Another day, another telecoms case…there have been three recent cases dealing with the use of Interim Rights for access to survey, the imposition of Code rights by an occupier and the interaction between operator's rights under the Code and the Landlord and Tenant Act 1954 (LTA 1954)


The three decisions follow an increasing number of cases brought to the UT under the Code: See Telecoms cases.

SUMMARY

Access for a site survey is a Code right: The University of London v Cornerstone Telecommunications Infrastructure Ltd

The Court of Appeal (CoA) has dismissed the appeal made by the University of London (UoL) against Cornerstone Telecommunications Infrastructure (Cornerstone) which we reported on last year here when it was heard in the Upper Tribunal (UT).

The CoA concluded that:

  • paragraph 3(d) of the Code could be construed to include an express right for operators to enter upon land to undertake a survey to assess suitability for the installation of electronic communications apparatus (ECA).
  • an application to undertake a survey could be a free-standing application for an “interim right” under paragraph 26 of the Code.

Only occupiers can be ordered to confer Code rights: Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd

  • The Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd (CB case) concerned who can confer Code rights under the Code. Rights under the Code are conferred on an operator either by voluntary agreement or by way of an agreement imposed by court order under Part 4, paragraph 20 of the Code
  • Was the freeholder a "relevant person" under paragraph 20 of the Code upon whom a court - imposed agreement conferring Code rights could be imposed? The UT held that it was the occupier of the land for the time being who can confer or be ordered to confer Code rights
  • This was the first CoA decision on the effect of the Code (the case was appealed from the Upper Tribunal (UT), the court with primary jurisdiction for Code cases). The case serves as a useful backdrop to the case below.

Code interaction with the LTA 1954: subsisting agreements entered into under the old Code: Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd

  • The third case, Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and AP Wireless 11 (UK) Ltd concerned whether the UT had jurisdiction under Part 4 of the Code to impose Code rights over land in favour of an operator which is already in occupation of the land (e.g. in situ), under a subsisting agreement (a telecoms agreement entered into prior to 28 December 2017, the date when the new Code came into force). In this case, the tenant was holding over under the terms of its existing tenancy after its contractual expiry date by section 24 LTA 1954.
  • The transitional provisions, which govern subsisting agreements, exclude Part 5 of the Code (which deals with renewals, modification and termination of Code agreements) in relation to subsisting LTA 1954 tenancies. This means that where an operator is in occupation of land under a subsisting agreement, which is continued by the LTA 1954, the operator cannot make use of Part 5 of the Code to obtain a new tenancy.
  • Following the decision in the CB case (above), in which the CoA held that it was the occupier who confers rights under the Code, the UT held that it did not have jurisdiction under Part 4 of the Code to impose Code rights over land in favour of an operator (in this case, Cornerstone) where the operator is itself occupying under a lease which, under the Code's transitional provisions, is continuing under the 1954 Act. This meant Cornerstone could not rely upon Part 4 of the Code to seek the imposition of a new agreement on the landlord. Neither could it rely on Part 5 as subsisting LTA 1954 Act tenancies are excluded.
  • Instead, an operator should first apply in the County Court for a new tenancy under the LTA 1954. However, when that new tenancy is close enough to its contractual termination, the operator may give six months' notice under paragraph 33 of the Code and seek a new agreement under Part 5. This means the renewal process under the 1954 Act must be followed and cannot be sidestepped by an operator serving a Part 4 paragraph 20 notice.

CORNERSTONE TELECOMMUNICATIONS INFRASTRUCTURE LTD V UNIVERSITY OF LONDON

CASE FACTS

Cornerstone wanted a right of access to the roof of a hall of residence owned by the UoL to carry out a site survey (and other non-intrusive investigations) to establish whether the site was suitable for the installation of ECA (in the telecoms industry, the inspection and investigation is referred to as a "multi-skilled visit" (MSV)). 

Cornerstone applied under paragraph 26 of the Code for an interim right of access for such purposes, rather than a full right under paragraph 20 of the Code.

The CoA case

First issue

Whether a right of access for survey purposes is a Code right

The UT had previously held that the ability to ask for an interim right for the purpose of carrying out an MSV fell under either of the following paragraphs of the Code:

  • 3(a) (the right to install electronic communications apparatus on, under or over the land); or,
  • 3(d) (the right to carry out any works on the land for or in connection with the installation of electronic communications apparatus on, under or over the land or elsewhere)

The CoA agreed with the UT that it was "necessarily implicit in a right to install electronic communications equipment that the operator may enter the land to carry out the installation". However, it expressed doubt as to "whether a right to install electronic communications equipment carries with it a right to assess the suitability of the site". 

