site owner, rather than merely an agreement conferring purely contractual rights, although the right to keep equipment installed on land does not of necessity have to involve the grant of exclusive possession;
  • In imposing a lease in this case, the Tribunal expressly made no finding as to the appropriate terms of the agreement, the Respondent having been debarred from contesting the appropriate agreement terms;
  • When the Tribunal makes an order imposing an agreement, that agreement takes effect without the parties then needing to execute it;
  • The Tribunal preferred to use the expression "no-network assumption" to describe the mandated valuation assumption at para 24(3)(a) of the Code, in preference to the term "no scheme", which was considered to bring with it baggage from the world of compulsory purchase;
  • Where the hypothetical "willing bidder" is the only likely bidder, that neither means that the consideration must be nominal, nor must be other than nominal;
  • No assistance was to be gained from transactions carried out under the old Code, as this would be contrary to the "no-network assumption";
  • In the circumstances of the case, there would be no real world market for the relevant rights, and the appropriate consideration for the rights themselves would therefore be nominal;
  • As the terms of the agreement did not expressly include a service charge, the hypothetical parties would agree a rent which took that into account. The quantum would not be calculated by reference to the number of likely visits to the premises by the operator, as the majority of heads of landlord expenditure were not dependent on such visits;
  • Taking into account a service charge, the appropriate consideration in this case was £1,000 per annum, but the site provider had agreed to pay £2,551.77 in its pleaded case, and that sum would be included in the agreement;
  • The Tribunal’s power to award compensation is not discretionary. The Tribunal further inclined to the view that the para 25(1) power to award compensation is freestanding, and therefore that one does not need to fall within para 84(2) in order to qualify for compensation. However, they declined to decide that latter point conclusively on this occasion;
  • In principle, the loss of ability to use land in a certain way was capable of causing a diminution in the value to land and thus of falling within paragraph 84(2)(b) of the Code, although this would not include any share in the share in the economic value created by the operator’s network which has been denied to the site provider in the assessment of consideration;
  • A site provider has a right to make a future application for compensation under para 25(2)(b) of the Code. Its right to seek compensation is not limited to the proceedings in which a para 20 agreement is imposed.
Click here for a copy of the judgment. Jonathan Wills represented the site provider, the London Borough of Islington.

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