Statement for Money Judgement and Order to Vacate

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					 A Review of Recent
  Developments in

A Review of Recent Developments in
Telecoms Law

1. Regulatory
   Graham Read QC

2. Contractual
   Ben Lynch and Laura McNair-Wilson

3. Electronic Communications Code
   Graham Read QC

Regulatory review

-Start with some basics

-The Common Regulatory Framework (2002)
(Cf. Recital (5) and Article 2(l) of the Framework Directive)

-Primacy of these Directives: s.3(6) and 4 of the
Communications Act 2003

1.   The Framework Directive (2002/21/EC)
2.   The Access Directive (2002/19/EC)
3.   The Authorisation Directive (2002/20/EC)
4.   The Universal Services Directive (2002/22/EC)
5.   Directive 97/66/EC concerning the processing of
     personal data and the protection of privacy in the
     telecommunications sector.

-The CRF implemented in the Communications Act 2003

-Directive 2009/140 EC of the European Parliament and
Council (25 November 2009)
Amends The Framework/Access/ Authorisation Directive

-The Department for Business Innovation and Skills
Consultation 13.9.10 ―Implementing the Revised EU Electronic
Communications Framework‖.

Ofcom –set up under the 2003 Act as the UK’s National
Regulatory Authority -
A series of regulatory tasks/powers which can significantly affect
CPs e.g.
•To conduct Market Reviews Articles 15 and 16 Framework
•To set various conditions: s 45
               ―General‖ (s.46 (2), 51, 52, 57, 58, 64);
               ―universal‖ (s.46(3), 67);
               ―access related‖ (s.46 (6), 73);
               ―privileged supplier‖ (s.46(4), 77);
               ―significant market power [SMP] conditions‖ (s.46
               (7),87- 92 or 93);

•To enforce and if needs be fine in respect of alleged
breaches of conditions (s. 94-103)
•To resolve ―disputes‖ between Communications Providers
(s. 185-191)

Right of appeal to the Competition Appeal Tribunal (s 192-
Appeal shall be decided ―on the merits and by reference to
the grounds of appeal‖: s. 195 (2)

Competition Appeal Tribunal has held Ofcom was seriously
wrong on a number of occasions.
• Modification of a General Condition on number portability
  – Vodafone v Ofcom [2008] CAT 22
• Resolution of disputes between C Ps – see TRD Appeal
  [2008] CAT 12
• Setting of SMP Conditions – see e.g. MTR appeal [2009]
  CAT 11

Vodafone v BT [2010] EWCA Civ 391, [2010] 3 ALL ER
1028: Final act of the MTR appeal process.

Re-emphasised that the Tribunal’s power to overturn an ex
ante SMP conditions was prospective only from the date of
the appeal and could not adjust prices in the period
between the imposition of the SMP condition and the
overturning of those charges

Ofcom concerned about its decisions being overturned so
often ?
1.     Department for Business Innovation and Skills
       Consultation 13.9.10 §54
       “Ofcom consider that the perception of an
       „enhanced‟ appeal right in the UK has resulted in
       regulatory uncertainty in the UK. They also consider
       that the burden of repeated appeals diverts resource
       from performing their statutory duties and impedes
       their ability to make timely, effective decisions in the
       interests of citizens and consumers. …”

Instead proposed instead of an appeal on the merits, there
should be a form of judicial review: §59.

“The Government therefore considers that a narrower form
of review such as an adapted form of Judicial Review can
be sufficiently flexible to take the merits of the case duly
into account. We propose to change section 192 of the
Communications Act 2003 to clarify that it is not the
Government‟s intention to go beyond what is required by
Article 4(1).”

2.       In case law Ofcom has sought to suggest that in any
         event an appeal on the merits is not a full

     E.g. where there are matters of ―economic appreciation‖,
     then the Tribunal should not overturn Ofcom’s decision
     simply because it would prefer an alternative solution.

     Used as a basis for new evidence being introduced after
     Ofcom has reached its decision

Roundly rejected by the Courts:

•See BT v Ofcom [2010] CAT 17

•Court of Appeal hearing listed 1 December 2010.

