Ben Sharples FRICS FAAV
Posted on 16 Dec 2019

Electronic Communications Code: Redeveloping to avoid Code rights

This is a further case in which the Tribunal had to consider whether the claimant mobile telephone network operators were entitled to rights (“Code rights”) pursuant to Schedule 3A to the Communications Act 2003, known as the Electronic Communications Code (“the Code”).

How the Code works

The Code has been drafted to facilitate the development of the mobile communications network and the Code rights now give operators the same sort of extensive powers enjoyed by water and electricity providers.

However, one of the limited circumstances in which occupiers of land can resist the imposition of Code rights is where they intend to redevelop the land and cannot reasonably do so if Code rights are granted (paragraph 21(5)). This aims to strike a pragmatic compromise, recognising that there are circumstances in which the landowner’s right to use land as he/she chooses should take priority over the need of the public for “access to a choice of high quality electronic communications services” as per the Code.

The Meyrick case

In the case of EE Limited & Hutchison 3G UK Limited v Trustees of the Meyrick 1968 Combined Trust [2019] the Trustees planned to redevelop the mast site by erecting their own mast in place of the Claimants’. The key issue here was that, under the Code, the landowner receives rent that is likely to be considerably lower than the market rent previously payable. By putting up their own mast they could exercise control over it and charge a rent higher than that paid under the Code.

This would be possible as Code rights cannot be obtained over electronic communications equipment, such as a mast, since it is excluded from the Code definition of “land.” Therefore a landowner who provides their own mast cannot be subjected to Code rights.

The fundamental question here was whether the landowner had a settled intention to carry out the redevelopment and, if so, whether their motive was to prevent the Claimants from claiming Code rights. If so, did that motive prevent them claiming the protection of paragraph 21(5)?

Question of intention

This question of intention also arises in the context of Case B of the Agricultural Holdings Act 1986 and section 31 of the Landlord & Tenant Act 1954, which both operate to ease the statutory security of tenure granted to tenants under those regimes.

The Trustee's redevelopment project provided for the installation of a 35m lattice mast capable of supporting not only mobile phone antennae belonging to the Claimants and other operators, but also the apparatus required for fixed wireless access broadband to serve the Estate. The redevelopment could not reasonably be carried out if the Claimants were granted the Code rights that they sought.

The difficult issue under paragraph 21(5) relates to the landowner's intention to redevelop. The Tribunal considered the similar and potentially persuasive case law relating to section 30(1)(f) of the Landlord and Tenant Act 1954. That provision is one of the grounds on which a landlord may recover possession of business premises at the end of the term, despite the security otherwise offered to business tenants under the 1954 Act.

The Tribunal agreed with the landowner that the case law associated with section 30(1)(f) is not binding authority in the context of the Code and of paragraph 21(5). The Code requires a fresh start. The principles applicable to the 1954 Act should be adopted, where they are relevant, although the different context in Code cases must be considered.

An additional dimension is that a redevelopment conceived purely to prevent the acquisition of Code rights, which would not be pursued if Code rights were not sought, will not satisfy the test in paragraph 21(5) for the reasons given by the Supreme Court in S Franses Ltd v Cavendish Hotel (London) Ltd [2018].

Accordingly, the landowner can only defeat an application for Code rights, if they can demonstrate that they have both a reasonable prospect of being able to carry out their redevelopment project and that they have a firm, settled and unconditional intention to do so. If they intend to do so purely in order to prevent the Claimants from getting Code rights then they will fail.

(1) Does the landowner have a reasonable prospect of carrying out the current scheme of redevelopment?

This is the objective limb of the test and the Tribunal had to decide whether the landowner had a reasonable prospect of putting the redevelopment into effect. There has to be a real, not merely a fanciful, chance of this.

The Tribunal questioned the financial viability of the proposed Estate broadband project, but accepted the Respondents could fund the redevelopment.  Planning permission had been granted and with their substantial resources, the Trustees had a reasonable prospect of being able, by themselves and without the need for the co-operation of the operators, to bring about their redevelopment scheme.

(2) Does the landowner have a firm, settled and unconditional intention to put their scheme into effect?

The Tribunal questioned whether the Trustees had the requisite intention, given that they appeared to have taken no active part in the proceedings. However, eventually they assumed that the main beneficiaries' intentions were those of the Trustees.

It was accepted that a good internet connection and good mobile phone coverage were important and perfectly reasonable priorities for a landowner. However the Tribunal did not believe that the Trustees intended to put the scheme into effect.

The Tribunal took the view that it was put together in response to the Claimants’ application for Code rights and to defeat that application. Even if they were wrong about the Respondents’ intention, their motivation in defeating Code rights was perfectly clear. Accordingly the Trustees could not rely on paragraph 21(5) of the Code.

It would be interesting to see what the Tribunal makes of a more thoroughly formulated scheme in any future case. In the Meyrick case, they were highly critical of the financial viability of the proposed scheme, its utility and whether there were viable alternatives to provide Estate-wide broadband.