Bridgewater Canal Company Ltd v Geo Networks Ltd

The Code first saw the light of day in Schedule 2 to the Telecommunications Act 1984 and has since been amended by the Communications Act 2003. It enables operators of communications networks to acquire rights to install and maintain equipment on other people’s land. An overview of the Code is necessary before going on to discuss the detail. Many of the relevant provisions of the Code are set out in the Appendix to this judgment, so I merely summarise the salient provisions at this stage. The Code is not one of Parliament’s 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 open to doubt. Although section 106 of the Communications Act 2003 says that the code set out in Schedule 2 to the Telecommunications Act 1984 is referred to as “the electronic communications code” in “this Chapter”, the amendments made by the 2003 Act did not include changing the title to Schedule 2, so that in Schedule 2 itself it is still called “The Telecommunications Code”. I have simply called it the Code.

In the ordinary case an operator of a network requires the agreement of an occupier of land in order to exercise rights under the Code. These rights include the right to execute works connected with the installation maintenance adjustment repair or alteration of apparatus; the keeping of apparatus on under or over the land; or the entry on to the land to inspect apparatus (§ 2 (1)). The occupier’s consent is needed before any of these rights can be exercised; and is needed for all of them. Normally a consent given by the occupier of land who is neither the freeholder nor a lessee will only bind the freeholder or lessee if they agree to be bound. If an operator requires an occupier to agree that any of these rights should be conferred on an operator, he may give notice to that effect (§ 5 (1)). Such a notice may also be given if the operator wants consent given by an occupier to bind holders of other interests in the land. If no agreement has been given after 28 days, the operator can apply to the court for an order conferring the proposed right (§ 5 (2)). On such an application the court must make an order in the operator’s favour; but only if one of two conditions is satisfied. The first is that any prejudice caused by the order is capable of being compensated by money. The second is that any such prejudice is outweighed by the benefit accruing from the order (§ 5 (3)). In exercising this power the court must have regard to the principle that no person should unreasonably be denied access to an electronic communications network (§ 5 (3)). This principle recurs in the Code and is clearly one to which Parliament attached considerable importance. The terms of an order must include terms and conditions to ensure that the least possible loss and damage is caused by the exercise of the right (§ 5 (5)). In addition the order must include financial terms. The financial terms that the order must include are:

The payments may be periodical and the court may require their amount to be determined by arbitration (§ 7 (4)). The court may also determine the persons to whom payments must be made.

Where an operator exercises a right under the Code he may be liable to pay compensation for injurious affection to neighbouring land. This is assessed in the same way as compensation for injurious affection under section 10 of the Compulsory Purchase Act 1965 (§ 16). I note, in passing, that it is not easy to see how “neighbouring land” is defined in a case where all that the operator wants to do is to run a cable through an existing duct.

The Code also contains restrictions on a person’s ability to require the removal of apparatus. Where apparatus is kept installed in over or under land, a person with an interest in the land may give the operator notice requiring the alteration of the apparatus. He may do this “notwithstanding the terms of any agreement binding” him (§ 20 (1)). Alteration of the apparatus includes its removal (§ 1 (2)). However, notice may only be given on the ground that the alteration is necessary to enable the carrying out of an improvement (which includes redevelopment and change of use) (§ 20 (1), (9)). The operator may give a counter-notice within 28 days. If he does, then the alteration will only be made if the court orders it to be made (§ 20 (2)). The Code circumscribes the court’s power to make such an order. First the court must be satisfied that the alteration is necessary for the carrying out of the improvement. Second, it must be satisfied that the alteration will not substantially interfere with any service which is or is likely to be provided by the operator’s network (§ 20 (4)). Third, the court must be satisfied that the operator already has all the rights needed to make the alteration, or could obtain them on an application made to the court (§ 20 (5)). If the court makes an order, the operator is entitled to reimbursement of his expenses of compliance with the order (§ 20 (8)); but is not otherwise entitled to compensation.

Where a person is entitled to require the removal of apparatus he must first serve notice on the operator. The operator may then serve a counter-notice within 28 days. The counter-notice may either contest the alleged right to require removal or may specify steps which the operator will take in order to acquire a right to keep the apparatus on the land (§ 21). In other words, the operator may apply to the court for an order conferring the right to keep the apparatus. Once a counter-notice has been served, the apparatus can only be removed under a court order (§ 21 (5)).

I shall call these provisions (and in particular the provisions of paragraphs 2 to 7) “the general regime”.

Running alongside the general regime are a number of special regimes. They are dealt with by paragraphs 9 to 12, which are expressly excluded from the general regime (§ 2 (9)). Thus, for example, an operator has the right to install apparatus over, under, along or across a publicly maintainable highway without going through the process of seeking agreement or going to court (§ 9). The highway authority has no right under the Code to object to the works. If an operator exercises this right, he is not required to pay compensation to the highway authority; although a charge may be payable under the New Roads and Street Works Act 1991. By contrast in the case of a private street he must go through the general regime (§ 9 (2)).

An operator may fly lines over land if the lines connect apparatus on adjacent or neighbouring land (§ 10). He may do this without giving notice to anybody; but the owner or occupier of the land over which the line flies or land in the vicinity which is prejudiced by the installation may object within three months (§ 17). The court will then decide the merits of any objection.

