Mercury Communications Ltd v London & India Dock Investments Ltd

Compensation — Wayleave agreement — Telecommunications code — Whether compulsory purchase compensation principles or ransom value proper approach to determination of consideration for deed of grant The plaintiff, Mercury Communications Ltd, proposed to lay 230m of additional cable ducts under Eastwood Wharf Road, a private road owned by the defendant, to link the eastern end of the Canary Wharf development, London Docklands, with one of Mercury’s earth stations; these receive and transmit international telecommunications by means of satellite.  The parties agreed the terms of a deed of grant of rights to lay the cable duct save for the determination of the consideration.  By para 7 of the Telecommunications Code (Schedule 2 to the Telecommunications Act 1984) the county court may determine ‘such terms with respect to the payment of consideration . . . as it appears to the court to be fair and reasonable if the agreement had been given willingly’.  It was contended, on behalf of Mercury, that compulsory purchase compensation principles were applicable and that the consideration was nil or nominal; the consideration should be limited to a small capital payment similar to the capital payments agreed with the National Farmers’ Union and Country Landowners’ Association.  For the defendant landowner it was argued that the rights to be conferred by the deed of grant were equivalent to a ‘ransom strip’ and that an annual payment of £24,175 was appropriate. Held: The direction in the code that the terms are to be ‘fair and reasonable’ involves an element of subjective judicial opinion; the court’s determination is not necessarily the same as the result in the market would have been if the grant had been given willingly.  Compulsory purchase principles, including the Pointe Gourde principle, are not applicable.  A ransom value approach, having regard to the profit which Mercury was forecasting from the use of the cables, was inappropriate.  The evidence of the terms of aerial agreements with telecommunications operators was of general assistance, in showing the relative bargaining powers of grantors and grantees, but the agreements with the NFU and CLA were of no value because they related to agricultural land and did not include anything for the bargaining power of the grantor.  Two agreements in 1987 and 1988 relating to the laying of cables in the immediate area for annual payments of £3,000, and arrived at with the code in the background, contained the best evidence.  Adjusting that figure for inflation and the additional number of cable ducts, the appropriate annual payment was £9,000.  Re Naylor Benzon Mining Co Ltd [1950] Ch 567 and BP Petroleum Developments Ltd v Ryder [1987] 2 EGLR 233 not followed. The following cases are referred to in this report. Batchelor v Kent County Council (1990) 59 P&CR 357; [1990] 1 EGLR 32; [1990] 14 EG 129; (1989) RVR 181; [1990] JPL 571, CA BP Petroleum Developments Ltd v Ryder [1987] 2 EGLR 233; [1987] RVR 211 Colchester Estates (Cardiff) v Carlton Industries plc [1986] Ch 80; [1984] 3 WLR 693; [1984] 2 All ER 601; [1984] EGD 461; (1984) 271 EG 778, [1984] 2 EGLR 64 Consett Iron Co Ltd’s Application, Re [1938] 1 All ER 439 Delaforce v Evans (1970) 22 P&CR 770; (1970) 215 EG 315, LT Evans (FR) (Leeds) Ltd v English Electric Co Ltd (1977) 36 P&CR 185; (1978) EGD 67; 245 EG 657, [1978] 1 EGLR 93 Fraser v City of Fraserville [1917] AC 187; 116 LT 258; 33 TLR 179, PC Hertfordshire County Council v Ozanne [1989] 2 EGLR 18; [1989] 43 EG 182; [1989] RVR 179, CA Hertfordshire County Council v Ozanne [1991] 1 WLR 105; [1991] 1 All ER 769; (1991) 89 LGR 345; [1991] 1 EGLR 34; [1991] 13 EG 157, HL Inland Revenue Commissioners v Clay [1914] 3 KB 466; (1914) 83 LJKB 1425; 111 LT 484; 30 TLR 573 Lambe v Secretary of State for War [1955] 2 QB 612; [1955] 2 WLR 1127; [1955] 2 All ER 386, CA Lloyd-Jones v Church Commissioners for England (1981) 261 EG 471, [1982] 1 EGLR 209, LT Lucas and Chesterfield Gas & Water Board, Re [1909] 1 KB 16 Lynall v Inland Revenue Commissioners [1972] AC 680; [1971] 3 WLR 759; [1971] 3 All ER 914, HL Naylor Benzon Mining Co Ltd, Re [1950] Ch 567; [1950] 1 All ER 518; (1950) 1 P&CR 69 Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, PC Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 Sidney v North Eastern Railway Co [1914] 3 KB 629, DC South Eastern Railway Co v London County Council [1915] 2 Ch 252 Stokes v Cambridge Corporation (1961) 13 P&CR 77; [1961] EGD 207; 180 EG 839, LT Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538 Richard Aikens QC and John Nicholls (instructed by Bird & Bird) appeared for the plaintiff; John Hobson (instructed by Allen & Overy) represented the defendant. Giving judgment, JUDGE HAGUE QC, said: This is an application made by Mercury Communications Ltd (‘Mercury’) for the grant of certain rights to lay and use ducts under a private roadway in the Isle of Dogs owned by London and India Dock Investments Ltd (‘LIDI’), a subsidiary of the Port of London Authority (‘the PLA’).  The application is made under the ‘Telecommunications Code’ contained in Schedule 2 of the Telecommunications Act 1984 (‘the 1984 Act’).  It has been agreed that these rights should be granted by an appropriate deed of grant, but the parties are in dispute as to the financial terms on which the grant should be made.  That is now the sole matter for my decision.  At the time of issue of the application there were other matters in dispute, but these were resolved by agreement before the hearing.  All the terms and conditions, apart from the financial terms, are incorporated in an agreed deed of grant. I have been told that this is the first application under the telecommunications code which has reached the stage of a judicial decision, and that the result of this application may have important consequences in other cases between Mercury and landowners generally.  That is no doubt so, but of course I can only deal with the230 facts and circumstances of this case, which in some respects are rather special.  However, as will appear, I deal with several points of interpretation of the telecommunications code which are likely to be of general application. Background It is convenient first to describe briefly the statutory and factual background to the application. Prior to 1981, the Post Office had a monopoly in the provision of telecommunication services, as a result of various Acts some of which I shall refer to later.  Under the British Telecommunications Act 1981 (‘the 1981 Act’) a new statutory corporation, called British Telecommunications and defined in the 1981 Act as ‘the corporation’, was established to take over the telecommunications part of the business of the Post Office.  By section 10 of the 1981 Act, all the relevant property, rights and liabilities of that business were transferred to the corporation.  By section 12, the corporation was given the exclusive privilege of running a telecommunications business in the British Isles; but by section 15, the Secretary of State was empowered to grant a licence to any other person to operate a telecommunications service, as specified in the licence.  Mercury was granted such a licence. The 1984 Act made provision for the corporation’s property, rights and liabilities to vest in a new company of the same name (‘BT’), in order to facilitate its privatisation.  The 1984 Act also abolished BT’s statutory monopoly, but made it necessary for any other operator to obtain a licence from the Secretary of State.  Under section 7, such a licence could authorise the operator to connect to and use the telecommunication system and apparatus of any other operator, including BT.  Under section 10, the Secretary of State was given power to apply the telecommunications code to an operator who was granted a licence. Mercury was duly granted such a licence on November 5 1984 for the period of 25 years from November 8 1984.  By para 2, the licence applied the telecommunications code to Mercury (subject to certain exceptions and conditions, none of which are relevant).  Mercury was given power to connect to and use the systems of BT and any other licenced operator and provision was made for agreements whereby the charge for any call is divided between the operators whose lines are used.  (There are similar agreements in force as to international calls.)  Mercury is the only operator licenced to operate nationally, so that nationally there is effectively a duopoly with BT.  There are, however, some operators who are licenced to operate locally, including East London Telecommunications Ltd, which as its name indicates operates in the east London area, including the Isle of Dogs. Mercury’s telecommunications network is based on an optical fibre trunk cable network, which at present connects over 90 of the cities and major towns in the UK.  Over the last 10 years, Mercury has invested £1.7 bn in building a national and international trunk network with other associated activities.  In the main, the trunk cables run alongside British Rail tracks, but in some instances also alongside canals or in London Underground tunnels.  Many short stretches are laid under public highways under the Public Utilities Street Works Act 1950 (which enables public utilities to lay installations under public highways without payment of consideration to the highway owner).  Within each city or town, access to and from the network is gained via a ‘trunk access node’.  Customers are connected via local distribution cables and a ‘Cable Distribution Node’ (CDN) to the trunk access nodes and thus to the trunk network.  A CDN performs a similar function to an exchange.  Optical fibre cables connect the various trunk access nodes and CDNs to each other. One such CDN, known as the Thameside CDN, comprises part of the Docklands Telecommunications Centre, at Eastwood Wharf Road, on the Isle of Dogs.  This is also one of Mercury’s three ‘earth stations’ which receive and transmit international telecommunications by means of satellite.  It is also an international cable station.  In addition, it handles virtually all of Mercury’s telecommunications traffic between Docklands and the rest of London.  The Thameside earth station, as I shall call the whole centre, is thus a vital part of Mercury’s national network.  It is built on land owned freehold by LIDI under a lease granted in 1984 pursuant to an earlier building agreement entered into granted shortly after Mercury received its licence under the 1981 Act. Canary Wharf As is well known, a major part of the plans for the redevelopment of London’s Docklands on the Isle of Dogs comprises the mainly commercial development at Canary Wharf by Olympia & York Canary Wharf Ltd (‘O&Y’).  This redevelopment was originally intended to be in three phases.  As I understand it, phase 1 is now more or less complete; but the future of phases 2 and 3 is, to say the least, uncertain.  Mercury is very anxious to provide telecommunication services to the Canary Wharf properties, for obvious business reasons.  Most of the anticipated commercial occupiers will be heavily dependant on full telecommunication services for the purposes of their businesses.  Also, some occupiers will be existing customers of Mercury who are relocating, and Mercury is anxious to retain their custom.  In order to obtain internal authorisation for the capital expenditure involved, a so-called ‘business case’ was prepared by the city region of Mercury as the sponsoring region.  The purposes and contents of the business case were described by Mr John Redgate (currently the controller, capital expenditure, for Mercury), in his statement and oral evidence and I do not propose to go into further detail about it.  The business case contained a financial summary, which has now been updated and really overtaken by a revised forecast, prepared under Mr Redgate’s supervision and completed in July 1992. The business case was duly accepted by those responsible in Mercury.  It showed an attractive commercial anticipated return on investment, but in addition it is, I think, clear that Mercury regarded a full telecommunications service for Canary Wharf as a prestige project which it was essential for Mercury to be involved in.  Mercury have accordingly negotiated suitable arrangements with O&Y.  As part of those arrangements, O&Y have constructed an underwater tunnel to Blackwall Place which will carry Mercury’s cable ducts.  From the end of the tunnel, it is proposed to lay the ducts under a private roadway owned by LIDI to connect with Mercury’s Thameside earth station. Proposed rights The private roadway in question is Eastwood Wharf Road, which is a tarmac estate road of secondary quality.  It runs off a public highway to the east called Prestons Road.  It is a no-through road which comes to an end at West India Dock.  It serves a number of adjoining commercial properties on the Wood Wharf Business Park, the freeholds of which are owned by LIDI or associated companies.  Immediately to the north is the elevated Cartier Circle, a road junction constructed at the eastern end of Canary Wharf. One of the adjoining commercial properties is the Thameside earth station.  The right to lay and use ducts is required to expand Mercury’s telecommunications link from the earth station to the eastern end of the Canary Wharf development.  There are existing cable ducts laid under Eastwood Wharf Road by Mercury running from the Thameside earth station to Canary Wharf under two agreements, the first being with the PLA dated January 29 1987 (‘the 1987 agreement’) and the second with LIDI dated June 22 1988 (‘the 1988 agreement’).  