Telecommunications – Electronic communications code – New code agreement – Claimant operators seeking to terminate existing code agreement and enter new agreement or modify subsisting agreement – Preliminary issues arising – Whether claimants required to plead site specific reason for new agreement – Whether claimants entitled to claim alternative relief not preceded by notice proposing change – Preliminary issues determined accordingly
The claimants, as operators under para 33(5) of Part 5 of the Electronic Communications Code, sought an order for termination of an existing code agreement (the lease), that was contracted out of security of tenure under the Landlord and Tenant Act 1954, and entry into a new agreement conferring code rights on the claimants, in respect of land at Pendown Farm, Pendown Cross, Cornwall.
Preliminary issues arose about when and how applications to the tribunal for a new code agreement under the Code could be made.
The lessor under the lease was the first respondent who, about eight weeks after expiry of the lease, granted the second respondent a 50-year lease of the land that was demised by the lease (the reversionary lease). Upon expiry of lease, the first respondent was the “site provider” within the meaning of Part 5. Upon grant of the reversionary lease, the second respondent became a person bound by the continuing code rights. The first respondent played no part in the hearing and was willing to be bound by any rights granted to the claimants.
The preliminary issues were: whether the claim for the termination and replacement of the subsisting code agreement with a new agreement was bound to fail where the claimants did not aver a site-specific need for the termination and replacement of the subsisting agreement; and (ii) whether the claimants’ alternative claim for the tribunal to make a different order under para 34 (other than under para 34(6)) was bound to fail in the absence of full particulars of the alternative form of order sought and the site-specific need for such an order.
Held: The preliminary issues were determined accordingly.
(1) It was apparent from the way that Part 5 applied to subsisting agreements that, as from the contractual expiry of subsisting agreements, parties were intended to have the right to apply for new code rights. It seemed clear that an operator under a subsisting agreement should not have to prove a site-specific justification for the replacement of an expired subsisting agreement with a new Code-compliant agreement. The significant additional rights conferred by the Code, the benefit of some or all of which would have been denied the operator for the duration of the subsisting agreement, were themselves a reason for the grant of a new agreement on different terms, if the subsisting agreement had run its agreed course. It should not be necessary in those circumstances for an operator to prove a special justification for the grant of a new, Code-compliant agreement: EE Ltd and another v Duncan [2021] CSIH 27 followed.
(2) Under Part 5, the court, presented with an application to vary or terminate the existing agreement, had to determine what order to make and, if applicable, the terms on which new rights should be conferred or a new agreement made. Paragraph 34(13) required the court, in determining which order to make, to have regard to all the circumstances of the case, and in particular to: the operator’s business and technical needs; the use that the site provider was making of the land to which the existing code agreement related; any duties imposed on the site provider by an enactment; and the amount of consideration payable by the operator to the site provider under the existing agreement (though that was not a consideration in the case of a subsisting agreement).
If the court decided to make an order conferring additional code rights or terminating the existing agreement and requiring a new agreement to be made, it had to make an order specifying the terms, to the extent that those were not agreed. In doing so, para 34(12) provided that the court also had to have regard to the terms of the existing agreement. That could not be read as imposing an overarching restriction on change. Where the existing agreement was a subsisting agreement, it might well not contain terms that were appropriate in all respects and there would therefore be a requirement to change them. If, on the other hand, the existing agreement was a new Part 2 agreement, it might contain terms that were appropriate in all respects, in which case the terms of that agreement were likely to be of greater significance.
(3) Part 5 of the Code drew a distinction between, first, a decision on which order the court would make and, secondly, specifying the terms of new rights or a new agreement, in so far as the parties could not agree them. In deciding which order to make, the court was required to have regard to all the circumstances. In specifying the terms of any order under para 34(5) or (6), the court had to have regard to the various considerations and to the terms of the existing agreement.
The tribunal rejected the argument that para 34(12) had the same meaning and effect as section 35 of the Landlord and Tenant Act 1954 Act which required an approach similar to that taken in O’May v City of London Real Property Ltd [1983] 2 AC 726; [1982] 261 EG 1185 (that the burden of persuading the court to approve changes to a bargain represented by an existing lease was on the party proposing it). Rather, the court had to decide what order to make taking into account all the circumstances (including the terms of the existing agreement) but in particular the factors in para 34(13) and, having done so, specify the terms of the new code right or new agreement, where that was required: O’May and Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd [2021] EWCA Civ 90; [2021] EGLR 14 considered.
Therefore, the application for termination of the existing agreement and the grant of a new agreement was not bound to fail in the absence of a site-specific case advanced as to why a new agreement was needed. There was no reason why an operator could not apply for a new agreement in the terms of its standard form code agreement, with any changes agreed with the site provider following service of the para 33 notice, if any, provided that the standard form was annexed to the notice.
(4) It was not permissible for an applicant to plead an alternative case for a different change to the existing agreement unless it had served a notice that identified the relief sought. The issue whether a different order was more appropriate would be determined, if raised, by the respondent to the application, in which case an applicant was entitled to respond to the case that it faced, both in principle and as to the terms of the order proposed. But an applicant might not in the guise of reply to the respondent’s case seek another different type of order.
Accordingly, as they had not served a notice identifying that a different change to the existing agreement was sought, the claimants might not pursue a case for alternative relief. That did not preclude them from responding to the second respondent’s argument that a different order should be made and engaging with it. But the claimants could not plead a case for a different kind of order under the pretext of the general words that they included in their points of claim.
Graham Read QC and James Tipler appeared for the claimants; Christopher Pymont QC and Wayne Clark appeared for the respondents.
Eileen O’Grady, barrister
Click here to read a transcript of EE Ltd and another v Stephenson and another
