Welcome to the latest Burges Salmon Electronic Communications Code Case Law Update. This quarterly newsletter will tell you all you need to know about the key cases involving the Code and why they are important.
This edition contains:
- a decision regarding how new Code rights should be sought where the occupier and operator have concurrent leases of a site;
- the grant of a condition that RAMS be approved by a land owner prior to an MSV;
- the third post-Code decision on valuing rent of mast sites under the 1954 Act; and
- a short update on upcoming changes to the Code.
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Vodafone Limited v (1) Gencomp (No.7) Limited (2) AP Wireless II (UK) Limited – 17 August 2022
Key points:
- Part 4 rather than Part 5 applies to renewals where an operator’s immediate landlord is a head tenant whose lease was granted during the term of the code agreement.
- Non-operator occupiers who occupy under a lease which is concurrent with a Code Agreement and intend to redevelop the site may face additional difficulties in terminating Code agreements.
In this case, the operator had applied to the Tribunal under Part 4 and Part 5 of the Code for a new Code agreement.
The operator occupied the site under a code agreement granted by a previous freeholder. During the term of that agreement, a lease was granted by the freeholder to AP Wireless, subject to the code agreement. The operator’s immediate landlord was therefore AP Wireless.
The Tribunal found that it did not have jurisdiction to order the renewal of the Code agreement under Part 5 of the Code. Because of AP Wireless’ lease, the freeholder was not the occupier and was therefore unable to grant Code rights. AP Wireless was not a party to the Code agreement or a successor in title to the freeholder and so was also unable to renew the Code Agreement under Part 5.
The Tribunal was, however, able to grant a new Code agreement under Part 4 of the Code, which could be used to enable an operator to apply for the renewal of its Code rights by a site provider who was not a party to the original agreement, following the recent Compton Beauchamp Supreme Court decision (considered in our Summer 2022 update).
The Tribunal noted that a concurrent lessee who wishes to redevelop land subject to a Code agreement may find themselves in difficulty, as they will be unable to terminate the agreement (as a non-party). The Tribunal advised persons contemplating redevelopment in such circumstances to consider alternative structures.
Permission to appeal this decision has been granted.
Cornerstone Telecommunications Infrastructure Limited v The London Borough of Hackney – 5 August 2022
Key points:
- Land owners should be entitled to a right of approval of an operator’s RAMS where the land owner is responsible for the management of the site and the operator is reliant on the land owner to make it aware of site specific risks
In this case, the operator sought to carry out a multi-skilled visit (“MSV”) at a potential site on the rooftop of a residential building owned by the local authority. The local authority did not object to the MSV but insisted on a condition that the operator’s risk assessment and method statement (“RAMS”) were approved by the local authority before the MSV could go ahead.
The local authority claimed that this condition was necessary in order for it to mitigate risks for its residential tenants and to avoid criminal liability under health and safety legislation. Whilst similar arguments were rejected in OnTower v AP Wirelesss (Audley House) (considered in our Summer 2022 update), in this case, the Tribunal was more sympathetic to the local authority. Unlike the site provider in Audley House, the local authority had full control of access to the potential site, the local authority had management responsibilities over the rooftop w and it would be liable for any unsafe practice that it could prevent.
The Tribunal decided that the approval condition should be imposed but qualified so that approval could be unreasonably withheld. The local authority was in a much better position to address the risks on the site than the operator, who would be reliant on the local authority to make it aware of site specific risks. This was especially the case where the rights sought where to carry out an MSV and so the operator had very limited knowledge of the site.
By including the approval condition, the Tribunal held that the risk of a dangerous MSV going ahead was reduced. If the local authority had final say over the RAMS and proposed unsafe practices, then the operator would have a choice whether to carry out the MSV on the local authority’s terms or not to proceed. If the operator had the final say and proposed unsafe practices, then the local authority would have no right to prevent this proceeding.
