4 March 2024
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Electronic Communications Code: First-tier Tribunal provides further guidance on the recoverability of legal costs

To The Point
(3 min read)

In two recent judgments, the First-tier Tribunal (FTT) determined the recoverability of legal costs incurred by landowners in relation to applications for "code rights" brought by Operators under the Electronic Communications Code (Code). In summary, landowners are entitled to recover their legal and professional transaction fees, however these costs must be reasonable. In respect of litigation fees, the usual rule will be that the Operator pays the landowner's reasonable costs. The judgments offer helpful guidance as to how costs arising from the Code will be determined.

The two cases of Cornerstone Telecommunications Infrastructure Limited v Chilton Court Residents Association Limited and Cornerstone Telecommunications Infrastructure Limited v GHS (GP) Limited and GHS (Nominee) Limited (judgments can be found here) both concerned applications by Cornerstone Telecommunications Infrastructure Limited (CTIL) for interim rights to carry out surveys of land to assess its suitability for the installation and operation of electronic communication apparatus, under paragraph 26 of the Code. In each case, the imposition of an agreement permitting surveys to be carried out was not opposed, however a number of terms of the agreement and costs were in dispute.

Paragraph 84 of the Code confirms that the power of the court to order the payment of compensation for loss and damage includes reasonable legal and valuation expenses. There have been several cases which have provided guidance as to how the Tribunal will deal with such costs.

In CTIL v The Mayor and Burgesses of the London Borough of Hackney [2022] UKUT 210 (LC), it was established that landowners should not be left out of pocket and should therefore be entitled to recover the legal and professional fees incurred in negotiating agreements granting code rights. In another previous case, the Tribunal stressed that what constitutes reasonable costs will turn on the individual facts of each specific case.

Litigation costs are determined in accordance with paragraph 96 of the Code which states the Tribunal may make such order as it thinks fit and must have regard to the extent to which any party is successful in the proceedings. The Tribunal's approach was summarised in EE Limited and Hutchison 3G UK Limited v HSBC Bank Plc [2022] UKUT 174 (LC) as follows:

"Where parties have not agreed that there should be no order for costs, the Tribunal’s usual order in such cases is that the operator should pay the landowner’s costs… The costs incurred by a landowner in a reference made necessary because an operator wishes to have a Code right to undertake a survey ought not in principle to fall on the landowner."

CTIL v Chilton Court Residents Association Limited

In line with the previous authorities, the FTT accepted that the landowner was entitled to recover its reasonable transaction costs in full and this required the Tribunal (i) to identify what constitutes transaction costs and (ii) to determine whether those transaction costs were reasonable.

In respect of (i), the FTT found that some costs were not transaction costs and in respect of (ii), the FTT found that the landowner had made no attempt to establish the reasonableness of the costs claimed. In light of this and the landowner having "…demonstrated almost no willingness to compromise but persisted in pursuing matters that were pointless and/or pedantic and/or unsupported by authority…" the FTT ordered CTIL to pay the landowner's transaction costs in the sum of £15,000, reduced from £61,449.47. The parties were to make submissions on litigation costs at a later date.

CTIL v GHS (GP) Limited and GHS (Nominee) Limited

On the particular facts of this case, the FTT did not consider the legal costs claimed to be reasonable. The FTT accepted that the landowner was entitled to satisfy itself that its interests were protected, especially in light of the high value of the development in question, but noted that "…excessive fact-finding and investigatory work was carried out on issues that were not issues at all … others were disproportionate to the concerns identified…"

The Tribunal reduced the landowner's transaction costs from £40,977.18 to £15,000. In respect of litigation fees, the FTT ordered that the Operator pay the landowner £6,750, reduced from £23,668.62.  

Whilst these two judgments are not binding, given that from April 2024 all proceedings brought under the Code must be issued in the FTT, they do offer general guidance to both landowners and Operators as to how costs incurred as a result of the Code will be dealt with.

Next steps

If you have a query relating to the Electronic Communications Code that you would like to discuss, please get in touch with one of our specialists.

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