The Court of Appeal has given its first judgment in a case involving the Electronic Communications Code introduced by the Digital Economy Act 2017.
The court rejected an appeal by Cornerstone Telecommunications Infrastructure Ltd (CTIL) in its clash with Compton Beauchamp Estates over the site of a telecommunications mast in the Vale of White Horse, next to a cutting on the main Didcot to Swindon railway line, which forms part of Compton’s Galleyherns Farm.
Lord Justice Lewison, summarising the dispute, said that the main issue on this appeal is whether the Upper Tribunal (the UT) has jurisdiction to require a freeholder who is not in occupation of land to confer rights under the Code on an operator, at a time when there is another operator in occupation of the land exercising Code rights.
He backed the UT’s decision – Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates [2019] UKUT 107 (LC); [2019] PLSCS 65 – that it did not.
The case involved an unusual set of facts, whereby Cornerstone sought an order for Code rights over a small parcel of farmland occupied by Vodafone – one of the two joint venture partners in Cornerstone, along with Telefónica (O2).
The Code states: “A Code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and the operator.”
The UT agreed with the landowner that it could not grant Code rights over the land, on the basis that the landowner was not the “occupier” of the site, Vodafone was. As a result, Compton was not the “relevant person” on which notice setting out the Code right should have been served.
This decision was reached despite Vodafone indicating that it would be willing to give up its right to occupy if Code rights were granted to Cornerstone.
Upholding the UT’s judgment, Lord Justice Lewison said that there does not appear to be any impediment to Cornerstone and Vodafone entering into an agreement, and then seeking Compton’s agreement to be bound by it.
He continued: “If Compton refuses, then Cornerstone may serve a fresh notice under paragraph 20, seeking to bind Compton to the terms of any agreement between it and Vodafone; and seeking the conferral of Code rights by Compton limited to those Code rights which affect the land of which it is said that Compton is the occupier. That seems to me to be the practical way forward.”
Telecoms expert Alison Hardy, a partner at Ashurst, said that the case “largely relates to a mistake by Cornerstone in serving a notice on the wrong party”, adding: “For some time, Vodafone and 02, who are Cornerstone’s joint venture investors, have been seeking to transition leases from their own name into Cornerstone’s name. In this case, Cornerstone was trying to secure a new agreement in its own name, while retaining, in the interim, the rights that Vodafone had.
“It is unlikely that the facts of this case will often be repeated, not least because Cornerstone and MBNL [the similar joint venture between EE and Three] will be more careful about the notices they serve. However, the key question of who the ‘relevant person’ is for the purposes of the Code, is important, and this case gives much-needed clarity to one aspect of the new Code. The answer is to establish who is in occupation.”
Damian Hyndman, partner in real estate litigation at Eversheds Sutherland added that the decision would be a “significant blow” for Cornerstone in particular, impacting on other existing matters and causing it to reconsider its approach to seeking new agreements in its name in respect of sites occupied by either Vodafone or Telefonica.
He said: “The Court of Appeal’s guidance on the practical route forward for Cornerstone to enter into an agreement with Vodafone and then seek Compton’s agreement to be bound by it is not the speedy and seamless transition from Vodafone to Cornerstone that would have been desired.”
“The Court of Appeal also provided some guidance on the position where an operator is already in situ and wishes to renew or vary its Code rights. The Court confirmed that the renewal of such rights is governed, principally, by Part 5 of the Code which concerns the termination or modification of agreements, rather than under paragraph 20.
“The impact of those comments by the court may well lead to a greater focus by operators on the inclusion of break clauses within new agreements in order to be able to break the term early and trigger the process set out in paragraph 33 of Part 5 of the Code to seek new/modified terms or a new agreement altogether.”
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