The New Electronic Communications Code and the Return of the 1954 Act

n the recent case of Cornerstone Telecommunications Infrastructure Limited (CTIL) v Ashloch Limited (1) and AP Wireless II (UK) Limited [2019] UKUT 0338 (LC), the Upper Tribunal determined the question – does it have jurisdiction under Part 4 of the Electronic Communications Code to impose Code rights over land in favour of an operator which is already in occupation of the land, holding over under a tenancy pursuant to section 24 of the Landlord and Tenant Act 1954.

The brief facts of the matter are that the tenancy had been granted prior to the introduction of the new Code in December 2017 and it was therefore a 'subsisting agreement' for the purposes of the transitional provisions at Schedule 2 to the Digital Economy Act 2017. The transitional provisions exclude Part 5 of the Code (which deals with renewals, termination and modification of Code agreements) in relation to subsisting Landlord and Tenant Act 1954 tenancies.

CTIL argued that since the transitional provisions do not exclude part 4, which deals with circumstances under which an operator can seek the imposition of a code agreement, the provisions of part 4 must apply to a subsisting agreement. This they argued meant that operators could utilise the process under paragraph 20 for the imposition of code agreements even in circumstances where the transitional provisions of the new Code applied. CTIL argued that this was necessary in relation to Paragraph 33 renewals as that process could not be relied on during the currency of the term. Accordingly CTIL proposed that "the settled position which Part 5 protects during the currency of the term, before the period of continuation under paragraph 30, may be upset by the operator alone giving 28 days' notice under paragraph 20 at any time of its choosing." The Tribunal was critical of the position adopted by CTIL and considered that the suggested operation of the new Code by CTIL "would be even more astonishing in the case of a subsisting agreement to which Part 2 of the 1954 Act applies, which the Law Commission recommended should not obtain the benefits of the new Code retrospectively."

The Tribunal therefore disagreed with CTIL. Applying the key principles from the case of CTIL v Compton Beauchamp (which we previously reported on here), they decided that part 4 does not apply to operators in situ (except in very limited circumstances).

The Deputy President held “An operator in situ under a subsisting agreement is in the same position as an operator in situ under an agreement made under Part 2 or imposed under Part 4; that status does not confer the right to give notice under paragraph 20, except for the very limited purposes of obtaining interim or temporary rights.”

The Tribunal explained that "it should come as no surprise that the transitional provisions of the New Code leave operators without the full benefits of the New Code and reliant instead on their pre-existing rights."

In a move which is likely to be of significant concern to operators the Tribunal also considered that rents would need to be assessed pursuant to section 34 of the 1954 Act where the lease was being renewed pursuant to the 1954 Act. In those renewals the Tribunal thought that "no scheme" rents being agreed under the new Code might only be of "limited assistance". The assumption which will therefore be drawn is that rents determined pursuant to section 34 of the 1954 Act would be similar to those rents granted prior to the introduction of the new Code. This would potentially then flow through into any new rent determined on a further renewal under paragraph 33 of the new Code. Accordingly there could be many cases where rents will remain at or close to the old Code rents for a considerable period of time.

This is a decision welcomed by landowners and is the first time the Tribunal has had to consider the relationship between the new Code and 1954 Act. The effect being that a paragraph 20 agreement cannot be sought by an operator already in situ regardless of whether it is a 1954 Act tenant holding over or not. The renewal process under the 1954 Act must be followed and cannot be sidestepped by an operator serving notice pursuant to paragraph 20 of the Code. We expect that CTIL will look to appeal the decision, and in the meantime we don't expect that operators will refer to this case in the same way that we have seen references made to the decision in EE Ltd and another v the Mayor and Burgesses of the London Borough of Islington [2019] which has been widely deployed in an effort to drive down rents.

it should come as no surprise that the transitional provisions of the New Code leave operators without the full benefits of the New Code and reliant instead on their pre-existing rights.

https://www.falcon-chambers.com/images/uploads/news/TCR-83-2018_final_.pdf