LC-2023-000734 - [2025] UKUT 00058 (LC)

Has there been a breach or have there been breaches of the Alienation Clause?

We take this question first because, if there has been no breach, the remaining questions do not arise. In answering this question, we are required to address the construction of the 2003 Agreement. We are also required to address the construction of the relevant agreements between Vodafone and CTIL, namely the Contribution Agreements and the 2012 MSA, which are lengthy and complex. There was no dispute over the general principles of construction which we should apply, which are well-known and do not need to be set out here. In particular, Vodafone’s counsel drew our attention to the summary of these principles set out by Lord Neuberger PSC in Arnold v Britton [2015] UKSC 36 [2015] AC 1619, at [15]:

“15 When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, para 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions. In this connection, see Prenn [1971] 1 WLR 1381, 1384—1386; Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 989, 995—997, per Lord Wilberforce; Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, para 8, per Lord Bingham of Cornhill; and the survey of more recent authorities in Rainy Sky [2011] 1 WLR 2900, paras 21—30, per Lord Clarke of Stone-cum-Ebony JSC.”

So far as breach is concerned, the starting point is the 2003 Agreement. Following the withdrawal of the allegation that Vodafone has transferred the Rights to CTIL, there remains the allegation that there has been a sharing of the Rights or some of them with CTIL.

In particular, and as Mr Watkin explained in closing submissions, the Respondents rely upon the fact that the grant of the Rights included the right to install and use the Passive ECA on the Vodafone Site. The Respondents’ case is that it is CTIL which has been and is using the Passive ECA on the Vodafone Site for the purposes of its own business. While, as mentioned above, the Respondents no longer allege a transfer of the Rights to CTIL, they do allege that the beneficial interest in the Passive Assets has been transferred to CTIL, together with a transfer of the goodwill in the Vodafone Site Management Business (as defined in the Contribution Agreements) and a transfer of the management and exploitation of managed sites and the Passive Assets (as defined in the Contribution Agreements) on those sites.

The 2003 Agreement itself contains two qualifications to the restriction on sharing the Rights.

First, by the Deed of Variation, Vodafone is permitted to share the Vodafone Site and the Rights with Telefonica, and has done so. We have noted that the company referred to in the Deed of Variation is Telefonica O2 UK Limited, while the company we are referring to as Telefonica, is Telefonica UK Limited. We understand that Telefonica O2 UK Limited is the former name of the company (Telefonica UK Limited) we are referring to as Telefonica. It follows that paragraph 1.11.3 of the Alienation Clause, as incorporated into the Alienation Clause by the Deed of Variation, applies to Telefonica.

Second, by paragraph 8.4 of the Fifth Schedule to the 2003 Agreement, the rights granted to Vodafone by the 2003 Agreement are expressed to extend to the exercise of those rights by Vodafone’s “agents contractors personnel telecommunications link providers and others authorised by Vodafone from time to time”. It is Vodafone’s case that this is what has happened in the present case. So far as CTIL has exercised the rights granted by the 2003 Agreement in respect of the Vodafone Site, it has done so as the agent of Vodafone, for the purposes of Vodafone’s business. Counsel were agreed that paragraph 8.4 essentially replicated the common law position; namely that exercise of rights in respect of premises, by the agent of the person who has the benefit of those rights, does not, without more and provided that the agent is acting in their capacity as agent, amount to a transfer or sharing of those rights.

The material we have to consider and analyse, in relation to the question of whether the Alienation Clause has been breached, falls into two broad categories. First, there are the relevant agreements entered into between Vodafone and CTIL. As agreed between the parties, the agreements we need to analyse in this first category comprise the Contribution Agreements and the 2012 MSA. Second, there is the remainder of the evidence adduced at the Trial, so far as it bears or is said to bear on the question of whether the Alienation Clause has been breached. Although it is convenient to consider these two categories of material in turn, we stress that the factual background is relevant to our analysis of the agreements between Vodafone and CTIL, in two respects. First, the factual background is relevant, in the construction of the relevant agreements, so far as it forms part of the admissible factual matrix at the time when a particular agreement was entered into. Second, the conduct of the parties, subsequent to a particular agreement is capable of being relevant, if and in so far as it casts light on the admissible factual matrix at the time when the relevant agreement was entered into. For these reasons we have kept the factual background in mind, in our analysis of the relevant agreements.

Before we come to the first of the above categories, namely the relevant agreements, it is convenient to make express reference to some of the authorities to which we were referred on the question of breach. We were referred, in particular, to a number of cases where the courts have had to consider where the dividing line is to be drawn between (i) occupation of premises by an agent, for the purposes of the business of the principal, and (ii) occupation of premises by a person for the purposes of their own business. We refer, in particular, to three of these cases.

In Dellneed v Chin (1986) 53 P&CR 172 the question before Millett J (as he then was) was whether what was described as a management agreement, entered into in relation to a Chinese restaurant, had in fact taken effect as a lease. The management agreement had been entered into between Mr Chin, the long leasehold owner of the premises, and Dellneed Limited for the purposes of Dellneed running a restaurant from the premises. The management agreement reflected a traditional arrangement in the Chinese restaurant trade, whereby an established restauranteur would make their premises available to a newcomer to the restaurant business who did not have the capital or experience to start up on their own.

In his judgment Millett J analysed the provisions of the management agreement in detail. His conclusion, on the basis of that analysis, was stated in the following terms, at page 185 of the report:

“It is plain from what I have already said that the management agreement does not represent the true relationship between the parties and that one of its purposes was to mislead the landlord should he make enquiries of the basis upon which Dellneed was or appeared to be in possession. It is plain that what was paraded as a management agreement was in truth nothing of the kind. Whatever the true relationship of the parties created by the agreement it was not the relationship of owner and manager of a business. The business which Dellneed was "to manage" was its own.”

So far as the substance of the transaction was concerned, Millett J stated his conclusion in the following terms, at pages 185-186 of the report:

“The substance of the transaction in the present case was abundantly established by the evidence. It was that for a period of three years Dellneed was to have the use of a fully furnished and equipped restaurant, with an established name and reputation on which to carry on its own restaurant business; that Mr. Chin was to make his advice and experience available to Dellneed; and that Dellneed was to pay to Mr. Chin the outgoings of the premises and an additional £400 a week so that Mr. Chin should receive this latter sum clear. I am quite satisfied that this arrangement necessarily involved, did involve and was intended to involve the granting of exclusive possession to Dellneed.”

In Teeside Indoor Bowls Ltd v Stockton-on-Tees Borough Council [1990] 2 EGLR 87 the question, again, was whether a local authority could demonstrate an intention to occupy certain premises within a leisure complex, which had been used as an indoor bowling club, within the meaning of paragraph (g) of Section 30(1) of the 1954 Act. The tenant of the premises, which had constructed and run the bowling club from the premises, pursuant to a 21 year lease granted by the local authority, argued that the local authority could not prove the intention to occupy because they intended to employ an outside company to operate the bowling club. For this purpose the local authority had entered into a detailed agreement with the company, pursuant to which the company was to operate the bowling club. The judge at first instance decided that this agreement was what it was said to be, namely a management agreement, so that the local authority was able to say, for the purposes of paragraph (g), that it would be occupying the premises through the operating company. The tenant appealed to the Court of Appeal. The appeal was given short shrift. Following a brief review of the terms of the management agreement Lloyd LJ, with whom Ralph Gibson LJ and Sir Denys Buckley agreed, stated his conclusion on the terms of the management agreement in the following terms, at 88L-M:

“Nobody suggests that any of these provisions — and there are many others which point in the same direction — are a sham. They give the council almost complete control over the operation of the company in running the club, as indeed the judge found. Clause 6 of the agreement governs the disposal of surplus income from running the club. Mr Merritt does not suggest that those provisions are in any way inconsistent with agency. It follows that as between the council and the company the council always intended to occupy, and have in fact occupied, the premises for the purposes of a business carried on by them through the company as the council's agents.”

