Telecommunications – Electronic communications code – Code rights – Jurisdiction – Agreement creating tenancy under Part II of Landlord and Tenant Act 1954 – Tenancy continuing on expiry of contractual term – Whether operator occupying land under tenancy to which 1954 Act applied entitled to seek new Code rights – Preliminary issue in favour of defendants
The claimant was a joint venture by Vodafone Ltd and the Telefonica group of companies to own and manage a combined portfolio of telecommunications sites. It was an “operator” within the meaning of the Electronic Communications Code. The first defendant owned the freehold of Windsor House, 15 High Street, Kings Heath, Birmingham (the property). The second defendant was a property investment company which specialised in leasehold telecommunications sites.
The freehold interest in the property was acquired by the first defendant in 2016, subject to an agreement dated 14 June 2002 between the previous owner and Vodafone, which created a ten-year tenancy of part of the roof, under Part II of the Landlord and Tenant Act 1954. When the contractual term expired, Vodafone remained in occupation and the tenancy continued under section 24(1) of the 1954 Act. The claimant gave notice under para 20 of Part 4 of the Code seeking the grant to it (not Vodafone) of new code rights. The second defendant intervened by taking a lease of the roof top site from the first defendant for a term of 99 years, subject to the Vodafone agreement.
The new Code was introduced with effect from 28 December 2017, subject to transitional provisions which provided that Part 5 of the Code (dealing with termination and modification of agreements) did not apply to a subsisting agreement that was a lease of land to which Part II of the 1954 Act applied. It was agreed that the Vodaphone lease constituted a subsisting agreement so that the claimant could not seek to renew it under Part 5. However, the claimant sought a new agreement under Part 4.
The second defendant disputed the Upper Tribunal’s jurisdiction to impose on it any Code agreement relating to the site because it was not itself in occupation. Following the Court of Appeal’s decision in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2019] EWCA Civ 1755 (in relation to a different site) that a Part 4 Code agreement could only be imposed in favour of an operator on a person who was occupying the land, the claimant arranged for the Vodafone agreement to be assigned to it to establish a direct landlord and tenant relationship between it and the second defendant.
The Upper Tribunal was asked to determine, as a preliminary issue, whether it had jurisdiction under Part 4 to impose Code rights over land in favour of an operator which was already in occupation under a tenancy which was continuing after its contractual expiry date under section 24(1) of the 1954 Act.
Held: The preliminary issue was determined in favour of the defendants.
(1) The renewal of rights by an operator in situ was governed principally by Part 5 of the Code and the transitional provisions prevented an operator from relying upon the Part 5 process to renew a subsisting agreement that benefitted from 1954 Act protection. The claimant’s argument, that on a proper appreciation of the Code Part 4 was available to an operator in situ, was inconsistent with the reasoning in Compton Beauchamp. Although that case was not specifically concerned with whether there was jurisdiction to require a freeholder to confer Code rights on an operator itself in occupation of the land, in both cases the claimant sought an order imposing on a landowner an agreement by which it would confer Code rights, and in both cases the freeholder was not the occupier. In Compton Beauchamp, the court had rejected a “rights based” approach when it held that Code rights might be granted by an occupier who had no interest in the land; and the claimant had not explained why the same objection did not apply equally where the operator itself was in occupation. When the court rejected the suggestion that the operator could never be an occupier, it was clear that it had in mind the situation of an occupier in situ seeking new rights.
(2) The claimant’s suggested operation of the Code was astonishing in the case of a subsisting agreement to which Part II of the 1954 Act applied, which the Law Commission recommended should not obtain the benefits of the new Code retrospectively. Rather than making use of the right of renewal under the 1954 Act, which required between six and twelve months’ notice to be given under section 26(2) expiring after the end of the contractual term, the operator would have an unrestricted opportunity to give 28 days’ notice under para 20. It would also escape the provisions in section 34 of the 1954 Act for determining the rent under a new tenancy, which substantially replicated the open market, and would instead obtain access to the valuation assumptions in para 24 of the Code, including the no-network assumption which stripped out the component of value referable to the intended use of the site as part of the operator’s network; and the restrictions of section 34 of the 1954 Act and para 34(12) of the Code, both of which made the terms of the existing tenancy or Code agreement the starting point when, in default of agreement, the court or tribunal was required to fix the terms on which new rights were to be enjoyed.
(3) A suggested deficiency was the possibility that a tenancy whose primary purpose was not to grant Code rights, renewed under the 1954 Act, might fall into a “black hole” in which it would be excluded by section 43(4) from any further protection under the 1954 Act, yet could not be recognised as a Code agreement under Part 2 because it was not granted by an occupier. The solution was supplied by Lewison LJ in Compton Beauchamp: Paragraph 34(8) of the Code was to be interpreted as applying to any new agreement between an operator and a site provider and deemed the Code to apply to the new agreement as if it were an agreement under Part 2. Whether a new tenancy was ordered by the court under section 29 or agreed between the parties, a tenancy obtained under the 1954 Act was a true agreement, coming into effect by means of an exchange of lease and counterpart executed by the parties (section 36(1)). If entered into for Code purposes, such a tenancy was outside the 1954 Act (section 43(4)), but it would be deemed by para 34(8) to be an agreement under Part 2.
(4) Accordingly, the Upper Tribunal had no jurisdiction under Part 4 to impose a Code agreement on an operator and a landowner where the operator was in occupation of the land under a subsisting agreement. Nor might an operator in occupation under a tenancy continued by Part 2 of the 1954 Act make use of Part 5 of the Code to obtain a new tenancy. Such an occupier first had to apply in the county court for a new tenancy under the 1954 Act; when that new tenancy was close enough to its contractual termination the operator might give six months’ notice under para 33 and seek renewal under Part 5.
Jonathan Seitler QC and James Tipler (instructed by TLT LLP) appeared for the claimant; The first defendant did not appear and was not represented; Wayne Clark and Jonathan Wills (instructed by Eversheds) appeared for the second respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another
