Electronic Communications Code Case Law Round-up 2024

The 2024 edition contains summaries of:

• An Upper Tribunal decision on whether a rooftop mast site lease was a Code agreement;
• An Upper Tribunal appeal on whether an Operator who has exhausted its 1954 Act renewal rights can rely on the Code; 
• An Upper Tribunal decision on greenfield site valuations;
• An Upper Tribunal appeal decision on whether two agreements took effect as licences or leases; 
• A First-tier Tribunal decision regarding a redevelopment break and lift and shift provisions in a lease of a new mast site; and
• An overview of the changes to Ofcom’s Code of Practice.

In 2025 we will be providing regular updates on individual decisions as these land. If you would like to subscribe to the case law update, please click here.

On Tower UK Limited v British Telecommunications PLC – 23 February 2024

Key points:

• The Upper Tribunal has determined that a telephone exchange is land and therefore a rooftop mast site lease was a Code agreement.
• The Tribunal also found that where the termination provisions of Paragraph 31 apply, there is no need for a site provider to serve a contractual break notice.
• The decision suggests that it is the facts at the date of the grant of an agreement that are relevant for considering whether the agreement is a Code agreement.

The Code facilitates the granting and protection of operators’ rights over land. To ensure that operators do not use the Code to access each others’ apparatus on favourable terms, “land” excludes apparatus or buildings whose sole purpose is to enclose apparatus. In this case the Tribunal was asked to consider whether the Code applied to a rooftop mast lease granted over the roof of a BT telephone exchange. BT served a 12-month notice on On Tower, to terminate the lease, as the terms of the lease permitted. It also served an 18-month Paragraph 31 notice. BT argued that only the contractual break notice was required, because the telephone exchange’s sole purpose was to enclose apparatus, and so the Code did not apply. The Tribunal found that because the enclosure of apparatus was not the telephone exchange’s sole purpose at the date the agreement was granted (it was used to house apparatus but also for storage and as an office), the lease was therefore protected by the Code. The Tribunal went on to find that where the site provider has a contractual right to break a lease protected by the Code, it is not necessary to serve a valid contractual break notice to rely on Paragraph 31 of the Code, as long as it informed the operator of a ground on which it could bring the agreement to an end.   The case provides helpful guidance on the considerations which apply in determining whether an agreement is protected by the Code. The decision that site providers need not serve a valid contractual break notice when relying on Paragraph 31 is also helpful for landowners. However, at the time of writing, an appeal of this decision is pending and caution is advised in relying on the decision.

Gravesham Borough Council v On Tower UK Limited – 4 June 2024

Key points:

• Operators cannot rely on Part 4 of the Code to impose rights on site providers, where they have allowed their rights to renew under the Landlord and Tenant Act 1954 to lapse.

This case was originally heard by the First-Tier Tribunal, as covered in our 2023 Update but was subsequently appealed to the Upper Tribunal. In the first instance decision, the FTT refused to strike out the operator’s Paragraph 20 application, notwithstanding that the operator had allowed its right to seek a new lease under the Landlord and Tenant Act 1954 to lapse. As a result of this decision, the site provider was unable to require the removal of the operator’s apparatus under Paragraph 40. The site provider appealed to the UT on the grounds that: 1. The operator’s only route to renewal was under the 1954 Act and having failed to renew under that regime, it was not entitled to try again under Part 4 of the Code; 2. The operator’s application was an abuse of process; and 3. The Paragraph 20 notice had been served while the 1954 Act tenancy was continuing and was therefore invalid. The UT found that where an operator exhausts its rights of renewal under the 1954 Act, it is prevented from making a further application for rights under Part 4 of the Code. The UT also held that, even if it was incorrect to reach this conclusion, the operator’s Paragraph 20 notice was invalid as it was served whilst the 1954 Act tenancy was continuing. As such, the FTT did not have jurisdiction to entertain the operator’s application and should have struck it out.  However, the UT stopped short of finding that the operator’s Part 4 application was an abuse of process, as it provided for a different remedy to that under the 1954 Act claim, which was only dismissed on procedural grounds due to the operator’s failure to serve a claim form. As stated in our previous coverage, the FTT decision appeared to set a concerning precedent which would allow operators to circumvent the 1954 Act procedure by deliberately failing to comply with procedural requirements. It is therefore welcome that the UT has corrected this approach, whilst also seemingly settling the question of what rights an operator has where its attempts to renew under the 1954 Act have been unsuccessful. 