Coming finally to Brumwell v Powys CC [2011] EWCA Civ 1613 [2012] L.&T.R. 14, this case featured prominently in the submissions of the parties. The case was concerned with land owned by the local council and used as a caravan park and as a camping ground. It is convenient simply to refer to this land as a caravan park. The defendant council entered into a set of three agreements with the claimant, an employee of the council who had previously been appointed as warden of the caravan park. The agreements comprised an operator agreement, whereby the claimant was appointed as operator to manage the park, a service occupancy agreement which provided the claimant with accommodation, and a contract of part-time employment to provide security at the site. The claimant commenced proceedings against the council, seeking to establish that, following the operator agreement, he had carried on the business of the caravan park on his own account and had occupied the park for that purpose. On this basis the claimant claimed that he was entitled to a new lease of the caravan park pursuant to the 1954 Act. The council’s case was that the claimant had been carrying on the council’s business at the park, as agent of the council and, as such, had no right to a new lease under the 1954 Act. The claimant’s case failed at first instance, and his appeal to the Court of Appeal was dismissed. In his judgment in the Court of Appeal, with which Pitchford and Laws LJJ agreed, Lloyd Jones J (as he then was) first rejected the argument that the service occupancy agreement and the employment contract were sham agreements. He then went on, at [34] and [35] to identify the task before the court in the following terms:

“34

The three agreements were intended by the parties to be part of the same transaction and accordingly, in ascertaining their effect, they should be read together. The central issue, both below and before us, was whether Mr Brumwell was the agent of the council in running the business on the Site. It was common ground between the parties that if Mr Brumwell ran the business as agent of the council he could not have exclusive possession of the Park. Mr Blohm submitted that Mr Brumwell carried on the business under the agreements in his own right and that therefore he had exclusive possession of the Park, was a tenant of it and was entitled to a new tenancy. On behalf of the council, Mr Graham Walters submitted that under the new arrangements set in place in 1998 Mr Brumwell ran the business on behalf of the council and that therefore he did not have exclusive possession of the land. Alternatively, pursuant to a respondent’s notice dated July 1, 2011 he argued that, independently of the conclusion on the issue of agency, there was no lease and no exclusive possession.

35

These issues are to be determined on the construction of the three agreements considered in the light of the surrounding circumstances and the purpose to be served by the agreements but not, as the judge observed, by reference to pre-contract negotiations. In construing the agreements the language and legal terminology employed by the parties are not conclusive in determining the legal incidents of the relationships; it is the substance of the agreements which matters.”

In reviewing the terms of the agreements, Lloyd Jones J noted a number of features of the operator agreement which he characterised as pointing strongly to the conclusion that the claimant carried on business on behalf of the council. His conclusions on the overall effect of operator agreement, even without taking into account the two other agreements which also had to be considered, were in the following terms, at [42] and [43]:

“42

At each step of the preceding analysis of the terms I have considered whether the fact that it was contemplated that the business would revert to the council might explain the degree of control by the council over the operation of the business by Mr Brumwell. However, to my mind, this cannot explain the remarkable intensity of control retained by the council over the business. Similarly, I have considered whether the council’s interest as a public authority in promoting tourism in mid-Wales could provide an explanation for its retention of control in the respects identified. However, I agree with the judge that the terms of the Operator Agreement go considerably beyond what is reasonably explicable by reference to any responsibilities the council may have as a public authority for the promotion of tourism.

43

The cumulative effect of these provisions leads me to the clear conclusion that Mr Brumwell undertook to manage the undertaking as the agent of the council.”

Keeping in mind the principles established by these and the other authorities to which we were referred on the question of breach, we turn to our analysis of the relevant agreements between Vodafone and CTIL; namely the Contribution Agreements and the 2012 MSA. There is one other preliminary point which we should make before our analysis. The Contribution Agreements and the 2012 MSA are lengthy and complex documents. We have been through the provisions of the agreements in detail, and we have had that detail in mind in our consideration and analysis of the agreements. It is not however feasible to make express reference to all of the provisions to which our attention was drawn in the agreements, nor expressly to go through the detail of all relevant parts of the agreements.

We start with the 2012 Contribution Agreement. We have already set out Recitals (R) and (S). They are important for two reasons.

First, Recital (R) recorded the intention of the parties that the telecoms site management business of each of the operators, including the single grid of sites and the passive radio access network assets on such sites should be transferred to and carried on by CTIL. CTIL was to acquire “real estate interests in the single grid of sites over a period of time and in a structured manner so as to achieve the single grid as efficiently and quickly as possible”. Thus, what was intended was a transfer to CTIL of Vodafone sites, including their management and Passive ECA, over a period of time and in a structured manner.

Second, Recital (S) recorded the intention of the parties that CTIL should, once operationally ready to do so, “as agent of Telefonica and Vodafone”, take over the management of all the sites belonging to Telefonica and Vodafone, pending the transfer of the sites selected for the single grid to CTIL, and take decisions to decommission sites which were no longer required. Each of Telefonica and Vodafone was to appoint CTIL as its agent and to grant to CTIL the rights it needed to undertake such management activities under its contribution agreement. Thus, what was intended was that CTIL would manage sites belonging to Telefonica and Vodafone, pending their transfer to CTIL, as agent of, respectively, Telefonica or Vodafone.

The intentions stated in these recitals were carried over into the clauses of the 2012 Contribution Agreement. The basic obligation in relation to the intended transfer was set out in clause 2, in the following terms:

“2.1

Vodafone shall sell and JVCo shall purchase, with effect from Completion, in accordance with the terms of this Agreement and subject to the provisions of Clause 5 (Third Party Consents) the Vodafone Site Management Business, constituted by the Sale Assets, so far as possible as a going concern.

2.2

The Vodafone Site Management Business to be transferred to JVCo shall comprise the management and exploitation of the Transferred Sites and the Managed Sites and the Passive Assets located on those Sites, including:

2.2.1

site acquisition, design and build;

2.2.2

site installation and commissioning;

2.2.3

site operation and maintenance;

2.2.4

making sites available to mobile network operators for the installation of Active RAN Assets on the sites; and

2.2.5

site decommissioning.

2.3

For the avoidance of doubt, notwithstanding the provisions of Clause 2.1, the transfer to JVCo of legal and/or beneficial ownership of any interest in a Site shall be completed in accordance with the provisions of Clause 5 (Third Party Consents) unless no Third Party Consents are required, in which case the Vodafone Transferring Site will be transferred to JVCo on Completion.”

The definitions used in the 2012 Contribution Agreement were located in a separate document, described as the Beacon Glossary, which was attached, as we understand the position, to a separate agreement or agreements relating to Project Beacon. Where we refer to definitions in our analysis of the 2012 Contribution Agreement, we are referring to the definitions in the Beacon Glossary.

Clause 2 introduced a number of the key definitions used in the 2012 Contribution Agreement. The Vodafone Site Management Business was defined in the following terms:

“Vodafone Site Management Business means the business of managing and exploiting a network of Sites and the Passive Assets located on those Sites, as carried on by Vodafone as at the date of Closing, including the goodwill attaching to that business and the activities of acquiring, designing, building, installing, commissioning and decommissioning Sites”

The Vodafone Site Management Business was expressed to be constituted by the Sale Assets, which were identified in Schedule 2 to the 2012 Contribution Agreement. The Sale Assets listed in Schedule 2 included the Vodafone Transferring Sites and the Passive Assets located on those Sites, and the Vodafone Managed Sites and the Passive Assets located on those Sites (subject to clauses 6.11, 6.12 and 9.9). Passive Assets were defined at some length. The definition corresponds, more or less, to the supporting infrastructure on a mobile communications site which we are referring to as Passive ECA.

A Vodafone Managed Site was defined to mean:

“a Site in the Territory owned by, leased or licensed to Vodafone or a member of Vodafone's Group including any Sites identified as Managed Sites in Schedule 3 (Sites) of the CA between Vodafone and JVCo which (i) has not been decommissioned and (ii) is not a Transferred Site), which is none of:

a.

a Transferring Site;

b.

an Excluded Site (excluding, subject to the demarcation process prescribed in paragraph 3 of Schedule 6 to a Contribution Agreement, the relevant part of such Excluded Site which is demarcated as a Managed Site in accordance with that paragraph);

c Site used exclusively for Excluded Networks; or

d.

a Site used exclusively for transmission equipment”

This is a complex definition. The evidence of Ms Daniels was that the Vodafone Site falls within this definition. This was not challenged by the Respondents. We understood it to be common ground that the Vodafone Site constituted a Vodafone Managed Site, for the purposes of the Contribution Agreements and the 2012 MSA. We proceed on this basis.

