24 Apr 2019

The operation of the Electronic Communications Code (ECC) continues to be shaped by significant decisions coming from the Upper Tribunal (UT). 

The ECC came into force in December 2017 replacing the existing Code with one widely regarded as being more operator-friendly, designed to facilitate the further development of the electronic communications market in the UK.

In outline, Code Operators are permitted to seek a "compulsory" agreement to siting their equipment on land, and the consideration to be provided for this will generally be lower than was previously the case. This is because the ECC stipulates that the equipment's actual use for electronic communications is to be disregarded in assessing rental value (the "no network" assumption as the Upper Tribunal refers to it).

Can an agreement be imposed by the Tribunal when another operator is already in occupation of the site?

This was the primary issue in CTIL v Compton Beauchamp Estates Ltd (UT 12/13 March 2019). A site at Gallyhearns Farm, Longcot was occupied by Vodafone. The landowner had issued possession proceedings following the expiry of Vodafone's lease but the operator was defending those proceedings on the basis that it had a 1954 Act protected tenancy of the site .

Vodafone is (along with Telefonica) a shareholder in CTIL, which sought an order from the Tribunal for an agreement to be imposed on the landowner allowing CTIL to occupy the site for the purposes of its network. Vodafone was not party to the proceedings although CTIL's counsel advised that he was authorised to offer an undertaking that Vodafone would surrender any interest in the site it had on the Tribunal granting the requested rights to CTIL.

Paragraph 9 of the ECC states " 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". 

The landowner argued, and the Tribunal decided, that where a third party (here Vodafone) was in fact the occupier of the land then the Tribunal had no jurisdiction to impose a code right. Thus the application was dismissed.

This was distinguished from the position where it was the applicant which already had the code right, on the basis that as matter of law any existing agreement between a landowner and an occupier applicant would be terminated by the imposition of a new agreement by the Tribunal.

This decision is of particular significance to cases involving CTIL seeking rights over land actually occupied by one of its shareholder companies rather than CTIL itself, but will apply to other situations as well. The position may however have been different if the current occupier had been made a party to the proceedings and to the proposed agreement solely for the purpose of agreeing to surrender its current interest as soon as the new agreement took effect which would then be akin to the position where the applicant is already in occupation. It remains to be seen whether this approach will be attempted in future claims.

Is the presence of third party equipment on a site a bar to the imposition of an agreement?

This was one of the preliminary issues decided by the UT in CTIL v Keast. (6 February 2019). In outline, the ECC provides that code rights can only be exercised over "land", which is defined as expressly excluding electronic communications apparatus (ECA) . Operators therefore cannot seek code rights over other operators' equipment (described in this case as "blue on blue" applications).

In this case the equipment on site was owned by Vodafone and CTIL's intention was to take a transfer of ownership of that equipment once an agreement had been imposed by the UT. The landowner argued that such equipment was a fixture and so had become part of the freehold land and CTIL was not entitled to code rights over it. 

Paragraph 101 of the ECC states "The ownership of property does not change merely because the property is installed on or under, or affixed to, any land by any person in exercise of a right conferred by or in accordance with this Code"

The landowner argued that paragraph 101 did not change the common law rule that fixtures become part of the land, and therefore CTIL could only have a "Swiss cheese" of rights in which the holes were the parts of the site already occupied by ECA.

CTIL argued, and the UT accepted, that it was entitled not to Swiss cheese with holes but to "cheddar" over the whole site. Paragraph 101 operated to prevent the ECA becoming a part of the land as a fixture and the presence of a third party's equipment on a site did not prevent the UT imposing a Code agreement over that site. CTIL could then put itself in a position to operate from that site by acquiring the equipment from Vodafone. 

The significance of this decision is somewhat diminished by the findings in CTIL v Compton Beauchamp discussed above, but there may still be situations in which it is relevant.

What terms can the Tribunal impose in Code agreements?

This was another decision of wider significance made by the UT in CTIL v Keast. 

Paragraph 23 of the ECC sets out the terms which the Tribunal may impose in an "enforced" agreement. This states that the agreement must contain " such terms as the Court thinks appropriate" and goes on to specify particular terms which must be included or considered.

CTIL was seeking terms including the right to install a generator, a covenant of quiet enjoyment by the landowner, rights to restrict the landowners access to the proposed site and covenants not to interfere with the site and to maintain his surrounding land in such a way as would not interfere with the site.
In this case the land owner argued that whilst the UT has a discretion as to which terms to impose, that relates only to the manner of exercise of Code rights and cannot include positive obligations on the landowner or restrictions on the use of the rest of his land. 

The UT rejected this argument. None of these types of terms fell outside of the Tribunal's discretion to impose. If Parliament had intended the terms to be imposed to be the subject of limitations of the type suggested by the landowner in this case it would have said so expressly. However, whether or not these terms would actually be granted in due course remained to be seen. The applicant was advised not to "count its chickens" and that it might have an uphill struggle to persuade the Tribunal that these proposed obligations were reasonable.

Can adjoining owners require the removal of apparatus to create a new means of access?

This was the principal issue addressed by the UT in the case of Evolution (Shinfield) LLP and others vs BT (2/3 April 2019).

The applicants were owners of some land adjoining a streetworks site on which an equipment cabinet was located. The cabinet was constructed in such a way as did not obstruct the current means of access which was to two cottages. However the adjoining owners had obtained planning permission for redevelopment which included a much widened access which would not be possible with the cabinet in its current location. BT's estimate of the cost of relocation of the cabinet and associated cabling was £300K.

It was common ground that if the cabinet were to be moved under other legislation (New Roads and Street Works Act 1991) then the applicants would have to bear the cost. However they contended that they had a right to seek the removal of the cabinet under the ECC without paying anything towards the cost.

Paragraph 38 of the ECC states that the owner of land adjoining that over which a code right was being exercised had the right to require the removal of electronic communications apparatus if (i) the apparatus interferes with or obstructs any means of access and (ii) the adjoining owner is not bound by a code right permitting this obstruction.

The applicants argued that "any means of access" did not just include existing access when the equipment was installed but future access which might be created, for example pursuant to a planning permission allowing development.

This construction of the ECC was firmly refuted by the UT and the application was dismissed. "Means of access," within the meaning of paragraph 38, had to be in existence when the equipment was installed. Paragraph 20 of the old Code also remained applicable to this site (under the transitional provisions) and any applicants under this paragraph would require the applicants to pay the costs associated with the works.

Further significant areas of the ECC remain to be adjudicated upon, but these cases add to a growing body of case law to shape understanding of the legislation and how it will be applied in practice.