Likely to be even more important:

•Directive 2009/140 EC of the European Parliament and
Council (25 November 2009) - is amending Article 10 of
the Authorisation Directive.

•When dealing with breaches of conditions, Ofcom to be
empowered to impose ―dissuasive financial penalties where
appropriate which may include periodic penalties having
retrospective effect‖.

Contract update

1. Chartbrook Ltd and another v Persimmon Homes
   Ltd [2009] 1 AC 1101

2. Attorney General of Belize v Belize Telecom [2009]
   UKPC 10; [2009] 1 WLR 1988

3. Mediterranean Salvage & Towage v Seamar Trading
   & Commerce [2009] EWCA Civ 531

Chartbrook Ltd and another v Persimmon
Homes Ltd [2009] 1 AC 1101

•Mistake in document
•Pre-contractual negotiations


•House of Lords – Lord Hoffmann
•        Mistake in document
•        Pre-contractual negotiations
•        Rectification
•Possibly extending orthodox position

•C owner of development land – D developer
•Contract: D obtains planning permission for C's land –
licence from C – construct mixed residential and
commercial development – sell properties on long leases.
•C grants leases at direction of D – D receives proceeds
and pay C an agreed price for land.
•Development built – dispute arose regarding a term of the
contract which provided for an "additional residential
payment", which was a term defined in the contract.

Facts: continued

•Dispute: calculation of amount payable under that term.
•D calculated as £897,051 – C calculated as £4,484,862.
•C sues D for unpaid balance of additional residential
payment which they claimed owed.
•D relied on pre-contractual negotiations documents in
support of construction of term. Alternatively, D
counterclaimed for rectification.
•D loses before Briggs J and before CA.

Facts: continued
•Schedule 6: Price: aggregate of total land value and balancing
payment. Total land value made up of three parts: total
residential land value, total commercial land value and total
residential car parking land value. Other element in price was
balancing payment.
•Balancing payment defined as additional residential payment
("ARP") and then goes on to define the latter expression.
•Definition of ARP, over which the whole dispute turned, was
outwardly uncomplicated:
        "23.4% of the price achieved for each residential unit
        in excess of the minimum guaranteed residential
        unit value less the costs and incentives."

Facts: continued

•C said meaning simple. You take the price achieved,
deduct the MGRUV and the C&I and calculate 23.4% of the
result. Gives you a figure for an individual flat which,
together figures for similar calculations on all other flats,
makes up the ARP or balancing payment. That and the total
land value is the price.
•D said that purpose of dividing price into total land value
and ARP was to give C a minimum price for land, calculated
on current market assumptions, and to allow for possibility
of an increase if market rose and flats sold for more than

Mistake in document
•Investors Compensation Scheme Ltd v West Bromwich
Building Society [1998] 1 WLR 896: "we do not easily
accept that people have made linguistic mistakes,
particularly in formal documents"
•In some cases, context and background drove a court to
the conclusion that "something must have gone wrong with
the language".
•―It is, I am afraid, not unusual that an interpretation which
does not strike one person as sufficiently irrational to justify
a conclusion that there has been a linguistic mistake will
seem commercially absurd to another.‖

Mistake in document: continued

•Labels: seldom arbitrary – usually chosen as a distillation
of the meaning or purpose of a concept intended to be
more precisely stated in the definition.
•C’s construction made structure and language of the
various provisions of schedule 6 appear arbitrary and
irrational, when it is possible for the concepts employed by
the parties (MGRUV, C & I etc) to be combined in a rational
•Answer: You deduct the C&I from the nominal price
achieved and the ARP is the excess, if any, of 23.4% of
that net sum over the MGRUV.

Mistake in document: continued
•When the language used in an instrument gives rise to
difficulties of construction, the process of interpretation does not
require one to formulate some alternative form of words which
approximates as closely as possible to that of the parties. It is to
decide what a reasonable person would have understood the
parties to have meant by using the language which they did.
•East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Brightman LJ
stated the conditions for what he called "correction of mistakes
by construction":
          "Two conditions must be satisfied: first, there must be a
          clear mistake on the face of the instrument; secondly, it
          must be clear what correction ought to be made in order
          to cure the mistake. If those conditions are satisfied, then
          the correction is made as a matter of construction."