The transfer or assignment of rights under or in respect of a Sale Asset was subject to the following important qualifications in, respectively, clauses 5.1 and 5.7:

“5.1

Nothing in this Agreement shall (without prejudice to the following provisions under this Clause 5) constitute a transfer or assignment (or attempted transfer or assignment) of rights under or in connection with any Sale Asset, or require JVCo to perform any obligation under a Transferring Contract or Managed Contract in place of Vodafone, if and while a Third Party Consent is required to the transfer or assignment of such Sale Asset to JVCo, or to the performance by JVCo of that obligation.”

“5.7

When (and only when) a Third Party Consent required under this Clause 5 is given, the relevant Sale Asset shall be transferred to JVCo.”

This was supplemented by clause 7.8, which provided as follows:

“7.8

Nothing in this Agreement shall oblige either Party to take any action (or omit to take any action) which would result in a breach of any Site Agreement or Third Party Consent. Each Party shall use all reasonable endeavours to obtain any Third Party Consent necessary to enable JVCo to perform its obligations under this Agreement.”

As can be seen, the transfer or assignment of rights under or in connection with a Sale Asset was deferred, and CTIL was not required to perform any obligations under a Transferring Contract or a Managed Contract in place of Vodafone, if and while a Third Party Consent was required to the transfer or assignment of the relevant Sale Asset to CTIL. Clause 5.2 stated, amongst other matters, that a Third Party Consent was required for the purposes of clause 5 if, in the absence of that consent, approval or waiver, the assignment in question would result directly or indirectly in the breach of the relevant Site Agreement. A Third Party Consent was defined to mean:

“a licence, concession, permit, authorisation, certificate, approval, registrations, agreement, permission and/or consent from a Third Party (including a Regulatory Authority)”

A Third Party was defined to mean a person who was not Telefonica, Vodafone or CTIL. The consent required by the Alienation Clause thus qualified as a Third Party Consent. As such, no transfer or assignment of the Rights was or could be effected by the 2012 Contribution Agreement, in the absence of the consent required by the 2003 Agreement.

Clause 4.1 dealt with conduct prior to completion of the transfer of a Sale Asset. Clause 4.1.1 provided as follows:

“4.1.1

Pending the transfer of a Sale Asset, and subject to Clause 5.3.1 (Transfer of Sites to JVCo), Clause 5.3.2 (Landlord Negotiations), Clause 7 (Management Services), Clause 9.2 (Termination of Managed Contracts) and Clause 11 (Decommissioning of Sites) Vodafone shall:

(A)

continue to carry on its business insofar as it relates to such Sale Asset in the normal course in compliance with all Applicable Laws; and

(B)

take all reasonable steps to preserve and protect the Sale Assets and shall notify JVCo in writing promptly of any material adverse change in the Sale Assets.”

Clause 6 dealt specifically with the use of Vodafone Managed Sites and Passive Assets. Clause 6.1 provided as follows:

“6.1

Pending transfer to JVCo of the Vodafone Managed Sites and the Passive Assets located on the Vodafone Managed Sites (or the decommissioning thereof pursuant to Clause 11 (Decommissioning of Sites), Vodafone hereby appoints JVCo, with effect from JVCo RFB Date, as its agent to manage the arrangements under which:

6.1.1

Vodafone:

(A)

is entitled to use each Vodafone Managed Site and the Passive Assets located at each Vodafone Managed Site;

(B)

has the benefit of services provided by JVCo in respect of each Vodafone Managed Site; and

(C)

accesses each Vodafone Managed Site

in each case for the purposes of providing services to Vodafone in accordance with this Agreement; and

6.1.2

Telefónica and Third Parties:

(A)

receive services from, or otherwise use, Passive Assets located at Vodafone Managed Sites; and

(B)

are entitled to access Vodafone Managed Sites in order to locate their Active RAN Assets on such Vodafone Managed Sites,

And each Party shall comply with Clause 6.4 in relation to the grant of licences to access and occupy in relation to such Vodafone Managed Sites.”

The JVCo RFB Date was defined to mean 12^th November 2012, or such other date as the Parties might agree. So far as we are aware, no other date was agreed, so that the JVCo RFB Date fell shortly after the date of the 2012 Contribution Agreement. The Management Services to be provided by CTIL were dealt with in clause 7. It is not necessary to set out the whole of this clause. We note, in particular, clauses 7.1 and 7.3:

“7.1

From the JVCo RFB Date, JVCo shall provide to Vodafone the following services:

7.1.1

managing the arrangements referred to in Clause 6.1;

7.1.2

operation and maintenance services at each Vodafone Managed Site, including:

(A)

operation of Passive Assets;

(B)

maintenance of Passive Assets;

(C)

site access control and management;

(D)

management of site security;

(E)

management of energy consumption at sites; and

(F)

compliance with all obligations on the part of Vodafone under any Site Agreements.

7.1.3

tracking and management of asset registers (including registers of Managed Sites and Passive Assets and Active RAN Assets on the Managed Sites); and

7.1.4

all other activities, functions, responsibilities and obligations that are necessary for, or an inherent part of, the performance of JVCo's obligations under this Agreement,

(together the “Management Services").”

“7.3

JVCo shall comply with all reasonable instructions of Vodafone and all processes or procedures, whether legal or operational procedures, which are consistent with this Agreement and reasonably required by Vodafone from time to time in respect of the Management Services.”

We also note clause 36.4 of the 2012 Contribution Agreement, which was in the following terms:

“Nothing in this Agreement or any documents referred to herein shall create or be deemed to create a partnership or the relationship of principal and agent or employer and employee between the Parties or to constitute a joint venture between the Parties or other jointly undertaken enterprise activities other than as expressly set out in this Agreement or in the a Project Agreement. No party to this Agreement has the authority or power to bind or contract in the name of or to create liability for or pledge the credit of another party to this Agreement in any way for any purpose.”

It seems to us that the intention behind clause 36.4 was clear. Its purpose was to ensure, so far as the clause was needed to achieve this purpose, that the 2012 Contribution Agreement did not confer any status on CTIL beyond that provided by its express terms; namely to act as agent of Vodafone in the various tasks and matters specified in the 2012 Contribution Agreement.

Pausing the analysis at this point, we can see nothing in the provisions of the 2012 Contribution Agreement which supports the allegation of breach of the Alienation Clause. The allegation of transfer of the Rights has been abandoned. The allegation of sharing of the Rights seems to us to be contradicted by the provisions of the 2012 Contribution Agreement which we have considered. We highlight the following points, in particular:

In their written and oral closing submissions the Respondents’ counsel concentrated their submissions, so far as the 2012 Contribution Agreement was concerned, on the Passive Assets; that is to say the Passive ECA on the Vodafone Site. In his oral closing submissions Mr Watkin drew our attention, in particular, to clause 6.12 which provided that, in relation to the transfer of Passive Assets located on Vodafone Managed Sites, “legal ownership of Passive Assets” should only transfer to CTIL upon transfer of the relevant Vodafone Managed Site to CTIL. Mr Watkin’s point was that clause 6.12 did not deal with the beneficial interest in the Passive Assets. It dealt only with ownership of the legal title. The beneficial interest in the Passive Assets, so Mr Watkin submitted, was transferred to CTIL by clause 5.5.2, which provided, in its most relevant part, as follows:

“5.5.2

while a Third Party Consent is required to the transfer or assignment to JVCo of rights under or in connection with a Sale Asset which is not a Vodafone Transferring Site or a Vodafone Managed Site:

(A)

Vodafone shall hold these rights and all monies or sums received under a Transferring Asset or Transferring Contract after Completion on trust for JVCo absolutely, to the extent that a Third Party Consent is not required in order for it to do so and (in the case of a Transferring Contract) the Parties shall treat such Transferring Contract as a Managed Contract;”

Mr Watkin’s essential submission was that this (as he submitted) transfer of the beneficial interest in the Passive Assets to CTIL was consistent with other evidence which supported his argument that the Vodafone Site Management Business was being carried on by CTIL on the Vodafone Site, for the profit and risk of CTIL. It seems to us that there are two problems with this submission.

The first problem is that the submission assumes that clause 5.5.2(A), as a matter of construction, did have the effect of creating a trust of the Passive Assets. As we read the clause, this is not correct, for the following reasons.