I shall have to refer to these two agreements in due course.  But the existing ducts are quite inadequate for Mercury’s purposes. Mercury therefore proposes to lay further cable ducts under Eastwood Wharf Road.  The total length of the new duct system will be 230m.  Of this length, 177m will comprise 24, 90mm pvc ducts, set three wide by eight deep in a reinforced concrete block, laid at a minimum depth of 600mm.  The remaining 53m will comprise six 90mm pvc ducts laid directly in the ground, also at a minimum depth of 600mm.  The proposed works will also include four manholes.  These will be underground concrete chambers with external dimensions of 2,950mm x 1,650mm x 2,530mm, accessed by vertical shafts, 900mm2, of varying lengths and each topped by a single metal cover 610mm2 level with the road surface. 231 It is common ground between the parties that Eastwood Wharf Road is much the most convenient route for the proposed new ducts, and that the only possible alternative routes would all lie across LIDI’s land let to others.  LIDI’s agreement to the grant of the proposed right is therefore essential. As well as Mercury’s existing ducts which I have mentioned, there are also a number of service and public utility ducts, drains and other conducting media currently laid under the verges and carriageway of Eastwood Wharf Road.  An illustrative diagram of these was produced in evidence.  In addition, O&Y have a right to lay further drains there.  There was some disagreement as to whether the installation of Mercury’s proposed new ducts would restrict the ability to lay further services in the road, and there was no real evidence on the point.  I do not think it really matters one way or the other, but in the absence of clear evidence to the contrary I think I should assume in favour of Mercury that other services could be laid without undue difficulty. Agreed statement of facts Much of the foregoing is taken from an agreed statement of facts prepared for the purposes of the hearing by the surveyor expert witnesses on each side, Mr David J Room FRICS of Grimley J R Eve, on behalf of Mercury, and Mr Edward M Sheard FRICS of Matthews & Son, on behalf of LIDI.  After preparing and exchanging their initial reports and supplementary reports pursuant to an interlocutory order dated May 15 1992, Mr Room and Mr Sheard very sensible met together to endeavour to agree as many matters of fact and valuation as they could.  They were happily able to agree virtually all the material facts, including the facts concerning the comparables, and also to come to a compromise (strictly for the purposes of this litigation only) as to all but a few of the relevant figures and percentages, in particular those arising in connection with Mr Sheard’s valuation.  All these matters are set out in the agreed statement, which is dated December 23 1992.  This must have involved each of them in a great deal of work and negotiation.  I have found that document of the greatest assistance; and without the sensible compromises which they managed to reach this already difficult case would have been even more complicated and the length of the hearing would have been much extended.  I should like to express my gratitude to both of them for their achievements in this regard and also for the clarity of their various reports. I am also grateful to the solicitors on each side for the convenient and careful way in which the numerous documents in the case have been prepared and presented and to counsel, Mr Richard Aikens QC and Mr John Nicholls, on behalf of Mercury, and Mr John Hobson on behalf of LIDI, for the lucidity and helpfulness of their arguments.  They summarised their arguments in written ‘outline submissions’ which I have found of great assistance. Deed of grant As I have mentioned, there is no dispute that the proposed rights should be granted and the parties finally agreed a form of deed of grant, apart from the financial terms, shortly before the start of the hearing.  The deed is a detailed document granting Mercury the rights it requires, subject to various terms and conditions.  It is not necessary for me to refer to it in any detail, but I should mention the following.  (1) The grant is for a term ending in the year 2009.  (2) All the installation and maintenance costs are to be paid by Mercury.  (3) Mercury gives LIDI a full indemnity against any liability arising as a result of the installation of the ducts and the operation of the cables, whether or not there is any default on the part of Mercury.  (4) On the footing that the consideration for the grant should be an annual sum (and not a capital payment as Mercury contends), there is provision for an annual review in line with inflation: this includes, if necessary, a reference to arbitration, which is permitted by para 7(4) of the telecommunications code set out below. Telecommunications code I turn now to the telecommunications code set out in Schedule 2 of the 1984 Act, which I will refer to as ‘the code’.  It is necessary for me to set out a few of its provisions in full.  Under the definitions in para 1 and in relation to the facts of this case, ‘the operator’ means Mercury, ‘the operator’s system’ means Mercury’s telecommunication system, and ‘the statutory purposes’ means the purposes of establishing and running Mercury’s system.  Para 2 reads as follows, so far as material: 2.–(1) The agreement in writing of the occupier for the time being of any land shall be required for conferring on the operator a right for the statutory purposes — (a)   to execute any works on that land for or in connection with the installation, maintenance, adjustment, repair or alteration of telecommunication apparatus; or (b)   to keep telecommunication apparatus installed on, under or over that land; or (c)   to enter that land to inspect any apparatus installed (whether on, under or over that land or elsewhere) for the purposes of the operator’s system. (2)  A person who is the owner of the freehold estate in any land or is a lessee of any land shall not be bound by a right conferred in accordance with subparagraph (1) above by the occupier of that land unless — (a)  he conferred the right himself as occupier of that land; . . . (5)  A right falling within subparagraph (1) above shall not be exercisable except in accordance with the terms (whether as to payment or otherwise) subject to which it is conferred; and, accordingly, every person for the time being bound by such a right shall have the benefit of those terms. In this case, as LIDI is the freehold owner as well as the occupier of the private road, no difficulty arises from subpara (2) of this paragraph. Para 5 of the code gives the court power to dispense with the agreement of any person in quite wide circumstances, and by a court order to confer on the operator the rights which he requires.  It is this power which Mercury is asking me to exercise in this case.  There is no dispute that the conditions for the grant of such an order are satisfied; as I have indicated LIDI has always been ready to grant to Mercury the rights it requires on terms, and the only term now outstanding concerns the consideration.  Subpara 4 reads: (4)  An order under this paragraph made in respect of a proposed right may, in conferring that right or providing for it to bind any person or interest in land and in dispensing with the need for any person’s agreement, direct that the right shall have effect with such modifications, be exercisable on such terms and be subject to such conditions as may be specified in the order. The crucial paragraph on which this case really turns is para 7.  This enables the court to fix financial terms where agreement is dispensed with, and reads, so far as material, as follows: 7.–(1) The terms and conditions specified by virtue of subparagraph (4) of paragraph 5 above in an order under that paragraph dispensing with the need for a person’s agreement, shall include — (a)   such terms with respect to the payment of consideration in respect of the giving of the agreement, or the exercise of the rights to which the order relates, 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; and (b)   such terms as appear to the court appropriate for ensuring that that person and persons from time to time bound by virtue of paragraph 2(4) above by the rights to which the order relates are adequately compensated (whether by the payment of such consideration or otherwise) for any loss or damage sustained by them in consequence of the exercise of those rights. (2)  In determining what terms should be specified in an order under paragraph 5 above for requiring an amount to be paid to any person in respect of — (a)   the provisions of that order conferring any right or providing for any right to bind any person or any interest in land, or (b)   the exercise of any right to which the order relates, the court shall take into account the prejudicial effect (if any) of the order or, as the case may be, of the exercise of the right on that person’s enjoyment of, or on any interest of his in, land other than the land in relation to which the right is conferred. . . . (4)  The terms specified by virtue of sub-paragraph (1) above in an order under paragraph above may provide — 232 (a) for the making of payments from time to time to such persons as may be determined under those terms; and (b)   for questions arising in consequence of those terms (whether as to the amount of any loss or damage caused by the exercise of a right or otherwise) to be referred to arbitration or to be determined in such other manner as may be specified in the order. The court ‘The court’ is defined by para 1 of the code as meaning the county court.  Presumably, Parliament thought that cases under the code would be relatively straightforward and could be accommodated in the normal county court listings without difficulty.  The hearing before me extended over seven full days.  The papers are contained in eight lever arch files, some of them quite bulky.  As well as considering the several reports from each expert and hearing their oral evidence, I have read statements from seven other persons and four of them also gave oral evidence.  Counsel made their submissions to me with economy, but their written outline submissions together covered 60 pages.  Further, the valuation issues which I have considered are of the kind which are familiar to the Lands Tribunal, but not to most county court judges. Bearing these matters in mind, I would suggest that in any future application under the code which is likely to be of substance, consideration ought to be given at an early stage to: (a) transferring the application to this court (Mayors and City of London Court), as happened in this case (the application having been commenced in Bow County Court); and (b) making arrangements so that the application is heard by a judge who has some experience in valuation matters. Matters agreed on the code Certain matters arising on para 7 of the code are clear and were common ground between the parties. (1)  The valuation date is the date of the court order. (2)  The consideration must be assessed on the basis of the terms and conditions of the deed of grant. (3)  As a result of those terms and conditions, there will be no loss or damage to LIDI as a result of the deed and the exercise of the rights thereby granted.  No compensation for ‘loss or damage’ is therefore payable under para 7(1)(b) of the code. (4)  Similarly, there will be no loss or damage to LIDI as a result of severance or injurious affection.  No compensation is therefore payable under para 7(2) of the code. It follows that the only financial term which can be imposed is the payment of ‘consideration’ under para 7(1)(a).  That word, to my mind, suggests that the rights to be granted have a price, irrespective of any detriment to the grantor.  The word is used in contrast to ‘compensation’ in paras 7(1)(b) and 7(2), which suggests loss or damage to the grantor for which he should be compensated. Outline of rival arguments The sole point at issue is therefore what, if any, consideration is payable under para 7(1)(a) of the code, ie what ‘would have been fair and reasonable if the agreement had been given willingly’.  The whole argument centres round the meaning and effect of those words in the circumstances of the case. The contentions of Mercury, put forward by Mr Room as expert and supported by Mr Aikens and Mr Nicholls as counsel, are (very briefly) as follows: (1) the general principles of compulsory acquisition of land apply in the assessment of the consideration; (2) under those principles, (a) only the value to LIDI can be considered, and (b) any increase in value to LIDI due to the scheme underlying Mercury’s acquisition must be ignored (‘the Pointe Gourde principle’); (3) the consideration is therefore nil or nominal; and (4) if not nil or nominal, the consideration should be limited to a small capital payment calculated by reference to similar capital payments which have been negotiated by Mercury with the National Farmers’ Union and the Country Landowners’ Association. The contentions of LIDI, put forward by Mr Sheard as expert and supported by Mr Hobson as counsel on behalf of LIDI, are (again very briefly) as follows: (1) the general principles of compulsory acquisition do not apply; (2) the rights conferred by the deed of grant are equivalent to a ‘ransom strip’ of the kind identified in Stokes v Cambridge Corporation (1961) 13 P&CR 77*; and (3) LIDI can thus negotiate for and so should be entitled to a percentage share of Mercury’s anticipated profits from its Canary Wharf operation.  