Therefore, the right in paragraph 3(d) was scrutinised: in particular, the definition of "works". Because paragraph 3 (d) uses the phrase "for or in connection with", the CoA said that "it is enough that [the works] are in connection with that installation". The purpose of the legislation "cannot be sensibly achieved unless operators can acquire (compulsorily if need be) the right to assess the suitability of potential sites".

It was held that a right was being validly sought under para 3(d) of the Code.

Second issue

If a Code right was being validly sought, could that be free standing and time - limited?

Arguments were put forward that an application for an Interim Right under paragraph 26 of the Code must be parasitic upon an application under paragraph 20. The detailed wording of paragraphs 26 (Interim Right) and 27 (Temporary Right) was scrutinised and compared. Paragraph 26 only requires that the operator gives "a notice which complies with paragraph 20(2) stating that an agreement is sought on an interim basis". Paragraph 27 requires a notice to be given "under paragraph 20(2). The CoA distinguished between the two and considered that a notice for paragraph 26 purposes simply has to contain the same information as is required for a paragraph 20 notice, not that an actual paragraph 20 notice has to be given. 

There was discussion about the lower threshold test of a "good arguable case" being needed to satisfy an Interim Rights application under paragraph 26, and the fact that an operator would more often than not go for an Interim Right rather than a full right in order to have a greater chance of success. The CoA felt that all potential problems posed could be dealt with by the terms of the actual agreement the UT imposed and did say that "the UT may well take the view that the making of successive applications for the same interim right amounts to an abuse of process. In that event [the UT] has the power to strike out the application". The Court also stated that "one explanation for the lower test of "good arguable case" under paragraph 26 is the fact that a code right exercisable on an interim basis by virtue of an order under that paragraph does not attract security of tenure. Where a less valuable right is in issue it is appropriate for a lower threshold test to be applied".

It was held that a free-standing application under paragraph 26 is permitted by the Code.

COMMENT

It is apparent from a number of the decisions on the new Code that the public policy decision behind its implementation, namely to enable the fast and cost-effective roll-out of a choice of electronic communications services, remains of paramount importance. The CoA noted that a survey is a necessary step in a series of works in connection with the installation of ECA.

The case provides useful clarification on the extent of Code rights. Landowners need to bear in mind that operators do have a standalone right of access for site surveys and investigations. Consequently, landowners need to have good reasons before they object to operator requests for inspections and, ideally, should engage with operators to agree reasonable terms on which an inspection can take place.

Another Interim Rights application was heard before the UT last week and it will be interesting to see the outcome in light of this decision.

CORNERSTONE TELECOMMUNICATIONS INFRASTRUCTURE LTD V COMPTON BEAUCHAMP ESTATES LTD (CB CASE)

CASE FACTS

Vodafone Ltd (Vodafone) had a 10 year lease of a fenced compound in which a telecoms mast was situated. The lease was contracted out of the 1954 Act and had expired in 2014. Vodafone remained in occupation of the site and retained its apparatus on a precarious basis, at first under an agreed tenancy at will and then, on its termination, by service of a counternotice under paragraph 21(4) of the old Code preventing removal of the mast without an order of the court.

Vodafone shared the site with Telefonica UK Ltd (Vodafone and Telefonica having formed Cornerstone Telecommunications as a joint venture company to own and manage shared sites). Cornerstone served a notice on the landowner under paragraph 20(2) of the new Code requiring the freeholder of the site, Compton Beauchamp (CB), to confer Code rights.