An operator also has the right to install apparatus on or under tidal waters or land (§ 11). If the land is one in which there is a Crown interest, he must obtain the consent of the Crown (§§ 11 (2), 26). The court does not have power to dispense with the Crown’s consent. Land covered by tidal waters will normally be owned by the Crown, but this is not invariable. There may have been an ancient grant; or title to the bed of a tidal river may have been acquired by adverse possession. If the land is not owned by the Crown then it seems that no consent is needed. However, before executing any works, the operator must submit a plan of the proposed works to the Secretary of State who may approve it with or without modifications. The operator need not notify anyone else. The Secretary of State must consult authorities exercising functions in relation to the tidal water or lands in question (§ 11 (5)). He has no obligation to consult (or even notify) riparian owners. But he must not approve a plan unless he is satisfied that adequate arrangements have been made for compensating owners of interests in the land in question for loss or damage sustained in consequence of the execution of the works (§ 11 (6)). These provisions will be replaced in due course by the regime to be established by Part 4 of the Marine and Coastal Access Act 2009 under which the functions of the Secretary of State will be taken over by licensing authorities.

Paragraphs 12 to 14 deal with linear obstacles. They are at the heart of this appeal and I will need to consider them in detail. For the moment I pass over them.

Special provisions apply to undertakers’ works. An undertaker is a person authorised by Act of Parliament to carry on any railway, tramway, road transport, water transport, canal, inland navigation, dock, harbour, pier or lighthouse undertaking (§ 23 (10)). If an undertaker wants to execute works which are likely to involve a temporary or permanent alteration to an operator’s apparatus it must give notice to the operator (§ 23 (2)). The operator may give counter-notice either agreeing to carry out the work itself, or requiring the undertaker to carry out the work under the supervision of and to the satisfaction of the undertaker (§ 23 (4)). In either case the undertaker must pay the operator compensation for loss and damage suffered in consequence of the alteration (§ 23 (5), (6)). The operator has no right to object to the works; and there is no provision for arbitration or application to the court for the resolution of any dispute about the nature of the works. However, the compensation is recoverable by action.

I come now to the particular provisions that deal with linear obstacles. I must quote them in full:

“Linear obstacles

12 (1) Subject to the following provisions of this code, the operator shall, for the statutory purposes, have the right in order to cross any relevant land with a line, to install and keep the line and other electronic communications apparatus on, under or over that land and—

(a)

to execute any works on that land for or in connection with the installation, maintenance, adjustment, repair or alteration of that line or the other electronic communications apparatus; and

(b)

to enter on that land to inspect the line or the other apparatus.

(2)

A line installed in pursuance of any right conferred by this paragraph need not cross the relevant land in question by a direct route or by the shortest route from the point at which the line enters that land, but it shall not cross that land by any route which, in the horizontal plane, exceeds the said shortest route by more than 400 metres.

(3)

Electronic communications apparatus shall not be installed in pursuance of any right conferred by this paragraph in any position on the relevant land in which it interferes with traffic on the railway, canal or tramway on that land.

(4)

The operator shall not execute any works on any land in pursuance of any right conferred by this paragraph unless—

(a)

he has given the person with control of the land 28 days' notice of his intention to do so; or

(b)

the works are emergency works.

(5)

A notice under sub-paragraph (4) above shall contain a plan and section of the proposed works or (in lieu of a plan and section) any description of the proposed works (whether or not in the form of a diagram) which the person with control of the land has agreed to accept for the purposes of this sub-paragraph.

(6)

If, at any time before a notice under sub-paragraph (4) above expires, the person with control of the land gives the operator notice of objection to the works, the operator shall be entitled to execute the works only—

(a)

if, within the period of 28 days beginning with the giving of the notice of objection, neither the operator nor that person has given notice to the other requiring him to agree to an arbitrator to whom the objection may be referred under paragraph 13 below; or

(b)

in accordance with an award made on such a reference; or

(c)

to the extent that the works have at any time become emergency works.

(7)

If the operator exercises any power conferred by this paragraph to execute emergency works on any land, he shall, as soon as reasonably practicable after commencing those works, give the person with control of the land a notice identifying the works and containing—

(a)

a statement of the reason why the works are emergency works; and

(b)

either the matters which would be required to be contained in a notice under sub-paragraph (4) above with respect to those works or, as the case may require, a reference to an earlier notice under that sub-paragraph with respect to those works.

(8)

If within the period of 28 days beginning with the giving of a notice under sub-paragraph (7) above the person to whom that notice was given gives a notice to the operator requiring him to pay compensation, the operator shall be liable to pay that person compensation in respect of loss or damage sustained in consequence of the carrying out of the emergency works in question; and any question as to the amount of that compensation shall, in default of agreement, be referred to arbitration under paragraph 13 below.

(9)

If the operator commences the execution of any works in contravention of any provision of this paragraph, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(10)

In this paragraph “relevant land” means land which is used wholly or mainly either as a railway, canal or tramway or in connection with a railway, canal or tramway on that land, and a reference to the person with control of any such land is a reference to the person carrying on the railway, canal or tramway undertaking in question.

Arbitration in relation to linear obstacles

13 (1) Any objection or question which, in accordance with paragraph 12 above, is referred to arbitration under this paragraph shall be referred to the arbitration of a single arbitrator appointed by agreement between the parties concerned or, in default of agreement, by the President of the Institution of Civil Engineers.

(2)

Where an objection under paragraph 12 above is referred to arbitration under this paragraph the arbitrator shall have the power—

(a)

to require the operator to submit to the arbitrator a plan and section in such form as the arbitrator may think requisite for those purposes;

(b)

to require the observations on any such plan or section of the person who objects to the works to be submitted to the arbitrator in such form as the arbitrator may think requisite for those purposes;

(c)

to direct the operator or that person to furnish him with such information and to comply with such other requirements as the arbitrator may think requisite for those purposes;

(d)

to make an award requiring modifications to the proposed works and specifying the terms on which and the conditions subject to which the works may be executed; and

(e)

to award such sum as the arbitrator may determine in respect of one or both of the following matters, that is to say—

(i)

compensation to the person who objects to the works in respect of loss or damage sustained by that person in consequence of the carrying out of the works, and

(ii)

consideration payable to that person for the right to carry out the works.

