First Supreme Court decisions on the new electronic communication code go (largely) in favour of operators
The new Electronic Communication Code (the "Code") came into force in December 2017. It gives telecommunications operators rights to install or keep equipment on land even after termination of contractual rights. The Supreme Court has today handed down judgment in three cases clarifying a number of points of ambiguity regarding the acquisition of Code rights by an operator which already has kit installed at a site.
It is now settled that operators in occupation of a site are entitled to apply for new rights.
The specific issues arising in each of the three cases are set out below followed by a summary of the Supreme Court judgment.
CTIL v Compton Beauchamp Estates Ltd
The Code provides that Code rights in respect of land may only be conferred on an operator by an agreement between the occupier of land and the operator. Compton had granted a tenancy of a field to Vodafone which allowed Vodafone to erect a telecoms mast on the site. Vodafone's contractual right to occupy terminated in 2017 but Vodafone failed to remove its apparatus and remained in occupation. CTIL, a joint venture between Vodafone and Telefonica used to manage joint sites, sought Code rights from Compton after the Code came into force. The Upper Tribunal (the "Tribunal") held that it had no jurisdiction to impose an agreement under the Code as Vodafone was the occupier, not Compton. The Court of Appeal agreed with the Tribunal determining that whether a person was an occupier was "a question of fact rather than legal status; it means physical presence on and control of the land".
CTIL v (1) Ashloch Ltd and (2) AP Wireless II (UK) Ltd
This case concerned both the definition of occupier and the interplay between the Code and the Landlord and Tenant Act 1954 (the "1954 Act"). Prior to the introduction of the Code, Ashloch granted a 1954 Act protected lease of part of the roof of its building to Vodafone, which was later assigned to CTIL. AP Wireless subsequently acquired a 99 year lease of the roof, subject to CTIL's lease. CTIL then sought a new Code agreement from AP Wireless (effectively its landlord). In reliance on Compton, AP Wireless argued that CTIL could not seek rights under the Code as it was already in occupation. They also argued that the Code's transitional provisions, which apply to agreements already in place when the new Code came into force (known as subsisting agreements), limited CTIL to renewing the agreement under the 1954 Act. The Tribunal (i) followed Compton, confirming that an operator in occupation cannot apply for new Code rights and (ii) held it had no jurisdiction to impose a Code agreement where the operator occupies under a 1954 Act protected lease. The first renewal of CTIL's agreement would have to be under the 1954 Act procedure. The Court of Appeal agreed.
On Tower UK Ltd (formerly known as Arqiva Services Ltd) v AP Wireless II (UK) Ltd
AP Wireless granted a 20 year lease and various supplementary leases of farmland to On Tower, which were all excluded from the security of tenure provisions of the 1954 Act. Following expiry of the leases in 2016, On Tower remained on site and a tenancy at will arose through the parties' conduct. After the new Code came into force, On Tower sought a new agreement from AP Wireless. The transitional provisions of the new Code only apply to subsisting agreements. The Upper Tribunal held that a tenancy at will was not a subsisting agreement, as the Code required agreements to be in writing, and it was therefore not open to On Tower to renew the agreement under the Code. In reliance on Compton and Ashloch the Tribunal also determined that it had no jurisdiction to impose a new agreement, as On Tower was already in occupation. A leapfrog certificate was granted, to allow this case to be heard by the Supreme Court together with Compton and Ashloch.
Supreme Court judgment
The Supreme Court concluded that an operator in situ, who applies for new Code rights is not to be regarded as the occupier of the site for the purpose of the Code. This means an operator can apply for new Code rights in those circumstances. Lady Rose emphasised that "To hold otherwise would in my judgment frustrate the way the Code should operate".
The judgment does limit the application of this principle to the operator who seeks to have new Code rights conferred on it: in all other circumstances the operator in occupation will be treated as the occupier. It also confirmed that the Code can only be used by operators in situ to seek additional Code rights and "Not to impose a modification of the rights already conferred in an existing agreement".
Accordingly, the Supreme Court held that:
- The Compton Beauchamp appeal must be dismissed. While Vodafone, despite occupying the site already, could have made an application to Compton direct, it was actually CTIL who made the application to Compton. There was no reason to disregard Vodafone's occupation of the site for the purpose of CTIL's application, and Compton was therefore unable to grant Code rights to CTIL.
- In the Ashloch appeal, the Supreme Court agreed with the earlier decisions that CTIL could only renew its lease under the 1954 Act and not by seeking a new agreement under the Code.
- The On Tower appeal was allowed. The lower Court's decision that On Tower was precluded from seeking a new agreement, because it was in situ, was based on the reasoning in Compton and Ashloch, but this bar has now been removed. Whether the tenancy at will is a subsisting agreement is not relevant, as On Tower can now seek new Code rights from the landowner.
The decision marks a significant departure from the lower Courts' approach – largely in favour of operators. Landowners will need to be alert to the practical implications, which include operators now being able to seek Code rights if they do not presently have them, but are already physically on site.
Some of the practical aspects of the decision may, however, be short lived. For example, now that it is clear that operators with subsisting 1954 Act protected leases have to renew under the 1954 Act, site providers should consider instigating renewals with protected operators now, so as to benefit from the more generous valuation provisions of the 1954 Act. However, the Product Security and Telecommunications Infrastructure Bill, which is currently making its way through Parliament, looks set to make sweeping changes to the Code including adopting the Code prescribed valuation mechanism for 1954 Act renewals of telecoms sites. Landowners should act promptly to take advantage of this if they can.
Given these significant decisions, the right advice on this complicated area of law is more important than ever. Our team is happy to advise you on any telecoms queries you may have.