Mistake in document: continued
•Two qualifications (as per Carnwath LJ – KPMG LLP v
Network Rail Infrastructure Ltd [2007] Bus LR 1336):
        (1) "correction of mistakes by construction" is not a
        separate branch of the law, a summary version
        of an action for rectification.
        (2) the words "on the face of the instrument"
•All that is required is that it should be clear that something
has gone wrong with the language and that it should be
clear what a reasonable person would have understood the
parties to have meant.

Pre-contractual negotiations
•To allow evidence of pre-contractual negotiations to be used in aid of construction would
therefore require the House to depart from a long and consistent line of authority, the binding
force of which has frequently been acknowledged. However:

           “I do however accept that it would not be inconsistent with the English
           objective theory of contractual interpretation to admit evidence of previous
           communications between the parties as part of the background which may
           throw light upon what they meant by the language they used. The general rule,
           as I said in Bank of Credit and Commerce International SA v Ali [2002] 1 AC
           251, 269, is that there are no conceptual limits to what can properly be
           regarded as background. Prima facie, therefore, the negotiations are
           potentially relevant background. They may be inadmissible simply because
           they are irrelevant to the question which the court has to decide, namely, what
           the parties would reasonably be taken to have meant by the language which
           they finally adopted to express their agreement. For the reasons given by
           Lord Wilberforce, that will usually be the case. But not always. In exceptional
           cases, as Lord Nicholls has forcibly argued, a rule that prior negotiations are
           always inadmissible will prevent the court from giving effect to what a
           reasonable man in the position of the parties would have taken them to have

•―...I would accept that previous negotiations may be relevant.‖

Pre-contractual negotiations: continued
•It therefore follows that while it is true that, as Lord
Wilberforce said, inadmissibility is normally based in
irrelevance, there will be cases in which it can be justified
only on pragmatic grounds. I must consider these grounds:

   (a) create greater uncertainty of outcome in disputes over
       interpretation and add to the cost of advice, litigation or
   (b) practical questions and subjectivity
   (c) continental legal systems

Pre-contractual negotiations: continued

―...there is no clearly established case for departing from the
exclusionary rule. The rule may well mean, as Lord Nicholls has
argued, that parties are sometimes held bound by a contract in
terms which, upon a full investigation of the course of
negotiations, a reasonable observer would not have taken them
to have intended. But a system which sometimes allows this to
happen may be justified in the more general interest of economy
and predictability in obtaining advice and adjudicating disputes.
It is, after all, usually possible to avoid surprises by carefully
reading the documents before signing them and there are the
safety nets of rectification and estoppel by convention.‖

Pre-contractual negotiations: continued
―The rule excludes evidence of what was said or done
during the course of negotiating the agreement for the
purpose of drawing inferences about what the contract
meant. It does not exclude the use of such evidence for
other purposes: for example, to establish that a fact which
may be relevant as background was known to the parties,
or to support a claim for rectification or estoppel. These are
not exceptions to the rule. They operate outside it.‖

•Extending orthodoxy?

•There are two legitimate safety devices which will in most
cases prevent the exclusionary rule from causing injustice.
But they have to be specifically pleaded and clearly
established. One is rectification. The other is estoppel by
•Both of these remedies lie outside the exclusionary rule,
since they start from the premise that, as a matter of
construction, the agreement does not have the meaning for
which the party seeking rectification or raising an estoppel

Rectification: continued
•The requirements for rectification were succinctly
summarized by Peter Gibson LJ in Swainland Builders Ltd
v Freehold Properties Ltd [2002] 2 EGLR 71, 74, para 33:
      ―The party seeking rectification must show that: (1)
      the parties had a common continuing intention,
      whether or not amounting to an agreement, in
      respect of a particular matter in the instrument to be
      rectified; (2) there was an outward expression of
      accord; (3) the intention continued at the time of the
      execution of the instrument sought to be rectified;
      (4) by mistake, the instrument did not reflect that
      common intention.‖

Rectification: continued
•Rectification is also available when there was no binding
antecedent agreement but the parties had a common
continuing intention in respect of a particular matter in the
instrument to be rectified.
•It would be anomalous if the "common continuing
intention" were to be an objective fact if it amounted to an
enforceable contract but a subjective belief if it did not. On
the contrary, the authorities suggest that in both cases the
question is what an objective observer would have thought
the intentions of the parties to be.