(3)

Where a question as to compensation in respect of emergency works is referred to arbitration under this paragraph, the arbitrator—

(a)

shall have the power to direct the operator or the person who requires the payment of compensation to furnish him with such information and to comply with such other requirements as the arbitrator may think requisite for the purposes of the arbitration; and

(b)

shall award to the person requiring the payment of compensation such sum (if any) as the arbitrator may determine in respect of the loss or damage sustained by that person in consequence of the carrying out of the emergency works in question.

(4)

The arbitrator may treat compliance with any requirement made in pursuance of sub-paragraph (2)(a) to (c) or (3)(a) above as a condition of his making an award.

(5)

In determining what award to make on a reference under this paragraph, the arbitrator shall have regard to all the circumstances and to the principle that no person should unreasonably be denied access to an electronic communications network or to electronic communications services.

(6)

For the purposes of the making of an award under this paragraph—

(a)

the references in sub-paragraphs (2)(e) and (3)(b) above to loss shall, in relation to a person carrying on a railway, canal or tramway undertaking, include references to any increase in the expenses of carrying on that undertaking; and

(b)

the consideration mentioned in sub-paragraph (2)(e) above 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 and subject to the same conditions (if any) as are contained in the award.

(7)

In the application of this paragraph to Scotland, the reference to an arbitrator shall have effect as a reference to an arbiter and the arbiter may and, if so directed by the Court of Session, shall state a case for the decision of that Court on any question of law arising in the arbitration.

Alteration of apparatus crossing a linear obstacle

14 (1) Without prejudice to the following provisions of this code, the person with control of any relevant land may, on the ground that any electronic communications apparatus kept installed on, under or over that land for the purposes of the operator’s network interferes, or is likely to interfere, with—

(a)

the carrying on of the railway, canal or tramway undertaking carried on by that person, or

(b)

anything done or to be done for the purposes of that undertaking,

give notice to the operator requiring him to alter that apparatus.

(2)

The operator shall within a reasonable time and to the reasonable satisfaction of the person giving the notice comply with a notice under sub-paragraph (1) above unless before the expiration of the period of 28 days beginning with the giving of the notice he gives a counter-notice to the person with control of the land in question specifying the respects in which he is not prepared to comply with the original notice.

(3)

Where a counter-notice has been given under sub-paragraph (2) above the operator shall not be required to comply with the original notice but the person with control of the relevant land may apply to the court for an order requiring the alteration of any electronic communications apparatus to which the notice relates.

(4)

The court shall not make an order under this paragraph unless it is satisfied that the order is necessary on one of the grounds mentioned in sub-paragraph (1) above and in determining whether to make such an order the court shall also have regard to all the circumstances and to the principle that no person should unreasonably be denied access to an electronic communications network or to electronic communications services.

(5)

An order under this paragraph may take such form and be on such terms as the court thinks fit and may impose such conditions and may contain such directions to the operator or the person with control of the land in question as the court thinks necessary for resolving any difference between the operator and that person and for protecting their respective interests.

(6)

In this paragraph references to relevant land and to the person with control of such land have the same meaning as in paragraph 12 above.”

The dispute between the parties turns on the scope of paragraph 13 (2)(e)(ii). Is the consideration to which it refers consideration only for the right to carry out the works (as Geo contends and the arbitrator found); or is it consideration both for the right to carry out the works and also for the right to retain the works on the land once the works themselves have been completed (as Bridgewater Canal Co contends)? Before attempting to answer that question I have some general observations on this regime.

First, whereas notice under the general regime must be given to the occupier of land, notice under paragraph 12 must be given to the “person with control of the land”. This is the person who carries on the railway, canal or tramway undertaking. The focus, therefore, is on the undertaking rather than land ownership. Second, the rights specified in paragraph 12 (1) are given “in order to cross” the canal, railway or tramway. To this extent they are unlike the rights given in relation to highways under paragraph 10, where the right includes a right to install apparatus “along or across” the highway. So whereas paragraph 10 would enable an operator to lay a cable along the length of the Great West Road, paragraph 12 does not enable him to lay a cable along the Great Western Railway. This is reinforced by paragraph 12 (2) which prevents deviation from the shortest crossing point by more than 400 metres. If an operator wants to lay a cable along the length of a canal, railway or tramway he must go through the general regime. Thus in my judgment the arbitrator was wrong when he said that the regime applicable to canal undertakers was similar to that applicable to highway authorities. Third, on one view paragraph 12 (1) appears to confer on an operator (at least) three rights (although the paragraph does not set them out in precisely this way):

However, on another view paragraph 12 (1) confers on the operator only one compendious right since paragraph 12 (1) speaks only of “the right” (singular) to do the various things, and sub-paragraphs (a) and (b) simply spell out in more detail what “the right” consists of. Fourth, whereas the right to install and keep apparatus is a right to install and keep it “on, under or over” the relevant land, the right to carry out works is a right to carry them out “on” (not “under or over”) the land. Yet the two parts must surely have been intended to be co-extensive. The word “works” is not defined. In the present case, as noted, it seems that the new fibre optic cable is to be propelled from the highway though the underground duct by compressed air. Nevertheless it is common ground that this constitutes the carrying out of “works” “on” the land. Fifth, on one view the assumption underlying paragraph 12 (and it may be more than an assumption) is that the rights of which it speaks are rights conferred by the statute itself. Paragraph 12 (1) starts with the words “Subject to the following provisions of this code, the operator shall have the right…”. Paragraph 12 (4) prohibits the execution of works on land in pursuance of “any right conferred by this paragraph”. This contrasts with the general regime under which, absent agreement, the operator must apply to the court for “an order conferring the proposed right” (§ 5 (2)). On the other hand, paragraph 13 (2) (e) (ii) speaks of the payment of “consideration payable … for the right”, which is an odd phrase if the operator already has the right for which he is being asked to pay. Sixth, paragraph 12 (4) places restrictions on the exercise of those rights. But the restrictions are limited. In the first place they only restrict the execution of works. The right (for example) to enter the land to inspect apparatus is unrestricted. In the second place, if the works are emergency works, the restrictions do not apply. The operator has an unrestricted right to carry out emergency works.