In his original report, after studying Mercury’s business case and the financial statement which I have mentioned, Mr Sheard put forward a claim for the consideration to be £140,000 pa.  However, after receiving Mr Redgate’s revised forecast (the figures in which are agreed) and discussing the matter and for the purposes of the case agreeing certain figures and percentages with Mr Room, Mr Sheard has reduced this figure to £24,175 pa. *Editor’s note: Also reported at (1961) 180 EG 839. Preliminary points on para 7(1)(a) of the code Before considering the rival arguments of the parties there are a number of general points arising on para 7(1)(a) of the code which it is convenient to deal with. The words ‘willingly given’ clearly refer to the grantor, who must therefore be a ‘willing’ grantor.  However, in my judgment, a ‘willing’ grantee must also be assumed, that is to say a grantee who is willing to take on ‘fair and reasonable’ terms.  After all, it is the grantee who is applying to the court for a grant on those terms, and it necessarily follows that he is a ‘willing grantee’ in that sense.  Statute frequently refers only to the ‘willing’ vendor, lessor or grantor, without mention of the purchaser, lessee or grantee, but it is always assumed that the latter too will be ‘willing’: see eg r2 of section 5 of the Land Compensation Act 1961; section 25(1) of the Finance (1909-10) Act 1910, mentioned below; section 34 of the Landlord and Tenant Act 1954; and section 9(1) of the Leasehold Reform Act 1967. In my judgment, I have to consider what would be ‘fair and reasonable’ terms as between these parties, ie LIDI and Mercury, as opposed to a hypothetical grantor and a hypothetical grantee.  That appears to me to be the consequence of the wording of para 7(1)(a), particularly in the light of the earlier parts of the code which assume that there have been prior negotiations between the parties.  Mr Aikens argued to the contrary, saying that para 7(1)(a) requires the court to consider a hypothetical situation.  That is to a certain extent true, but I see no reason to depart from reality more than is necessary or is required by the relevant wording of the legislation.  The wording of para 7(1)(a) is significantly different in this respect from other legislation, eg section 8(2) of the Mines (Working Facilities and Support) Act 1966, which refers to ‘a willing grantor’ and ‘a willing grantee’. What I have to decide is what would have been ‘fair and reasonable’ if the grant had been willingly given.  That, in my view, 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.  This distinction may perhaps account for the fact that the code directs the consideration to be determined by a judge rather than the Lands Tribunal. 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 been if the grant had been given willingly.  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 would233 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 a 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 reasonable’. In my view, the word ‘willingly’ in para 7(1)(a) cannot be taken in isolation.  For it is a meaningless concept if considered apart from the financial terms of the grant.  Whether or not a vendor or grantor is ‘willing’ must necessarily depend on the price or consideration he is to receive.  Thus, a vendor cannot sensibly be stigmatised as being unwilling because he refuses to accept an offer at an inadequate price.  ‘Willing’ must mean ‘willing to sell at a fair price’.  Likewise ‘given willingly’ in para 7(1)(a) must, in my judgment, mean ‘given willingly for a consideration which is fair and reasonable’.  In his submissions, Mr Aikens argued that, ex hypothesi, LIDI was not willing because it would not give consent to the proposed grant except on what he described as its own prohibitive terms.  In my judgment, that does not advance the argument and is logically fallacious, because it begs the real question and indeed really assumes what it is setting out to demonstrate. Authorities on ‘willing’ In my judgment, the meaning and effect of the word ‘willingly’ in its context is critical; and I consider it helpful, and indeed essential, to refer at some length to three important authorities in which the meaning of the word ‘willing’ in a similar context has been considered. (1)  Inland Revenue Commissioners v Clay [1914] 3 KB 466 (CA), arose from the first attempt to tax increases in land values made by the famous Lloyd George budget which resulted in the Finance (1909-10) Act 1910.  For the purpose of ‘increment value duty’, it became necessary to determine the ‘gross value’ as at April 30 1909 of a house.  That house had a value at that date for a person wishing to use it as a residence of £750.  But it adjoined a nurses’ home which the trustees of the home desired to extend.  It was advantageous to them to pay at least £1,000 for the house for that purpose, and they did in fact purchase it for that sum on September 29 1910.  The ‘gross value’ was defined by section 25(1) of the Act to mean: . . . the amount which the fee simple of the land, if sold at the time in the open market by a willing seller in its then condition, free from incumbrances, and from any burden, charge, or restriction (other than rates or taxes) might be expected to realise. At first instance before Scrutton J at [1914] 1 KB 349, it was argued by the Solicitor-General on behalf of the Revenue that the ‘gross value’ was £750, and that (to quote Scrutton J at p348) it ‘must exclude the price which one particular buyer will give because of his particular need; that this is not the price in the ‘open market’; and that the willing seller must be willing to sell at a market price, not a fancy price’.  In support of his argument, the Solicitor-General relied on some dicta of Fletcher Moulton LJ in Re Lucas and Chesterfield Gas & Water Board [1909] 1 KB 16 that in assessing compensation on a compulsory purchase you cannot consider the special needs of the compulsory purchaser.  Scrutton J rejected that argument, and held the ‘gross value’ to be £1,000, saying in the course of his judgment at p348: The seller is not to be assumed to be making a forced sale at any price he can get, however low.  He must be willing to sell, not demanding compensation for a forced sale, but he is not required to exclude the principal bidder from his market, because that principal bidder wants the house more than any one else and will therefore give more for it. In the Court of Appeal the Solicitor-General repeated his argument before Scrutton J, but in addition put forward what I will refer to as ‘the one more bid argument’.  This was rejected by all three judges in the Court of Appeal.  Cozens-Hardy MR said at p472: An ‘open market’ sale of property ‘in its then condition’ presupposes a knowledge of its situation with all surrounding circumstances.  To say that a small farm in the middle of a wealthy landowner’s estate is to be valued without reference to the fact that he will probably be willing to pay a large price, but solely with reference to its ordinary agricultural value, seems to me absurd.  If the landowner does not at the moment buy, land brokers or speculators will give more than its purely agricultural value with a view to reselling it at a profit to the landowner. Swinfen Eady LJ said at p476: The fact that No 83 [the house] had a potential value, by reason of its proximity to the nurses’ home, and the very rapid increase of the work of that institution, pointing to a necessary extension at an early date, ought properly to be taken into consideration in arriving at the value it might be expected to realize. Later he said: It was then urged by the Solicitor-General that if the probability of this special buyer purchasing, above the price, which but for his needs would have been the market price, could be taken into consideration at all, then only one further point or bid could be allowed, and it must be assumed that this special buyer would have become the purchaser upon making this one extra bid.  Such an assumption would ordinarily be quite erroneous.  The knowledge of the special need would affect the market price, and others would join in competing for the property with a view of obtaining it at a price less than that at which the opinion would be formed that it would be worth the while of the special buyer to purchase. A sale by a willing seller is distinguished from a sale which is made by reason of compulsory powers, where the vendor frequently obtains an addition to the price by reason of being under compulsion to sell.  It does not mean a sale by a person willing to sell his property without reserve for any price he can obtain. Pickford LJ said at p478: . . . I think a willing seller means one who is prepared to sell, provided a fair price is obtained under all the circumstances of the case.  I do not think it means only a seller who is prepared to sell at any price and on any terms, and who is actually at the time wishing to sell.  In other words, I do not think it means an anxious seller. I should add that in relation to compulsory purchase, the effect of Inland Revenue Commissioners v Clay was reversed by r(3), section 2 of the Acquisition of Land (Assessment of Compensation) Act 1919 (now section 5 of the Land Compensation Act 1961), which provided that there should be left out of account any value ‘for which there is no market apart from the special needs of a particular purchaser’.  Those words have now been repealed by para 1, Schedule 15 to the Planning and Compensation Act 1991, thus restoring the effect of Inland Revenue Commissioners v Clay. (2)  In the well known ‘Indian case’, Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302, the facts were briefly as follows.  A harbour was being constructed at Vizagapatam, and land had been acquired compulsorily for that purpose.  Part of that land had been allocated for use by oil companies and other industrial concerns, but it was malarious.  The appellant’s land immediately to the south of this land contained a spring which yielded a constant and abundant supply of good drinking water which could easily be made available for the oil companies and those engaged in the harbour works, but not others.  The appellant’s land was compulsorily acquired for the purpose of executing antimalarial works.  The main question which came before the Privy Council was the extent to which the water supply should be taken into account in assessing the appellant’s compensation.  Under the relevant Indian legislation the same principles applied as those under the Lands Clauses (Consolidation) Act 1845 before the coming into operation of the 1919 Act. Lord Romer delivering the judgment of the Privy Council said at p312: The compensation must be determined, therefore, by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser.  The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded.  Neither must be considered as acting under compulsion.  This is implied in the common saying that the value of the land is not to be estimated at its value to the purchaser.234 But this does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded.  The wish of a particular purchaser, though not his compulsion, may always be taken into consideration for what it is worth. A little later on he said in relation to ‘market value’: But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features, as regards its position or its potentialities.  In such a case the arbitrator in determining its value will have no market value to guide him, and he will have to ascertain as best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities. At p314, Lord Romer dealt with the argument that the arbitrator must hold any imaginary auction at which the persons present would include those only interested in the land itself and not interested in the potentialities; those persons would pay only what was referred to as the ‘poramboke’ value (which I take to be the rough equivalent of existing use value).  Lord Romer accepted that such purchasers would drop out when the bidding reached the ‘poramboke’ value, which would leave the auction to the ‘potentiality’ buyers.  He continued at p315: But at what figure will this bidding stop?  As already pointed out it cannot be imagined as going on until the ultimate purchaser has been driven by the competition up to a fantastic price.  For he is ex hypothesi a willing purchaser and not one who is by circumstances forced to buy.  Nor can the bidding be imagined to stop at the first advance on the ‘poramboke’ value.  For the vendor is a willing vendor and not one compelled by circumstances to sell his potentiality for anything that he can get. Lord Romer then expressed the view that an imaginary auction was of no help, because the arbitrator still had to estimate the true value to the vendor of the potentiality.  He continued at p316: Upon the question of the value of the potentiality where there is only one possible purchaser, there are some authorities to which their Lordships will have to refer.  But dealing with the matter apart from authority it would seem that the value should be the sum which the arbitrator estimates a willing purchaser will pay and not what a purchaser will pay under compulsion.  It was contended on behalf of the respondent that, at an auction where there is only one possible purchaser of the potentiality, the bidding will only rise above the ‘poramboke’ value sufficiently to enable the land to be knocked down to that purchaser.  