2019 was the year when the Upper Tribunal and Court of Appeal started to put flesh on the bones of the Electronic Communications Code. Issues of uncertainty and debate have been clarified and new areas of uncertainty have arisen. Our key takeaway points from 2019 are:
1. The distinction between Part 4 and Part 5 is important
Prior to the introduction of the Code, the expectation was that the procedure under Paragraph 33, Part 5 of the Code would be used where an operator wanted to renew a Code agreement relating to existing equipment. This requires the service of 6 months’ notice by either the operator or site provider and such notice must expire after the expiry of the contractual term of the existing Code agreement (or, if possible, after the date which the site provider could bring the agreement to an end). However, the almost ubiquitous use by operators of the procedure for the grant of new Code agreements under Paragraph 20, Part 4 of the Code (possibly attracted by the shorter 28 days’ notice period and avoiding engagement with the transitional provisions (see below)) had put this expectation into doubt.
The decisions in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and AP Wireless II (UK) Ltd and Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd have provided welcome clarity on when the Part 4 and Part 5 procedures should be used. In general, Part 4 should be used for a new agreement where the operator does not have equipment in situ and Part 5 should be used where a Code agreement relating to existing equipment is to be renewed. Landowners and operators should be aware of the distinction and ensure that the correct procedure is followed.
2. Who is in Occupation?
The increasing use by mobile operators of infrastructure providers such as Cornerstone and MBNL has put the question of who is in physical occupation of mast sites into focus. In Compton Beauchamp, the Upper Tribunal and Court of Appeal found that, where the mobile company and not the infrastructure provider was the party to an existing Code agreement and physically occupied the site, there was no jurisdiction for the third party infrastructure provider to apply for Code rights to be granted to them directly by the landowner. This was because the landowner was not in occupation of the land and Paragraph 9 requires an agreement to be entered into between the occupier and the operator. Who is in physical occupation of the site is, therefore, potentially of key importance to the parties in any dispute or negotiations over terms of a Code agreement.
3. Don’t forget the Transitional Provisions
In Ashloch, the Tribunal found that, as Cornerstone was seeking to renew an existing Code agreement, the renewal provisions in Part 5 of the Code would apply. However, as the existing agreement was a lease protected by the Landlord and Tenant Act 1954, the Code’s transitional provisions meant that Part 5 would not apply and instead the lease would need to be renewed under the 1954 Act. The 1954 Act does not include the requirement to assume that the transaction does not relate to the provision or use of an electronic communications network when valuing rent (a 'no network' valuation) which means that it is likely that the rent payable under the renewal agreement will be higher than if it were renewed under Part 5 of the Code. Landowners should always check whether the existing agreement to be renewed is protected by the 1954 Act and falls within the exclusion in the transitional provisions. If so, it could make a significant difference to rental income.
4. Ancillary Rights can be Code rights
The continued litigation between Cornerstone and the University of London has made it clear that rights ancillary to the Code rights specifically referred to in the Code may also be Code rights. This includes the right for operators to carry out multi-skilled visits of a site to assess its suitability to host telecoms apparatus. Landowners should take expert advice on whether a right proposed by an operator may be considered to be such an ancillary right to ensure that unnecessary disputes are avoided.
5. Tribunal Warnings on Conduct
The Tribunal has not been backward in expressing its distaste for parties in Code disputes adopting an inflexible approach in negotiations and taking points which rack up costs unnecessarily. In Cornerstone Telecommunications Infrastructure Ltd v (1) Central Saint Giles General Partner Limited (2) Clarion Housing Association Limited, the Tribunal was robust in its criticism of the conduct of the parties in negotiations and this was reflected in its cost order. Landowners and operators should be wary of adopting unreasonable or inflexible positons in disputes or negotiations as there are likely to be cost consequences.
6. Follow Ground (f)
One of the grounds that landowner can rely on to oppose the grant or renewal of a Code agreement is that it intends to redevelop all or part of the land in question. Although the wording used is different, the expectation was that the requirements on landowners to satisfy this ground would be the same as or similar to the requirements placed on a landlord seeking to oppose the grant of a new lease under the 1954 Act on ground (f). This expectation was proven to be correct in the case of EE Limited and Hutchison 3G UK v Meyrick 1968 Combined Trust Of Meyrick Estate Management which found that a landowner must demonstrate a firm, settled and unconditional intention to redevelop the site. Landowners and operators should follow developments in this area under the Code but also in 1954 Act cases relating to ground (f).
Trends in 2020
2020 will undoubtedly be a year where the law in this area will continue to develop. We expect to see the following trends in 2020:
- Despite appeals from both sides to de-escalate growing tensions between landowners and operators, these battles will continue unabated. As a result, the trend for increasing numbers of Code cases appearing before the Upper Tribunal, Court of Appeal and Supreme Court will continue. In particular, eyes will be firmly on the potential appeals in Compton Beauchamp and Ashloch.
- With the focus of both landowners and operators on the consideration payable for Code agreements and the increased clarity on the basis of a 'no network' valuation provided by the Tribunal in Compton Beauchamp, there may be an increase in the number of cases before the Tribunal which purely relate to a dispute about valuation.
- As the law on the more ‘mainstream’ areas of the Code become more settled, there is likely to be more litigation on more ‘niche’ elements of the Code (for example, on the provisions of Part 7 relating to Transport Land Rights or the conditions in Paragraph 17 with which an operator needs to be satisfied to upgrade or share apparatus).
- Following Compton Beauchamp, there may be more disputes about whether the site provider can refuse to give consent to assignment of existing agreements.
- Possible further government legislation to seek to resolve the impasse between landowners and operators and to promote and assist the 5G rollout.