Seventh, paragraph 12 envisages the service of notices by the operator in two cases. The first is where the operator wishes to carry out works which are not emergency works. This kind of notice must be served before the works are carried out (§ 12 (4)). The second is where the operator has already exercised his right to carry out emergency works. This kind of notice must be served as soon as reasonably practicable after starting the works (§ 12 (7). In either case the notice must contain a plan and section of the works or a description of the works (§§ 12 (5), (7) (b)). In neither case is the operator required to tell the recipient what financial proposals he has for compensating or otherwise paying him. Mr Elvin relied on this as an indication that the right to object was limited to technical engineering grounds; and could not extend to objections on financial grounds. In the case of a notice given under paragraph 12 (4), the recipient of the notice may either do nothing or he may object to “the works”. If he does nothing, then the operator may go ahead after 28 days and need not pay anything. If he objects to “the works” then he may require the objection to be referred to arbitration (§ 12 (6) (a)). The only requirement for payment by the operator is a requirement imposed by an arbitrator under paragraph 13 (2)(e). Accordingly, it follows that if the undertaker has no objection to the works as works but there is a dispute about the compensation that should be paid, the undertaker’s only recourse is to object to “the works”; because that is the only way in which he can require a reference to arbitration. Mr Elvin said that it would be a “curious” intention to attribute to Parliament to require an undertaker to make a nominal objection to the works, in order to prompt an arbitration, when he had no real concern with the works, but wanted compensation for the retention of the line. Curious or not, that is precisely what Parliament has said. If the undertaker wants any compensation for anything (even if he only wants compensation for loss caused by the process of carrying out the works), he must object to the works themselves. Mr Elvin did, I think, agree that this was so in the course of his reply. Thus it seems to me that reliance on the fact that the notice need not tell the undertaker what financial proposals for compensation the operator has does not advance Mr Elvin’s case. Moreover, if the objection is referred to arbitration, the arbitrator has power to require either party to furnish him with such information as the arbitrator may think requisite “for those purposes” (§ 13 (2)(c)). The expression “those purposes” has not been defined; but in context it must, I think, mean “for the purposes of the arbitration on the objection”. Since the arbitrator has power to award a money payment on one basis or another (whichever side is right) it seems to me that this power must include power to require the provision of information relevant to the amount of the money payment.

By contrast, if the operator begins to carry out emergency works, in consequence of which he gives notice under paragraph 12 (7), the only “question” that the undertaker can refer to arbitration is the question of compensation (§ 12 (8)). He cannot object to the works, even if they have not been completed. It may be that he would be able to require the operator to alter the apparatus by serving notice under paragraph 14; but any dispute under that paragraph is referred to the court, rather than to arbitration (§ 14 (3)). So the two questions must be considered by different tribunals. If there are reasons for this labyrinthine procedure, they are buried deep.

Paragraph 13 deals with the arbitration. It is supplemented by Part I of the Arbitration Act 1996, which applies to statutory arbitrations: Arbitration Act 1996 s. 94. The arbitrator is to be a single arbitrator. He is to be chosen by the parties themselves; but if they cannot agree he is to be chosen by the President of the Institution of Civil Engineers (§ 13 (1)). Mr Elvin (and the arbitrator himself) placed some reliance on this. The argument is that if the person who chooses the arbitrator is the President of the Institution of Civil Engineers, then that indicates that the dispute must be limited to technical engineering matters. There might be some force in the point if the Code said that the arbitrator was to be a civil engineer; but it does not. All it says is that, if the parties cannot agree, the person who chooses the arbitrator is a civil engineer. Many statutory arbitrators are appointed by the Lord Chancellor, but that does not mean that they must be politicians. I do not think that this point carries any real weight.

Paragraph 13 (2) deals with an arbitration arising out of an objection to works. It gives the arbitrator a number of express powers. These include the power to require “modifications” to the works. It does not give him the express power to uphold the objection in its entirety. Does he have such a power as a necessary implication? Mr Elvin says “No”. Mr Small says “Yes”. It is lamentable that the drafting does not make this clear.

