Last year proved to be busy for the courts as they continued to put flesh on the bones of the new electronic communications code. The courts have had to determine more disputes in the last two years, since the new code took effect, than they had to in the previous 30+ years of the code.
The tail end of last year saw the Court of Appeal in England deliver judgments in the first two appeals brought under the new code and a further significant decision by the Upper Tribunal in England in relation to the renewal of code agreements and leases.
Taking a closer look at these decisions, it is interesting to see the approach being taken by the courts in interpreting the new code and the implications this will have on the currently strained relationship between property owners and telecoms operators.
CTIL v Compton Beauchamp Estates Limited (Court of Appeal)
We covered the Upper Tribunal’s decision in our last update on the code. The key issue was whether code rights could be imposed on the owner, Compton Beauchamp, whilst it was not in occupation. It was not disputed that Vodafone was in occupation. As the code provides that code rights can only be conferred on an operator by “the occupier”, the Court of Appeal dismissed CTIL's appeal.
The Court of Appeal also commented that the renewal of rights by an operator in situ is governed primarily by Part 5 of the code which contains a procedure for modifying existing agreements.
CTIL v Ashloch Limited & AP Wireless II (UK) Limited (Upper Tribunal)
Following shortly after the Compton Beauchamp appeal, the Upper Tribunal was again required to consider rights of renewal in relation to existing apparatus. In this case, however, CTIL was the operator in situ and argued that the powers under Part 4 of the code, to acquire new court-imposed rights, were available to it as an alternative to using the modification procedure.
The Upper Tribunal held that it had no jurisdiction to impose a new code agreement under Part 4 where the operator is already in occupation under a subsisting agreement.
The University of London v CTIL (Court of Appeal)
This appeal concerned an application for interim rights to enter onto roof top premises to carry out surveys for the purpose of assessing the suitability of the site for the installation of telecoms apparatus (known in the industry as a “multi-skilled visit” or “MSV”).
The code makes no express provision for such rights but the Upper Tribunal had ruled that entry for such purpose was a code right as it was a necessary step in “the installation” of telecoms apparatus and that entry for such purposes constituted “works …. in connection with the installation” of apparatus (both of which are express code rights).
Whilst the Court of Appeal was doubtful that a right to install carries with it a right to assess the suitability of the site, it ruled that an MSV, even if non-intrusive, amounts to “works in connection with the installation of electronic communications apparatus”.
The Court of Appeal also upheld the Upper Tribunal’s decision that interim rights can be sought and imposed even where there is no related application for permanent code rights. If the MSV determines that the site is not suitable for telecoms kit, then there would be no need for permanent code rights.
New year, new approach?
The standoff between property owners and telecoms operators continues, as parties on both sides grapple with the new basis of valuation under the code and the resulting reduction in rents being offered (see my previous blog here). However, recent experience indicates that there may be a shift in attitudes as consensual agreements begin to filter through.
Looking to the year ahead, what might we expect to see?
- Greater use of the modification procedure – following expiry of the contractual term, either party (property owner or telecoms operator) can serve notice on the other proposing revised terms. In the event that revised terms are not agreed within 6 months, either party can apply to the Tribunal for imposed terms. The Compton Beauchamp and AP Wireless decisions have made it clear that the modification procedure is to be used for renewals on existing sites and that the Part 4 procedure is for securing new rights.
- Further legislative intervention – there is presently a Bill before Parliament to amend the code to facilitate connections for tenants in multi-let buildings, to address the issue of delays being caused by unresponsive landlords. It may be the case that the operators’ powers are enhanced even further to break the current log jam.
- Changing behaviours/attitudes – RICS recently issued professional guidance for surveyors advising on the code. Scottish Land & Estates and NFU Scotland have also joined forces to set up a special telecoms forum to tackle issues with the new code, including what has been regarded as aggressive behaviour on the part of operators.
- A move towards more balanced terms recognising the code requirement to minimum loss and damage caused from the exercise of code rights – Practical Law has now produced a style lease for greenfield sites and a style wayleave agreement which are intended to provide property owners and occupiers with protections which are otherwise missing from the operators’ standard form documents.
- Further development of the “no network” assumption in valuing code rights – the Upper Tribunal considered the basis for valuation of a greenfield site in Compton Beauchamp but, as code rights were not imposed in that instance, the Tribunal was not required to determine the level of consideration payable.