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Telecoms Code answers … and more questions

Posted: 15/02/2021

COMMENT: On 29 January 2021, the Court of Appeal gave judgment in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2021] EWCA Civ 90; [2021] PLSCS 25. The operator’s appeal was dismissed, with the court confirming that, where an operator is occupying a site under a tenancy protected by the Landlord and Tenant Act 1954 (referred to throughout this article as the 1954 Act), the only route to renewed rights under the Electronic Communications Code is via an application to the county court using Part II of the 1954 Act.

The Court of Appeal’s consideration of the issues in Ashloch followed the decision in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2019] EWCA Civ 1755; [2019] PLSCS 201. There is some crossover of issues. Principally, these concern the meaning of ‘occupier’ under the code and whether an operator can confer rights on itself where in situ. Unsurprisingly, on those points Lewison LJ simply referred to his own reasoning in Compton Beauchamp, and noted that he would be corrected by the Supreme Court in due course if he was wrong. As such, Ashloch does not change the position on either of these points. However, Ashloch adopts the understanding of the term ‘a person’ (which appears in paragraphs 26 and 27 of the code) set out in Cornerstone Telecommunications Infrastructure Ltd v University of London [2019] EWCA Civ 2075; [2019] EGLR 58 – a decision that followed just one month after Compton Beauchamp.

What the court decided

The issue before the court in Ashloch was fairly simple: did the Upper Tribunal (UT) have jurisdiction to impose an agreement under Part 4 where the operator is in occupation of the land and occupying under a continuation tenancy arising under the 1954 Act? The operator contended that it could use the mechanism contained in Part 4 of the code in an effort to obtain more favourable terms. As stated above, a key part of the court’s reasoning concerned the meaning of ‘occupier’ and whether an operator could confer rights on itself. However, the court also made some further important observations as to why it felt the reasoning of the UT in Ashloch was correct.

First, the court noted that if Part 4 were available to an operator, it would be exclusively available to the operator and not to the landowner. This would be one-sided and unfair. Further, if an operator could utilise the Part 4 process, this would allow the operator to circumvent the limitation contained in paragraph 33(3) of the code, which provides that a request for additional code rights can only come into effect after the agreement could have been brought to an end by the operator.

Secondly, the fact that an operator will be able to use paragraph 20 in circumstances where paragraph 40(8) applies (where an operator is facing removal proceedings under Part 6) does support a wider reading of paragraph 20 more generally.

Thirdly, there are important differences in the procedure to obtain a new tenancy under the 1954 Act and under the code. The notice period required under the 1954 Act is not more than 12 months’ and not less than six months’ notice, whereas only 28 days’ notice is needed under the code. There are additional grounds available to a landlord to refuse a renewal under the 1954 Act compared with the code, including where the landowner wishes to use the land for his own business purposes. To allow the operator to access Part 4 of the code would deprive the landowner of these grounds without any justification. Further, the operator would be able to access a new agreement where the consideration was determined on the ‘no network’ assumption, rather than on the ‘open market’ test under the 1954 Act. Finally, the starting point for a new agreement under the 1954 Act is the drafting of the existing tenancy, whereas under the code it is the terms sought by the operator with necessary amendments.

The points above were firmly bolstered by the view of the Court of Appeal, drawn from documents such as the Law Commission Paper issued in February 2013, that it was intended the code allow existing agreements to run their course, and not interfere with ‘carefully negotiated agreements’ entered into prior to the code coming into force. This reasoning underpins the decision of the Court of Appeal with regard to each of the above points.

Access to land consultation

On 27 January 2021, the Department for Digital, Culture, Media and Sport finally issued its consultation on the changes to the Electronic Communications Code.

The consultation underlines Government commitment to achieve ‘future-proof, gigabit-capable broadband and 5G networks’. Three main problem areas are identified:

  • Issues relating to obtaining and using code agreements – aimed at streamlining the conclusion of consensual agreements by supporting ‘faster and more collaborative negotiations’.
  • Rights to upgrade and share – potentially by restricting automatic rights to upgrade and share, including by introducing limited retrospective rights to upgrade and/or share apparatus installed prior to the 2017 reforms.
  • Difficulties specifically relating to the renewal of expired agreements – premised on the need for greater certainty about what will happen when agreements expire and with a view to encouraging ‘prompt and collaborative negotiations for renewal agreements, with appropriate measures’ when agreements cannot be reached.

The consultation closes on 24 March 2021. Further details, including on how representations should be made, can be found here.

This article was published in Estates Gazette in February 2021.

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