Paragraph 12 (3) prohibits the installation of apparatus which interferes with traffic on the railway or canal. Suppose that the operator gives notice of works and the undertaker objects on the ground that the apparatus once installed will interfere with traffic. What is the arbitrator to do? Mr Elvin says that this goes to his jurisdiction; and he must either leave the parties to fight it out in court or, perhaps, rule on his own jurisdiction (as he would be entitled to do under section 30 of the Arbitration Act 1996). Mr Small says that the arbitrator should simply enter on the reference and uphold the objection. Leaving the parties to fight it out in court is, to my mind a very unsatisfactory conclusion and one which no rational legislator can have intended. Treating it as a matter going to the arbitrator’s jurisdiction rather than to the substance of the dispute is possible, but to my mind artificial. It would mean that instead of the arbitrator saying to the operator “You cannot carry out your intended works because they would contravene paragraph 12 (3)” he would have to say “I cannot rule on the notice of objection because the works to which you object would contravene paragraph 12 (3)”. In substance, surely, that is a ruling on the objection. In addition this conclusion would involve the arbitrator looking at the long-term consequences of carrying out the works (i.e. “whether” they should be carried out and not just “how”). It is therefore inconsistent with what the arbitrator actually decided. Or suppose that the operator gives notice of works and the undertaker objects that the ground conditions are unsuitable. Paragraph 12 (2) prohibits deviation from the shortest crossing route by more than 400 metres. What happens if the arbitrator decides that ground conditions are such that it is not possible to cross the railway or canal without deviating by more than 400 metres from the shortest route? Instinctively I would have thought that the arbitrator would uphold the objection. It would again be very artificial to regard this as being a jurisdictional challenge. Or suppose that the undertaker give notice of works to install a line crossing the station car park and the undertaker objects to the works on the ground that he is on the point of building a new ticket office on the land. Mr Elvin says that the arbitrator cannot uphold the objection; but that the undertaker’s remedy lies in invoking paragraph 14 or paragraph 23 once the works have been completed. This cumbersome procedure seems to me to be a waste of economic resources. It would be far more sensible for the objection to be upheld. As an alternative Mr Elvin said that the arbitrator could require modifications to the works. These could be spatial modifications (e.g. to overcome any difficulty over ground conditions) or temporal modifications (e.g. to provide for the removal of apparatus when the new ticket office is begun). Modifications on this scale are difficult to separate from a denial of the claimed right altogether. Moreover, temporal modification in the way that Mr Elvin suggests is not a modification of the right to carry out works (which is what the notice of objection relates to) but the right to keep the apparatus on the land once the works have been completed. Yet the foundation of Geo’s argument is that the latter right is unrestricted and none of the arbitrator’s concern. To my mind Mr Elvin’s alternative argument is again inconsistent with his primary point. It is also contrary to the arbitrator’s conclusion that what happened after the works had been carried out was nothing to do with him. This leads me to view it with considerable scepticism. Either the primary argument is wrong, or the statutory scheme is even more incoherent than appears at first sight.

What is referred to arbitration is an “objection”. The only objection that can be referred is an objection “to the works”. Thus the dispute between the parties is a dispute about the works and such a dispute can be a dispute about whether the works should be carried out at all. That is the subject matter of the reference. The first principle of arbitration is that its object is to obtain the fair resolution of disputes by an impartial tribunal: Arbitration Act 1986 s. 1. If the undertaker objects to the works in principle (as paragraph 12 (6) appears to entitle him to do) it hardly seems a fair resolution of the dispute to tell him that his objection cannot under any circumstances be upheld. In making his decision the arbitrator is required to have regard to all the circumstances. He must also have regard to the principle that “no person shall unreasonably be denied access to” a network. The formulation of the principle gives a further clue. It is not that no person shall be denied access to a network. It is that no person shall unreasonably be denied access. Necessarily, as it seems to me, formulating the principle in this way entails the conclusion that there may be circumstances in which it is reasonable to deny such access. If so, then there may be circumstances in which the operator is denied the right to cross the linear obstacle. In my judgment, therefore, it is implicit in the reference of the objection to arbitration that the arbitrator has power to uphold the objection in its entirety.

The foundation of the arbitrator’s reasoning was that since he had no power to uphold an objection in principle to the works, it must follow that he had no power to award consideration for the right to retain the works once they had been carried out. I respectfully disagree with the first step in this reasoning. But that does not necessarily answer the question. It is still necessary to ask: what must Geo pay for?

Mr Elvin says that Geo need pay only for “the right to carry out the works”. This is limited to the actual process of installing the apparatus. The right to keep the apparatus once it has been installed has already been granted by the Code as a statutory “buy one get one free”. There are three main strands to the argument. The first is a policy strand looking at the balance of competing public interests. The second is a comparative strand analysing the differences between this special regime, other special regimes and the general regime. The third is a linguistic strand arising out of paragraphs 12 to 14.

Mr Elvin says, and Mr Small does not dispute, that persons who carry on canal, railway and tramway undertakings do so in the public interest as well as for private profit. Their undertakings are part of the national infrastructure. It is also common ground that code operators providing electronic communications networks also do so in the public interest as well as for private profit. Mr Elvin says that for this reason the Code balances competing public interests. That is what distinguishes the special regimes from the general regime. As originally advanced (Skeleton Argument § 71) the argument was that the checks and balances in the Code where the person in control is discharging a public function by providing infrastructure are different from those where ordinary landowners and occupiers are involved. The Code has been drafted on an assumption that land used for public benefit is to be used in ways which are for the ultimate public benefit, not so that owners of canal undertakings can make significant profits from operators of electronic communications networks. One indication of this is the special rights given to statutory undertakers under paragraph 23 to require the operator to alter or remove apparatus.

In my judgment, however, the simple dichotomy between “public” and “private” cannot be sustained. On the one hand, there are special regimes applicable to some parts of public infrastructure where the operator pays nothing. Under paragraph 9 of the Code the operator may run a line along the entire length of a public highway without any payment under the Code. On the other hand, as regards some parts of public infrastructure the operator must make an application under the general regime. For example an undertaker who carries on a dock undertaking has the rights given by paragraph 23; but if an operator wants to acquire rights to place apparatus on the dockside he must apply to court under the general regime. An order of the court under the general regime will require the operator to pay as much for that right as the operator would have to pay a private landowner. Then there are hybrid regimes. If the operator wants to place apparatus in tidal waters (which may of course be immediately adjacent to a dock) he must apply to the Secretary of State under paragraph 11 of the Code. The dock undertaking or port authority is entitled to be consulted, but it is the Secretary of State who decides. The Secretary of State must be satisfied that arrangements have been made for paying compensation. There are, however, two points to note about compensation payable under this regime. First, it is payable to persons who are owners of interests in the tidal waters or lands in question: not to those exercising statutory functions (although they may of course be the same persons). Second, the compensation is for loss and damage sustained by those persons in consequence of the execution of the works. There is no requirement to pay “consideration” for anything.