EE Limited & Hutchison 3G UK Limited v AP Wireless II UK Limited (Vache Farm) – 29 July 2024

Key points:

• In a departure from earlier decisions, consideration for a rural site was set at £1,750pa.
• The Tribunal suggested that the figures in the “Affinity Water table” should be adjusted for inflation.
• The Tribunal supported a limited site provider break clause for redevelopment but refused a more general break based on the Paragraph 21 test.

In this case the Upper Tribunal was asked to determine several outstanding terms in the renewal of a greenfield mast site lease, including the site payment and the inclusion of a landlord redevelopment break clause. Following the decision in EE & H3G v Affinity Water, covered in our Spring 2022 update, the Tribunal has generally adopted a high level approach to determining site payments. This approach has consisted of basing site payments on decisions previously reached by the Tribunal on similar sites rather than re-calculating the site payment each time. Under this approach, many operators have adopted the practice of offering a £750pa consideration in respect of unexceptional rural sites. In this case, the Tribunal re-affirmed that it was desirable to have predictability in negotiations over relatively modest sums but stressed that the Tribunal’s mind should not be closed and that evidence to support higher levels of consideration must be taken seriously. Having been presented with comparable evidence relating to small non-telecoms rural compounds, the Tribunal was persuaded that the £750pa previously awarded for greenfield sites was too low and should be adjusted to £1,750pa, to reflect relevant comparables as well as the rate of inflation since the previous rate was set.  The Tribunal chose not to update the table of figures from the Affinity Water case nor to comment on the impact on rent for other types of sites, other than to reiterate the impact of inflation. This revised figure was adopted by the First-Tier Tribunal as the starting point in its decision concerning Ewefields Farm and 13 other sites between the same parties the following week, resulting in site payments of £1,750pa – £2,500pa being awarded for those sites. The figure was also used by the Lands Tribunal for Scotland in On Tower UK Limited v Mclean, where it was adopted as the “floor” for rural mast site consideration. On the question of the redevelopment break clause, the Tribunal imposed a term allowing the site provider to break the agreement on 18 months notice expiring on the 5th (or any subsequent) anniversary where it intended to redevelop the site and could not reasonably do so whilst the lease continued. The Tribunal declined to exclude redevelopment for telecommunications purposes, as the operator requested. The Tribunal also declined the site provider’s request that they be able to break the lease where the Paragraph 21 Test was no longer met, finding that there was no evidence to support the need for such a break and that opportunities for disputes should not be made available without good reason.

AP Wireless II (UK) Ltd v OnTower UK Ltd (Burlington Gardens) – 9 September 2024

Key points:

• An agreement which has provisions allowing an operator to install and enclose apparatus on land, which substantially restricts the site provider’s access, and which binds successors in title, is likely to be construed as a lease rather than a licence.
• However, where such an agreement does not provide for a fixed term or a periodic tenancy, it will likely take effect as a licence, regardless of the grant of exclusive possession.

In this case the Upper Tribunal considered an appeal of a First-Tier Tribunal decision, regarding whether two agreements granting rights to install and maintain electronic communications apparatus were licences or leases. If the agreements were leases, they would require renewal under the Landlord and Tenant Act 1954, rather than under the Code.In order to be a lease, an agreement must grant exclusive possession of land for a term certain at a rent.