Clause 5.5.2 is concerned with rights under or in connection with a Sale Asset which is not a Vodafone Transferring Site or a Vodafone Managed Site. The Vodafone Site is, and was a Vodafone Managed Site. The Sale Assets were defined in Schedule 2 to the 2012 Contribution Agreement. Paragraph 2 of the Second Schedule refers to the Vodafone Managed Sites “and the Passive Assets located on those Sites”. Mr Watkin’s essential point was that the Passive Assets were clearly distinguished from the Vodafone Managed Sites throughout the 2012 Contribution Agreement, and thus qualified as “a Sale Asset which is not a…..Vodafone Managed Site”, within the meaning of clause 5.5.2.

On its face, there is merit in this argument. There is a separation of the wording in paragraph 2 of the Second Schedule between the Vodafone Managed Sites and the Passive Assets located thereon, which can be carried over into the identification of a Sale Asset which is not a Vodafone Managed Site in clause 5.5.2. This analysis is supported by the reference to legal ownership in clause 6.12. There are however difficulties with this analysis if one looks beyond sub-clause (A) of clause 5.5.2.

If one looks at the remainder of the sub-clauses in clause 5.5.2, which set out various obligations on the part of Vodafone in respect of Sale Assets subject to the trust imposed by sub-clause (A), they read very oddly if they were intended to extend to Passive Assets on Vodafone Managed Sites.

Looking more widely at the 2012 Contribution Agreement, there are provisions which are inconsistent with the argument that clause 5.5.2(A) created a trust of Passive Assets on Vodafone Managed Sites, pending a subsequent transfer of legal title. We have already set out clause 6.1. By clause 6.1 Vodafone appointed CTIL, as its agent, to manage the arrangements under which Vodafone did the things referred to in sub-clause 6.1.1, “in each case for the purposes of providing services to Vodafone in accordance with this Agreement and the Master Services Agreements”. The things referred to in sub-clause 6.1.1 included the use of each Vodafone Managed Site and the Passive Assets located at each Vodafone Managed Site. The scheme of clause 6.1 seems to us to be inconsistent with CTIL already having the beneficial interest in the Passive Assets. On the same theme, we also note clause 33.3.1, which provided that the risk in relation to Passive Assets on Vodafone Managed Sites was to be with Vodafone. Also on the same theme the relevant provisions of the 2012 Contribution Agreement provided for CTIL to collect revenues from the Passive Assets as agent of Vodafone. If however CTIL became the beneficial owner of the Passive Assets on the Vodafone Managed Sites, by virtue of clause 5.5.2, it is difficult to understand why the 2012 Contribution Agreement did not provide for the risk and reward in relation to these Passive Assets to vest in CTIL

It is also important to keep in mind that clause 5.5.2(A) does not establish a trust of a Sale Asset as such. The trust is established in relation to “rights under or in connection with” a Sale Asset which is not a Vodafone Managed Site. Where Passive Assets were concerned, it is not obvious what these rights might have been. If, by contrast, one treats clause 5.5.2 as directed, at least principally, towards Transferring Assets and Transferring Contracts, as referred to in paragraphs 3 and 4 of Schedule 2 to the 2012 Contribution Agreement, clause 5.5.2 makes much better sense.

For these reasons, we conclude that the trust established by clause 5.5.2(A) did not, on its true construction, extend to Passive Assets on Vodafone Managed Sites. Even if we are wrong in this conclusion, it seems to us that, at most, clause 5.5.2(A) established, in relation to Passive Assets on Vodafone Managed Sites, a trust of rights under or in connection with these Passive Assets, as opposed to a trust of the Passive Assets themselves. It seems to us that a trust of this kind falls short of what the Respondents are seeking to establish, in terms of ownership of the Passive ECA on the Vodafone Site.

The second problem with the argument that the 2012 Contribution Agreement effected a transfer of the beneficial interest in the Passive Assets to CTIL is more fundamental, and more shortly stated. If it is assumed, contrary to our view, that clause 5.5.2(A) did create a trust of the Passive Assets we cannot see, at least so far as the 2012 Contribution Agreement is concerned, that this comes anywhere near altering what seems to us to have been the plain effect of the 2012 Contribution Agreement; namely to constitute CTIL as the agent of Vodafone, in respect of Vodafone’s use of the Vodafone Site. We do not accept, on this hypothesis, that the 2012 Contribution Agreement had the effect of constituting CTIL the operator of its own business, either in respect of the Passive Assets (the Passive ECA) on the Vodafone Site or otherwise.

We therefore conclude that clause 5.5.2 does not assist the Respondents in their case that there was a sharing of the Rights with CTIL in respect of the Vodafone Site, in breach of the Alienation Clause. Beyond this, we do not consider that there are any other provisions in the 2012 Contribution Agreement which support the Respondents’ case that there was a sharing of the Rights with CTIL in respect of the Vodafone Site, in breach of the Alienation Clause. In summary therefore, we conclude that the provisions of the 2012 Contribution Agreement did not, in themselves, give rise to any breach of the Alienation Clause.

The position might have been altered by the 2012 MSA which was also entered into between Vodafone and CTIL and applied to the Vodafone Site. The 2012 MSA is a lengthy and detailed agreement but, having analysed its terms, we do not consider that it had the effect of sharing any of the Rights with CTIL, in breach of the Alienation Clause. Nor, in our view, did it have the effect of transferring to CTIL the legal or beneficial interest in either the Passive ECA on the Vodafone Site or the business of Vodafone in relation to the Vodafone Site. In our view, there was nothing in the 2012 MSA which converted the relationship of agency between Vodafone and CTIL, as created by the 2012 Contribution Agreement, into a relationship where CTIL ran its own business from the Vodafone Site.

It is not necessary to go through the terms of the 2012 MSA in much detail, or at length. We note, in particular, recital (S), which was in very similar terms to recital (S) to the 2012 Contribution Agreement:

“(S)

It is intended that JVCo shall, once it is operationally ready to do so, as agent of the Telefónica and Vodafone, take over the management of all the sites belonging to Telefónica and Vodafone, pending the transfer of the sites selected for the single grid to JVCo and take decisions to decommission sites that are no longer required. Telefónica and Vodafone have each appointed JVCo as its agent and granted JVCo the rights it needs to undertake such management activities under a Contribution Agreement between JVCo and each operator (each on identical terms). The Contribution Agreement also provides for the transfer of other defined assets as necessary to enable JVCo to provide services to Telefónica and Vodafone.”

In very short summary, under the term of the 2012 MSA CTIL agreed to provide the Master Services to Vodafone in respect of the sites specified therein, in return for various fees. The services to be provided were effectively management services, to be provided by CTIL as the agent of Vodafone, not as an independent contractor running its own business from Vodafone Managed Sites. It was also made clear, in terms of the ownership of sites and the ECA thereon, that they remained in the ownership of Vodafone until transfer had taken place pursuant to the terms of the 2012 Contribution Agreement. This was reflected in clause 4.1.1, which provided as follows in relation to the ownership of sites:

“4.1.1

As between the Parties, and subject to the transfer of the relevant Managed Sites to JVCo pursuant to the Contribution Agreement between Vodafone and JVCo:

(A)

all Single Grid Sites, Shared Demand Sites and Unilateral Demand Sites, and Passive Assets on those Sites, shall be owned by, leased or licensed to JVCo; and

(B)

all Vodafone Differential Demand Sites and Vodafone Right To Build Sites, and Passive Assets on those Sites, shall be owned by, leased or licensed to Vodafone.”

As can be seen, these provisions were expressed to be subject to the transfer of the relevant Managed Sites to CTIL, pursuant to the 2012 Contribution Agreement. This was further reflected in clause 28.2.1, which provided as follows:

“The Parties acknowledge and agree that, as between the Parties:

28.2.1

risk in relation to Vodafone Managed Sites, including any Passive Assets at such Sites, shall remain with Vodafone;”

We also note clause 31.4 of the 2012 MSA, which was in almost identical terms to clause 36.4 of the 2012 Contribution Agreement, as follows:

“Nothing in this Agreement or any documents referred to herein shall create or be deemed to create a partnership or the relationship of principal and agent or employer and employee between the Parties or to constitute a joint venture between the Parties or other jointly undertaken enterprise activities in each case other than as expressly set out in this Agreement or in a Project Agreement. Neither Party has the authority or power to bind or contract in the name of or to create liability for or pledge the credit of the other Party in any way for any purpose other than as expressly set out in this Agreement or a Project Agreement.”