WHAT DOES THE CODE SAY ABOUT THE IMPOSITION OF CODE RIGHTS?
  • Rights under the Code are conferred on an operator either by voluntary agreement or by way of an agreement imposed by court order
  • An operator can, in the absence of agreement, apply to the UT under paragraph 20 of the Code to impose a Code agreement on a "relevant person" which grants Code rights to the operator over land (provided the operator satisfies the necessary requirements)

Paragraph 20 refers to a "relevant person." Under paragraph 9 of the Code, the agreement conferring Code rights (whether voluntary or court imposed) is made between the occupier of the relevant land and the operator. Paragraph 105 of the Code states "references in this code to an occupier of land are to the occupier of the land for the time being." The occupier may be the freeholder, a leaseholder, a licensee or other person in occupation of the site, but in whatever the circumstances, it is the occupier who confers the rights

  • An agreement made with an occupier will only bind any other person with an interest in the land (such as the freeholder) if that person has either agreed to be bound by it, or the court has ordered the agreement to be binding upon it (paragraph 20(1)(b)). Accordingly, a licensee, as the occupier, has the standing to enter into an agreement, and is the person to grant Code rights, but not so as to bind those with superior interests.
THE COURT OF APPEAL CASE
  • The CoA held that the ‘relevant person’, for the purpose of conferral of Code rights under paragraph 20, is the occupier of the land, as referred to in paragraph 9, and defined in paragraph 105, as being "the occupier of the land for the time being"

Occupation is a question of fact

  • The CoA endorsed the test proposed by the UT that an occupier for Code purposes is "a question of fact rather than legal status, it means physical presence on and control of the land." It is only if there is no such person that it becomes relevant to consider people who exercise powers of management or control over the land. Only in very special circumstances can two or more people be occupiers of the same parcel of land at the same time for Code purposes

An operator in situ cannot impose Code rights on itself

  • Where it has been determined that an operator is in fact the occupier of the relevant land, that operator cannot grant Code rights to itself. The CoA took the view that an operator in situ would need to utilise the provisions in Part 5, specifically paragraph 33 (dealing with how a party can seek to modify the terms of an agreement that has expired) to seek a renewal of the agreement. If a renewal cannot be agreed with the site provider, then that paragraph allows the operator to apply to court for an order pursuant to paragraph 34 (orders the court may make) imposing a new Code agreement on the site provider.
WHAT SHOULD HAPPEN?
  • An operator seeking rights should apply under paragraph 20 against the occupier of the land, or enter into a consensual agreement with them
  • If it is necessary for others to be bound, the operator should obtain agreement or make the necessary paragraph 20 application
  • The judge suggested that instead of serving notice on the landowner, Cornerstone should have reached an agreement with Vodafone, as the occupier, to confer Code rights on Cornerstone and then apply to the UT for CB, as landowner, to be bound. While Vodafone’s occupational rights were precarious, agreement with it was nevertheless the correct way to proceed. In default of an agreement with CB, a new notice under paragraph 20 would need to be served seeking CB’s agreement to be bound by the agreement reached with Vodafone
  • The CoA dismissed the landowner's fear that Cornerstone would negotiate a "sweetheart deal" with Vodafone, The landowner would not be bound by such an agreement, and paragraph 23 of the Code enables the UT to modify an operator's proposals “as the court thinks appropriate”. Consequently, if the operator and occupier were to enter into a sweetheart deal, the UT could modify it. 
PRACTICAL IMPLICATIONS

The decision is of practical importance for operators seeking new Code rights. It now appears clear that:

  • in the case of an operator coming to a new site, the appropriate person to serve with a paragraph 20 notice is the occupier of the land, whether or not that person has an interest in the land
  • in the case of an operator already in situ wishing to renew/vary or seek additional Code rights, the appropriate channel is Part 5 of the Code, not paragraph 20.
  • Lewison LJ explained why the focus is on the occupier for conferral of Code rights: “The consent of the occupier to the exercise of rights connected with telecommunications has been a feature of the legislation for many years. As long ago as 1982 the government took the view that it was often impractical for operators to establish who were the lessees and ultimate owners of a piece of land. It also took the view that some persons with remoter interests in the land could unreasonably prevent a person having access to telecommunications services."
  • it seems that is not necessary for an occupier to have title in order to be able to grant Code rights. Although the CoA did not have to determine any issues involving squatters in order to resolve the matters in this case, they declined to rule out the possibility that a squatter could be the occupier for Code purposes.
  • it was recognised that although some Code rights may not lead to the operator being in occupation, for example the right to lop trees, others may result in the operator themselves being in occupation of the site. If such an operator wants to vary or renew their Code rights, the appropriate avenue is Part 5, not paragraph 20. 

CORNERSTONE TELECOMMUNICATIONS INFRASTRUCTURE LTD V ASHLOCH LTD AND AP WIRELESS 11 (UK) LTD

CASE FACTS

Vodafone occupied a rooftop site under a lease granted on 14 June 2002. The contractual term of the lease had expired in 2012 but, because it had security of tenure under the LTA 1954, Vodafone remained in occupation before assigning the lease to Cornerstone in 2019. Cornerstone was therefore occupying under a subsisting agreement and a direct relationship of landlord and tenant had been established.