But if the potentiality is of value to the vendor if there happen to be two or more possible purchasers of it, it is difficult to see why he should be willing to part with it for nothing merely because there is only one purchaser.  To compel him to do so is to treat him as a vendor parting with his land under compulsion and not as a willing vendor.  The fact is that the only possible purchaser of a potentiality is usually quite willing to pay for it. Lord Romer then referred with approval to Inland Revenue Commissioners v Clay, and expressed the opinion that if the house, in that case, had been compulsorily purchased under the Land Clauses (Consolidation) Act 1845 before its purchase by the trustees, it should have been valued at £1,000 and not £750. Lord Romer a little later referred to Re Lucas and Chesterfield Gas & Water Board supra, and expressly disapproved the dicta of Fletcher Moulton LJ (relied on by the Solicitor-General in Inland Revenue Commissioners v Clay) mentioned above.  Lord Romer then referred to Sidney v North Eastern Railway Co [1914] 3 KB 629 and some dicta of Rowlatt J in that case and said at p322: If and so far as this means that the value to be ascertained is the price that would be paid by a willing purchaser to a willing vendor, and not the price that would be paid by a ‘driven’ purchaser to an unwilling vendor, their Lordships agree.  But so far as it means that the possibility of the promoter as a willing purchaser being willing to pay more than other competitors, or in the cases where he is the only purchaser of the potentiality, more than the value of the land without the potentiality is to be disregarded, their Lordships venture respectfully to differ from the learned judge. For these reasons, their Lordships have come to the conclusion that, even where the only possible purchaser of the land’s potentiality is the authority that has obtained the compulsory powers, the arbitrator in awarding compensation must ascertain to the best of his ability the price that would be paid by a willing purchaser to a willing vendor of the land with its potentiality in the same way that he would ascertain it in a case where there are several possible purchasers and that he is no more confined to awarding the land’s ‘poramboke’ value in the former case than he is in the latter. (3)  FR Evans (Leeds) Ltd v English Electric Co Ltd (1977) 36 P&CR 185* concerned a rent review clause under which the rent was to be ‘the rent at which the demised premises are worth to be let with vacant possession on the open market as a whole between a willing lessor and a willing lessee’ for the remainder of the term of the lease and upon the same covenants and conditions.  The demised premises in question were ‘the Walton Works’, which were exceptionally large factory premises.  Their size made them, for practical purposes, unlettable to anyone except English Electric.  (There was thus effectively a monopoly position on either side, akin to that in the present case.) *Editor’s note: Also reported at (1978) 245 EG 657, [1978] 1 EGLR 93. Donaldson J, on an appeal from an arbitrator, stressed that both the lessor and the lessee were hypothetical persons.  At p190, under heading (c), he said: The fact that it is very likely that the English Electric Co Ltd would have been the only potential lessee is relevant, but its relevance is indirect.  It does not matter whether the only potential lessee was this company or the XYZ Co Ltd.  What matters is that in the state of the market there was not likely to be more than one willing lessee.  The effect of this fact is not, however, decisive because this single potential lessee is to be assumed to be a willing lessee — neither reluctant nor importunate, but willing.  Just as the hypothetical lessor cannot rely too much on the fact that no property similar to the Walton Works is available on the market, so the hypothetical lessee cannot rely too much upon the fact that he has no competitors — he is, and is known to be, a willing lessee.  Furthermore, it is known that he will remain a willing lessee so long as the willing lessor does not press his demand for rent beyond the point at which he is ceasing to act as a willing lessor and at which a willing lessee would cease to be such. Donaldson J then mentioned Inland Revenue Commissioners v Clay.  Later he said at p192: The rent for which each is negotiating is that which is high enough to be acceptable to a willing lessor and low enough to be acceptable to a willing lessee. Finally, he said at p193: I also agree that the possibility of the parties’ failing to reach agreement is to be disregarded; to borrow and adapt an immortal phrase, ‘We are not interested in the possibilities of failure to reach agreement.  They do not exist.’  As the negotiations proceed, however, each will be considering whether it would not be better at a given level of rent to break off the negotiations.  True it is that they will resist these temptations, but the extent to which they operate on their respective minds will be reflected in the rent which will, notionally, be agreed in the end. There are further passages in the judgment of Donaldson J which are in my view of assistance.  His comments are, it seems to me, very much in line with those stated in the ‘Indian case’.  The report does not say whether he was referred to that case; but (particularly having regard to the experienced counsel involved) I would be surprised if he was not. The FR Evans case went to the Court of Appeal, but there is no report of the judgments there.  It appears, however, that Donaldson J’s reasoning and decision were approved: see the note at (1978) 245 EG 657 at p662, [1978] 1 EGLR 93. Mercury’s submissions as to compulsory purchase principles As I have indicated, Mr Aikens submitted that, in interpreting and giving effect to para 7(1)(a) of the code, an analogy should be drawn with the principles applicable on the compulsory purchase of land and the same principles applied.  Those principles are now embodied in the Land Compensation Act 1961 as amended, which replaced and broadly re-enacted the relevant parts of the 1919 Act.  It was not suggested that either of those statutes could be applied directly, but235 that the main principles which were developed by decisions of the courts under section 63 of the Land Clauses (Consolidation) Act 1845 should be.  The relevant part of that section provides that in estimating the compensation payable, regard should be had: not only to the value of the land to be purchased or taken by the promoters of the undertaking, but also to the damage, if any, to be sustained by the owner of the lands by reason of the severing of the lands taken from the other lands of such owner, or otherwise injuriously affecting such other lands . . . The section thus provided for compensation for severance and injurious affection, but did not go into any detail about the ‘value’ of the land. The principles evolved by the courts were summarised by Eve J in South Eastern Railway Co v London County Council [1915] 2 Ch 252 in a much-cited passage at p258 where he states them under six heads, the material ones of which read as follows: (1)  the value to be ascertained is the value to the vendor, not its value to the purchaser; (2) in fixing the value to the vendor all restrictions imposed on the user and enjoyment of the land in his hands are to be taken into account, but the possibility of such restrictions being removed for his benefit is not to be overlooked . . . (4) increase in value consequent on the execution of the undertaking for or in connection with which the purchase is made must be disregarded.  (5) the value to be ascertained is the price to be paid for the land with all its potentialities and with all the use made of it by the vendor. Head (4) is now commonly called ‘the Pointe Gourde principle’ from the case in which it was affirmed by the Privy Council, Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565.  I will return to this principle in due course. I should deal with one point which arises out of the South Eastern Railway case.  The facts were that the railway company owned two adjoining pieces of land near Charing Cross Station.  The LCC compulsorily acquired a frontage strip of one piece for the purposes of widening The Strand.  The arbitrator found that the value of the strip taken, on its own, was £18,330.  But he added that the aggregate value of the two pieces of land together had been reduced by only £3,465.  The LCC argued that the compensation payable was thus only £3,465, that being the loss to the owner.  Eve J and the Court of Appeal rejected that argument, holding that the compensation was £18,330.  Eve J at p259 of his judgment commented that the LCC’s argument: would bring about some starting results; the most obvious one being that it would upset all uniformity of value, inasmuch as the value of the identical piece of land in the hands of one vendor might be assessed at many times it value in the hands of another, and this, not from any intrinsic distinction, but by reason solely of extraneous considerations.  Moreover, it would be calculated to work injustice in that a vendor compelled to sell, and who the Legislature intended should be compensated for being compelled to sell, might have to accept from the undertakers a price far less than he would have obtained from any other purchaser, and out of all proportion to the true value of the land had it been ascertained without reference to the fortuitous circumstances of his being also interested in the contiguous land. Eve J’s reference to ‘uniformity of value’ in this passage has been seized on in later cases as affording support for the proposition that there should be uniformity of value whoever is the purchaser.  But it is clear from the facts and passage cited above that Eve J was dealing simply with uniformity of value in the hands of different vendors, and that his remarks have been taken out of their context in the two later cases to which I now refer. In support of his argument, Mr Aikens referred to and relied on two decisions on section 9(2) of the Mines (Working Facilities and Support) Act 1923 and its successor section 8(2) of the Mines (Working Facilities and Support) Act 1966.  Those Acts provide for the compulsory acquisition of rights to work minerals.  The sections each provide that ‘compensation or consideration’ is to be assessed: on the basis of what would be fair and reasonable between a willing grantor and a willing grantee, having regard to the conditions subject to which the right is or is to be granted. The resemblance between these words and those of para 7(1)(a) of the code is obvious.  The only difference of any possible significance is that the willing grantor and the willing grantee are hypothetical persons, not the actual grantor and grantee (as I have held above to be the case under para 7(1)(a) of the code).  In both of the decisions, the court held that the compulsory purchase principles outlined above applied by analogy.  I must consider each of them in some detail. In Re Naylor Benzon Mining Co Ltd [1950] Ch 567, the applicants owned land owned by one Dunkerley.  They had mined their own land for ironstone, but it was almost worked out and they negotiated with Dunkerley for the right to mine the ironstone in his land.  It was clearly convenient for the applicants to work Dunkerley’s land.  Wynn-Parry J said (in a passage omitted from the Law Reports, but appearing at [1951] 1 All ER 521A) that it was ‘common ground between the applicants and Mr Dunkerley that the applicants are in a particularly favourable position to develop the land . . ., both as regards continuity of work and as regards a saving of expense’.  The applicants were thus clearly in the position of special purchasers. The applicants therefore put forward a proposed draft mining lease setting out certain royalty payments.  It was clear from the evidence, said Wynn-Parry J at p574 of the law report: first that the applicants were anxious to come to an amicable agreement with the respondent Dunkerley if possible; secondly that they considered what from their point of view would represent a good commercial transaction, taking into account that, for the reasons to which I have already referred they were in a particularly favourable position to conduct mining operations on Dunkerley’s land. But Dunkerley did not accept the draft lease and its royalties, and so the applicants applied to the court for compulsory rights under the 1923 Act.  Matters then took a curious turn, because at an early stage of the hearing Dunkerley indicated that he was now willing to accept the draft lease with its royalties as it stood.  The applicants, however, had by then been advised that the royalties proposed in the draft lease were higher than those prevailing in the area, and said that, although they did not desire to resile from the terms which they had put forward, in view of certain sections of the Iron and Steel Act 1949 which had by then come into force, they could no longer properly consent to them. Counsel for the applicants argued that the compulsory purchase principles were applicable, and that under those principles it would be wrong to take into account the special value which the property might have to a special purchaser who had obtained powers of compulsory purchase (such as the applicants); on the latter point he relied on the dicta of Fletcher Moulton LJ in Re Lucas and Chesterfield Gas & Water Board, mentioned above.  Unfortunately, counsel for Dunkerley failed to draw Wynn-Parry J’s attention to the fact that those dicta had been expressly disapproved in the ‘Indian case’, although he did refer to Inland Revenue Commissioners v Clay.  