UK Supreme Court provides welcome clarity on the operation of the Telecoms Code

The occupier

The three cases before the Supreme Court were all appeals by telecoms operators against the decisions of lower courts.  The Supreme Court decided to amalgamate its judgment on the three appeals, focussing in particular on one issue common to all three: whether the ‘occupier’ for the purposes of the Telecoms Code should be taken to include an operator who already has a presence on a site, by virtue of having already installed electronic communications apparatus on the site prior to the Telecoms Code taking effect.  

The meaning of the word “occupier” is important when a telecoms operator is seeking the benefit of "new" Code rights on an existing site.  New Code rights are those rights introduced by the revised Telecoms Code when introduced in 2016.  Under paragraph 9 of the Telecoms Code, “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”.  A telecoms operator can seek new Code rights by way of a consensual agreement with the land owner.   If the land owner refuses, the operator can apply to the Upper Tribunal (Land Chamber) under paragraph 20 of the Code for an agreement to be imposed, provided that paragraph 9 applies.

The land owners argued:

• If a telecoms operator becomes an occupier of a site by virtue of it having already located its apparatus on a site, that operator cannot legally enter into an agreement with itself (as both operator and occupier).  It cannot therefore rely on paragraph 20 of the Code to require the Upper Tribunal to impose an agreement on the site providers which grants the telecoms operator new Code rights;

• A telecoms operator should not have the right to change the Code rights they enjoy for a particular site until the end of the initial period covered by the agreement.  Only then do the telecoms operators’ rights under Part 5 of the new Code of the Telecoms Code (the section dealing with termination and modification of agreements) come into play.

Other issues in the combined appeals

In the Ashloch appeal, the Supreme Court was also called upon to clarify the interplay between a telecoms operator’s rights of renewal under the Telecoms Code and its rights of renewal under the Landlord and Tenant Act 1954.   In particular, the provisions  that came into effect to smooth the transition from the previous telecoms code to the new Code in 2016.

There were also important distinguishing features between the three cases, which explains the different outcomes in each.  In Ashloch, the Supreme Court had to wrestle with the 1954 Act question.  In On Tower, the Court had to decide whether, as a matter of law, the telecoms operator was still the beneficiary of a “subsisting agreement” in circumstances where it appeared to have become a tenant at will.  And in Compton Beauchamp the question of occupation was further complicated by the fact that the telecoms operator was sharing use of the site with another operator that had the benefit of a lease or, at least, a tenancy at will from the land owner.

The Supreme Court’s decision on occupation and paragraph 20

In relation to the principal question of identifying the “occupier of the land”, the Supreme Court anchored its decision in the underlying policy behind the Telecoms Code.  It  held that an operator’s occupation of land, where the operator has already located apparatus on the land, should be disregarded for the purposes of paragraph 9 and a paragraph 20 application.  In that way, the telecoms operator’s existing rights over that site will be no impediment to seeking the benefit of new and additional Code rights over the same site.

The Supreme Court's judgment recognised that the policy underlying the Telecoms Code is to enable the creation and expansion of a telecommunications network that can keep pace with rapid changes in technology.  The Telecoms Code should not be read in a way which disadvantaged certain operators, leaving them unable to upgrade equipment in readiness for the roll out of 5G services just because they already “occupied” the site with existing apparatus.  In holding that occupation by the operator itself should be disregarded in relation to any paragraph 20 application, the Supreme Court also headed off a potential slew of future litigation about whether or not a particular operator enjoyed rights over a site which equated to “occupation”, where the word  has no fixed meaning.

In the On Tower case, the Supreme Court allowed the appeal and held that the Tribunal had jurisdiction to consider an application by On Tower under paragraph 20 for an order imposing on AP Wireless an agreement granting it new Code rights.  On Tower’s occupation of the site was originally by virtue of leases which eventually expired, but it continued in occupation, paying rent.  The Supreme Court found that On Tower had the benefit of a subsisting telecoms agreement (within the meaning of the transition provisions) in the form of a tenancy at will following expiry of its leases.  The Supreme Court was able to find that On Tower’s occupation of the site under that tenancy at will, and its onsite apparatus, should be disregarded for the purposes of paragraph 9. This meant that On Tower was not treated as an occupier and could rely on paragraph 20.  

Importantly in the Compton Beauchamp case and similar cases involving shared telecoms sites, the law will not disregard occupation of a site by all telecoms operators, and every case will be decided on its own facts.  In this case, it was another operator that had originally taken a lease of the site, from the freeholder Compton Beachamp. In due course, the tenancy expired but it was common ground that the initial operator became a tenant at will.  In the meantime, Cornerstone began to share the site with the initial operator.  This was a sharing arrangement between them, and neither the lease nor any Code rights were assigned to Cornerstone.  When Compton Beachamp served notice to quit on the initial operator together with a notice under the old Telecoms Code requiring removal of the apparatus, Cornerstone served notice under paragraph 20 of the Telecoms Code seeking a new agreement with extended Code rights.  The Supreme Court found that whilst occupation by Cornerstone was of the type that would be disregarded for the purposes of the paragraph 20 application, occupation by the initial operator should not be disregarded, because it is only the occupation by the operator that is making the application for new Code rights that should be disregarded. Moreover, the initial operator was still in occupation, so the paragraph 20 application should have been served on it and not on Compton Beachamp. The appeal was dismissed.   

Landlord and Tenant Act 1954 

In Ashloch, Cornerstone was the tenant of a rooftop site in Birmingham under the terms of a business tenancy granted in 2002.   The contractual term had expired in 2012.  At the relevant time, Ashloch was the freehold owner of the land and an intervening 99 year lease of the rooftop had been granted to AP Wireless II (UK) Limited.  When Cornerstone served notice on AP Wireless under paragraph 20 of the Telecoms Code, AP Wireless contended that Cornerstone was obliged to rely on its rights under the Landlord and Tenant Act 1954 rather than the more advantageous terms of the Telecoms Code.   The reasons given included that Cornerstone was an occupier for the purposes of the Telecoms Code and unable to enter into an agreement with itself.

The Supreme Court held that whilst Cornerstone was not precluded from relying on paragraph 20 rights by reason of it being in occupation (for the reasons explained above), a telecoms provider that has a right of renewal under the Landlord and Tenant Act 1954 must exercise its rights under that Act rather than rely on paragraph 20 of the Telecoms Code.

Comment

Both telecoms operators and land owners will welcome the clarity that has been provided by the Supreme Court in its judgment in these three cases, even though the decisions (perhaps unsurprisingly) will further improve the negotiating position of some operators.    

In deciding that the occupation of a site by a telecoms operator should be disregarded in any application under paragraph 20 for the grant of new Code rights, the Supreme Court has unshackled the regime.  The decision makes it easier for operators to upgrade existing sites where the land owner has been reluctant to enter into a new agreement voluntarily, and it has been done in a way which should prevent a torrent of litigation over what constitutes occupation by a telecoms operator.

This is a further boost for telecoms operators and shifts the balance of power yet further in their favour.  But even land owners will recognise that the clarity provided by the Supreme Court should make negotiations between operators and land owners less painful in future, with the parties having a better understanding of their respective legal positions.

Authored by Tim Reid and Megan Stewart.