Network operators of telecommunications equipment have rights, in accordance with Schedule 3A to the Communications Act 2003 (as introduced by the Digital Economy Act 2017) (the "Code"), to install and operate their equipment on sites. Code rights are wide-reaching, affording operators a level security of tenure. Landowners may only restrain such rights, if they can successfully argue that the operator has failed to meet a number of conditions as set out at paragraph 21 of the Code.

Test under the Code

Paragraph 21 is said to be a stiff test for landowners to meet. It does not require the operator's consideration of the suitability of other sites; and, there is a presumption (which cannot be displaced) that telecommunications equipment is a public benefit.

Paragraph 21 test:

The prejudice caused to the landowner is capable of being adequately compensated by money (note: the landowner is not entitled to make profit from the deal); and,

The public benefit outweighs the prejudice to the landowner (regard will be given to the public interest in access to a choice of high quality electronic communications services).

A Code agreement will not be imposed where either these conditions are not met or, the landowner intends to redevelop all or part of the land, or neighbouring land, and could not reasonably do so if an agreement was imposed.

In a recent case in the Upper Tribunal (1 September 2020), the landowner defeated an operator's application to impose a Code agreement upon it.

Facts of the case

The landowner was a collegiate university, said to frequently have some 3,000 persons on campus on any given day (pre-lockdown). A largescale redevelopment of a shopping centre was to commence in the near future (circa five years). In the redevelopment, the operator had existing equipment on two roof-tops in the shopping centre. It wanted a temporary move onto the landowner's building. Then, once the redevelopment had completed, it would move to new buildings in the redevelopment, for its permanent home. The landowner's building was itself being demolished at some point during the redevelopment.

The landowner had in place with the developer, a sale and leaseback of its building. The contract provided for the landowner to be able to exercise a break clause in the lease, if it delivered up with vacant possession free from third party rights and telecommunications apparatus. If it failed to meet the break conditions, the landowner would be liable for rent of £3million per annum.

The landowner's argument

The landowner argued that if a Code agreement was imposed, there was little, if any, certainty that it would be able to remove the operator in-time to properly effect the break. It said that there was no time for litigation within the Code and Tribunal timescales. The Tribunal considered the Code procedures for removal of the operator's equipment and potential litigation timescales, if the operator refused to leave voluntarily.

The operator's argument

The operator said that the Tribunal should consider only the public benefit to flow from the conferral of Code rights, that it would have no defence against an order to remove its equipment and, if the redevelopment did not complete within the expected timescales, it would have no Code rights (save for interim ones). It did not trust the landowner to refrain from enforcing removal of the apparatus.

The Tribunal's decision

The Tribunal accepted the landowner's evidence regarding timescales in the redevelopment; and, noted the operator's previous failure to vacate a site, without reference to the Tribunal by the developer. It said that the prejudice to be suffered by the landowner for the public good, was too much to ask.

In deciding that the paragraph 21 test had not been met, the Tribunal highlighted the stress and operational difficulties to the landowner caused by the risk involved. It remarked specifically on the reputational risk to the landowner if it was unsuccessful – the developer, prospective students etc., and the lower risk regarding potential injunctive action by the developer. Such prejudices and damage, the Tribunal held, could not be compensated by money.

The imposition of a Code agreement put the landowner at risk both of having to pay rent, and of being liable in very substantial damages to the developer. The prejudice caused was too great to be outweighed by the public benefit.

Our comment

The case adds to a body of cases dealing with the new Code. It gives insight into the factors, which the Tribunal will consider in what it described as the private prejudice versus public benefit test. Rightly finding that some things are not able to be remedied with money, such as stress and reputation; and, the Code will not frustrate a landowner's right to do with its land as it sees fit (in these circumstances, in the form of a sale and leaseback agreement).