OnTower UK Limited v AP Wireless (II) UK Limited (New Zealand Farm) – 26 August 2022
Key points:
- In contrast to Code valuations, the use of comparables is likely to be key in mast site valuations under the 1954 Act
- The O’May principle will also play a greater role in 1954 Act valuations compared to Code valuations.
This case concerned a renewal of a greenfield mast site under the Landlord and Tenant Act 1954. Whilst the renewal of the lease was not opposed by the land owner, there were disagreements between the parties in relation to rent and other terms.
In relation to rent, the operator sought to impose an annual rent of £675, whereas the site provider sought £7,000. In a continuation of the approach used in EE v Morriss (covered in our Spring 2022 update) the Court chose to rely on comparable evidence, rather than the more artificial, iterative approach set out in Vodafone v Hanover Capital. The Court determined annual rent at £3,200. This is significantly more than the £600 to £1,200 such a site might be expected to attract using the “rate card” for Code valuations set out in the Affinity Water case (also covered in our Spring 2022 update), albeit rent under the 1954 Act includes sums which would usually be made as upfront capital payments under the Code.
Relying on the O’May principle, which requires a party in 1954 Act lease renewal proceedings to justify any departure from the previous lease, the Court refused the site provider’s request to add various provisions into the new lease, including a requirement for 48 hours’ notice to be given, a requirement to provide RAMS and details of contractors’ safe working practices and a “Jervis v Harris clause” which would have allowed the site provider to enter onto and repair parts of the site which the operator had failed to repair. The reliance on the O’May principle is distinct to that under the Code, which in EE v Stephenson (covered in our Autumn 2021 update) was found not to apply to the Code. However, even though different principles apply, the decisions reached by the Court in relation to the non-financial terms were very similar to those reached by the Tribunal using Code principles in Audley House.
The case shows key distinctions between renewals under the 1954 Act and the Code. Whilst Code valuations generally make little use of comparables and focus on the use of the established rate card, this case shows the importance of comparables in 1954 Act telecoms renewals. The Court’s approach to non-financial terms also differs under the 1954 Act to the Code, though there was consistency in outcomes in relation to the non-financial terms in this case under the 1954 Act and in Audley House under the Code.
2017 Electronic Communications Code New Changes – What You Need to Know
Telecommunications Infrastructure (Leasehold Property) Act 2021
On 17 October 2022 regulations were made to bring the Telecommunications Infrastructure (Leasehold Property) Act 2021 (“the Act”) into force from 26 December 2022.
The Act inserts a new Part 4A into the Code to allow operators to apply to the First-tier Tribunal for interim Code rights in respect of multiple dwelling buildings, where a tenant in that building has made a service request to the operator, but the landlord has repeatedly failed to respond to the operator's formal notices requesting access.
Product Security and Telecommunications Infrastructure Bill
On 24 November 2021, the Government published its response to the “Access to Land: consultation on changes for the Electronic Communications Code” (“the Consultation”) along with the initial draft of the Product Security and Telecommunications Infrastructure Bill (“the Bill”). Part 2 of the Bill provides for various modifications to be made to the 2017 Electronic Communications Code (“the Code”) and associated legislation.
The Bill has progressed through all parliamentary steps with a small number of amendments. It is currently awaiting Royal Assent and implementation. Changes to the Bill include the following:
- The proposed provisions regarding who is able to grant Code rights where an operator is in exclusive possession have been removed, presumably as these provisions are no longer necessary following the Supreme Court’s recent decision on this point (considered in our Summer 2022 update).
- Additional rights for operators to fly lines from other operators’ apparatus have been added.
- A new ground for the Tribunal to refuse the grant of Code rights has been added where the Code rights would be likely to prejudice national security, defence or law enforcement.
- There is to be an independent review of the effect of the Code and related legislation on the deployment of 1 gigabit per second broadband and other forms of telecommunications infrastructure, within 3 months after the Bill becomes law.
It is anticipated that the Bill will obtain Royal Assent in the coming months.
The proposed changes (from the first draft of the Bill) are considered in more detail here.