In conclusion, and so far as the 2012 MSA is concerned, we accept Vodafone’s submission that this was a services contract, with CTIL appointed to provide the various services specified therein. As we have said, we do not consider that it had the effect of sharing any of the Rights with CTIL, in breach of the Alienation Clause.

In their written closing submissions, and in Mr Watkin’s oral closing submissions, the Respondents’ counsel relied principally upon the 2021 Contribution Agreement. Their argument was that there were significant differences between the 2012 Contribution Agreement and the 2021 Contribution Agreement which demonstrated that, at least by the time of the 2021 Contribution Agreement, CTIL could not be said to be acting as agent of Vodafone in respect of the Vodafone Site. The evidence of Mr Yorston was that there were master services agreements between Telefonica and CTIL, which mirrored the MSAs between Vodafone and CTIL. As such, so it was submitted, there was the equivalent of the 2021 MSA between Telefonica and CTIL.

The effect of all this, so it was memorably submitted by the Respondents’ counsel, was that CTIL was not acting as the equivalent of Vodafone’s “plumber” or “cleaner” in relation to the Vodafone Site. Rather, CTIL was acting as “hotelier” to Vodafone and Telefonica. Pursuant to the master services agreement with Telefonica, so it was submitted, CTIL was managing and exploiting the Vodafone Site, selling the equivalent of hotel space to Vodafone and Telefonica.

The Respondents’ counsel referred us to clause 13 of the 2021 Contribution Agreement, which gives CTIL the right to demand and collect revenues, as agent of Vodafone, but also to retain all those revenues, in the following terms:

“13.1

Where lawfully permitted under any Master Site Share Licence. Individual Site Licence or Third Party Licence, with effect from the JVCo RFB Date, Vodafone hereby appoints JVCo as its agent to demand and collect revenues (including, where applicable, all amounts in respect of VAT payable in respect of such sums) arising and accruing from the provision of access to or use of the Passive Assets located at each Vodafone Managed Site to any person.

13.2

JVCo shall provide Vodafone promptly following issue with copies of all VAT invoices issued in Vodafone’s name by JVCo pursuant to Clause 13.1 and shall account to Vodafone for all amounts in respect of VAT so collected within thirty (30) days of receipt.

13.3

All revenues (excluding amounts in respect of VAT) collected by JVCo pursuant to Clause 13.1 shall be retained by JVCo in consideration for the provision of the Management Services in respect of such Vodafone Managed Sites pursuant to this Agreement (for which there shall otherwise be no charge save pursuant to Clause 17.5).”

We were also referred to clause 14, which deals with expenses. Clause 14.1 confers responsibility upon CTIL for the payment of these expenses, in the following terms:

“14.1

Vodafone appoints JVCo as its agent to be responsible for paying, and JVCo undertakes that it shall pay from its own resources, all costs and expenses which arise on or after the JVCo RFB Date in connection with the setting up, upgrading, operation, maintenance, access to, use of or decommissioning of any Vodafone Managed Site or any of the Passive Assets at any Vodafone Managed Site, including, for the avoidance of doubt:

14.1.1

the payment of rent, licence fees and all and any other costs, fees and expenses, outgoings and taxes and other payments which arise on or after the JVCo RFB Date and which are properly due and payable in accordance with the terms of the relevant Site Agreement;

14.1.2

any expenses in relation to elements of a Managed Contract which arise on or after the JVCo RFB Date and which remain with Vodafone pursuant to Clause 9.2 (Site-Specific elements of Managed Contracts);

14.1.3

any capital expenditure incurred by JVCo on or after the JVCo RFB Date in relation to the Vodafone Managed Sites; and

14.1.4

the costs and expenses incurred by JVCo on or after the JVCo RFB Date in relation to decommissioning of Sites pursuant to Clause 12 (Decommissioning of Sites),

provided that Vodafone shall reimburse JVCo any amount in respect of VAT comprised in any costs, fees and expenses paid by JVCo out of its own pocket for which Vodafone is entitled to credit as input tax within thirty (30) days of provision to Vodafone of an invoice that complies with all requirements imposed by the relevant taxation authorities and meets all conditions necessary to allow Vodafone to obtain credit for such VAT.”

We were also referred to clause 9.1, which confers the following responsibility upon CTIL:

“9.1.1

For the duration of its appointment pursuant to Clause 6.1 (Use of Vodafone Managed Sites and Passive Assets) and subject to the remainder of this Clause 9, JVCo shall assume sole and exclusive responsibility for, and shall manage, the due performance of all obligations and all liabilities arising or falling due for performance after the JVCo RFB Date under the Managed Contracts in respect of the Vodafone Managed Sites or the Passive Assets located at the Vodafone Managed Sites.

9.1.2

To the extent that any obligations or liabilities (including payment obligations) under a Managed Contract do not relate to the Vodafone Managed Sites or the Passive Assets located at the Vodafone Managed Sites, such obligations and liabilities shall remain with and be managed Vodafone in accordance with the “split management” principle set out in Clause 9.1.3.

9.1.3

Each Party will provide to the other Party all information, co-operation and assistance reasonably requested by such other Party in relation to the split management arrangements provided for in Clauses 9.1.1 and 9.1.2 for Managed Contracts which relate in part to elements of Vodafone’s business which are outside the scope of Project Beacon. Any disagreements in relation to such split management arrangements shall be considered and resolved at a Representatives’ Meeting.

9.1.4

Each Party acknowledges that there may be contracts not currently listed in Part 2 of Schedule 4 (Contracts) which relate to activities reasonably required to be performed by JVCo in relation to the Vodafone Managed Sites and/or the Passive Assets located at the Vodafone Managed Sites, and so should be treated as Managed Contracts. If either Party identifies such a contract it shall notify the other Party in writing and such contract shall be deemed to be a Managed Contract.”

In addition to this we were referred to clause 10, which contains the following provisions of indemnity at 10.1.1:

“10.1.1

Subject to Clause 30.3 (Limitations), Vodafone shall indemnify on an after-tax basis and hold harmless JVCo against all Losses which may be suffered or incurred by JVCo as a result of any act, neglect, default or omission on the part of Vodafone to perform or comply with any obligation or discharge any liabilities of Vodafone under the Managed Contracts:

(A)

arising in respect of the period prior to the JVCo RFB Date; or

(B)

which do not relate to the Passive Assets or the Vodafone Managed Sites (irrespective of the period to which such obligations or liabilities relate).”

Losses are widely defined, in Schedule 12 to the 2021 Contribution Agreement, to mean “losses, claims, damages, costs, charges, expenses and liabilities (including reasonable legal fees and disbursements)”.

The essential point being made by the Respondents, by reference to these provisions, was that the 2021 Contribution Agreement had the effect of placing the entire financial risk and reward, in relation to the Vodafone Site and as between Vodafone and CTIL, on to CTIL. So, by way of example, clauses 12.1 and 13.1 of the 2012 Contribution Agreement provided for CTIL to be appointed as agent to collect revenues arising and accruing from the provision of access to or use of the Passive Assets located at each Vodafone Managed Site, and to pay the costs and expenses specified in clause 13.1. The revenues were the revenues of Vodafone, and CTIL was entitled to payment for its services and reimbursement of expenses in accordance with the provisions of the 2012 Contribution Agreement. By contrast, so it was submitted, the 2021 Contribution Agreement provided for CTIL to retain all the revenues and pay all the expenses out of its own resources. The same theme, of CTIL assuming direct responsibility for the management of the Vodafone Site and the Passive ECA as its own business, was, so it was submitted, to be found in the other provisions of the 2021 Contribution Agreement to which we were referred.

We can see the potential significance of this point. In Brumwell, Lloyd-Jones J noted the fact that the business was carried on at Mr Brumwell’s risk, in the sense that Mr Brumwell was required to pay a fixed sum which was not related in any way to the profitability of the undertaking. There was no profit sharing arrangement, nor was the arrangement one under which Mr Brumwell paid to the council all of the receipts up to a fixed sum. Mr Brumwell was left to make money, if the business was profitable, and to bear the loss, if it was not. As Lloyd-Jones J stated, in his judgment in Brumwell, at [38]:

“While such an arrangement is not necessarily incompatible with [the] status of Mr Brumwell as agent, I accept that the fact that a business is carried on by an individual at his own financial risk is normally indicative of his acting as a principal and not as an agent.”

