Can operators bring old agreements into line with the new Code?

The judgment in EE Ltd and another v Duncan [2021] CSIH 27 raised an important question – and the decision, in which the Scottish appeal court refused to obstruct an operator’s ability to bring an old agreement into line with the new Code, strengthened the hand of operators north of the border. The same issues were raised in EE Ltd and another v Stephenson [2021] UKUT 167 (LC). The operators sought an order for the termination of an existing Code agreement, a demise that was contracted out of the Landlord and Tenant Act 1954, which had expired, and for a new agreement in the form of their standard, modern, greenfield lease – and invited the tribunal to follow the Scottish decision. The operators explained that such an agreement would facilitate site sharing, and unfettered upgrading of their apparatus, thereby catering for the speedy introduction of new technology. Furthermore, the consideration payable for a new agreement would be in the region of £250 per annum, rather than the passing rent of £5,693. The site providers argued that the operators should be required to provide site-specific justification for their request at the very outset – and that there was no need for the existing agreement to be terminated. It could be modified instead. They suggested that Duncan was wrongly decided because the Scottish court had failed to consider paragraph 34(12) of the Code, which requires the tribunal to “have regard to the terms of the existing code agreement” and tried to persuade the tribunal that the operators should be required to justify each and every departure from the terms of the existing agreement. But the tribunal agreed with the court of session. The latest version of the Code was intended to confer broader rights and more flexibility on operators to cater for 5G networks and new technology, and to enable operators to provide services more cheaply. Parliament had referred to a “steady phasing in of new Code rights” and could not have intended that its intentions should be impeded by the continuation of agreements, with more limited rights, at higher rents or fees, for a significant time after their expiry dates. Therefore, an operator is not, at the very outset, required to justify seeking a new agreement that meets its business and technical needs for a standard form agreement, to facilitate estate management, in place of a subsisting agreement that has expired. But the site provider can, of course, oppose the application on the ground that, in the particular circumstances, another of the orders available to the tribunal would be more appropriate, or would suffice – in which case the tribunal will deal with the arguments at trial. Fancourt J compared and contrasted the Code, which requires site providers to accept changes in the public interest, and the Landlord and Tenant Act 1954. He observed that paragraph 34(12) of the Code directs the tribunal “also” to have regard to the terms of an existing Code agreement and rejected the notion that it imposes an overarching restriction on change. And he disagreed with arguments that, in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2021] EWCA Civ 90, the court reasoned that paragraph 34(12) has the same meaning and effect as section 35 of the 1954 Act and therefore requires an approach similar to that taken in O’May v City of London Real Property Ltd [1983] 2 AC 726; [1982] 261 EG 1185. Allyson Colby is a property law consultant