Case files on the Electronic Communications Code

The new Electronic Communications Code has prompted a wave of litigation and a flurry of tribunal decisions – Danielle Drummond-Brassington, Martin Garner, Robin Biela, Rob Wood, Charlotte Green and Ellie Black survey the most significant so far. The Digital Economy Act 2017 containing the new Electronic Communications Code, which came into force on 28 December 2017, reset the basis on which site providers and Code operators deal with each other. Site providers had to get used to new powers conferred on the operators and operators needed to learn how to persuade site providers to accommodate operators in a world where the rents they pay reflect the “no Code/scheme” basis and so are significantly less. It would be easy to look at the number of cases since the commencement of the Code, compare this with the cases on the old Code and say the relationship between site provider and operator is strained. However, most of the cases have been brought by one operator, so perhaps this is not reflective of the market. The speed with which the Upper Tribunal (Lands Chamber) (the UT) has been dealing with cases has also been remarkable, driven by a statutory requirement to deal with Code applications for new sites within six months. While many site providers may not be happy about being forced into a contentious process, we may look back in a few years and be thankful that one party sought to get clarity so early on in circumstances where, in the old world, there was no judicial guidance. Only time will tell. In the meantime, we review what we have learnt since 28 December 2017. Cornerstone Telecommunications Infrastructure Ltd v University of London [2018] UKUT 356 (LC); [2018] PLSCS 188 Overview: The central question in this case was whether the operator (CTIL) was entitled to a right of access to carry out a survey on one of the university’s buildings to establish whether telecommunications equipment could be installed on it. Lessons learnt: The right to carry out a survey is a Code right. Further, the Code right could be an interim right that is not dependent on a permanent right being sought. Comment: This case has paved the way for multiple requests by operators to carry out surveys on a variety of properties. Practitioners have dealt with many applications. While the UT has indicated that it considers it has dealt with the matter of surveys, many themes are now appearing in subsequent requests, eg undertakings for costs and the provision of structural drawings. While hopefully these issues can be dealt with by the parties, it is likely the UT will have to pick this up again, assuming of course that the Court of Appeal upholds this decision. An appeal is scheduled for November. Watch this space… EE Ltd v Islington London Borough Council [2018] UKUT 53 (LC) Overview: The case focused on the level of compensation and consideration payable to site providers and whether the UT has jurisdiction to impose leases of apparatus on site providers. Lessons learnt: The fact the Code disregards the suitability of a site for operators for valuation purposes will frequently lead to nominal values. Consideration may be significantly reduced when compared with sums payable under the old Code. The UT has the power to impose a lease. Failure to engage with tribunal directions can result in being debarred from objecting to the terms proposed. Comment: While stalemates between operator and site provider valuers continue in the market, this case offers a helpful insight as to the tribunal’s approach to consideration and compensation. Compensation does not need to be ordered and payable at completion of the agreement. Instead, site providers may apply for this as issues arise during the lifetime of the arrangement. However, the reality is that unless compensation is substantial then pursuing this at a later stage may not be financially viable. Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates [2019] UKUT 107 (LC); [2019] PLSCS 65 Overview: The UT was asked to decide whether it had jurisdiction to grant Code rights to CTIL where the landowner was not in occupation of the land. The tribunal held (agreeing with the landowner) it could not grant Code rights over the land, on the basis that the landowner was not the “occupier” of the site, Vodafone was. This decision was taken despite Vodafone indicating that it would be willing to give up its right to occupy if Code rights were granted to CTIL. The UT also gave some useful valuation guidance. Lessons learnt: The decision highlights the need to identify who is in “occupation” before any Code rights can be granted/conferred. Comment: The case involved an unusual set of facts, whereby CTIL sought an order for Code rights over a small parcel of farmland which was occupied by Vodafone. In its ruling, which will be welcomed by landowners, the UT compared the imposition of Code rights to compulsory acquisition. It therefore felt entitled to take a cautious approach when imposing Code rights and only after the operator had complied with the strict procedures laid down in the Code. The UT also shared some helpful observations regarding approaches to valuing consideration. It was not persuaded by CTIL’s expert’s valuation approach, which involved applying a pro-rata apportionment to transactions relating to larger pieces of farmland. The decision also suggests that non-telecommunications transactions are likely to be more useful than network comparables, as no adjustment is required to reflect the “no-network assumption”. This case is scheduled to go before the Court of Appeal in October. Cornerstone Telecommunications Infrastructure Ltd v Keast [2019] UKUT 116 (LC); [2019] PLSCS 69 Overview: The decision confirms three key points: 1. Apparatus installed pursuant to the Code, even if firmly affixed to the land, will not become “land” in accordance with common law principles. It was therefore possible for the UT to grant code rights over land that had apparatus already installed on it. 2. The UT has a wide discretion as to the terms of any Code agreement. It will have in mind the need to be fair to both parties, and what is “appropriate” is likely to be influenced by the basis of consideration that it can impose. 