The FTT found that although some terms of both agreements were consistent with them being leases, and the decision was finely balanced, there was no grant of exclusive possession with a corresponding interest in land. The agreements simply granted a bundle of rights for the installation and operation of equipment, the plans annexed to the agreements did not demarcate a defined demise and there was a “lift and shift” clause allowing the landlord to require the apparatus to be moved. The site provider appealed to the UT on the grounds that: 1. The FTT was mistaken in its approach to construing the agreements, with too much focus on the form of the agreement and not enough on its substance and effect. 2. The FTT was mistaken in its conclusions on the meaning and effect of various provisions of the agreements. Disagreeing with the FTT, the UT found that it was clear that the terms of both agreements did grant exclusive possession and would have taken effect as leases if granted for a term certain. This was because the sites were occupied solely by the operator’s equipment, were enclosed by the operator, the site provider’s rights to come onto the sites were substantially restricted and the agreements bound successors in title. The presence of the lift and shift provisions were not sufficient to undermine the exclusive possession enjoyed by the operator. However, the UT found that one of the agreements was nevertheless a licence rather than a lease. Whilst the FTT had found that both agreements were granted for a term certain, the UT found that only one of the agreements (which had been granted for a 20-year term) was granted for a term certain. The other agreement provided for a “minimum term” of 10 years after which it could be terminated on 12 months’ written notice by either party at any time. Because this did not give rise to either a fixed certain term or a periodic tenancy of a fixed term (because there was no fixed date by which notice had to expire), there was no term certain, and the agreement was therefore a licence. 

Cornerstone Telecommunications Infrastructure Limited v The Chartered Institute of Personnel and Development – 31 July 2024

Key points:

• The Tribunal provided useful guidance on several disputed terms relating to the installation of a new rooftop mast site.

This case concerned CTIL’s application under Paragraph 20 to acquire new rights to install and operate apparatus on a rooftop site. Whilst the grant of rights was agreed, the First-Tier Tribunal was required to determine the outstanding terms, including the redevelopment break clause and “lift and shift” provisions. The contractual term of the lease was agreed at 10 years, but the site provider sought a rolling redevelopment break option, exercisable from day one with 18 months’ notice, on the basis that it intended to sell the building within the next year and that the purchaser would likely redevelop the property. The Tribunal noted that if proposals were afoot for an imminent redevelopment by the site provider or a prospective buyer then there might be compelling argument for the rolling break. However, because there were no such proposals, the Tribunal was not convinced that there would be in the foreseeable future and because the operator was also subject to a “lift and shift” provision, it was reasonable for the break to be exercisable only on the 5th (or any subsequent) anniversary. Although a “lift and shift” provisions was agreed in principle, the Tribunal determined the length of notice required and the number of relocations allowed. The Tribunal preferred the operator’s more certain 6 month notice period over the site provider’s preferred “reasonable notice”. The Tribunal preferred to limit the relocations for which the operator would need to bear the costs to two during the 10-year term, rather than allowing the site provider its preferred six locations or restricting relocations to once per 5-year period, as requested by the operator. The Tribunal also rejected the site provider’s proposal to delay installation of apparatus to allow it to decide whether or not to carry out roof works beforehand, finding that the site provider was unlikely to carry out major works in the next 6 months, the operator needed to install its apparatus without delay and the site provider’s proposal introduced an unhelpful avenue for further argument and delay. The Tribunal went on to resolve other areas of disagreement including relating to interference, access arrangements, damage to property, the operator’s indemnity, the powering down of equipment and road closures.

Ofcom Publishes Updated Code of Practice under the Electronic Communications Code 2017

On 15 April 2024, Ofcom published its updated Code of Practice and Statement concerning agreements for access to private land under the Code. The new Code of Practice follows Ofcom’s announcement to review the past Code of Practice, and publishing of a draft set of revisions and Consultation inviting feedback from stakeholders last year.   Substantive updates incorporated in the new Code of Practice include:

• Widening the definition of “Site Provider” to encompass both “landowners” and “occupiers” where they have parallel interests to make it clear that the Code of Practice is applicable to both;
• Requiring operators to provide information on their approach to fees and under what circumstances professional fees would be compensated.
• The removal of a 7-day suggested timeframe in respect of how long an operator should request access is given when it is requested for a site survey;
• Insertion of a section on how operators and site providers should co-operate to comply with electromagnetic field exposure requirements;
• The addition of wording making it clear that operators should not use emergency access provisions for routine access and maintenance and that such provisions should not override other agreed access protocols;
• The addition of sections relating to sharing and upgrading of overground and underground apparatus;
• Clarification that removal of apparatus installed by a utility provider by virtue of a separate wayleave or easement will need to be discussed between the site provider and utility provider, but that operators should give reasonable assistance and co-operation without charge; and
• Various amendments to the ADR section to improve clarity.

The final version of the Code of Practice can be found in Annex 3 of the Statement.