Electronic Communications Code: Lease or Licence?

The Court of Appeal in England, in Cornerstone Telecommunications Infrastructure Limited v Ashloch has recently decided, that:

• “Tenant” telecommunications operators cannot seek to obtain a new code agreement under Part 5 of the electronic communications code (“the Code”) where they entered into the lease with a landowner before 28 December 2017; and
• Where the applicant seeking a new arrangement with a landowner is a “tenant” telecommunications operator, the court does not have authority to impose a new code agreement on a landowner under Part 4 of the Code.

The Electronic Communications Code came into force on 28th December 2017 replacing the old 1984 telecommunications code. It regulates how electronic communications operators may exercise rights to install and maintain apparatus on, under or over land. Essentially, operators must agree such rights with landowners and if this if not achieved, the County Court in Northern Ireland can impose an agreement on a landowner.

The Code is not retrospective in its application, therefore, existing arrangements, regulated under the 1984 Code, are subject to a number of transitional provisions. The Code applies to them, but with changes.

In this particular case, the operator had a lease of the land upon which it installed the telecommunications equipment. After the expiry of the contractual term in 2012, it remained in possession as a business tenant (under the English equivalent of our Business Tenancies (Northern Ireland) Order 1996) (“the BTO”). In 2018, the operator sought new code rights under Part 4 of the Code.

The court of first instance (the Upper Tribunal) decided that it did not have jurisdiction under Part 4 of the Code to impose a new code agreement where the operator was already in occupation. It also decided that the operator could not apply for modification of the lease under Part 5 of the Code as, due to the transitional arrangements; the proper route to renewal by the operator was to make an application under the equivalent of the BTO to the County Court and not under the Code. The Court of Appeal agreed.

This is undoubtedly a win for landowners as if operators possess their sites under a lease and not an arrangement that simply grants rights over third party lands (such as an agreement or licence) then the landowner may find himself in a better position at renewal.

If he is not prepared to grant a new lease, then the landowner will be able to use the more plentiful grounds of opposition to a new tenancy under the BTO than under the Code (including that the landowner wishes to occupy the land for a business carried on by the landowner) and may even be able to get the operator out quicker than under the Code.

If the landowner is happy to grant a renewal lease, he should be in a position to negotiate better terms with his operator tenant, as, if the parties do not agree, the Lands Tribunal’s starting point in settling the terms of a new lease will be the terms of the existing lease. The new rent should be higher as the court will decide it by reference to open market rent and Paragraph 24 of the Code (which provides that the court must disregard use of the site by the operator to settle the licence fee) will not bind the decision maker.

In conclusion, it is therefore essential that landowners and operators alike, who wish to renew their arrangements or wish to resist any such renewal, should carefully consider the terms of their documentation, how the relationship operates on the ground and obtain considered legal advice. Landowners who wish to resist a new grant might wish to assess what they intend to use the property for, if not for telecommunications, and, if they are mindful to renew, how to renew on the best possible commercial terms.

For further information or assistance, please contact Niall in our Real Estate team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.