Wynn-Parry J accepted both of those arguments, citing at some length and placing considerable reliance on the disapproved dicta of Fletcher Moulton LJ.  Although this is not entirely clear, Wynn-Parry J seems, following and applying those dicta, to have ignored the special value of the minerals to the applicants and to have set the scale of royalty payments by reference only to the general level of such payments in the area. I have to say that I find the Naylor Benzon case a difficult one.  Wynn-Parry J did not discuss the limitations inherent in the grant being on the basis of a willing grantor and a willing grantee (discussed under ‘Preliminary points on para 7(1)(a)’ and in the authorities dealt with in ‘Authorities on ‘willing” above), and seems to have thought that the alternative to applying the compulsory purchase principles would be an entirely open negotiation.  In applying the authorities he referred to the ‘uniformity of value’ dicta of Eve J in the South Eastern Railway Co case set out above, but with all respect applied them out of context and wrongly.  His other reason for applying the compulsory purchase principles stemmed from the disapproved dicta of Fletcher Moulton LJ.  Finally, even if those principles are applicable, in my view, the exclusion of the applicants’ own offer from being taken into account was contrary to the ‘Indian case’ and to Inland Revenue Commissioners v Clay. 236 BP Petroleum Developments Ltd v Ryder [1987] RVR 211*, on which Mr Aikens placed considerable reliance, concerned the Wytch Farm oilfield in Dorset.  By the Petroleum (Production) Act 1934, petroleum was nationalised (without compensation), but under section 2 power was conferred on the responsible minister to grant licences to search, bore for and get petroleum.  By section 3, the 1923 Act, and any Act replacing it was made applicable to petroleum with certain modifications, and available to any person granted a licence.  One such modification is that, by section 3(2)(a), an additional allowance of not less than 10% has to be made to the compensation on account of the acquisition of the working rights being compulsory.  Another is that by section 6, model clauses prescribed by regulations must be incorporated in any licence.  The model clauses prescribed provide for the Crown alone to receive royalty payments, and preclude the licensee from entering into arrangements to share the proceeds of sale of the petroleum with any other person. *Editor’s note: Also reported at [1987] 2 EGLR 233 BP had been granted a licence to exploit the Wytch Farm oilfield, and applied under the 1966 Act for the grant of working rights.  A good deal of the decision of Peter Gibson J relates to the question of whether any, and if so what, rights should be granted and to other matters (including compensation for disturbance and severance) with which I am not concerned.  But one of the main issues was that of the ‘compensation or consideration’ payable under section 8(2) of the 1966 Act.  Counsel for BP argued that the compulsory purchase principles were applicable, relying on the Naylor Benzon case.  Counsel for the respondent landowners argued the contrary, pointing out: (i) that a dictum of Finlay J in Re Consett Iron Co Ltd’s Application [1938] 1 All ER 439 at p447 that no assistance was to be derived from the Land Clauses (Consolidation) Act 1845 in considering compensation under the 1923 Act had not been drawn to Wynn-Parry J’s attention; and (ii) that the dicta of Fletcher Moulton LJ had been disapproved in the ‘Indian case’.  Counsel also pointed to analogous situations, including that identified in Stokes v Cambridge supra, a case to which I shall return, to justify a different approach.  But Peter Gibson J was unpersuaded and, following the Naylor Benzon case held that the compulsory purchase principles were applicable.  I will return later to the manner in which he applied those principles, and in particular in relation to the Pointe Gourde principle and the assessment of the potentiality to the landowners.  I would also mention that the landowners lodged an appeal, which was settled by agreement before it reached the Court of Appeal. Had the matter been free from authority, I would not myself have considered that the compulsory purchase principles were applicable to the 1923 and 1966 Acts.  I would have held that the relevant principles were those derived from the phrases ‘willing grantor’, ‘willing grantee’ and ‘fair and reasonable’ discussed above.  These are of course in many respects very similar to, and to large degree overlap, the compulsory purchase principles.  In most cases, the practical result is likely to be the same.  But I cannot myself see any justification for going beyond the former principles and introducing further concepts which Parliament refrained, presumably intentionally, from incorporating into the legislation.  Nevertheless, had the present case been one under the 1966 Act, as the Naylor Benzon case had been strongly challenged but followed in the BP case, I would have considered myself bound to follow them in that respect (even assuming that as a county court judge I am not technically bound by the decision of a High Court judge): cf Colchester Estates (Cardiff) v Carlton Industries plc [1986] Ch 80†  at p85. † Editor’s note: Also reported at (1984) 271 EG 778, [1984] 2 EGLR 64. Mr Aikens submitted that it necessarily follows, particularly from the BP case, that I should likewise apply the compulsory purchase principles to para 7(1)(a) of the code.  He said that there was no significant difference between the wording of that paragraph and the wording of section 8(2) of the 1966 Act, and that Parliament must have had that section and its interpretation in the Naylor Benzon case in mind when enacting para 7(1)(a) of the code. Mr Hobson pointed out a number of differences which he said distinguished the BP case from the present one.  These were briefly: (1) the legislative provisions use different wordings; (2) the case concerned the exploitation of petroleum which had been nationalised without compensation by the 1934 Act; (3) a licence under the 1934 Act confers a monopoly; (4) there are no model clauses in the present case; (5) licensees under the 1934 Act can acquire rights compulsorily (but so in effect can an operator under the code); (6) the criteria for the grant of rights are rather different under the 1966 Act and para 5 of the code; (7) in the present case there is no addition for the acquisition being compulsory; and (8) the particular phrases ‘compensation or consideration’ and ‘a willing grantor’ and ‘a willing grantee’ in section 8(2) of the 1966 Act are materially different.  However, I agree with Mr Aikens that these differences would not, by themselves, be of sufficient significance to justify me in drawing a distinction between the BP case and the present case.  But the matter does not end there. LIDI’s submissions as to compulsory purchase principles Mr Hobson submitted that there are three reasons why the compulsory purchase principles cannot properly be applied to para 7(1)(a) of the code. First, he drew attention to certain provisions of the code where the statutory provisions as to compulsory acquisition are expressly incorporated into the code.  These are: (i) para 4, and in particular subpara (8) which expressly incorporates some of the rules in section 5 Land Compensation Act 1961; and (ii) para 16, which deals with injurious affection and which (in my view significantly) incorporates the relevant provisions of the 1961 Act into the assessment of that part of the compensation for a grant specified in para 7(2).  Mr Hobson also drew attention to section 34 of the 1984 Act, which also directly incorporates the 1961 Act.  These express references, he submitted, preclude any unexpressed incorporation of compulsory purchase principles by analogy.  It is, in my view, also significant that where the 1961 Act is incorporated, the Lands Tribunal (which of course is familiar with compulsory purchase law) is given jurisdiction, as one would expect.  The fact that the county court is otherwise given jurisdiction suggests that Parliament did not consider that compulsory purchase law would otherwise be applicable. Second, Mr Hobson drew attention to the code concerning telecommunications under previous Acts, which was replaced by the code under the 1984 Act.  The relevant parts of the previous Acts provided as follows.  Section 6 of the Telegraph Act 1863 gave any telegraph company power to execute certain works under, over along or across any street (defined as a public way) or public road, and also power under subpara (4) thereof to: place and maintain a telegraph and posts under, in, upon, over, along or across any land or building, or any railway or canal, or any estuary or branch of the sea, or the shore or bed of any tidal water . . . By section 7 it was provided, so far as material, as follows: In the exercise of the powers given by the last foregoing section the company shall do as little damage as maybe, and shall make full compensation to all bodies and persons interested for all damage sustained by them by reason or in consequence of the exercise of such powers; the amount and application of such compensation to be determined in manner provided by the Land Clauses (Consolidation) Act 1845 . . . and any Act amending those Acts, for the determination of the amount and application of compensation for lands taken or injuriously affected. By the Telegraph Act 1868, which enabled the Postmaster-General to acquire the undertakings of telegraph companies, the 1863 Act was extended to the Postmaster-General.  By the combined effect of sections 3 and 4 of the Telegraph Act 1878 and the Telegraph (Construction) Act 1916, it was provided that differences between the Postmaster-General and other persons should be determined by a county court. The important point stressed by Mr Hobson was that until the 1984 Act the telecommunications code thus expressly incorporated the compulsory purchase legislation (and in particular the 1845 Act), as237  well as conferring jurisdiction on the county court.  He submitted that Parliament, in replacing the previous code with a new code which did not (apart from the specific instances I have mentioned) incorporate the compulsory purchase legislation, was deliberately not applying the compulsory purchase principles.  To construe the new code as nevertheless continuing to apply those principles would, said Mr Hobson, be flouting the plain intention manifested by Parliament.  (I should mention that both counsel agreed that there was no assistance to be gained from Hansard on the matter.) Third, Mr Hobson referred to other statutes by which public utility companies have been given powers to acquire rights compulsorily.  In all such cases, the compulsory purchase legislation, and in particular the Land Compensation Act 1961, had been expressly incorporated.  Mr Hobson instanced section 9 and Part II, Schedule 3, Gas Act 1986; section 10, Part II, Schedule 3 and para 7, Schedule 4, Electricity Act 1989; and section 155, para 1, Schedule 9 and para 8, Schedule 11, Water Resources Act 1991.  It is not necessary to go through these in any detail.  They essentially repeated similar provisions in previous Acts.  Mr Hobson said that the contrast with the code was obvious, and reinforced his argument that Parliament had not intended to apply compulsory purchase principles to the code. Conclusion on application of compulsory purchase principles I prefer the arguments of Mr Hobson.  It seems to me that the idea that Parliament must have had the wording of section 8(2) of the 1966 Act and the Naylor Benzon decision in mind when enacting the code is rather far-fetched anyway, but made quite untenable by the other parts of the code, the provisions of the code it replaced, and the comparable legislation.  I therefore hold that the Naylor Benzon and BP cases are distinguishable in this respect, and that para 7(1)(a) of the code must be applied without regard to compulsory purchase principles.  The principles applicable are those derived from the words ‘willingly’ and ‘fair and reasonable’ discussed above. Pointe Gourde principle It follows from the foregoing that the Pointe Gourde principle in compulsory purchase, on which Mr Room and Mr Aikens placed reliance, has no application.  However, I heard a good deal of evidence and argument relating to it, and for the sake of completeness I propose to make some comments and findings about it in relation to the facts of this case. The Pointe Gourde principle and its relationship to a Stokes v Cambridge situation were considered by the Court of Appeal in Batchelor v Kent County Council (1990) 59 P&CR 357*.  That case concerned the compulsory acquisition for highway purposes of a ‘ransom’ strip of land giving access to a substantial area of housing land.  Mann LJ, with whom the other members of the court agreed, referred to the short statement of the Pointe Gourde principle in the Pointe Gourde case itself supra at p572: It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition. *Editor’s note: Also reported at [1990] 1 EGLR 32. Mann LJ also cited another short passage from Fraser v City of Fraserville [1917] AC 187 at p194: . . . the value to be ascertained is the value . . . excluding any advantage due to the carrying out of the scheme for which the property is compulsorily acquired, the question of what is the scheme being a question of fact . . . in each case. Mann LJ then referred to Stokes v Cambridge saying [at p360]: In that case there was an assessment of compensation for land which had an agreed potential for industrial use subject to the provision of satisfactory access.  