Michael Upton: The Electronic Communications Code – three new cases

Michael Upton

At the end of 2017 the new Electronic Communications Code (enacted by the Digital Economy Act 2017, amending the Communications Act 2003) replaced the old 1984 Telecommunications Code. After two-and-a-half years, the new code is producing a steady flow of decisions, throwing some much-needed light on its meaning, writes Michael Upton.

The code allows Ofcom-recognised telecoms operators to serve notice requesting rights to install electronic communications apparatus on property – and failing agreement, to apply for compulsory rights over a site. In England, application is to the Upper Tribunal; here, to the Lands Tribunal. Where the Tribunal grants an operator’s application, it may do so by imposing a deemed agreement on the land-owner – or another person with prior rights in the land, such as a tenant – but for shorthand here we will refer to land-owners. A code agreement can be a lease, wayleave or licence – again for shorthand let us here talk of leases.

Applications may be made for new apparatus on completely new sites – but commonly, the apparatus has already been on-site for years under a previous lease the original term of which has expired. In CTIL v Ashloch, [2019] UKUT 338 (LC), the lease was continuing under an English statutory equivalent of tacit relocation. Here we ‘put a kilt’ on Ashloch by interpreting what it would mean in the context of Scots tacit relocation. In such a case, of course, an operator retains a leasehold title to keep its apparatus on the site. But what if an operator would rather have a new right, not just from year to year as tacit relocation provides, but for a new term of years? – and perhaps with a new rent? The rent-fixing formula under the new code seems likely to produce rents generally lower than those which prevailed under pre-2017 leases – so for that and other reasons, a new-code arrangement may be more attractive to an operator than tacit continuation of the status quo.

How then should such an operator proceed? Part 4 of the code provides for the tribunal to impose a new agreement. Readers of the code could be forgiven for thinking that it is straightforwardly the relevant part under which to serve notice and if need be apply to the tribunal. But as reported in these pages on October 24th last, the Court of Appeal has held that part-4 proceedings must be and can only be directed against an occupier: CTIL v Compton Beauchamp Estates, [2019] EWCA Civ 1755 So where does that leave an operator who is already the occupier of the site, but who wants a new right?

At least one thing seems obvious: the code cannot mean that it has to serve notice on itself, or that it can grant itself a new right, or apply to the tribunal to have a right granted against itself.

Ashloch answers the conundrum by holding that part 4 does not apply to this situation at all. The answer lies in part 5 of the code. Part 5 is headed ‘Termination and modification of agreements’, but under that simple heading it contains complex provisions, including a tribunal power to impose a new agreement on the termination of an earlier one. A part-5 agreement can run from a date after the earlier agreement has ended, or a date after it “could have been brought to an end by the site provider” [emphasis added] (para. 31(3)). Reading Ashloch in Scots terms, a lease running on tacit relocation can be brought to an end at its anniversary, assuming due notice to quit – so whether that has actually happened or not, it is enough for part 5 that it could happen. It follows that from a date after the yearly term of the tacit lease, the tribunal can impose a new agreement. Crucially, notices and applications under part 5 are directed against the “site provider”. A “site provider” includes a landlord under an existing lease. The operator who is already in occupation should proceed not against itself but against the landlord under part 5.

That might look like an abstruse point, but it was sufficiently fundamental for CTIL’s application in Ashloch to be struck out – and sufficiently important that CTIL are reported to be taking it to the Court of Appeal. For the choice between parts 4 and 5 can make a difference: apart from an operator being able to invoke part 4 whenever it chooses, while part 5 can only be used with reference to actual or potential dates of expiry of an existing agreement, under part 4 the tribunal has a wide discretion about the terms of a new agreement, whereas under part 5 the old agreement must at least be the starting point for judicial consideration of new terms, and there may be a presumption in favour of the old terms (cf. O’May v City of London Real Property Co. Ltd., [1983] 2 AC 726). CTIL have also sought permission to appeal Compton Beauchamp Estates to the Supreme Court. So the debate goes on.

Meanwhile EE Ltd. v Chichester, [2019] UKUT 164 (LC), concerns one of the few clear-cut defences that the code gives a land-owner as a sufficient answer to an application for a code agreement. That is where it would interfere with an intention to re-develop the land, or neighbouring land. The Upper Tribunal held that the defence failed – fundamentally because there was no evidence that the landowner’s intention had pre-existed the operator’s request for a code right. What had to be proved was a firm, settled and unconditional intention to re-develop - but here the re-development plan had simply been created in order to provide the defence.

Three comments can be made. The first is that to rely on the ‘intention to re-develop’ defence, it would be a good idea to have lodged, say, a planning application, or to have let a contract to a builder or at least an architect or engineer, before the operator first expressed interest in the site. But secondly, ‘re-development’ is undefined, and seems a somewhat open-ended concept – just so long as it cannot live happily with some electronic communications apparatus. Thirdly, as a matter of the policy of the legislation, the defence favours the land-owner who wants to change his property, over the land-owner who just wants it to remain the way it has always been. Perhaps that is the spirit of the age.

Lastly, the Lands Tribunal has provided some further guidance about the rent-fixing formula – under the old code rather than the new one. Not all litigation under the old code is at an end so it may remain relevant. Wyness v Scottish Hydro Electric Power Distribution, decided on 17th April, concerns compensation for a wayleave for an electricity cable – and so was not a case under either code – but the tribunal considered how compensation is assessed under the old code. Generally, compensation for compulsory purchase is assessed using the ‘no scheme’ rule; i.e., assuming that the subjects are not going to be used for the purpose of the scheme for which they are being acquired. That tends to depress compensation. The old code provides that rent is to be fixed as what is “fair and reasonable”. SSE Telecommunications v Millar, [2018] SCA (CIV) 14, held that that impliedly imported the ‘no scheme’ rule. But rating cases such as Hutchison 3G (UK) v Assessor for Renfrewshire (2008) have valued telecoms sites on the contrary basis that the old code requires ‘with scheme’ rents, nearer to open-market levels. In Wyness the tribunal noted that Hutchison had not been cited in Millar, and described the outcome in Millar as one which “would have represented a considerable surprise to the property industry” and “questionable”.

Michael Upton MCIArb is a member of Themis Advocates

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