Further clarification on the Electronic Communications Code as Tribunal considers its jurisdiction to grant Code rights

Written on 10 Apr 2019

In its first decision on this issue, the Tribunal has ruled that a landowner cannot grant rights under the Electronic Communications Code to an operator in respect of a communications site where a third party operator is already in occupation. However, the Tribunal provided some useful guidance as to how this issue can be overcome in the future.

The new Code, which came into force in December 2017, is intended to modernise the previous Code, which was no longer fit for purpose to support the efficient roll-out of digital communications infrastructure to provide next-generation connectivity to the UK.

In an issue not looked at before, the Tribunal considered the impact on its jurisdiction to award rights to an operator, under paragraph 21 of the Code, of the rights of a third party operator already in occupation of the site.

What was the dispute about?

In Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited, Cornerstone, a network operator, sought rights under the Code from the freehold owner of the land, Compton Beauchamp Estates Limited (CBE) in respect of a site already occupied by Vodafone.

CBE argued that Vodafone was the occupier of the site for the purposes of the Code and that this meant that CBE was unable to grant Cornerstone the rights sought.

The context for these proceedings was that CBE had issued a claim for possession and removal of apparatus against Vodafone under the old Code. Vodafone occupied the site under an expired contracted-out lease. It was Vodafone’s position that it continued to occupy the site as periodic tenant but CBE claimed that the occupation was by virtue of a tenancy at will which had been terminated.

At the hearing, the Tribunal addressed the following issues:

  1. Whether a Code agreement can be imposed on a party that is not in occupation.
  2. Whether Cornerstone satisfied the public benefit test.
  3. The terms the Tribunal can impose in a Code agreement.
  4. The consideration and compensation that should be payable if a Code agreement were imposed

The Tribunal’s Decision

Can a Code agreement be imposed on a party that is not in occupation?

On this issue, the Tribunal found in favour of the site provider that:

  • To be in a position to confer Code rights by agreement a person must be an occupier of the land.
  • In most circumstances that will be the person entitled to possession. But a person with a right to possession is not the occupier for the purposes of the Code if there is someone else in actual occupation.
  • Vodafone had become a tenant at will following expiry of its lease but the continuing presence of its apparatus on the site was lawful under paragraph 21(9) of the old Code. Notwithstanding the possession claim, Vodafone remained the occupier of the site.
  • As CBE was not the occupier of the site, it could not grant Code rights to Cornerstone without Vodafone’s agreement. Accordingly, the Tribunal had no jurisdiction to impose a Code agreement under paragraph 21 of the Code
  • However, a person is able to grant Code rights to an operator if that operator (as opposed to a third party operator) is already in occupation even though in such a case the person granting the right is not in occupation. In those circumstances, any previous agreement would be terminated by an operation of law upon the granting of that right.

Had Cornerstone satisfied the public benefit test?

The Tribunal decided that because of the nature of Vodafone’s rights of occupation, due to the ongoing possession claim, Cornerstone had met the public benefit test.

The terms the Tribunal can impose in a Code agreement

Because the Tribunal dismissed Cornerstone’s application on the first issue, it did not consider the nature of the terms that could be imposed in a Code agreement. However, the Tribunal provided a warning that the terms of any agreement sought by an operator should be set out in detail before the Tribunal.

What consideration or compensation should be payable?

Again, because it had already decided to dismiss Cornerstone’s application, the Tribunal did not consider consideration or compensation in great detail. Nevertheless, the Tribunal:

  • Dismissed CBE’s approach of arbitrarily discounting pre- and post-2017 comparables.
  • Concluded that looking at transactions of similar rights granted, and existing use values, may be helpful to the Tribunal, but warned that it would need full details of any comparable that was put before it.

What guidance did the Tribunal provide?

The Tribunal made a number of useful suggestions to operators and land owners in similar situations:

  • The operator in occupation could grant rights to the third party operator seeking rights, who in turn could ask the Tribunal to order that those rights bind the land owner
  • Alternatively, the operator in occupation could also enter into the Code agreement, which could expressly deal with the surrender of that operator’s rights.
  • The full particulars of any agreement being sought by an operator should be provided to the Tribunal.
  • Any evidence put before the Tribunal in respect of valuation should be properly detailed in order to allow the Tribunal to assess its value and relevance as comparable evidence.

Osborne Clarke comment

This decision adds to the growing body of case law in this fast-developing area and has added some clarity in respect of an issue which has been debated between operators and site providers across a number of sites. It is hoped that this decision, and the suggestions made by the Tribunal, will allow parties to progress negotiations consensually in order to support the objectives of the Code and the cost effective roll out of digital communications infrastructure.

This decision will be of particular importance to infrastructure providers who are key players in the UK’s plans for the next generation connectivity as highlighted in our next-generation connectivity report.

Following the decision in EE Limited and Hutchison 3G Limited v The Mayor and Burgesses of the London Borough of Islington, this decision also demonstrates that the Tribunal is continuing to take a strict approach against parties who do not come fully prepared to the Tribunal.