Railway, canal and tramway undertakers have a different hybrid regime. As Mr Elvin accepted, if an operator wants to run a line along (rather than across) a canal or railway, he must apply under the general regime for a court order conferring that right. As in the case of a dock undertaking, an order of the court will require the operator to pay as much for that right as the operator would have to pay a private landowner. In such a case the canal or railway undertaker will still have whatever rights are available under paragraph 23; and, for that matter, the additional rights under paragraph 14. The same would apply if an operator wanted to put a mobile phone mast on top of Paddington Station. If, on the other hand, he wants to run a line across a canal or railway, he can resort to paragraph 12. Rights under paragraphs 14 and 23 are available in such a case also. They are a constant in each case. In addition there are many public authorities who are not within any special regime at all. Local authorities, central government, police forces and the NHS all spring readily to mind. If an operator wishes to place apparatus on land belonging to these bodies, the general regime applies. Thus the simple public/private dichotomy cannot in my judgment explain this wide variety in regimes. Nor is it possible to discern clear policy choices which lead to the differences in treatment as between different persons exercising public functions.

Mr Elvin then submitted that different considerations applied to linear obstacles. Although a linear obstacle may not be particularly wide, it may be literally hundreds of miles long, which could force an operator unable to reach terms with the relevant person with control of it to have to re-route his cables significantly, or be unable to provide his communications network. The statutory provisions are a means of overcoming obvious ransom strip issues in the public interest of providing communications infrastructure. Obvious examples include canals and railway lines which may provide many miles of linear obstacle which it would often be difficult for an operator to avoid (Skeleton Argument § 25). I agree that one of the statutory purposes is to overcome “ransom strip issues” in the interests of providing communications infrastructure. But that begs the question whether ransom strip issues arise if Bridgewater Canal Co’s construction is correct. I shall return to this in due course when I have considered the basis on which a money payment can be ordered.

I start with the general regime. A court order under paragraph 7 of the Code must include financial terms. Those terms are:

The first component of the money payment contains a number of instructions. First, what is to be paid is consideration. This word is used in contra-distinction to “compensation” in the second component and simply means “price”. Second, what the consideration is paid for is “the giving of the agreement or the exercise of the rights”. This is very strange drafting. In the first place it assumes that agreement is in fact being given, when the whole point of the application resulting in the making of an order is to dispense with agreement, as the opening words of paragraph 7 itself make clear. In the second place the order will itself confer rights on the operator (which he can choose to exercise or not) so it is difficult to see why he should pay consideration for the exercise of the rights, rather than the rights themselves (or, to be pedantic, the right to exercise the rights). It may be that what the draftsman had in mind was, for example, a term that requires the operator to make a payment each time he comes onto the land, rather like a wayleave rent. In the third place the subsequent reference to agreement having been willingly given does not in terms apply to the exercise of rights (in so far as that is meant to be different from the giving of agreement). So it is difficult to avoid the conclusion that the draftsman has not been precise with his choice of words.

Third, the payment terms must be “fair and reasonable”. Fourth, they must be assessed “as if” the agreement had been willingly given. These last two instructions mean that the price will not necessarily be the same as the market value of the rights, although the market value may be a good starting point (Mercury Communications Ltd v London and India Dock Investments Ltd (1993) 69 P & CR 135, 144). A person may not be willing to agree unless proper (but not undue) account is taken of the potentiality of his land in unlocking development or other value (Mercury Communications Ltd at 159-60). But this still leaves open the question what is “fair and reasonable” which may involve a measure of subjective opinion (Mercury Communications Ltd at 144 and 159). In Cabletel Surrey and Hampshire Ltd v Brookwood Cemetery Ltd [2002] EWCA Civ 720 Mance LJ said, without expressing any concluded view, (§ 7) that 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 might in some cases amount to no more than ransom strips.”

Later in his judgment Mance LJ seems to have approved the rejection in Mercury Communications Ltd of the argument that a ransom value may be set by the owner (§ 25). It seems to me, therefore, that even in the case of rights acquired over land of a private owner under the general regime, ransom payments are excluded by the statutory formula.

I should mention here that the general regime incorporates the landowner’s power to require alteration or removal of apparatus where that is necessary for development (§ 20). Since this power applies irrespective of the terms of any agreement, it is plainly something that must be taken into account in assessing the amount of the consideration.

The second component of the money payment is called compensation. It is tied to loss or damage sustained by persons bound by the rights “in consequence of the exercise of those rights”. This component seems to be tied to the actual (and future) exercise of rights, rather than the initial grant by court order. If this is right, then it seems that what the draftsman had in mind was some form of contractual indemnity rather than the fixing of an actual money payment at the date of the court order.

The monetary payments that may be awarded by an arbitrator under paragraph 13 are set out in paragraph 13 (2)(e) as amplified by paragraph 13 (6). An award under paragraph 13 (2) (e) is part of a list of things that the arbitrator has power to do. By contrast paragraph 7 (1) says that the court order “shall include” payment terms. Mr Elvin argues that this means that under paragraph 13 the arbitrator has what he calls a “limited discretion”; and that he may decide to award no sum at all. Paragraph 13 (2) (e), like paragraph 7 (1), consists of two components (although in reverse order):

If an arbitrator were to conclude that the carrying out of the works would cause loss or damage to the undertaker I find it very difficult to see how it could be a proper exercise of discretion not to award any sum at all. In the analogous case of emergency works paragraph 13 (3) (b) says that the arbitrator “shall award … such sum (if any)” as he may determine in respect of loss or damage sustained by the carrying out of the works. This seems to me to be saying that if the arbitrator determines that the person claiming compensation has suffered loss and damage then he must order compensation. I cannot see why there should be any difference between compensation for loss and damage caused by emergency works and loss and damage caused by non-emergency works. I consider, therefore, that despite the fact that paragraph 13 (2) (e) (i) is described as a power, if the arbitrator concludes that loss or damage has been suffered he must order compensation. If that goes for compensation under paragraph 13 (2) (e) (i) it is difficult to see how a different approach is warranted for paragraph 13 (2)(e)(ii), which is introduced by the same words.