In Brumwell however Lloyd-Jones J was not persuaded, for the reasons which we have quoted from his judgment earlier in this decision, that Mr Brumwell was operating the business of the caravan park. The cumulative effect of the provisions in the operator agreement in that case led Lloyd-Jones J to the clear conclusion that Mr Brumwell undertook to manage the undertaking as the agent of the council. In the present case the cumulative effect of the provisions in the 2021 Contribution Agreement leads us to an analogous conclusion. We do not accept the submissions of the Respondents. In our view the 2021 Contribution Agreement did not change the essential nature of the relationship between Vodafone and CTIL, as established by the 2012 Contribution Agreement and as we have analysed that relationship. It seems to us that CTIL remained as agent of Vodafone in relation to the Vodafone Site and the Passive Assets, and was not operating any independent business of its own on the Vodafone Site.

This is demonstrated by the clauses of the 2021 Contribution Agreement to which we were taken by the Respondents’ counsel. In the case of both clause 13 and clause 14, we note that each clause provides that Vodafone appoints CTIL as its agent. The arrangements in these clauses in relation to revenues and expenses are simply part of the regime which applies to this agency. As clause 13.3 makes clear, CTIL is entitled to retain the revenues “in consideration of the Management Services”. The payment provisions may have changed in the 2021 Contribution Agreement, but the relationship has not changed. CTIL is still being paid for the provision of management services to Vodafone, as agent of Vodafone.

In the case of clause 9.1 of the 2021 Contribution Agreement, clause 9.1.1 refers to the duration of CTIL’s appointment pursuant to clause 6.1, which provides as follows:

“6.1

Pending transfer to JVCo of the Vodafone Managed Sites and the Passive Assets located on the Vodafone Managed Sites or the decommissioning thereof pursuant to Clause 12 (Decommissioning of Sites) and subject to JVCo’s obligations under the Toronto MSA and the terms of this Agreement, Vodafone hereby appoints JVCo, with effect from the JVCo RFB Date, as its agent to (and JVCo shall) manage the Managed Sites and in particular the arrangements under which Vodafone, Telefónica, each of their respective Affiliates and Third Parties are entitled to use, access and have the benefit of services from or in respect of each Vodafone Managed Site and each Party shall comply with Clause 6.4 in relation to the grant of licences to access and occupy in relation to such Vodafone Managed Sites.”

Clause 6 in the 2021 Contribution Agreement is not in the same terms as clause 6 in the 2012 Contribution Agreement, but clause 6.1 in the 2021 Contribution Agreement retains the reference to CTIL being appointed as agent of Vodafone pending the transfer of the Vodafone Managed Sites and the Passive Assets located thereon. All this remains inconsistent with the submission that CTIL, under the terms of the 2021 Contribution Agreement, was operating its own business from the Vodafone Site and providing services to Vodafone in that “hotelier” capacity. Also inconsistent with the Respondents’ argument, in the context of clauses 6 and 9, is clause 9.2 of the 2021 Contribution Agreement, which specifically provides for the benefit and burden of Managed Contracts to remain with Vodafone, pending the transfer of the relevant Managed Site to CTIL:

“To the extent that a Managed Contract relates to a Managed Site, the benefit and burden of such Managed Contract in relation to such Managed Site (including, for the avoidance of doubt, rights to receive revenue and obligations to pay expenses) shall remain with Vodafone until such Managed Site transfers to JVCo in accordance with this Agreement.”

So far as the indemnity provisions in clause 10 of the 2021 Contribution Agreement are concerned, the essential point remains the same. While these provisions may be said to impose material and significant obligations of indemnity upon CTIL, we cannot see that they convert the position of CTIL, in relation to the Vodafone Site, into that of a “hotelier”, whether clause 10 is taken in isolation or in concert with the other provisions of the 2021 Contribution Agreement. Nor can we see that this clause is inconsistent with the relationship of Vodafone and CTIL continuing to be one of agency.

In this context we should also make reference to clause 36.4 of the 2021 Contribution Agreement, which replicated clause 36.4 of the 2012 Contribution Agreement and (subject to minor variations) clause 31.4 of the 2012 MSA, both as quoted above. It is clear that the intention behind this clause, as continued into the 2021 Contribution Agreement, remained what it had been in relation to the 2012 Contribution Agreement and the 2012 MSA; namely to prevent the 2021 Contribution Agreement conferring any status on CTIL beyond that provided by its express terms, which was to act as agent of Vodafone in the various tasks and matters specified in the 2021 Contribution Agreement.

In the context of our analysis of the 2021 Contribution Agreement, there is a further important point to bear in mind. By reason of the collaboration between Vodafone and Telefonica, it is Telefonica which has control of the Vodafone Site, as a site falling within its geographical area of responsibility. Mr Page explained that, since June 2017, Vodafone has transmitted its signal through the Active ECA of Telefonica on the Vodafone Site. There clearly has been a sharing of the Rights with Telefonica in relation to the Vodafone Site, but this is authorised by the Alienation Clause, in its varied form. This seems to us to create further difficulties for the Respondents’ case that there has been a sharing of the Rights with CTIL. There has been a sharing of the Rights with Telefonica, but this is authorised. The answer of the Respondents’ counsel to this point was that CTIL was providing services, as business occupier of the Vodafone Site, both to Vodafone and to Telefonica. So far as Vodafone is concerned however, we have rejected the argument that the relevant agreements between Vodafone and CTIL had this effect.

In these circumstances it was not clear to us whether the Respondents’ counsel were arguing that if the relationship between Telefonica and CTIL was one where CTIL was providing services from the Vodafone Site to Telefonica, with CTIL as the operator of its own business on the Vodafone Site, this would place Vodafone in breach of the Alienation Clause, notwithstanding that this was not the position between Vodafone and CTIL. If this argument was being pursued, we do not see how it can succeed, for at least two reasons.

First, the evidence we have of the relationship between Telefonica and CTIL is very limited. As we have noted, the evidence of Mr Yorston, in his first witness statement, was that there was a mirror of the 2021 MSA entered into between Telefonica and CTIL. We have not seen the mirror master services agreement, or for that matter any other agreement entered into between Telefonica and CTIL, but in the absence of challenge to this part of Mr Yorston’s evidence we proceed on the basis that there is an agreement between Telefonica and CTIL which mirrors the 2021 MSA. We do not see however how this alters the overall position. It has not been necessary for us to set out an analysis of the 2021 MSA in this decision, because it does not apply to the Vodafone Site. The 2021 MSA is however the subject of a fairly lengthy analysis in the judgment in the Pound Hill Site Proceedings. We have also considered the 2021 MSA for the purposes of considering what the effect of a mirror agreement would have been, as between Telefonica and CTIL. Our analysis is the same as that set out in the judgment, which is to the effect that the 2021 MSA did not alter the relationship between Vodafone and CTIL created by the Contribution Agreements and the 2012 MSA. Putting to one side the problem that we have no knowledge what other contribution agreements or management services agreements may have been entered into between Telefonica and CTIL, if we assume that there is a mirror of the 2021 MSA between Telefonica and CTIL, it follows that that agreement could not have created a relationship between Telefonica and CTIL of the kind contended for by the Respondents. On our analysis the provisions of the 2021 MSA, if it had applied to the Vodafone Site, would not have had the effect, any more than the 2012 MSA had this effect, of converting CTIL from agent of Vodafone to a party operating its own business from the Vodafone Site. The same must apply to the master services agreement which exists between Telefonica and CTIL, if it is assumed to be a mirror of the 2021 MSA.

Second, we have difficulty in understanding how the relationship between Telefonica and CTIL could, in any event, be of the kind contended for by the Respondents, if the relationship between Vodafone and CTIL is that CTIL’s involvement with the Vodafone Site is as agent of Vodafone, effectively providing management services to Vodafone. Nor can we understand how the relationship between Telefonica and CTIL could, in any event, place Vodafone in breach of the Alienation Clause.

