Telecoms: Supreme Court settles Code confusion
In early February the Supreme Court heard three appeals (Compton Beauchamp, Ashloch & ON Tower cases1) concerning the grant to operators of rights under the Electronic Communications Code ("the Code") on land not owned by them.
We have previously explored the issues in two articles - Telecoms: Ashloch appeal confirms lease renewal status and Telecoms: A realistic rent for rural mast sites.
The Supreme Court decision was published last week - we now explain the judgment and consider the impact on landowners.
The occupier issue
The main issue was whether and how an operator who has already installed electronic communications apparatus ("ECA") on a site can acquire new or better Code rights from the site owner.
The issue stems from the interpretation of the word "occupier" in paragraph 9 of the Electronic Communications Code (the "Code") and whether this includes an operator who is presently on site as a result of having installed and operated ECA there. Paragraph 9 reads:
"A code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and that operator"
the point being that if the operator already on site is deemed to be the "occupier" for the purposes of paragraph 9 of the Code, then it cannot obtain new Code rights, because it cannot grant them to itself. This was the conclusion of the Court of Appeal in both Compton Beauchamp and Ashloch.
Reasoning for judgment on occupier issue
The Supreme Court started from the position that "occupier" has no fixed meaning, but instead takes its meaning from the context in which it appears and the purposes of the provisions within which it is used. The context here is the Government's policy to encourage the roll out of new digital infrastructure across the UK and that this is an industry in which technology develops rapidly.
The Supreme Court held that an operator, that is already a party to a Code agreement, can only apply to the Tribunal to modify the terms of existing Code rights it already has, once Part 5 of the Code becomes available i.e. after the date on which the Code agreement would, contractually, have come to an end (although nothing prevents a consensual variation of the agreement under paragraph 11 of the Code). However, this does not prevent an operator from obtaining additional Code rights in respect of the same land.
The Supreme Court reviewed the Code as a whole and considered other provisions which assume that an operator can apply for new Code rights, even if it already has ECA installed on site (for example paragraph 26 (interim rights) and paragraph 27 (temporary rights)). On these provisions, the Supreme Court found that an operator, that has ECA installed on a site, is not to be regarded as the occupier of that site for the purposes of paragraph 9 of the Code. As a result, an operator can agree new Code rights with the occupier of the site, identified in accordance with paragraph 105 of the Code. This also means that the operator may apply to the Upper Tribunal under paragraph 20 for an order imposing an agreement to confer those Code rights on it.
Upper Tribunal's Jurisdiction - the Code v Landlord and Tenant Act 1954
All three cases here involved leases for sites with ECA, installed by operators, which pre-dated the Code coming into force. The rights initially conferred were by way of business leases within the Landlord and Tenant Act 1954 Act ("1954 Act") with the operator either benefiting from, or contracting out of, security of tenure.
Instead of applying the Code retrospectively, transitional provisions were introduced in the Code to deal with agreements entered into before it came into force. The transitional provisions dealing with the relationship between the Code, the old telecommunications legislation and the 1954 Act are complex and are beyond the scope of this article. However, the key issue surrounding the operation of these transitional provisions, that determines whether the Upper Tribunal has jurisdiction, is whether there is a "subsisting agreement" between the landowner and occupier. It was held by the Upper Tribunal in the ON Tower case that this meant the agreement had to be in writing.
On this point the Supreme Court found that the transitional provisions meant that an operator with a subsisting agreement, protected under the 1954 Act, does not have the option of renewing the rights under the Code. An operator in this position must instead apply to the County Court for the grant of a new tenancy under Part 2 of the 1954 Act; the Upper Tribunal has no jurisdiction to grant a Code agreement.
It is important to note that if there is no written agreement, it cannot be a subsisting agreement within the meaning of the transitional provisions and therefore the transitional provisions do not apply.
These decisions have clarified matters somewhat for landowners in two ways:
- If an operator already has ECA on site it can apply for new Code rights in respect of that same piece of land, notwithstanding the fact it may already exercise Code rights over that land. However, it is still worth landowners checking which company actually has the existing agreement and who is applying for the rights.
- If the subsisting agreement is a protected business tenancy under the 1954 Act, then, if the landowner does not want to grant new Code rights, the operator cannot apply to the Upper Tribunal for an agreement to be imposed under paragraph 20 and must therefore apply for a renewal under the 1954 Act.
This will be a relief for a number of landowners not wanting to lose their higher rents for the time being, as it means the leases will continue to be assessed at market value in accordance with the 1954 Act. However, if landowners do choose to go down this route, they should take action sooner rather than later. This is because the Product Security and Telecommunications Infrastructure Bill is currently making its way through the Houses of Parliament and it includes amendments to the Code, that may apply Code valuation to 1954 Act renewals.
For more information please contact Solicitor, Dani West.
- Compton Beauchamp (Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Ltd
- Ashloch (Cornerstone Telecommunications Infrastructure Limited v Ashloch Ltd and AP Wireless (UK) Ltd)
- On Tower (On Tower UK Ltd (formerly know as Arqiva Services Ltd) v AP Wireless II (UK) Ltd)
The judgement on these three cases was handed down on 22 June 2022.
Cornerstone's appeal was dismissed in the Compton Beauchamp case because Vodafone was the occupier and not Compton Beauchamp and therefore was not able to confer any Code rights on Cornerstone. As it was Vodafone with ECA installed on site, not Cornerstone who was applying for the Code rights, Vodafone's ECA was not to be disregarded and Vodafone was therefore considered the occupier under paragraph 9 of the Code.
On Tower's appeal was allowed because it already had ECA on site and therefore was not deemed to be the occupier for the purposes of paragraph 9 and so could apply for new Code rights under paragraph 20.
Further submissions are required in the Ashloch case for that matter to be decided.