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Case Update - Telecommunications Code

Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited, AP Wireless II (UK) Limited [2019] UKUT 338 (LC)

The Court has provided guidance on the relationship between the Electronic Communications Code and the Landlord and Tenant Act 1954 in determining that an operator may not apply for a new tenancy under the Electronic Communications Code where there is an existing protected tenancy in place under the Landlord and Tenant Act 1954.

Background

The Electronic Communications Code ("the Code") (previously governed by the Telecommunications Act 1984) was updated in 2017 by the Digital Economy Act 2017.

The Code sets out the basis on which telecommunications operators may exercise rights to install and maintain electronic communications apparatus on land. Part 1 of the Code sets out a number of rights ("the Code rights") in relation to an operator and any land, including the rights:

1. to install electronic communications apparatus on, under or over the land,
2. to keep installed electronic communications apparatus which is on, under or over the land,
3. to inspect, maintain, adjust, alter, repair, upgrade or operate electronic communications apparatus which is on, under or over the land …

These Code rights can be acquired by an operator either by:

1. Written agreement with the relevant occupier under Part 2 of the Code; or
2. An agreement imposed by court order under Part 4 of the Code.

Under Part 4 of the Code, an operator may give notice to a relevant party that they wish to enter into a new agreement to which the Code rights apply. This would allow an operator to install or keep installed electronic communications apparatus on a plot of land. If the relevant party does not consent to a new agreement, then the operator may apply to the court under Part 4 to impose one.

Further, Part 5 of the Code permits an operator to give six months' notice to request modification of an agreement, with the proposed change not to take place earlier than the contractual termination date.

The Facts

Vodafone and RVB Investments entered into an agreement in 2002 ("the Agreement") which created a tenancy over the rooftop of Windsor House and allowed Vodafone to use the roof for the purpose of installing telecommunications apparatus.

In 2016, Ashloch Limited ("Ashloch") acquired the freehold to Windsor House which was still subject to the Agreement.

The Agreement expired in 2012 but Vodafone continued to occupy and use the roof of Windsor House for the same purpose and on the same terms as previously. No steps were taken by Ashloch or Vodafone to terminate the tenancy, therefore the tenancy continued by virtue of section 24 of the Landlord and Tenant Act 1954 which provides for the continuation of commercial tenancies and allows a landlord or a tenant to apply to the court for the grant of a new lease.

In October 2018, AP Wireless II (UK) Limited ("AP"), a company specialising in the acquisition of leasehold telecommunications sites, entered into a 99-year lease with Ashloch over the rooftop of Windsor House. The lease was granted subject to the Agreement.

Cornerstone Telecommunications Infrastructure Limited ("CTIL") (being a joint venture between Vodafone and Telefonica) gave notice to AP in November 2018 seeking a new agreement on the grant to it of Code rights. As AP did not respond to the notice, the dispute was referred to the Upper Tribunal.

CTIL subsequently arranged for the Agreement to be assigned to it in August 2019, thereby creating a direct contractual relationship between the operator and the landowner. When they became the operator under the Agreement, CTIL served another notice on AP, calling on them to enter into an agreement which granted them with Code rights.

What were the issues?

AP disputed the Upper Tribunal's jurisdiction to impose any agreement under Part 4 of the Code. They argued that Part 4 was not available to CTIL just because they had become the occupier of the site. According to AP, because of the continuance of the agreement following its expiration in 2012, the only route to obtain new rights was to apply to the County Court for a new tenancy under section 24 of the Landlord and Tenant Act 1954.

CTIL argued that it was open to apply to the Upper Tribunal for an agreement under Part 4 of the Code as it had now become the operator under the Agreement. It also argued that the Code would be deficient if Part 4 was not available to an operator in situ.

What was the decision?

The Upper Tribunal found in favour of AP and struck out CTIL's notice under Part 4 of the Code, deciding that they did not have jurisdiction under the Code to impose an agreement where the operator was in occupation under a subsisting agreement i.e. the tenancy continued by virtue of the Landlord and Tenant Act 1954 following expiry of the original term in 2012.

Equally, where an operator is in an occupation under the Landlord and Tenant Act 1954, it cannot rely on Part 5 to obtain a new tenancy, instead the occupier had to apply to the County Court for a new tenancy.

What is the significance of this decision?

The decision in this case will assist telecommunications operators to identify the correct procedure to follow in order to obtain a new tenancy agreement in what was previously, a confusing landscape.

The procedure depends on the type of tenancy which is in place. If, for instance, the operator and the occupier have entered into a tenancy for a fixed term, the operator can seek to rely on the Code to obtain a new agreement towards the end of that term.

However, if the tenancy continues under a protected tenancy by operation of the Landlord and Tenant Act 1954, then a new agreement should be sought from the Court under the 1954 Act. When this new agreement approaches its contractual termination, the operator may then give six months' notice under Part 5 of the Code to seek modification or renewal of that agreement.

Tenancies for the purposes of accommodating telecommunications apparatus are not rare, and it can easily become complicated when there are multiple legal entities and different frameworks are involved. We also strongly recommend you seek independent legal advice as early as possible.

For more information contact Stephen McArdle in our Business Dispute Resolution department via email or phone on 0333 207 1142. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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