In summary, returning to the 2021 Contribution Agreement and drawing together all of our analysis of the 2021 Contribution Agreement, we conclude that the 2021 Contribution Agreement did not change the essential nature of the relationship between Vodafone and CTIL, as established by the 2012 Contribution Agreement and as we have analysed that relationship. We conclude that CTIL remained as agent of Vodafone in relation to the Vodafone Site and the Passive Assets, and was not operating any independent business of its own on the Vodafone Site. Put more simply, we reject the argument that CTIL became the “hotelier” of the Vodafone Site, either in relation to Vodafone or in relation to Telefonica.

This concludes our analysis of the first category of material, namely the agreements entered into between Vodafone and CTIL, which we have to consider in relation to the question of whether the Alienation Clause has been breached. Drawing together all of the above analysis, we conclude that there is nothing in this material which has given rise to a breach of the Alienation Clause.

We now turn to the second category of material which we have had to consider and analyse; that is to say the remainder of the evidence adduced at the Trial, so far as it bears or is said to bear on the question of whether the Alienation Clause has been breached. We can take this second category more shortly. It was not suggested by the Respondents that any of the agreements between Vodafone and CTIL were sham agreements, concealing some other relationship than that created by the relevant agreements. Nor was it suggested that there was anything in the evidence which had had the effect of varying or disapplying any of the provisions of the relevant agreement. We have already made reference to the conduct of the parties, in our analysis of the relevant agreements. We have also accepted the potential relevance of the remainder of the evidence to the factual matrix against which we have construed the relevant agreements. Beyond this, we accept that the conduct of the parties is capable of being relevant on the basis that such conduct might, independent of the meaning and effect of the relevant agreements, give rise itself to a sharing of the Rights in breach of the Alienation Clause.

In this context the evidence of Mrs Main was of particular value because, as we have said, she was able to give evidence from CTIL’s side of the relationship with Vodafone. In her first witness statement Mrs Main explained the nature of the relationship between CTIL and Vodafone, in relation to a site such as the Vodafone Site. It was clear from this evidence that CTIL could not be described as operating a business of its own from the Vodafone Site, but was rather acting as agent of Vodafone in its dealings with the Vodafone Site which involved Vodafone. Mrs Main was cross examined at some length by Mr Watkin, but she maintained her evidence that CTIL acted as agent of Vodafone in relation to the Vodafone Site, and we do not consider that her evidence was undermined. In particular, Mrs Main emphasized repeatedly, in the course of her cross examination, the control and governance which Vodafone had over sites which were subject to a Vodafone lease. It was clear that, in referring to a Vodafone lease, Mrs Main was including sites subject to agreements such as the 2003 Agreement, the status of which has been left unresolved by the parties in these proceedings.

The only material blow landed by Mr Watkin in cross examination related to two rent review memoranda entered into between Mr and Mrs Buck (the previous owners of the Steps Hill Sites) and Vodafone, on 11^th May 2017, recording the agreement which had been reached on the reviewed rent payable in relation to the Vodafone Site with effect from, respectively, 31^st July 2012 and 31^st July 2015. The signature of the person signing on behalf of Vodafone in each of the memoranda was indecipherable, but Mr Watkin made a plausible case for the hypothesis that the two signatures were the same as the signature on another document in the bundle which was identified as that of a Mr Warren. The significance of this was that Mrs Main was adamant in cross examination that a rent review carried out on a CTIL site was signed off by CTIL’s Head of Legal, who was Mr Warren, while a rent review on a Vodafone site would be signed off by Vodafone. This prompted the obvious question as to why, if a rent review on a Vodafone site would be signed off by Vodafone, there were two rent reviews in relation to the Vodafone Site which had, apparently, been signed off by Mr Warren, Head of Legal at CTIL. Mrs Main did not concede that the indecipherable signature on the rent review memoranda was that of Mr Warren but, if it was, she speculated that Mr Warren had signed the memoranda with the benefit of a power of attorney given to him by Vodafone.

This particular part of the cross examination seemed to us to sum up the difficulties with the Respondent’s case on the evidence. While this seems to us strictly to be a matter for a handwriting expert, it looked to us as though Mr Watkin was right to identify the signature on the rent review memoranda as that of Mr Warren. We do not regard it as necessary to make a finding on this question, but if we proceed on the basis that Mr Watkin was right, we do not see where this takes the Respondents’ case. The two rent review memoranda are clearly expressed as being entered into between Mr and Mrs Buck and Vodafone. The signature which appears for Vodafone on the memoranda is clearly identified as being “for and on behalf of” Vodafone. We heard no evidence from Mr Warren, but if he did sign the memoranda, he clearly did so on behalf of Vodafone with the benefit, it must be inferred, of an express or implied authority to do so on behalf of Vodafone. Put at its highest, this evidence comes nowhere near demonstrating that CTIL was doing anything other than acting as managing agent of Vodafone in relation to the Vodafone Site. Nor does this evidence undermine, let alone contradict the evidence of Mrs Main that CTIL acted as agent of Vodafone in relation to Vodafone Site, with Vodafone rather than CTIL being the party in control.

We also note, in the context of the question of whether the beneficial ownership in the Passive Assets on the Vodafone Site had passed to CTIL, the evidence given by Mrs Main in answer to some questions from the Chamber President, at the conclusion of her cross examination. Mrs Main gave evidence that her understanding of the position, in relation to Passive ECA on sites held by Vodafone or CTIL, was that the Passive ECA was owned by the same person who had the interest in the relevant site. Clearly, Mrs Main could not herself, as a witness of fact, assist us with the construction of clause 5.5.2 of the 2012 Contribution Agreement (the provision relied upon by the Respondents in this context), on which we have already expressed our conclusions. Her understanding of the position does however serve to confirm that CTIL did not regard itself as having an actual interest in the Passive ECA on the Vodafone Site.

We also consider that we can attach some weight to the evidence of Ms Daniels and Mr Yorston; to the effect that the relationship between Vodafone and CTIL in relation to the Vodafone Site has been and remains one of agency. It is true that much of the evidence of each of these witnesses constituted commentary on the agreements between Vodafone and CTIL, to which we should not and do not attach weight. Aside from this however, both witnesses were able to give some evidence of their own on the relationship between the parties, to the effect we have just set out. The Respondents’ counsel pulled no punches in closing submissions, describing Mr Yorston’s evidence as his worthless second-hand understanding of the Contribution Agreements. In our view this criticism goes too far. While, as we have said, much of Mr Yorston’s evidence did constitute commentary on the agreements, Mr Yorston did have evidence of his own to give on the relationship between Vodafone and CTIL, to which we attach some weight.

We also note that both Mr Yorston and Mrs Main confirmed in their evidence that the ultimate commercial objective of both Vodafone and CTIL, in relation to the Vodafone Site and in relation to other sites yet to be transferred to CTIL, was that the relevant site provider should enter into a new code agreement with CTIL. This evidence was not challenged. Indeed, it was relied upon by the Respondents in relation to certain parts of their submissions. This evidence seemed to us further to bring out the point that in relation to sites such as the Vodafone Site, where a transfer is still pending, the relationship between the two parties has yet to move beyond one of agency.

In relation to Ms Daniels’ evidence the Respondents’ counsel emphasized, in their closing submissions, that Ms Daniels had accepted in cross examination that it made no practical financial difference whether sites were transferred to CTIL or not. Again however, the Respondents’ problem is the same as that we have identified above, in relation to the rent review memoranda. The concession of no practical financial difference comes nowhere near establishing that CTIL has been running its own business from the Vodafone Site. Concentration on this part of the cross examination also overlooks the important evidence which Ms Daniels did give on the relationship between Vodafone and CTIL. We highlight two extracts from the oral evidence of Ms Daniels. The first of these extracts is taken from Ms Daniels’ cross examination, at [T1/155/5-156/2], immediately prior to the extract relied upon by the Respondents:

“Q. The inference for that is this, isn't it, Ms Daniels, that it makes no difference in it the operation of Vodafone and CTIL's business whether or not a transfer has actually occurred because actually it's rather difficult even to work that out. Isn't that a reasonable inference?

A. In relation to which part of the operation of Vodafone's business?

Q. Well, point to a part of Vodafone's business in which that isn't true.

A. So, in relation to the way that we interact with Cornerstone in relation to these sites, there is a difference between a Vodafone−managed site and a site that is provided by Cornerstone that it holds in its name.