Satisfactory access should be secured across an adjoining strip of land which was in separate ownership.  The Lands Tribunal held that the value of the subject land should be diminished in the open market to take account of what the owner of the ransom strip would require before granting access across his strip . . . Stokes v Cambridge was not doubted before this court.  Nor was it suggested that the open market value of acquired land cannot embody a ransom component if it holds a key to development elsewhere . . . Counsel informed the court that the case was the first to come before it in which the relationship between the Pointe Gourde principle and Stokes v Cambridge had to be considered.  On that, Mann LJ said at p361: I find no difficulty with the relationship.  If a premium value is ‘entirely due to the scheme underlying the acquisition’ then it must be disregarded.  If it was pre-existent to the acquisition it must in my judgement be regarded.  To ignore the pre-existent value would be to expropriate it without compensation and would be to contravene the fundamental principle of equivalence . . . What is the ‘scheme underlying the acquisition’ in the present case?  Various suggestions were put forward on behalf of Mercury, including Mercury’s licence and national network or the provision of telecommunication services to the whole docklands area.  I agree with Mr Hobson that these suggestions are too wide.  In my judgment, the ‘scheme’ must be confined to the provision of telecommunication services to the Canary Wharf development and I so find as a fact. However, in my judgment, the premium value of the right to lay cable ducts was pre-existent to the acquisition of the right.  The Thameside earth station and the proposal to develop Canary Wharf both existed before the acquisition.  Following and applying the dicta of Mann LJ in the Batchelor case at p361 set out above, even if the compulsory acquisition principles had been applicable, I would have found that the Pointe Gourde principle was not relevant and so account had to be taken of the special value to Mercury of the proposed grant. I should mention that although Peter Gibson J in the BP case mentioned the Pointe Gourde principle, as I read his judgment he did not consider it applied on the facts of that case: see at p231 (left hand column) where he said: . . . I do not see why the fact that the presence of oil and gas in the Wytch Farm oilfield gives to the licensee (but only the licensee) a special interest in acquiring the rights should be ignored. That is clearly correct and in accordance with the dicta of Mann LJ set out above.  The existence of the oilfield and the value of the surface rights to exploit it plainly were pre-existing to the acquisition of those rights.  In my view, the situation is the same in the present case. Factors affecting quantification of the special interest In the BP case, evidence was given of annual sums paid for similar rights in comparable cases, which were greatly in excess of, and bore no relationship to, agricultural values (which were the existing use values).  Although as mentioned above he considered that the consideration for the grant should properly reflect the special interest of the licensee, Peter Gibson J felt able to disregard that evidence.  Instead, he returned (at p232) with some enthusiasm to the concept of an imaginary auction, notwithstanding its rejection by Lord Romer in the ‘Indian case’.  He said: In the real world the willing special purchaser would bid a price sufficient to make sure he would beat all who were acquiring the lands for their existing use.  I cannot see the logic of a purchaser, however willing, being assumed to pay a price far in excess of other bidders.  The willing grantor is to be assumed to be willing to sell at the best price he can obtain and he cannot be assumed to insist on a reserve price measured by reference to some value other than what is fairly and reasonably obtainable in the market. On that basis, Peter Gibson J decided that the consideration should be just ‘something more’ than the agricultural value of the land, and he fixed it at £45 per acre, an increase of 8% over the agricultural value of £40 per acre.  (This compared with the landowners’ valuer’s figure, based on the comparables of £2,500 per acre.)  Mr Aikens relied on this part of Peter Gibson J’s judgment and argued that I should adopt a similar approach. I am unable to accept that argument and I must respectfully decline to follow this part of Peter Gibson J’s judgment, for the following reasons: 238 (1)  In my judgment, it is inconsistent with the reasoning of the Court of Appeal in Inland Revenue Commissioners v Clay and that of Lord Romer in the ‘Indian case’.  I prefer those cases, by which I am bound. (2)  It appears simply to resurrect the ‘one more bid’ argument which was decisively rejected in those cases.  It has also been rejected in other contexts (see, eg Lloyd-Jones v Church Commissioners for England (1981) 261 EG 471, [1982] 1 EGLR 209), and is inconsistent with the actual decision in other cases (see, eg Lambe v Secretary of State for War [1955] 2 QB 612). (3)  The fallacy of that argument is exposed if one postulates a property which is of interest to only one purchaser or grantee, ie a property with a negligible existing use or ‘poramboke’ value, such as a factory constructed or adapted for the special use of a particular tenant or of such a size as to be of interest to only one tenant (as in the FR Evans case).  On the ‘one more bid’ argument, the vendor or grantor would sell or let at only a nominal or very small figure, without regard to the value to the purchaser or grantee.  In my view, on that basis he would plainly be a driven or forced vendor or grantor, and not a willing one. (4)  Similarly, the fallacy of the argument is also exposed by considering the case of a grant of a right of way or a wayleave agreement, which will cause no detriment to the landowner.  If there is only one possible user of the way in question, runs the argument, the person wishing to acquire the right of way will only have to offer a small consideration which the landowner will therefore be obliged to accept.  The logical consequence of this, it seems to me, is that the consideration will be the same whether the right of way is for the purposes of a small cottage or a large mansion or a factory.  That is plainly absurd and contrary to all experience.  In practice the landowner is able to negotiate an appropriate consideration, which can take one of several forms, eg a capital payment, an annual ascertained rent or a wayleave rent, depending on the circumstances.  The landowner is able to do so because he is able to take into account in his negotiating stance the importance and value of the proposed right to the grantee.  If he is forced to disregard these factors, he will, in my view, again cease to be a ‘willing’ grantor and will become a driven or forced one. (5)  On the facts of the BP case, it was held that a grantor would be ‘willing’ to grant on fair and reasonable terms at £45 per acre even though other grantors were receiving £2,500 per acre for similar grants.  It may well be that the latter figure was a somewhat false one and reflected a strong element of anxiety on the part of the grantee.  But making every possible allowance for that, I have to say that in my view the disparity borders on the absurd, and I find it impossible to see how the grantor would be considered ‘willing’ at the former figure. (6)  In his comments on Stokes v Cambridge at p231, Peter Gibson J expressed the view that that decision could only be justified on the footing that there was more than one possible purchaser of the ‘ransom strip’; this view again appears also to depend on the ‘one more bid’ argument.  With respect, that is a novel suggestion, and it finds no support in the decision itself nor in the recent cases in the Court of Appeal in which the Stokes v Cambridge principle has been considered by the Court of Appeal, ie the Batchelor case supra and Hertfordshire County Council v Ozanne [1989] 2 EGLR 18 (reported in the House of Lords on a different point at [1991] 1 All ER 769*). *Editor’s note: Also reported at [1991] 1 EGLR 34. Conclusion on Mercury’s main submissions For these reasons I reject Mercury’s main submissions that the compulsory purchase principles are applicable, that the Pointe Gourde principle is applicable and that the consideration should be only a nominal or small one. LIDI’s main submissions I turn to the main arguments advanced on behalf of LIDI.  Although the installation of the ducts in Eastwood Wharf Road would involve only a very small addition to Mercury’s network, it was said that the benefit to Mercury would be considerable.  The use of the ducts (and thus of LIDI’s land) would unlock the benefits which Mercury expects to gain from the Canary Wharf extension to its network, as originally set out and quantified in the business plan, but now adjusted in the revised forecast.  This is a highly relevant factor which LIDI would be able and entitled to take into account in any negotiations with Mercury.  LIDI would not be acting ‘willingly’ unless proper (but not undue) account is taken of the ‘potentiality’ of the land and LIDI’s bargaining position in this respect.  For the reasons which I have given above, and following Inland Revenue Commissioners v Clay, the ‘Indian case’ and the F R Evans case, thus far and in principle I agree with this submission.  But it of course leaves open the crucial question which is what would be ‘fair and reasonable’ if LIDI’s agreement to the deed of grant had been given willingly. Mr Sheard in his evidence, supported by Mr Hobson in his submissions, argued (as I have indicated) that the situation is analogous to the acquisition of an essential right of access to a development site.  The well known principle in such a situation, which is based on market transactions and which has been accepted by the Lands Tribunal and by the courts, is that the owner of the access land which of itself is of little value (or ‘ransom strip’ as it is often pejoratively, and perhaps misleadingly, referred to) can negotiate and is entitled to a percentage share in the resulting increase in the development value of the development site.  The quantification of the percentage share depends on the facts and circumstances of the particular case.  In Stokes v Cambridge supra, there was a compulsory acquisition of a development site.  The Lands Tribunal held that one-third of the development value should be deducted from the compensation payable because that amount would have to be paid to the owner of the access land.  The Batchelor case supra concerned the compulsory acquisition of the access land.  The Lands Tribunal awarded compensation at 15% of the development value of the development site.  In the Ozanne case supra, another case of compulsory acquisition of the access land, the award of 50% of the development value, which was on the footing that it would be split between different owners of the access land (a point stressed by Mr Hobson, because ducts would have to be laid elsewhere than in Eastwood Wharf Road in this case). This principle is not necessarily confined to the valuation of access land.  It may be equally applicable in any other situation where a development value is unlocked.  As an example, Mr Sheard in his evidence mentioned a case where a right to light had been released enabling a development to take place. On the footing of that principle, Mr Sheard suggested that the proper consideration to be paid by Mercury should be an annual sum representing a percentage of the anticipated net profit to Mercury from its Canary Wharf network ‘loop’.  On the basis of the business case (and assuming average annual depreciation of capital at 10% and interest on capital expended at 15%), in his original report he arrived at an annual sum of £140,000; this was based on a percentage share attributable to the rights to be granted of 15%. As I have mentioned, as a result of the figures in the revised forecast and the agreement reached at their meeting, Mr Sheard and Mr Room have agreed all the figures and percentages except the appropriate deduction for operating costs.  The average annual revenue forecast was agreed at £3,150,000; the revised capital expenditure estimate at £6,586,000; the appropriate rate of depreciation on capital expenditure at 10%; the appropriate rate of return on capital expenditure at 15%; and the appropriate percentage attributable to the deed of grant (making allowances to reflect certain agreed factors) at 4.33%.  This agreement and the annual consideration derived by each party therefrom can be summarised as follows: Description Mercury LIDI Estimated revenue £3,150,000 £3,150,000 Deduct annual costs Operating costs on revenue 1,417,500 (45%) 945,000 (30%) Depreciation on £6,586,000 658,600 (10%) 658,600 (10%) 239 Return on capital do 978,900 (15%) 978,900 (15%) Net benefit 86,000 558,500 Share attributable to deed of grant, agreed at 4.33% 3,724 24,183 but say £3,725 £24,175 The only difference is the percentage of operating costs on revenue.  Mr Room was of the opinion that the deduction for this factor should reflect all Mercury’s operating costs, and on that basis the appropriate percentage was agreed at 45%.  Mr Sheard was of the opinion that it should reflect only the incremental costs attributable to the Canary Wharf loop, and on that basis the appropriate percentage was agreed at 30%.  