12 Jul 2019

There has been a steady stream of new Telecoms Code cases coming out of the First Tier Tribunal. The latest considers how the genuineness of a site provider's intention is to be assessed when the site provider seeks to prevent an operator accessing land on the ground of the site provider's intended redevelopment.

EE Limited & Hutchison 3G UK Limited v Sir James HE Chichester & Others [2019] is the first case where the provisions of paragraph 21 (5) of the Code are considered, under which a site provider is able to prevent Code rights from being obtained over its land if such would prevent intended redevelopment.

Background facts

Sir James Chichester and his co-trustees were the owners of an estate in the New Forest in Hampshire. This was the site of several existing telecoms masts which were subject to leases that had expired well before the commencement of the new Telecoms Code in December 2017. Negotiations for renewal of those leases progressed on the basis that a market rent (as permissible under the old Code) would be paid, but those negotiations foundered before the leases were completed. At that point (December 2017) the new Telecoms Code came into force under which (pursuant to the "no network" valuation assumptions now required by the new Code) a significantly decreased rental would have been payable to the Trustees for the renewed leases.

At this point, the Trustees (through their estate managers) worked up an alternative scheme for the estate whereby the Trustees themselves would erect new masts (in place of the existing masts) and invite operators to install telecoms equipment on those masts. The rationale for the scheme appeared to be that, under the new Code, Code rights can only be obtained against a site provider's land, but not against a mast on the land. The Trustees erecting their own new masts would have the effect (in this scenario) of enabling the Trustees to charge a market rent for use of the masts, as the "no network" valuation assumptions of the Code would not apply to that mast usage.

When the operators indicated that they would not use any such new masts for their equipment, the estate managers revised their scheme so it was purportedly designed to provide better broadband accessibility for other users and occupiers of the estate.

Faced with the Trustees' continuing refusal to enter into leases under the new Code for their existing mast sites, the operators applied to the Tribunal for an order imposing Code rights in respect of the sites on the Trustees. The Trustees resisted that application, relying on paragraph 21(5) of the Code, which precludes the Tribunal from imposing Code rights if the site provider "intends to redevelop all or part of the land to which the Code right would relate and could not reasonably do so if the order were made".

Legal issues for determination by the Tribunal

1. How is the intention under paragraph 21(5) to be assessed, in law?

The Tribunal accepted the operators' argument that paragraph 21(5) was very similar to the well-known "redevelopment ground (f)" under the Landlord & Tenant Act 1954. Under ground (f), a landlord who intends redevelopment can successfully resist a tenant renewing its lease. There is a considerable body of case law around what such intention legally requires, culminating in the recent significant Supreme Court case on the issue, S Franses v Cavendish Hotels.

The Tribunal accepted that the two legal provisions were different and related to legally different scenarios. Therefore, it could not be said that in every respect paragraph 21(5) should be interpreted as operating precisely how ground (f) under the 1954 Act operates. However, that point having been made, the Tribunal accepted that, for the purpose of assessing the issues before the Tribunal in respect of intention, it should interpret paragraph 21(5) in the same way as ground (f). This meant that:

  • the date for assessing the nature and genuineness of the Trustees' intention to redevelop was the date of the hearing itself and not any earlier
  • the traditional two stage test under the 1954 Act for intention applied, namely:
    • (a) has the site provider genuinely formed an intention to do the redevelopment
    • (b) is there a reasonable objective prospect of the development being feasible?
  • (applying the test in S Franses) an intention to carry out a scheme that would not be carried out if the operators were not asserting Code rights would not satisfy the requisite intention test, being inappropriately conditional.

2. How did these legal criteria apply to the facts of the case?

The Tribunal was willing to find that there was no impediment to the Trustees' second scheme proceeding in terms of financing, planning or engineering feasibility.

However, the Tribunal was wholly unconvinced as to the genuineness of the Trustees' intention actually to carry out their second scheme.

  • None of the Trustees had actually given evidence to the Tribunal, leaving all the evidence to be given by their estate manager
  • The fact that the schemes were worked up after the new Code came into effect strongly suggested their rationale was simply to avoid the rent reductions that the new Code would inevitably bring
  • The fact that the scheme was changed when the operators refused to cooperate with the first scheme again suggested the rationale was simply to avoid the effects of the new Code
  • Evidence as to viability of the second scheme strongly suggested that there were better, more effective and less expensive ways of providing better broadband for the site, and the Trustees should be taken as not wanting to waste money unnecessarily.

The Tribunal therefore found that the Trustees held no genuine intention to carry out the second scheme, and in any event the schemes would not have been worked up if it were not for the need to avoid new Code rights being imposed. The Trustees therefore failed in their attempt to block the operators from asserting Code rights over their mast sites on the estate.

Comment and conclusion

Anyone familiar with the drafting and workings of the 1954 Act will recognise loud echoes of that Act in many places throughout the new Code. That said, it has not been until now that it is possible for practitioners to say with due certainty that the new Code is likely to be interpreted and given effect to in a way similar and in line with the 1954 Act's workings.

Although it would have been surprising if the Tribunal had found that judicial authority on the 1954 Act was of no assistance in interpreting the Code, this case is welcome in providing confirmation that the new Code can be interpreted (at least in respect of this paragraph) in line with the 1954 Act. It is also an interesting example of the new 1954 Act S Franses test of conditionality of intention being applied in a non-1954 Act context.