Telecoms operators successfully challenge Lands Tribunal decision not to permit termination of lease based on old statutory code

John Duncan, the owner of West Dullatur Farm, entered into the agreement with EE Ltd, which subsequently assigned its interest to Hutchison 3G UK Ltd, in 2003. EE and Hutchison sought to appeal a decision that that there was no relevant case for the termination of the subsisting agreement between the parties in order to substitute a new agreement based on an updated statutory code.

The appeal was heard by the Lord Justice Clerk, Lady Dorrian, sitting with Lord Malcolm and Lord Doherty. The appellants were represented by Barne QC and the respondent by Upton, advocate.

Electronic Communications Code 

Following the expiry of the agreed term in 2012, the lease between the operators and the owner continued on a yearly basis by tacit relocation. In 2018, the operators sought agreement as to a new lease that was designed to update the existing agreement to comply with a new version of the Electronic Communications Code (ECC), as contained in schedule 3A to the Communications Act 2003, as amended by the Digital Economy Act 2017.

The owner expressed a preference for continuation of the agreement under the old code, with a proposed change in the financial arrangements appearing to the main point of contention. On 8 November 2019, the operators each served a notice on the owner proposing termination of the old agreement, stating that in the absence of an agreed outcome they could apply to the tribunal for an order that the notice takes effect.

The Lands Tribunal refused the operators’ application on the basis that a relevant case had not been presented for termination. It was acknowledged that the new lease would bring the parties’ relationship into line with the minimum non-derogable provisions in any agreement for a new site under the new code, but it had not been contended that there was any particular need for such changes at the site, nor that any new provisions were required to give the agreement business or technical efficacy.

It was submitted for the appellants that there was no sound basis for the Tribunal’s position that the reference in paragraph 33(14) of the ECC to “the operator’s business and technical needs” created a hurdle they were required to clear to establish a basis for termination. Rather than applying a test of necessity, the tribunal should have addressed what it is that the operators might reasonably require.

In a cross-appeal, it was submitted for the respondent that the tribunal had erred in rejecting his submissions that the notice served by the operators was invalid in having specified a date for termination of the lease which was not an anniversary of its ish, and because a written lease continued by tacit relocation fell outside the scope of the code as it was no longer an agreement made in writing.

Generic term

The opinion of the court was delivered by Lord Malcolm, who began: “[We] agree with the tribunal that paragraph 34 opens up a wide range of possible orders. However we part company with the tribunal in its assertion that the operators required to do more than point to the current arrangements as being out of step with the minimum rights available under the new code, for example in terms of assignation, upgrading, sharing and rent.”

He explained further: “Given the underlying aims and purposes of the new code, which include that over time old agreements will be brought into line with new ones, we understand the phrase ‘business and technical needs’ where it appears in paragraph 34(13) to be a generic term which, whatever else, includes the benefits for operators mandated by the new code. We agree with the operators’ submission that it can be construed as a reference to matters which are reasonably required from a business and/or technical point of view.”

Lord Malcolm concluded on this issue: “The tribunal’s analysis would severely curtail the legislative intention to create the opportunity to bring old agreements into line with new code arrangements. These aims are of a piece with those of the new code as a whole. The overall scheme of this part of the code is inimical to the proposition that significant weight should be given to the existing rights and obligations of the parties.”

Turning to the respondent’s cross appeal, the judge noted: “A consideration of the structure of paragraph 33(3) suggests that the overall intention was to postpone the introduction of a new agreement until after the first time when the existing agreement could be terminated by the site provider, and also give the parties at least six months from the date of the notice to try to reach an agreed outcome. This would be in line with paragraph 33(4) which allows for an application by either party to the tribunal for a paragraph 34 order if they have not reached agreement within that period.”

On whether a lease continued by tacit relocation fell into this scope, he stated: “In our view the tribunal reached the correct decision on this matter. When the new code came into force the operators occupied the site under the terms of a written agreement which had been extended from year to year on tacit relocation. It follows that both parties were subject to its terms and the tribunal had jurisdiction to deal with the application.”

For these reasons, the operators’ appeal was allowed, and the cross appeal dismissed. The matter was remitted to the tribunal for further procedure.