Impending telecoms legislation will address issues for new Code agreements, but where does that leave operators already in place?
As we await the decision of the Supreme Court in the conjoined cases of Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd  EWCA Civ 1755;  PLSCS 201, Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another  EWCA Civ 90;  EGLR 14 and Arqiva Services Ltd v AP Wireless II (UK) Ltd  UKUT 195 (LC);  PLSCS 127, the Product Security and Telecommunications Infrastructure Bill – which will deal with some of the issues arising, where they do so in the context of new Code agreements – is progressing slowly through the legislative process.
Having been introduced in November 2021, the Bill has now completed the committee stage and is due for report. But what will the consequences of the Bill becoming law be for operators already in situ?
In determining Ashloch, the Supreme Court will be required to consider whether the Upper Tribunal (Lands Chamber) had the jurisdiction to impose an agreement under Part 4 of the Electronic Communications Code in circumstances where the operator was in occupation of the land and occupying under a continuation tenancy arising under the Landlord and Tenant Act 1954. In that case, the operator contended that it could use the Part 4 mechanism since to do so would allow it to obtain a better outcome as compared to Part 5. Similarly, in Compton Beauchamp the operator appealed the ruling by the UT that it lacked jurisdiction to impose a Code agreement because the landowner was not in occupation of the site.
Paragraph 105 of the Code as currently drafted poses a question of fact, since it asks who the occupier is for the time being. In relation to land which is unoccupied and not a street in England and Wales, pursuant to paragraph 105(6) the reference to an occupier is to be read as a reference to the person (if any) who for the time being exercises the powers of management or control over the land, and, if there is no such person, to every person whose interest in the land who would be prejudicially affected by the exercise of a Code right in relation to the land.
The Bill, as currently drafted, will deal with this issue where it arises in future where operators are on site under new Code agreements, and resolve it in their favour. It will solve the problem by inserting new sub-paragraphs (6A) and (6B) into paragraph 105 of the Code. (6A) will provide that (6B) will apply in relation to land which is occupied exclusively by an operator or operators exercising Code rights in relation to the land. (6B) will provide that the references to an occupier shall include (a) any person other than the operator (or operators) who for the time being exercises powers of management or control over the land, or (b) if there is no such person, every other person whose interest in the land would be prejudicially affected by the exercise of a Code right in relation to the land (see section 57 of the Bill as amended by Public Bill Committee, dated 22 March 2022).
Almost certainly, the meaning of the words “exercising Code rights in relation to the land” in the new paragraph 6A shall mean exercising rights in accordance with paragraph 3 of the Code rather than exercising rights of the type specified in paragraph 3, however so acquired. As such, the Bill will not render the decisions in Compton Beauchamp and Ashloch in this respect academic, as neither operator was in occupation exercising Code rights. In Compton Beauchamp the operator in situ was Vodafone, occupying under a tenancy at will following the expiry of contracted out fixed term tenancy, where the applicant under paragraph 20 was CTIL. In Ashloch the operator was occupying under a continuation tenancy pursuant to section 24A of the 1954 Act. But the Bill will open the Part 4 process up to operators currently in occupation under Code agreements and thus allow them to use the more advantageous route in future.
In relation to operators occupying under protected tenancies, the Bill will amend the 1954 Act to effectively import the “no network” assumption into the Act. Section 61 of the Bill will create a new section 34A of the Act. Section 34A(2) mirrors paragraph 24 of the Code since it sets out that the amount payable in rent under the tenancy must be an amount or amounts representing the market value of the agreement to confer the Code right. Section 34A(3) replicates the content of paragraph 24(2) of the Code, providing that market value should be assessed on the following assumptions: (i) that the transaction is at arm’s length, (ii) on the basis that the buyer and seller were acting prudently and with full knowledge of the transaction, and (iii) on the basis that the transaction was subject to the other provisions of the tenancy agreement.
Finally, section 34A(4) repeats paragraph 24(3) of the Code and states that market value must be assessed on the assumption (a) that the rights conferred do not relate to the provision or use of an electronic communications network; (b) that paragraphs 16, 17 and 17A of the Code (assignment, and upgrading and sharing) do not apply to the rights or any apparatus to which those rights could apply; (c) that the rights in all other respects correspond to the Code rights; and (d) that there is more than one site which the buyer could use for the purpose for which the buyer seeks the rights.
This article was published in Estates Gazette in April 2022.