Compensation under paragraph 13 (2)(e)(i) is payable to the person who objects to the works. Consideration under paragraph 13 (2) (e) (ii) is payable to that person. Since the only person who can object to the works is the person with control of the land (i.e. the person carrying on the undertaking), he is the only possible recipient of compensation or consideration. Mr Elvin says that this shows that a person’s proprietary interest in the land itself is irrelevant to the question of compensation or consideration. Mr Elvin also points to the heads of damage for which compensation is payable. These are loss and damage sustained by the carrying out of the works. They are extended by paragraph 13 (6) (a) so as to include any increase in the expense of carrying on the undertaking. Here again Mr Elvis says that the focus is on the undertaking rather than on any proprietary interest. This is, I think, a fair linguistic point. Under the general regime, although in the first instance it is the consent of the occupier of land that is required, there are provisions enabling the operator to secure that the consent binds owners of other interests in the land, and provisions for paying compensation or consideration to them. In the case of tidal waters, the compensation is payable to the owners of interests in the land, rather than to those exercising statutory functions over it. Under paragraph 12 by contrast there is nothing that enables compensation or consideration to be paid to an owner of an interest in the land, unless he is also the person carrying on the undertaking.

I rather suspect that the phrase “person having control of the land” was chosen in preference to the “occupier” because it might be difficult to determine who occupies a railway or canal. And as Mr Small submits, it must be a rare case in which a person who carries on a railway or canal undertaking does not have a proprietary interest in the land on which the undertaking is carried on. In addition, consideration under paragraph 13 (2) (e) (ii) is to be assessed as if the recipient “had given his authority” willingly for the works to be carried out. If the works in question are (as here) the running of a cable underneath the canal, it is difficult to see how this assumption would work unless the recipient of the compensation either has (or is assumed to have) a sufficient interest in the land as to enable him to authorise the works in question. There is also the point that, unless the works in question are intended to cross the railway or canal, the general regime applies; with the result that compensation and/or consideration will be payable to the occupier of the land, and also to those (if different) having proprietary interests in it; if they are to be bound by the rights conferred on the operator. I cannot see why the identity of the recipient of the compensation or consideration should be radically different depending on whether the line went across or along the canal or railway. While recognising the force of Mr Elvin’s linguistic point, it does not seem to me to be safe to draw conclusions from it, given the overall imprecision of language used in the Code and the practicalities of operation of this part of the Code.

The key issue is the meaning of the phrases “loss or damage sustained … in consequence of the carrying out of the works” (§ 13 (2) (e) (i)) and consideration payable “for the right to carry out the works” (§ 13 (2) (e) (ii)). In the latter case the consideration is to be determined on the basis of what would have been fair and reasonable if the objector had given his authority willingly for the works to be executed “on the same terms and subject to the same conditions” as the award. The common component in both heads is the concentration on carrying out of “the works”.

Mr Elvin says that this refers only to the process of executing the works themselves. In other words it covers the period while the operator (or his contractor) is actually on site. What happens after he has left is neither here nor there. Mr Small retorts that the “right” conferred by paragraph 12 is a single compendious right both to install and keep lines and apparatus on the land. Hence the use of the phrase “the works” in paragraph 13 (2) (e) is statutory shorthand for that compendious right. In this he is supported by the introductory words of paragraph 12 (1) which refer to “the right”. The use of the singular suggests a singular right. On the other hand, paragraph 12 (4) restricts the operator in the exercise of “any right” conferred by paragraph 12, which suggests a plurality of rights. In the case of the general regime paragraph 2 speaks of “a” right, but then goes on to enumerate separately the various rights of which it speaks. This syntax suggests that there is a plurality of rights, but then slightly different language is used. Once again minute dissection of the statutory language leads to no clear conclusion.

Mr Small sought to draw comfort from the fact that paragraph 12 (1) referred not only to works for the installation of apparatus, but also to works in connection with maintenance, adjustment, repair and alteration of apparatus. This, he said, showed that the draftsman “is not stopping at the temporal point of installation.” I agree that in a general sense he is not; but I cannot see where this takes Mr Small, because as I read paragraph 12 the operator must give a separate notice every time that he wants to come on to the land to carry out works. Thus whichever construction is right, the problem of what the operator must pay for still remains.

Regrettably, once again the Code is not clear on this point, and I doubt whether minute linguistic analysis really helps. Suppose that in the exercise of powers under paragraph 12, an operator installs apparatus on relevant land by a canal or railway which does not interfere with traffic but which makes the future repair and maintenance of the canal or railway more expensive. The increased expense of carrying on the undertaking is, in principle, a recoverable head of loss for the purpose of compensation. It is one thing for an undertaker providing infrastructure of public benefit not to ransom another such undertaker: it is a different thing for him to bear an uncompensated loss at that other’s expense. The increased expense of carrying on the undertaking surely cannot be limited to the few days (or weeks) that it takes actually to install the apparatus. The compensation provisions in this respect must be looking to the future generally; otherwise the canal or railway undertaker will have to bear an uncompensated loss. Moreover, the ascertainment of the increased expense of carrying on the undertaking for only a few days or weeks seems to me to be an unlikely objective for Parliament to have envisaged. It is true that the undertaker might be able to invoke the right under paragraph 14 to require the apparatus to be altered, but if he is prepared to put up with the inconvenience provided that he is adequately compensated, I do not see why he should be forced into using that draconian remedy. As mentioned, Mr Elvin submitted that the terms and conditions imposed by an arbitrator could include temporal modifications to the works that the operator proposed. This submission, too, entails that the arbitrator may concern himself with the long-term future, and is not restricted to the period during which the works are actually carried out. It seems to me, therefore, that loss sustained “in consequence of the carrying out of the works” must include loss sustained as a result of the presence on (or under or over) the land of whatever it is that the works have installed.