Rectification: continued
•―Perhaps the clearest statement‖: Denning LJ in Frederick E Rose
(London) Ltd v William H Pim Jnr & Co Ltd [1953] 2 QB 450, 461:

       ―Rectification is concerned with contracts and documents, not
       with intentions. In order to get rectification it is necessary to
       show that the parties were in complete agreement on the terms
       of their contract, but by an error wrote them down wrongly; and
       in this regard, in order to ascertain the terms of their contract,
       you do not look into the inner minds of the parties—into their
       intentions—any more than you do in the formation of any other
       contract. You look at their outward acts, that is, at what they
       said or wrote to one another in coming to their agreement, and
       then compare it with the document which they have signed. If
       you can predicate with certainty what their contract was, and
       that it is, by a common mistake, wrongly expressed in the
       document, then you rectify the document; but nothing less will

Rectification: continued
•Unless itself a binding contract, the prior consensus is, by
definition, not contained in a document which the parties have
agreed is to be the sole memorial of their agreement. It may be
oral or in writing and, even if the latter, subject to later variation.
In such a case, if I may quote what I said in Carmichael v
National Power plc [1999] 1 WLR 2042, 2050-2051:

"The evidence of a party as to what terms he understood to have
been agreed is some evidence tending to show that those terms,
in an objective sense, were agreed. Of course the tribunal may
reject such evidence and conclude that the party misunderstood
the effect of what was being said and done."

Rectification: continued

―In a case in which the prior consensus was based wholly or in
part on oral exchanges or conduct, such evidence may be
significant. A party may have had a clear understanding of what
was agreed without necessarily being able to remember the
precise conversation or action which gave rise to that belief.
Evidence of subsequent conduct may also have some evidential
value. On the other hand, where the prior consensus is
expressed entirely in writing, (as in George Cohen Sons & Co
Ltd v Docks and Inland Waterways Executive 84 Ll L Rep 97)
such evidence is likely to carry very little weight. But I do not
think that it is inadmissible.‖

Implied Terms: the three classic tests

•Business Efficacy: A term is implied if, without it, the
contract will not work.

•Officious Bystander Test: A term is implied if it is so
obvious that the parties must have intended it to form part
of the agreement.

•Incomplete Contracts: A term is implied where the parties
have failed to fully state the terms of the contract.

Attorney General of Belize v Belize
Telecom [2009] UKPC 10; [2009] 1 WLR
•Case concerned the Articles of Association of Belize
•Under the Articles, the only person with power to remove Government
Appointed Directors was the holder of a special share with 37.5% of
the issued share capital.
•Belize Telecom held the special share and in excess of 37.5% of the
issued share capital and appointed two GADs.
•Subsequently, Belize Telecom lost shares leaving it with less than
•Case was determined by the Privy Council with Lord Hoffman giving

Could the GADs be removed?

•Respondent argued no: without the requisite share capital
the Directors were irremovable until death.
•Appellant argued yes: A term must be implied providing
that a GAD appointed by virtue of a specified shareholding
must vacate office if no such shareholding existed.
•An implied term was required to avoid defeating the
overriding purpose: namely that the composition of the
board reflected shareholder interests.

Ascertaining Intention

•The court has no power to improve upon the instrument
which it is asked to construe.
•It’s task is to identify the intention of the parties i.e. the
meaning which the instrument would convey to a
reasonable person with all the background knowledge
available to those to whom the instrument is addressed:
Investors Compensation Scheme Ltd. West Bromwich
Building Society [1998] 1 WLR, 896
•An implied term only spells out, in express terms, what the
instrument means.