Upon taking the assignment, Cornerstone served a notice on the landlord under paragraph 20 (Part 4) of the Code seeking the grant of a new Code agreement at a lower rent (the first stage of the process for a court- imposed right if mutual agreement is not reached). The rights sought related to the part of the roof that Vodafone continued to occupy under the LTA 1954. Cornerstone then asked the UT to impose a new agreement on the landlord (the second stage of the process).

CODE TRANSITIONAL PROVISIONS

The transitional provisions relate to subsisting agreements and govern the interaction between the LTA 1954 and Code rights. Transitional provisions state that where the LTA 1954 applied prior to the coming into force of the new Code, it continues to apply.

Part 5 of the new Code (termination, modification and renewal of agreements) does not apply to a subsisting agreement which has security of tenure under the LTA 1954.

CORNERSTONE'S CASE

The operator, Cornerstone, argued that since the transitional provisions do not exclude Part 4 of the Code (court imposition of agreements), the provisions of Part 4 must apply to a subsisting agreement. The UT disagreed with Cornerstone. The UT explained that "it should come as no surprise that the transitional provisions of the New Code leave operators without the full benefits of the New Code and reliant instead on their pre-existing rights". The UT considered that Cornerstone's suggestion "would be even more astonishing in the case of a subsisting agreement to which [the LTA 1954] applies, which the Law Commission recommended should not obtain the benefits of the New Code retrospectively".

Following the CB case (detailed above) the landlord disputed the UT's jurisdiction to impose Code rights on it, because it was not in occupation of the relevant part of the roof. The landlord contended that the rights under Part 4 of the Code were not available to Cornerstone, because Cornerstone was now the occupier of the site and it benefited from continuing rights under the LTA 1954. The landlord argued that the only way for Cornerstone to obtain new rights was by applying to the County Court for a new tenancy under the LTA 1954. It was accepted by both parties that the lease constituted a subsisting agreement, and as a result, Cornerstone could not seek to renew it under Part 5 of the Code. 

DECISION

The UT held that the renewal of rights by an operator in situ is governed (at least principally) by Part 5 of the Code. It also noted that the effect of the transitional provisions prevented an operator from relying upon the Part 5 process to renew a subsisting agreement that benefits from 1954 Act protection.

The UT considered the Court of Appeal’s decision in the CB case and the Law Commission’s consultation and reports that preceded the introduction of the Code.

It firstly held that (with the exception of interim and temporary agreements) Part 4 of the Code, can only be used to impose a Code agreement on an occupier of land. In this scenario, it was Cornerstone rather than the landlord, which was in occupation of the rooftop site under a subsisting agreement.

As a result, Cornerstone could not rely upon Part 4 of the Code to seek the imposition of a new agreement on the landlord (as the landlord was not the occupier).

The UT further noted that Cornerstone’s submissions that it could rely upon Part 4 of the Code to seek a new agreement when already in occupation “would be even more astonishing in the case of a subsisting agreement to which…the 1954 Act applies”, since it would enable operators:

  • to only give 28 days’ notice to landowners (instead of the six to 12 months’ notice required under the 1954 Act);
  • to escape the open market rental valuation assumptions contained within the 1954 Act; and,
  • to avoid the starting point that it is necessary to have regard to the terms of the existing tenancy.

The UT determined that it could not have been Parliament’s intention that operators could circumvent the wording of the transitional provisions. It therefore held that where an operator is in occupation of land under a subsisting agreement, which is protected by the 1954 Act and wishes to renew the same: “[it] must first apply in the county court for a new tenancy under the 1954 Act”.

COMMENT

A significant number of subsisting agreements are either contracted out of the 1954 Act or do not attract its protection (by virtue of only being contractual licences). The renewal of these agreements will therefore proceed in accordance with Part 5 of the Code and will be caught by its ‘no scheme’ valuation principle. Furthermore, the UT has made it clear that the transitional provisions only apply to the first renewal of any subsisting agreements that are 1954 Act protected. Any subsequent renewals will fall squarely within the ambit of Part 5 of the Code. Operators may therefore take a longer-term view.

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Julie Middlemass

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