Michael Upton: The new Electronic Communications Code – first rental-valuation judgment

Michael Upton

Advocate Michael Upton M.C.I.Arb, of Hastie Stable, examines the first rent valuation case under the Electronic Communications Code.

Relations between landlords and telecoms operators in respect of the installation and maintenance of electronic communications apparatus (ECA) on land and buildings are in important respects governed by legislation.

Until 2017 it was to be found in what was originally the Telecommunications code in the Telecommunications Act 1984 (amended by the Communications Act 2003). Since 28th December 2017, the old code has been replaced by the new Electronic Communications Code in the Digital Economy Act 2017.

Under the code, an operator may apply for compulsory rights to install and keep apparatus on another person’s property. In England, application is to the Upper tribunal; in Scotland, to the Lands Tribunal for Scotland. Where the tribunal grants an application, it does so by imposing a deemed agreement on the landlord. The tribunal has jurisdiction to determine both:-

(1) the rent to be paid as consideration for the landlord’s deemed agreement, and

(2) compensation for loss and injury he has sustained or will sustain.

The new code re-wrote the principles of valuation, particularly for rent. Where the old code provided for “fair and reasonable” consideration, the emphasis of the new code is on the statutory assumption that the operator will not be using the site for the purposes of electronic communications: a version of the ‘no scheme’ rule of C.P.O. compensation.

On Monday, the Upper Tribunal gave judgment in EE Ltd. v. Islington LBC. It is only the fourth judgment on the new code at all, and the first ruling to apply the new approach to fixing a rent. It is also the first decision that the tribunal’s jurisdiction to impose a deemed agreement on the landlord gives it power to impose not only, say, a wayleave or licence, but a lease.

Two operators sought a lease of part of the roof of a block of flats, apparently to install and operate mobile-telephone signals apparatus. On the valuation issues, the tribunal held:-

  1. The ‘no scheme’ rule should be labelled the ‘no network’ rule, because not all the C.P.O. compensation principles apply under the new code;
  2. Old code precedents are irrelevant;
  3. Rent under the new code will not necessarily be merely nominal;
  4. But nothing in the new code rules that out, so a purely nominal rent could be fixed (e.g., £50 p.a.), depending on the characteristics of the site;
  5. On the other hand, it is only the purpose of the operator’s rights which the valuation ignores; not their content, nor any burden or demands on the landlord which they may involve;
  6. The grant of a right to install additional apparatus at a later date is to be disregarded by the valuation;
  7. But it should reflect any inconvenience to the landlord; and
  8. Where costs are borne by landlord for the operator’s benefit, the rent should contribute to them.

The operators’ suggested annual rent was £1. The landlord’s was £13,250. The tribunal fixed it at £1,000.

On compensation for loss and damages, the tribunal held that:-

  1. Compensation for loss and damage is effectively a right, not discretionary, but
  2. It will not be awarded for the landlord’s inability to realise the true market value of his site for use for ECA, for that would subvert the ‘no network’ principle - i.e., judicial imposition of an agreement is no injury in law; and
  3. Effectively the same goes for the landlord’s being unable to charge or participate in site-sharers’ rents, while4. Compensation for reinstatement should be left till the lease reaches its ish.

Over the thirteen months since the new code came into force, there has been a perception of a degree of log-jam in negotiations over ECA agreements nationally, because of lack of ‘price information’; i.e., diverging expectations combined with an absence of public benchmarks. This judgment provides guidance on some points of general application, but by no means all that may arise, in a sector where almost every negotiation has special features. Such roof-top sites are a minority of the 33,000-odd telecommunications sites in Britain, but all practitioners in telecoms law will nonetheless wish to read the EE judgment closely.

Applications for compulsory rights under the code have to be determined within six months, from lodging to final judgment. This judgment also addresses the co-operation required from parties if that is to happen.

The same case gave rise to an earlier decision on interim rights: [2018] UKUT 01361 (LC).

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