Not a multiple test

The various tests given in earlier authorities should neither
be treated as alternative tests, nor applied cumulatively;

There is always and only one question: Is that what the
instrument, read as a whole against the relevant
background, should reasonably be understood to mean.

Relationship with express terms

•The orthodoxy that an implied term may not contradict an
express term is not an absolute rule. It is subject to the
contextual interpretation of the express term.

•Where the court finds an implied term is necessary to give
effect to the objective intention of the parties, then it may
subvert an express term if evident that the draftsman has
failed to address his mind to the scenario in question.

Mediterranean Salvage & Towage v
Seamar Trading & Commerce [2009]
EWCA Civ 531
•Appellant was a ship owner who’s vessel sustained damage at
the Lebanese port where it was loaded because of a hidden
underwater projection.
•The charterers had been responsible for nominating the
loading berth. It was argued that since the contract made no
provision for a specific loading berth, there was an implied term
that the charterers had a duty to nominate a berth that was safe.
•The charterers argued that the loss lay where it fell and if the
parties had intended it to warrant the safety of the loading berth
they would have made express provision in the contract.


A term will only be implied if it is necessary to give effect to
the contract, not on the basis that it is reasonable.

In this case it was not necessary to imply a term to make
the contract work.

Applying Lord Hoffman’s test of objective intention: the
charterers had not agreed to assume the risk of damage at
the berth arising out of hidden dangers. Therefore the
owners should bear their own loss.

Electronic Communications Code:

•Originally introduced in a series of piecemeal acts from
1863-1916 (especially s 6 of the Telegraph Act 1863 and
s.1 The Telegraph (Construction) Act 1916)
•Telecommunications Code – Schedule 2 (Note § 28 (3) re
previous consents).
•The     ―Electronic    Communications     Code‖:    s106
Communications Act 2003

―The Code is not one of Parliaments better drafting efforts.
In my view it must rank as one of the least coherent and
thought-through pieces of legislation on the statute book.
Even its name is op[en to doubt.‖ Per Lewison J The
Bridgewater Canal Co v GEO Networks [2010] EWHC 548
Ch [2010] 13 EG 82 CS

Nb. Don’t overlook      the Street Works (Charges for
Unreasonably Prolonged Occupation of the Highways)
(England) Regulations 2001: see §23 Transco plc v
Leicestershire CC [2003] EWCA Civ 1524

Two particularly relevant provisions:
•§ 5 of the Code – County Court may impose a wayleave
on a landowner without consent. Links to §7 the terms
upon which the Court can order such a wayleave.
•§ 21 of the Code – once an agreement has come to an
end, landowner may not force a challenged removal
without consent .
―The principle that resort to the County Court should not
readily or routinely be contemplated is in my judgment a
sound one.‖ Per Pill LJ § 11 Phoebe St Ledger-Davey v.
First Secretary of State (Orange) [2004] EWCA Civ 1612.

•§21 provides for Landowner to serve notice and if operator
serves a counter notice within 28 days then need for Court order
•§21(6) of the Code specifically prevents the Court from ordering
the removal of apparatus unless the Court is satisfied that either:-
       (a) The operator is not intending to take any steps to
       secure a right to keep the apparatus on the land or is
       being unreasonably dilatory in the taking of those steps;
       (b) That the taking of those steps by the operator has not
       secured or will not secure the right to keep the apparatus
•Although not explicitly stated, the principal steps by which the
operator can secure a right to keep the apparatus on the land is
under paragraph 5.

§ 5 ―The court shall make an order under this paragraph if, but
only if, it is satisfied that any prejudice caused by the order-
         (a) is capable of being adequately compensated for by
         money; or
         (b) is outweighed by the benefit accruing from the order to
         the person whose              access to an         electronic
         communications         network     or   to   an    electronic
         communications services will be secured by the order;
and in determining the extent of the prejudice, and the weight of
that benefit, the court shall have regard to all the circumstances
and to the principle that no person shall unreasonably be denied
access to an electronics communication network or electronic
communications services.‖

•2 stage test: First can prejudice be compensated by
money – only if not, does the Court weigh the benefit.
•Strong emphasis on ensuring that no person shall be
denied access to a network – almost given equal weight to
all other circumstances.
•Despite the ―if but only if‖ provision, if already telecoms
apparatus there (i.e. a §21 removal situation) it is likely to
be a question merely first stage compensation and not

Deciding the terms under of any wayleave: §§ 5(4) and 7
and in particular compensation.