In their evidence, both gave detailed reasons for their opinions on this aspect of the matter. Conclusion on LIDI’s main submissions I do not propose to choose between these two opinions, because I altogether reject this method of arriving at a ‘fair and reasonable’ consideration.  In my judgment, it is not an appropriate method to use for any situation except where: (1) there is a single capital payment to be made; and (2) the benefit to the developer/payer can be relatively easily quantified, as in the typical Stokes v Cambridge situation.  I have heard no evidence of this kind of ‘profit’ calculation being employed in practice in any other situation, and in particular in any situation involving an annual payment.  In none of the comparable transactions referred to in evidence (including the ‘aerial agreements’ mentioned below) was there any suggestion of it being used.  I cannot think that, except in very special and unusual instances, it would be so used where its basis is an estimated future profit on an annual basis. Mr Sheard in his evidence and Mr Hobson in his argument, sought to draw support for LIDI’s argument and the application of the Stokes v Cambridge principles by reference to way leave rents.  The sharing of the benefit, said Mr Sheard in para 7.5 of his first report is a principle adopted not only where a development is made accessible by the grant of access rights by agreement, but also in relation to the grant of easements or wayleaves to transport minerals across lands; in such cases the owner of the land being crossed effectively charges a toll for the right to transport material by reference to the value or amount of material transported.  In doing so, it is frequently the case that an estimate is made in advance of the amount likely to be transported, and an annual sum fixed by reference to that estimate without subsequent adjustment to reflect actual movements. That, in my view, is an accurate description of a wayleave rent, and I would add that royalties are similarly ascertained by reference to the quantities of minerals extracted from the ground.  But, in my judgment, this does not support LIDI’s claim to share in the profits at all.  The whole point of wayleave and royalty payments is that they are related solely to the relevant quantity of materials, which reflects the use made by the grantee of the rights granted, not the profit made.  The payments have to be made whether the grantee operates at a profit or a loss. In the course of his argument on this aspect of the matter, Mr Aikens referred me to Whitwam v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538, in which the Court of Appeal considered the question of the proper measure of damages where ‘one man runs trucks on rails on another man’s land [when] it does not do any harm whatever, and there is no pecuniary damage’: see at p542.  Mr Aikens stressed that in such a situation the damages are not assessed by reference to the profits derived by the defendants from such a user.  As Rigby LJ pointed out at p543, ‘in fact it is a matter of indifference whether the defendants made a profit out of the transaction’.  In such a case, the damages are assessed on the basis of an appropriate wayleave rent.  In my judgment, the Whitwam case clearly supports Mercury’s argument against LIDI’s main submission that the consideration should be based on Mercury’s anticipated profit, although as mentioned below I think it may be something of a two-edged sword from Mercury’s point of view. There are, in my view, further cogent reasons for not assessing the consideration by reference to Mercury’s profit. It seems to me that whether Mercury makes a profit or not on its Canary Wharf loop is not really material.  Mercury might decide for business and prestige reasons to operate the loop at a nil profit or even at a loss.  It is difficult to see why that should affect the consideration.  The most material matters, in my view, are the amount of use of the ducts and cables, and their overall importance to Mercury and its operations. Although Mr Room and Mr Sheard have come to an agreement as to the manner in which the profit benefit to Mercury of the Canary Wharf ‘loop’ should be calculated for the purposes of these proceedings, there is obviously great scope for argument on many of the component factors.  In the normal case, this would make LIDI’s method of arriving at the appropriate consideration very difficult to apply in practice, and I think it is most unlikely that the market would attempt to do so. It will be apparent from the calculations set out above in relation to the figures agreed by Mr Room and Mr Sheard that some quite minor variations in some of the estimated figures and/or the appropriate percentages to be applied can and do lead to enormous differences in the resulting consideration figure.  This is vividly illustrated, first by the reduction in Mr Sheard’s original figure of £140,000 pa to £24,175 pa, and second by the fact the relatively small difference between them as to the proper percentage deduction for operating costs results in Mr Sheard’s figure being over six times Mr Room’s figure.  Other similar examples could be given by taking quite small adjustments to the figures or percentages; Mr Room’s schedule DJR 13 shows how sensitive the results are to small changes in the figures used.  This, to my mind, demonstrates that this method certainly does not accord with what the market would do and, in my judgment, does not produce a ‘fair and reasonable’ consideration. All the above figures and percentages have been arrived at after disclosure of Mercury’s business case and the revised forecast, and as the result of negotiations between Mr Room and Mr Sheard.  In the normal way in an ordinary transaction, the relevant information would not be available to the proposed grantor.  The market would therefore not take the figures and percentages into account, and I do not consider that it is right for me to take them into account: see the estate duty case of Lynall v Inland Revenue Commissioners [1972] AC 680, mentioned by Peter Gibson J in the BP case at p230. Basis of determination of consideration Having now rejected the main submissions of both sides, I must consider how otherwise to determine what would be the ‘fair and reasonable’ consideration for the deed of grant in accordance with the principles discussed above.  One suggestion was that it should be related to the development value of Eastwood Wharf Road.  In relation to that, there was evidence of the development value of sites in the area.  I do not propose to discuss that evidence, for two reasons.  In the first place, the road itself is not part of a development site and I am unable to see how that evidence is of any assistance in determining the value of the road.  I agree with Mr Room that the road’s value is only as an access and for carrying services.  Second, and more importantly, the value of the road for present purposes is the bargaining power it gives to LIDI, which is quite unrelated to either any development value of neighbouring sites or the intrinsic value of the road simply as a piece of land. The nearest analogous situation, in my view, is that of a wayleave, as discussed under ‘Conclusion of LIDI’s main submissions’ above.  The Whitwam case supra gives a good illustration of the appropriate method of fixing an appropriate consideration for a right of importance and value to the grantee but which causes no detriment to the grantor, which is why I have described that case as something of a two-edged sword for Mercury to employ; and, as I have already said, wayleave payments automatically reflect the use made of the right granted and its importance to the grantee.  In principle, it seems to me that the equivalent of a wayleave rent would be the most ‘fair and reasonable’ method of determining the consideration.  However, that is plainly not practical in the present case, just as it is not practical in the240 majority of right of way cases.  There must necessarily be instead a capital payment or annual rent, but that should, in my view, reflect the anticipated use of the right and thus its importance and the value to the grantee. The only material on which this can be based is, I consider, the evidence of comparable transactions and I must now turn to these. Aerial agreements At an early stage of the hearing before me, Mr Hobson made an application for leave to adduce evidence of transactions relating to the grant of rights to fix and use aerial antennae on radio masts and elsewhere.  Mr Aikens objected to the introduction of this evidence on the grounds: (1) that it was irrelevant; and (2) that it was too late.  As to (1), I considered that the evidence could well be of assistance, in that it might show how the market fixed the compensation for the grant of a not dissimilar right of value to the grantee which caused little or no detriment to the grantor, and that it was not therefore irrelevant.  As to (2) however, I took the view that in general terms the evidence was much too late and so there would be unfair prejudice to Mercury if such evidence were to be allowed in.  The evidence would effectively be of comparable transactions which Mercury’s witnesses would be unable to investigate and thus put themselves in a position to be able to comment upon.  But it appeared that some of the transactions involved organisations associated with Mercury.  I took the view that Mercury’s witnesses would not have undue difficulty in ascertaining sufficiently the facts and circumstances of those transactions.  I therefore allowed evidence of those transactions, but not others, to be adduced.  Mercury was in fact able to produce evidence as to those transactions, and the circumstances in which they were negotiated. I summarise that evidence as follows.  The transactions in question concerned the grant of licences to Mercury Personnel Communications Network Ltd (‘MPCN’) or Mercury Personal Communications (‘MPC’), a partnership with which Mercury is connected, albeit indirectly, and of which MPCN became a part.  MPCN was, and MPC is, involved in the mobile telephone business, and required the use of suitable radio masts.  Negotiations took place for this purpose with the PLA, which owned Cory’s Radio Mast at Gallion’s Reach near the River Thames.  There was an initial agreement in early 1991 for MPCN to be entitled to fix two antennae (with associated equipment) to the mast at an annual rent of £3,000, subject to an annual upwards-only RPI adjustment.  Shortly afterwards, MPCN’s requirements were increased first to four installations and subsequently to varying larger numbers of installations.  It became clear that the PLA required £1,500 per installation and was not prepared to concede any discount for the larger numbers.  The licence which was eventually granted to MPC permitted six aerials and eight microwave dishes at an annual rent of £21,000 (ie £1,500 per installation) subject to yearly upwards-only RPI reviews. The affidavit evidence of Mr Rodney J F Gillington [FRICS], a chartered surveyor experienced in this field, is of interest.  Towards the end of his affidavit he says: It is not unusual to express rental on a ‘per antenna’ basis especially on existing radio masts or on sites operated by telecommunications companies.  Owners of existing radio masts and telecommunications companies are aware of the value to an operator of a radio mast or an established telecommunications site.  There is a market in radio masts because the benefit of such a site to an operator like MPC is known.  As regards this mast, firstly, there is no real alternative in the area, especially to an operator faced with the time constraints which faced MPC in this case.  Secondly, the mast is available for immediate use by the operator.  Thirdly, such a mast involves the operator in no capital cost and limited planning constraints.  All these must have been weighed up by MPC before they agreed to accept the rental. This evidence is not, in my view, of any assistance as regards the quantum of the consideration in the present case, for the rights granted and the circumstances generally are wholly different.  But nevertheless the evidence is, in my judgment, of value because it provides illustrations and cogent support for some of the matters I have discussed above, as follows: (1)  In the real world of the market, a grantor who is in a position to grant a right of value to a grantee can and does obtain a not insubstantial consideration for the grant.  There is no question of his accepting a nil or nominal amount because the grant of the right involves him in no loss or detriment.  The fact is that he is able to use his bargaining strength to negotiate a realistic, but not excessive, figure.  How much he is able to negotiate depends on the importance of the right to the grantee, the special suitability of the site to the grantee and the availability of the alternatives. (2)  Mr Room, in his second supplementary report dealing with the aerial agreements, accepted that Eastwood Wharf Road, like Cory’s Radio Mast, has a special suitability to Mercury by reason of its location.  But he argued that the circumstances were different in that the mast was an expensive capital investment of value to the PLA and it was not surprising that the PLA should expect a payment by way of contribution to the costs from any one who wished to share its facilities.  In my judgment, this argument is fallacious, for the expenditure of the grantor is not really relevant to the critical factor, which is his bargaining power.  