This conclusion feeds into the interpretation of paragraph 13 (2) (e) (ii). This paragraph is concerned with “consideration” (i.e. price). Since loss and damage to the undertaker has been dealt with in paragraph 13 (2) (e) (i), the natural reading of paragraph 13 (2) (e) (ii) is that it is dealing with something else. What is that something else, if not the value to the operator of acquiring the right? If, as I think, part of the notion of carrying out works is the permanent (or indefinite) consequence of carrying them out, then it seems to me that paragraph 13 (2) (e) (ii) envisages that the consideration will take into account the fact that the right to carry out the work will carry with it the right to retain on or under the land whatever apparatus has been installed as a result of those works. The notion that the consideration must be assessed on the assumption that the operator has no right to retain or use the apparatus after it has been installed seems to be to be both counter-factual and far divorced from the real world. If a counter-factual assumption is to be made, then it must be spelled out clearly. There is only one counter-factual assumption referred to in this part of the Code, and that is the counter-factual assumption that authority has been willingly given. So far as the real world is concerned, if an operator and an undertaker were discussing the consideration that the operator would be required to pay in order to acquire the right to carry out works to install apparatus, the first question that the operator would ask would surely be: can I keep it there once I have installed it? If the answer is no, it is difficult to see why the operator should agree to pay anything, particularly since he will have to compensate the undertaker for any loss or damage suffered in consequence of the works. Yet paragraph 13 (2) (e) (ii) must have contemplated that consideration would be payable, at least in some circumstances. Mr Elvin was not able to explain satisfactorily in what circumstances consideration would be payable.

In addition, the consideration must be “fair and reasonable”. It does not seem to me to be fair that an operator should have something for nothing. If he acquires something of value to him, fairness seems to me to require that he pays for it. As I have said, Mr Elvin warned against allowing persons in control of linear obstacles extracting ransom payments from operators. However, it seems to me that the use of the phrase “fair and reasonable” precludes the extraction of a ransom payment, as Mance LJ observed in Cabletel. Once that objection has been cleared out of the way, I do not consider that there is a compelling argument against the payment of consideration by an operator.

In my judgment, therefore, what the operator must pay for is the right to carry out the works; which right carries with it the right to keep the works on (or under or over) the relevant land in accordance with whatever terms and conditions the arbitrator awards. The price payable must be fair and reasonable but will take into account everything that the operator acquires by carrying out the works. Because the price is one that is fair and reasonable it will not include a ransom value. Accordingly, I consider that the arbitrator came to an erroneous conclusion.

I have reached my own conclusion without the need to consider Mr Small’s argument (not raised before the arbitrator) based on the Human Rights Act 1998. The argument is that unless the Code requires the operator to pay for the right to retain the apparatus as well as for the right to install it, Bridgewater Canal Co’s rights under Article 1 of the First Protocol (“A1P1”) would be infringed. A1P1 provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

There is a clear distinction in the Strasbourg jurisprudence between cases of deprivation of property and cases of control. On particular facts the two may shade into one another, because so-called control may be so extensive as to amount in practice to a deprivation: Sporrong v Sweden (1982) 5 EHRR 35. But that is not this case, since on the facts found by the arbitrator the works will not impair the running of the canal, or indeed depreciate the value of Bridgewater Canal Co’s interest.

In cases of deprivation, A1P1 will normally be infringed if a person is deprived of property without payment of any compensation: James v United Kingdom (1986) 8 EHRR 123. But even in a deprivation case, compensation need not be full market value: Lithgow v United Kingdom (1986) 8 EHRR 329. Where the case is one of control rather than deprivation, there is no right to compensation if the state can properly take the view that the benefit to the community outweighs the detriment to the individual even without the payment of compensation: R oao Trailer and Marine (Leven) Ltd v Secretary of State [2005] 1 WLR 1267.

In the present case even if Geo are correct, the scheme does provide for compensation to be paid for loss and damage. If an undertaker is properly compensated for loss and damage he suffers as a result of carrying out the works, then it seems to me his inability to recover more from the operator does not come close to establishing a breach of A1P1. In addition, without knowing what price would be charged for the right claimed by the operator, it is impossible to say in the abstract whether a breach has been established. It is one thing to deprive an undertaker of tuppence ha’penny; it is another to deprive him of tens of thousands of pounds. Had I favoured the construction advanced by Mr Elvin, A1P1 would not have caused me to change my mind.

As it is, however, I will allow the appeal. I am provisionally minded to order Geo to pay Bridgewater Canal Co’s costs of the appeal. It will be apparent that, in my view, the Code is extremely difficult to understand; and that the overall scheme of the Code is difficult to fit into a coherent framework. I recognise therefore that others may take a different view from my own. It is also the case that the point is one of general importance. Subject to submissions to the contrary, I am provisionally minded to give permission to appeal under section 69 (8) of the Arbitration Act 1996; which I believe that I have power to do despite the terms of CPR 52.13 (see Athletic Union of Constantinople v National Basketball Association (No 2) [2002] 1 WLR 2863). I invite the parties to attempt to agree an order; but if they cannot it can be discussed when this judgment is handed down.