The Court is charged (emphasis added) to set such terms
―as it appears to the Court would have been fair and
reasonable if the agreement had been given willingly and
subject to the other provisions of the order‖.

Fair and reasonable
―necessarily involves an element of subjective judicial opinion,
for there can be no proof or objective determination of what is
fair and reasonable. To a certain extent the answer must depend
on the judge‟s own perception of what is fair and reasonable.
There is thus a distinction between this case and the more
common category of case where the legislation or the
agreement in question requires a determination of “market
value” or “market rent” or the like; such a determination involves
an objective assessment of a factual matter not involving any
discretion or subjective opinion. ... Following on from that it is in
my judgment clear that what I have to determine is not the same
as what the result in the market would have if the grant had
been given willingly.

Ignore Market value ?

―That is, however, far from saying that the market result is
irrelevant or can afford no guidance. Indeed in my view the
market result is the obvious starting point; and in most cases it
will come to the same thing as what is “fair and reasonable”
because prima facie, it would be neither fair nor reasonable for
the grantor to receive less than he would in the market or for the
grantee to have to pay more than he would in the market. But
there may be circumstances, of which the absence of any real
market may be one, in which the judge could properly conclude
that what the evidence may point to as being the likely market
result is not a result which is “fair and/or reasonable‖.

Mercury Communications v. London & India Dock Investments
Ltd (1993) 69 P&CR 135, HH Judge Hague Q.C.

Further guidance on fair and reasonable ?

―This formulation was no doubt chosen because of the
public interest in enabling ordinary members of the public to
be offered and to obtain new telecommunications services
without individual landowners being able to insist on
perhaps excessive sums, for example because of the need
to use what in some cases amount to no more than ransom

Cabletel Surrey & Hampshire Limited v. Brookwood
Cemetery Limited [2001] EWCA Civ 720, Mance LJ § 7:-

―across-the-board rates, regardless of location, size, use
and importance seem to me the antithesis of the fair and
reasonable rate required to be fixed under the Code.‖
Mance LJ § 20 Cabletel Surrey & Hampshire Limited

But §6 of the Judgement: ―we are not in the circumstances
to be taken as expressing any concluded view on any such

Lewison J The Bridgewater Canal Co v GEO Networks
[2010] EWHC 548 Ch [2010] 13 EG 82 CS
• Unusual, having inserted a conduit pursuant to an
   agreed deed, to see no provision for the insertion of
   extra cables in the vacant duct: cf §4.
• It was under a different part of the Code §12 and 13
   relating to linear obstacles.
• It was under an appeal from an engineer arbitrator –
   who effectively decided that once the nature of the works
   were agreed, there was no power to award
   compensation for the granting of the right to use the
   duct. §6 of the Judgment

Little relevance to compensation under § 7 of the Code ?
•§13 (6)(b) stated ―the consideration mentioned ...... shall
be determined on the basis of what would have been fair
and reasonable if the person who objects to the works had
given his authority willingly for the works to be executed on
the same terms .......‖
•Lewison J used the approach to §7 of the Code as a
reason for overturning the arbitrator’s conclusion: §§ 35-40
of the Judgment
•However, only decided the arbitrator was wrong – not the
level of compensation.

•Article 11 of the Framework Directive prescribes the
process by which Member States allow rights of way to
install facilities on public and private land.
•Some amendment of Article 11 of Directive 2009/140 EC
of the European Parliament and Council (25 November
•Considered §77 and 78 Department for Business
Innovation and Skills Consultation 13.9.10 ―Implementing
the Revised EU Electronic Communications Framework‖.

A Review of Recent Developments in
Telecoms Law

1. Regulatory
   Graham Read QC

2. Contractual
   Ben Lynch and Laura McNair-Wilson

3. Electronic Communications Code
   Graham Read QC


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