The new Electronic Communications Code (the “Code”), which came into force in December 2017, is widely seen to favour the interests of operators over landowners, which is unsurprising given that the policy objective of the Code is to facilitate the installation and maintenance of a world-class communications network (including full-fibre and 5G) that will form a foundation stone for the future growth of the UK economy.
To date, the most controversial part of the Code has been the new valuation provisions which have led to some mobile operators seeking significantly lower rents on proposed and existing mast sites and landowners becoming more reluctant to agree to the continued presence of masts on their land as they now offer a less attractive income stream.
The old code was litigated very rarely (almost famously so) but the provisions of the Code have already been the subject of several decisions in the Upper Tribunal (which has replaced the County Court as the forum for the resolution of matters under the Code).
EE Ltd v Sir James H E Chichester [2019] UKUT 164 (LC) is the first decision on paragraph 21(5) of the Code which allows landowners to resist the grant of Code rights over their land if they are intending to redevelop all or part of the land concerned, or any neighbouring land that would otherwise be sterilised if the Code rights were granted. It concerned four mast sites operated by EE and Hutchison 3G UK Limited on the 5,600 acre Hinton Admiral Estate in Hampshire.
The decision confirmed that the test in paragraph 21(5) is effectively the same as that for ground (f) under section 30 of the Landlord and Tenant Act 1954 (under which landlords can oppose business lease renewals on the basis of redevelopment). Accordingly, it has two stages: (a) the landowner must have a genuine, unconditional intention to redevelop (a subjective test); and (b) the landowner must be practically able to redevelop (an objective test).
In this instance the landowner was found not to have demonstrated the necessary subjective intention and accordingly failed in its attempt to rely on paragraph 21(5). To simplify, the landowner had come up with a scheme by which it would install its own masts on the sites concerned, in place of the operator’s own masts, as part of a plan to develop a Fixed Wireless Broadband service across its estate. The operators would then be subsequently invited to put their equipment on the landowner’s own masts. This was quite clever, as Code rights can only be obtained over land. The Code would not apply to the fixing of equipment to the landowners own masts, with the result that the landowner could then negotiate a rent free from the restraints of the valuation provisions in the Code. However, the Upper Tribunal questioned the landowner’s motive. It found that the landowner’s plans were not genuine and that there was no serious intention to carry them out. Considering the timing of the plans, and their financial and practical utility, as well as the landowner’s apparent failure to explore other options, the Upper Tribunal took the view that the plans had been put together primarily to try and prevent the operators from obtaining Code rights.
The decision is another instance of the Upper Tribunal interpreting the Code in light of the policy objectives behind its creation. It is a warning to landowners that paragraph 21(5) will be interpreted strictly and that there are unlikely to be any loopholes for them to exploit whether to either (a) seek to remove operators entirely from their land or (b) create a negotiating position from which the new valuation provisions can be side-stepped and higher rents obtained.
For more information please contact Doug Scott