Q. Which is what?

A. In relation to the way that we operate and interact with other parties who may be on that sharing and using that site and with the landlord, that those interactions are done in Vodafone's name with Cornerstone acting as Vodafone's agent.”

The second of these extracts comprises a lengthy passage of evidence taken from Ms Daniels’ re-examination, at [T1/172/17-177/10]. The passage is too lengthy to quote in full, but we quote the following part of this extract, at [T1/173/24-174/21]:

“So, the contribution agreement, obviously, as has been explained by both counsel, sets out the basis on which there is a sale of business, which includes the sale assets from Vodafone to Cornerstone and that includes the sites , but in relation to transferring sites, to the extent that they are unable to be transferred, they −− because a third−party consent is needed or another action is needed in order to perfect the transfer of those sites , then in the interim period management services are provided by Cornerstone in relation to those sites and those management services relate mainly to undertaking the sort of activities of the tenant, as it were, on behalf of Vodafone as Vodafone agents, so that is ensuring that, you know, rental is paid, that health and safety liabilities are dealt with and other matters, and also includes managing relationships with other third−party sharers who might happen to be on that site, although I understand in relation to these sites there are no sharers, other than Virgin Media O2 that we have already referred to.”

The Respondents sought to argue, by reference to this part of Ms Daniels’ evidence, that under the terms of the Contribution Agreements, CTIL was acting as agent of Vodafone in performing tenant functions for Vodafone, but that the basis or predominant basis of CTIL’s presence on the Vodafone Site, as provided for and paid for by the MSAs, was for the purposes of the passive infrastructure business sold by Vodafone to CTIL. We cannot accept this argument. It seems to us to be contradicted by the evidence of Ms Daniels in particular, and by the evidence in general. It also depends upon the proposition, which we have already rejected, that Vodafone sold what was referred to as the passive infrastructure business to CTIL. In relation to the Vodafone Site it is clear, both from the relevant agreements and from the remainder of the evidence, that there has been no such sale.

On the Respondents’ side Mr Ward made reference to a number of matters in his witness statement which, he suggested, gave rise to uncertainty about which operator was actually in occupation of the Vodafone Site and whether or not there had been a breach of the Alienation Clause. We do not however attach weight to this evidence, for two reasons. First, and as we have already noted, Mr Ward’s evidence was given at a high level. He was not able to give direct evidence concerning the relationship between Vodafone and CTIL in relation to the Vodafone Site. Rather, Mr Ward was commenting on documents which he had seen. Second, as was apparent from the terms of Mr Ward’s witness statement, and as became further apparent in Mr Ward’s cross examination, Mr Ward was not able to refer to any matter which provided any real support for the Respondents’ case that CTIL was operating its own business from the Vodafone Site, or that CTIL was acting as other than the agent of Vodafone and Telefonica, respectively, in its dealings with the Vodafone Site.

The second reason stated in our previous paragraph applies to the various documents which were relied upon by the Respondents in support of their case that there had been a sharing of the Rights, in breach of the Alienation Clause. For the sake of completeness we will deal briefly with those documents which were highlighted in the Respondents’ closing submissions. We were referred to the Director’s report and financial statement for CTIL, for the year ending 31^st March 2013, which sets out an account of the collaboration between Vodafone and Telefonica and the launch of CTIL as a joint venture company. This account contains the following paragraph:

“On commencement of its operation, the parents transferred to the company their respective interests in passive network assets at an agreed independent valuation of £960,000,00 settled by the issuance of 160,020 shares at a premium of £959,840,000 that has been credited to reserves CTIL is responsible for taking over the beneficial ownership and management of all of the cell sites belonging to Telefonica and Vodafone, pending confirmation of the transfer of the sites selected for the single grid and decisions to decommission sites that are no longer required CTIL also exclusively provides services to Telefonica and Vodafone in relation to use and access to sites and infrastructure assets on those sites.”

We were also referred to similar statements in CTIL’s annual reports for, respectively, the years ended 31^st March 2014 and 31^st March 2022; in each case referring to CTIL’s “beneficial ownership and management of all the cell sites” described as owned or operated by Telefonica and Vodafone. In the case of the annual report for the year ended 31^st March 2022, there is also reference to “the transfer by the parent companies of their respective interests in passive network assets in 2012”. The point was also made that Vodafone’s own public documents contained statements which not only did not contradict what was stated in CTIL’s public documents, but were in fact consistent with the statements in CTIL’s documents to the effect that CTIL had the beneficial ownership of all the sites belonging to Telefonica and Vodafone.

We did not find any of this material, by which we mean the documents relied upon by the Respondents in this context, either helpful or persuasive as evidence. As such, we attach little weight to this material. Documents such as annual reports, financial statements and public announcements are not dispositive documents. Nor are they contractual documents. We do not know how such documents came to be drafted, or where the information came from which appears in the documents. In the case of CTIL’s reports and financial statements the references to CTIL having the beneficial ownership and management of all of the cell sites belonging to Telefonica and Vodafone are ambiguous. It is not entirely clear to what these statements were referring, or what they were intended to mean. If they were intended to mean that the Contribution Agreements or either of them and/or the 2012 MSA had the effect of transferring the beneficial interest in the Vodafone Managed Sites to CTIL, they are plainly wrong, for the reasons which we have already set out. This may however be unfair, given the ambiguity in the statements.

At best, the documents relied upon by the Respondents in this context constituted secondary evidence which might, in a different case, have provided some corroborating or supporting evidence for the Respondents’ case that there has been a transfer to CTIL of the beneficial interest in the Passive Assets, the goodwill in the Vodafone Site Management Business and the management and exploitation of the Vodafone Managed Sites and the Passive Assets located thereon. As it is, the Respondents have failed to establish this case, or any part of it, either by reference to the relevant agreements or by reference to any other direct evidence. The documents relied upon by the Respondents are not capable of making good this failure.

Drawing together all of the analysis, in this section of our decision, we conclude that the Respondents have failed to establish that there has been any breach of the Alienation Clause.

If the Alienation Clause has been breached, and if the breach is only a single breach, is a single breach sufficient to engage Paragraph (a)?

Given our conclusion on the question of whether there has been any breach of the Alienation Clause, this question does not strictly arise for decision. In these circumstances we make only two points on this question. First, and if the question had arisen for decision, we note that the breach of the Alienation Clause ultimately relied upon by the Respondents was the alleged sharing of the Rights with CTIL. If this sharing of the Rights had been established, it seems to us that this would have been a continuing breach of the Alienation Clause, as opposed to a single, once and for all breach. As such, and on this hypothesis, we would have concluded that the Respondents had established “breaches” of the Alienation Clause, within the terms of Paragraph (a), regardless of whether Paragraph (a) can also be engaged by a single, once and for all breach. Second, and on the interesting question of whether Paragraph (a) can be engaged by a single, once and for all breach, we consider that this question should be left for decision in a case where it strictly arises. We are not persuaded that obiter observations of our own on this question are either necessary or appropriate.

If the Alienation Clause has been breached, and if Paragraph (a) is engaged, was the breach or were the breaches substantial?

This question, again, does not strictly arise for decision. In our view it is not appropriate to attempt to answer this question on a hypothetical basis. The question of whether a breach or breaches are substantial is not one which raises an independent question of law. In order to answer the question it is first necessary to identify the relevant breach or breaches. In the absence of such identification, the question of substantiality cannot be answered. We do not think that it would be sensible or appropriate for us to attempt to hypothesise a breach or breaches of the Alienation Clause, in order to permit us to address the question of substantiality.

If Paragraph (a) is engaged, and if there has been substantial breach of the Alienation Clause, ought the 2003 Agreement to come to an end?

This question, again, does not strictly arise for decision. Again, in our view it is not appropriate to attempt to answer this question on a hypothetical basis. Our reasons are the same as those we have expressed in relation to the previous question.

Preliminary Issue (a) – conclusion

Our conclusion on Preliminary Issue (a) is that Icon cannot rely on Paragraph (a). For the reasons which we have stated, the Respondents have failed to establish that Vodafone has breached any of its obligations under the 2003 Agreement. Accordingly, Paragraph (a) is not engaged.