Electronic Communications Code - what’s your intention?

Overview

A new Electronic Communications Code came into force on 28 December 2017. This new Code was intended to be more operator friendly and contains provisions which should result in lower rents being charged to operators.

Cases in relation to disputes under the new Code are now being heard and providing useful guidance in relation to its provisions. In EE Ltd and Hutchison 3G UK v Meyrick, a landowner attempted to resist the imposition of Code rights on the basis that it (a) intended to redevelop its land, and (b) would not be able to carry out the redevelopment if the Code rights were granted, but was unsuccessful. The Upper Tribunal (UT) found that while the landowners had a reasonable prospect of implementing the proposed redevelopment scheme, they did not have the requisite intention. It was held that the redevelopment plans were "conceived in order to defeat the claim for Code rights".

The detail...

The claimants in this case were mobile telephone network operators (and "Code operators’" which gave them rights under the Code), who although competitors, often shared infrastructure such as masts. The claimants had operated from their own mast sites on the respondent landowner’s property on the Hinton Admiral Estate for many years but lease renewal negotiations under the old Code had broken down and the parties had also been unable to reach agreement under the new Code.

The claimants sought Code rights under the new Code and the landowner objected relying on paragraph 21(5) of the Code which provides that the Court may not impose Code rights "if it thinks that the relevant person intends to redevelop all or part of the land to which the code right would relate, or any neighbouring land, and could not reasonably do so if the order were made."

The proposed redevelopment in this case involved the removal of the operator’s existing mast and the installation of a new mast owned by the landowner. The landowner’s position was that it wished to establish a fixed wireless broadband service across the Estate and needed a new taller mast to do this. However, as the UT also noted, electronic communications equipment is specifically excluded from the definition of "Land", so a landowner who provides their own mast cannot be subject to Code rights and "can demand whatever consideration they choose, and impose whatever terms they wish".

The landowner’s redevelopment scheme evolved overtime. The scheme before the UT had planning permission and a broadband provider ready to provide the service. However, it appeared that Code operators were reluctant to use a mast which was provided by an unregulated operator and not subject to Code Rights. The redevelopment scheme was financially very unattractive to the landowner without the support of one or more Code Operators placing their equipment on it. It was also noted that the landowner had failed to explore alternative options for improving the speed of the broadband to the Estate nor provided evidence to show a significant problem.

The Tribunal adopted a two-stage test (used when landlords oppose a lease renewal under the Landlord and Tenant Act 1954 on redevelopment grounds and most recently considered in the Supreme Court decision S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62) in determining whether the landowner could rely on paragraph 21(5) of the Code. The UT noted the landowner could resist the claimant’s application "only if they can demonstrate both that they have a reasonable prospect of being able to carry out their redevelopment project and that they have a firm, settled and unconditional intention to do so. If they intend to do so purely in order to prevent the Claimants from getting Code rights then they will fail."

Even though it was not "a viable plan" the UT found that in respect of the first limb the landowner did have a reasonable prospect of being able to carry out the project "through sheer weight of resources". However, the respondent landowner failed on the second limb. The UT noted that they found it "wholly implausible that the Respondents, as trustees with fiduciary duties to their beneficiaries (and also as landowners who claim to be committed to the welfare of their land and their tenants) would waste their resources on it. In reality, the redevelopment plans are conceived in order to defeat the claim for Code rights. Even if we are wrong about the Respondents' intention, their motivation is perfectly clear."

EE Ltd and Hutchison 3G UK v Meyrick 1968 Combined Trust of Meyrick Estate Management [2019] UKUT 164 (LC)