The expenditure would count for nothing if there was no demand for the use of the mast, and an absence of expenditure does not affect the value to the grantee of a facility and therefore the bargaining power of the grantor. (3)  However, there was never any question of the consideration being ascertained by reference to the profits of MPCN or MPC.  The consideration is an index-linked annual sum assessed, indirectly at any rate, by its value to the grantee and the market generally. (4)  For these reasons, in my judgment, the evidence of the aerial agreements affords no support for, and indeed is evidence at variance with, the main contentions of both Mercury and LIDI. (5)  It was argued on behalf of LIDI that the evidence shows that there should be no discount for bulk allowed in the assessment of consideration, but, in my view, the situations are not comparable in that respect, for these reasons: (a) It appears that there are plenty of would-be grantees for rights to use Cory’s Radio Mast, so that a grantee has little bargaining power in that respect; (b) Cory’s Radio Mast can accommodate only a finite number of antennae, and the increase in the number of antennae correspondingly reduces the amount of space available.  The position is different in the case of the installation of cables encased together, occupying only the surface area covered by three cables although going relatively deep; it was accepted by Mr Sheard in evidence that there would be little prospect of other services being laid under Mercury’s cables; (c) I think there may well be substance in Mr Room’s view that the course of the negotiations may have affected the availability of a discount, and that if facilities for the full 14 antennae had been requested at the outset, some reduction from the per antenna figure might have been obtained. Agreements with NFU and CLA Mr Room gave evidence, supported by the documents in his appendix DJR 5, of standard wayleave agreements negotiated by Mercury with the National Farmers’ Union and the Country Landowners’ Association.  The figures applied during the three years ended December 31 1991, but are currently under renegotiation.  The agreements provide for capital payments for the grant of 25-year terms, calculated at £3 per metre for single cables, £3.50 per metre for double cables, £285 for surface manholes and £10 for deep buried manholes.  (These are the figures for owner-occupiers, and are apportioned in other cases between the owner and the tenant.)  On a similar basis, Mr Room calculated that the consideration in the present case should be a capital sum of £2,000, which he put forward as a possible alternative to a nominal figure. I am unable to accept this evidence as being of any value in the present case.  To start with the obvious point, the figures were in respect of non-urban land and the documents show that they were to some extent arrived at by reference to the value of agricultural land.  Further, the fact that the standard figures are on a per metre and per manhole basis show that they are really only, or at any rate mainly, concerned with compensation for actual depreciation and inconvenience.  It is clear that the figures do not include anything to reflect any bargaining power individual owners may have due to special circumstances.  They appear to cover, for instance, cases where it would be relatively easy (if less convenient) for Mercury to lay ducts under adjoining public highways at no consideration, and do not provide for any addition where the opposite is the case.  They are thus dealing with an entirely different situation, and can afford no help in the present case where (as I have held) the considerable bargaining power of LIDI is the dominant factor, and indeed the only factor of any consequence, to be taken into account. Schedule and analysis of comparables Mr Room and Mr Sheard agreed a schedule and analysis of 16 transactions in the City of London.  Owing to the confidentiality of BT’s transactions, all the transactions in the schedule were bargains struck by Mercury with landowners in private negotiations without any application to the court under the telecommunications code.  All were grants (mostly for a 25-year term) permitting the installation of between one and four 90, 95 or 100mm cables, ie cables of similar width to those in the present case, but many fewer of them.  Mr Room and Mr Sheard omitted from the schedule a number of transactions in which the grantor had received direct benefit from the grant (by the landowner’s building being connected to the Mercury system); in my judgment, Mr Room and Mr Sheard were clearly right to omit these, because they could not be comparables of any evidential value in relation to a transaction in which the grantor receives no benefit apart from the monetary consideration itself. The amounts paid by way of consideration for the grants were a mixture of capital and annual payments.  The capital payments have been converted into annual payments by taking a seven years’ purchase, and the figures adjusted in accordance with the Retail Price Index to October 1992 (at the time, that being the most recent date for which figures were available), in order that the transactions can be compared on the same basis. Unfortunately, there are special factors affecting most of the transactions which, in my judgment, renders them of no real evidential value, as follows: (a)  In each of the transactions numbered 1, 4, 5, 10, 11, 13, 14 and 15 in the schedule, it is apparent that the grantor’s tenants would obtain benefit from the installations.  Mercury’s services being connected to the relevant buildings.  This might well increase the rental and/or lettability of the buildings and thus benefit the grantor.  In my view, these transactions really fall into the same category as those omitted by Mr Room and Mr Sheard mentioned above. (b)  In three other transactions, numbered 1, 9 and 12, the cables had been laid across private land in preference to breaking up the adjoining public highway (when, as I have indicated, no consideration is payable).  This factor plainly affected adversely the bargaining power of the grantor (and indeed may well have removed it altogether), and probably accounts for the consideration in nos 1 and 12 being nil.  As regards no 9 (647 Commercial Road), the evidence was that it had not been appreciated that Mercury’s cables, which had been laid under a pavement, had in fact been laid in private land until a sale of that land had been agreed.  The grantor was anxious to regularise the position as quickly as possible in order not to jeopardise his sale. (c)  In the transactions numbered 2 and 3 (Throgmorton Avenue), it appears that the services had to be connected to adjoining buildings, which puts them in the same category as (a) above.  But in addition the grantor has the right to determine the agreement on six-months notice. (d)  In the transaction numbered 16 (Marks and Spencer car park), the cable serves only one customer. The transaction numbered 6 (Billingsgate Market) was an early transaction for 10 years only, the two 100mm cables being intended as only temporary until replaced, as they now have been.  The consideration was £1,500 pa, subject to RPI increases, and in addition Mercury agreed to make certain other payments during the laying of the cable and to pay the grantor’s costs of £1,250.  These factors, in my judgment, render the transaction of some evidential value (in contrast to those mentioned in paras (a) to (d) above, albeit limited value. The best comparables, purely as transactions, are those numbered 7 and 8 in the schedule, which are ‘the 1987 agreement’ with the PLA and the ‘1988 agreement’ with LIDI which I mentioned under ‘Proposed rights’ above.  Under the 1987 agreement, Mercury was granted the right to lay two 100mm cables over a length of 700m, and under the 1988 agreement the right to lay four 95mm cables over a length of 340m.  However, the evidence as to the negotiations leading up to these two agreements shows that there was no direct consideration of the telecommunications code or of the principles on which the consideration should be determined.  What happened as to the 1987 agreement, which was in fact negotiated in October 1985, was that Mr Graham D Hall [FRICS] (who gave evidence) had a meeting with two representatives of Mercury.  There had not been much preparation for the meeting.  Mercury’s representatives suggested an annual rent of £1,000, Mr Hall suggested £5,000, and the parties split the difference by agreeing the figure of £3,000 pa.  It was, said Mr Hall, really a ‘horse deal’.  As to the 1988 agreement, Mr Desmond Collier on behalf of Mercury and Mr Hall merely took the 1987 agreement figure.  The number of cables was to be double but the length of them was to be about half.  Both Mr Collier and Mr Hall said that there was very little discussion as to the consideration, which was considered as being almost ancillary to other matters. Mr Aikens submitted that, having regard to the evidence about the negotiations, little reliance could be placed on these agreements as comparables.  He also stressed that there were important practical circumstances which must have had the effect of inducing Mercury to agree excessive amounts.  Although it would have been theoretically possible to invoke the code and have the consideration determined by the court, this was not an option in practice open to Mercury by reason of (a) the inevitable delay and the time constraints on Mercury to get its network into operation; (b) the inherent uncertainty involved; and (c) the expense of any litigation, which would be out of all proportion to the amounts involved (although this factor would also affect LIDI).  Mercury thus had a considerable ‘anxiety to settle’.  In my view, there is plainly great force in these points, and they have been recognised by the Lands Tribunal in other contexts where there is a grantee’s ‘anxiety to settle’ as affecting the reliability and evidential value of comparables: see eg Delaforce v Evans (1970) 22 P&CR 770*.  If there had been more reliable comparables available.  I would not have placed put much weight on them. *Editor’s note: Also reported at (1970) 215 EG 315. However, that is far from saying that the 1987 and 1988 agreements (and transaction no 6) are of no evidential value.  Although the telecommunications code was not directly considered, it was in the background.  The cables were of equivalent dimensions.  Importantly, to my mind, both parties were undoubtedly ‘willing’ to enter into the agreements.  Furthermore, the figures agreed, albeit after an unsophisticated ‘horse deal’, seem to me to be, if a little high, at any rate in the right sort of bracket, and of a kind that appears to be fair to both parties and reasonable.  The agreements are of course at total variance with the main arguments of either party before me.  But I have to say, that in my view, the unsophisticated first thoughts and reactions of Mr Hall on behalf of LIDI and Mr Collier and the other representatives of Mercury in the initial negotiations produced results which are much more in accord with what was envisaged by para 7(1) of the code than the alternative results produced by the main arguments of the parties before me. Conclusion Having, for the reasons set out above, rejected the main arguments of both parties, and also Mercury’s reliance on the NFU/CLA agreements, I must do the best I can with the sparse material available.  In the circumstances, and in default of anything better, the starting point must, I think, be the 1987 and 1988 agreements.  At current money values, these can be taken as providing in round figures for annual payments of £4,000.  I adjust this figure downwards by about241 one-third to take account of Mercury’s ‘anxiety to settle’.  I then use it to determine what I think would be a corresponding figure for three cables laid side by side, as the uppermost cables.  This is not easy, because the two £3,000 annual payments in the 1987 and 1988 agreements took into account different lengths of cable, which I consider in this case (depending as it does on the parties’ bargaining strengths) as a factor of little importance.  This determination is necessarily rough and ready and a matter of judgment, but I arrive at a figure of £2,000 pa.  I must then take account of the seven layers of three cables underneath the uppermost three cables.  I reject the suggestion that these should be ignored, which seems to me to ignore LIDI’s bargaining strength and to be quite unrealistic.  But, in my judgment, it is appropriate to make a fairly substantial discount for these layers, and I determine a discount of 50%.  That adds up to a total annual figure of £2,000 + 50% of 7 x £2,000 = £9,000.  I do not consider it appropriate to add anything for the manholes etc, as they are simply component parts of the installation of the 24 cables and the figures I have determined already take them into account. I now consider that figure objectively and ignoring the method of arriving at it.  In my judgment, it is the right sort of figure given the importance of the ducts to Mercury and the bargaining strengths of both sides, and I consider that it is fair to both parties and reasonable on the basis that the deed of grant was to be willingly given. Accordingly, I hold that the figure to be inserted in the deed of grant should be an annual figure (and not a capital sum), and should be £9,000 pa.  I will hear counsel as to the precise form of order and as to costs and any other matters.