3. The UT cannot impose on a site provider a Code right not claimed in its notice. However, claiming more rights in the notice than ultimately sought will not invalidate the notice or wider application for Code rights. Lessons learnt: The UT confirmed that the courts take a very strict approach to the construction of statutes that seize private property and that, if there is any ambiguity, the construction used should be the one that interferes least with property rights. The operator, however, was successful on all points in dispute. Comment: This case and Compton Beauchamp Estates are difficult to reconcile at a first read. However, Keast is a clear example of the tribunal seeking to give effect to the Code when faced with difficult background facts. Evolution (Shinfield) LLP v British Telecommunications plc [2019] UKUT 127 (LC); [2019] PLSCS 71 Overview: This case concerned removal rights under the Code in the event of obstruction. Developers wanted to remove a BT telecoms cabinet to create a new exit and the cabinet was in the way. Lesson learnt: Developers cannot remove apparatus installed on neighbouring land where the apparatus does not interfere with a means of access to their property that was not present at the date of installation. Comment: The decision highlights the need to carefully consider if there will be a development of the land on which apparatus is placed in the future. If there is, site providers should ensure they have factored this in to avoid expensive relocation costs. EE Ltd and Hutchison 3G UK Ltd v Sir James H E Chichester & Ors [2019] UKUT 164 (LC) Overview: The UT was asked to decide as a preliminary issue whether the site provider’s plan to redevelop the site by placing its own mast in place of the operator’s demonstrated the necessary intention to defeat an application for the imposition of a Code rights. Lesson learnt: The principles of the Landlord and Tenant Act 1954 case law (particularly, in relation to intention) can be adopted where relevant. Here the tribunal was not bound by the Supreme Court decision in S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62; [2019] EGLR 4, but its principles were relevant and therefore applied. In particular, a conditional intention was not sufficient for the same reasons as in Franses. Comment: This case goes some way towards putting to bed the debate as to whether the test for intention to develop under the Code was intended to be assessed in line with the principles that have been established in the extensive case law developed under the 1954 Act. The ruling, which will be music to operators’ ears, confirmed that those opposing the imposition of Code rights on redevelopment grounds must be able to demonstrate at the date of hearing that (a) they have a reasonable prospect of being able to carry out their redevelopment project and (b) they have a firm, settled and unconditional intention to do so. Such intention cannot be an intention to carry out a scheme purely to prevent the operator from obtaining Code rights. Cornerstone Telecommunications Infrastructure Ltd v Central Saint Giles General [2019] UKUT 183 (LC); [2019] PLCS 106 Overview: The UT provided further guidance on the conduct of both operators and landowners when making and responding to requests for access for preliminary surveys to assess suitability for electronic communications apparatus. Lessons learnt: Unreasonable or obstructive behaviour by either party when dealing with such requests may have adverse cost consequences, even if a party is ultimately successful at any final hearing. The case also illustrates it may be reasonable for an operator to be required to provide a £10m indemnity, which exceeds the maximum level suggested in the Ofcom Standard Terms. Comment: In a decision that was intended to send a message to both operators and landowners on conduct, the UT confirmed that operators “cannot simply demand unquestionable co-operation from property owners”. Operators were also discouraged from seeking Code rights that were not necessary to carry out their function. Landowners were also warned to deal reasonably with requests for access and not be obstructive. Here, despite being the successful parties, the site providers were awarded only £5,000 each towards their costs, which were substantially higher. No end in sight As an industry we have had far more judicial guidance on the new Code than the old. There is likely to be much more to come as operators move from initial surveys and temporary rights to permanent installations. There is still a long way to go to find the balance in the new world where operators and site providers find solutions rather than litigate. In the meantime, the parties will have to be prepared to have a few battles – and learn from other disputes along the way. Main image © Online/Shutterstock Danielle Drummond-Brassington is a partner and head of real estate disputes, Martin Garner and Robin Biela are senior associates, and Rob Wood, Charlotte Green and Ellie Black are associates at CMS