Q&A: Talking the telecoms talk

Question

A Code operator is occupying part of my building under a lease which is continuing under the Landlord and Tenant Act 1954. We are in discussions regarding a new agreement. Does the new Electronic Communications Code or the 1954 Act apply to the renewal process?

Answer

The Court of Appeal has recently confirmed that the procedures set out in the 1954 Act would apply.

Explanation

The new Electronic Communications Code gives Code operators strong protections to ensure continuity of coverage and gives them more flexible rights to increase access to electronic communications services.

There are complex transitional provisions which apply to agreements made under the previous Code (prior to December 2017) which have recently been considered by the Court of Appeal in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2021] EWCA Civ 90; [2021] PLSCS 25. The court found that the new Code is not available to an operator already in occupation under a 1954 Act protected lease.

This means that as a landlord you can give between six and 12 months’ notice to terminate the lease as opposed to the 18 months’ required under the new Code. Moreover, if you wanted to oppose the grant of a new agreement you could rely on the grounds available under the 1954 Act, including ground (g), namely that you intend to occupy the premises for the purpose of your own business or residence. Proceedings would take place in the County Court rather than the Upper Tribunal (Lands Chamber). With regard to the terms of the new agreement, it is not yet clear whether including provisions available under the new Code would amount to “reasonable modernisation” under the 1954 Act. Any subsequent renewal will be under the new Code and so it may be that the operator will seek a shorter term (see Vodafone Ltd v Hanover Capital Ltd [2020] EW Misc 13 (CC); [2020] EGLR 35).

The reasoning in Ashloch was based on the Court of Appeal’s previous decision in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates [2019] EWCA Civ 1755; [2019] PLSCS 201. In that case, the operator was already in occupation of the site. It was therefore not possible to serve a notice on the landowner requiring the conferral of Code rights because the operator, not the landowner, was the “occupier” for these purposes. Compton Beauchamp is due to be heard by the Supreme Court this summer so there may be further changes in this area. The Department for Digital, Culture, Media and Sports has also issued a consultation on changes to the Code including providing greater certainty surrounding the renewal process of expired agreements.

Question

What terms are the tribunal likely to impose in an Electronic Communications Code agreement as regards the upgrading and sharing of equipment?

Answer

There are pre-conditions relating to upgrading and sharing contained in the Electronic Communications Code but there is conflicting authority as to the test for a departure from these conditions. This topic is likely to be the subject of a Court of Appeal decision in the near future.

Explanation

Paragraph 17 of the Code (which applies to all Code agreements) allows the operator to share and upgrade its equipment on two conditions. These are that the changes have at most a minimal adverse impact on its appearance (paragraph 17(2)), and no additional burden is imposed on the landowner (paragraph 17(3)).

An additional burden includes anything that causes additional loss, damage or expense. When a Code agreement is being imposed, paragraph 23(5) requires the tribunal to include terms that are appropriate for causing the “least possible” loss and damage to landowners. So is it appropriate for the tribunal to allow sharing and upgrading free from the paragraph 17 conditions?

In Cornerstone Telecommunications Infrastructure Ltd v University of the Arts London [2020] UKUT 248 (LC); [2020] EGLR 36 – the first thorough consideration of lots of disputed terms in England – the paragraph 17(3) safeguard was included. The tribunal described the inclusion of paragraph 17 as “the starting point”, it having been “drafted to express policy framed in full knowledge of the importance of sharing and upgrading”. An operator had to justify more, if it wanted more.

Similarly, in CTIL v Fothringham LTS-ECC-2020-07, in Scotland, it was held that an operator had to persuade the tribunal to grant rights that were unfettered by the paragraph 17 conditions. However, the judgment went further, stating that it would “require pretty compelling evidence” in order to do so. The tribunal’s reasoning was that in enacting paragraph 17, “Parliament was striking a balance between the interests of the operators and the public, on one hand, and site providers, on the other”.

In On Tower UK Ltd v JH & FW Green Ltd [2020] UKUT 348 (LC); [2020] PLSCS 229, the tribunal declined to include any paragraph 17 safeguards, expressly disagreeing with the proposition that “pretty compelling evidence” was required to oust them. Permission to appeal to the Court of Appeal has been granted in that case and so any decision in that forthcoming appeal will provide much-needed guidance in this area and be the most authoritative consideration of this topic to date.

This article was first published in Estates Gazette on 8 March 2021 and was written by barrister, Jonathan Wills at Landmark Chambers and senior associate, Georgina Muskett at Charles Russell Speechlys. For more information, please contact Georgina or your usual Charles Russell Speechlys contact in the Real Estate Disputes team.