On Tower v APW (1) Icon(2) (Queen's Oak Farm) – intention to redevelop under the Telecoms Code

The recent First Tier Tribunal case of On Tower v APW (1) Icon(2) (Queens Oak Farm) (LC – 2019 – 000826) contains a thorough analysis of what is needed by a site provider to prove an intention to redevelop when opposing renewal of a code agreement under paragraph 31 (4) of the Telecoms Code.

Background facts

On Tower occupied a mast site at Queen's Oak Farm (the Site). It licenced several mobile network operators (MNO's ) to use the tower for their electronic communications apparatus (ECA).

Icon Tower Infrastructure Limited became the freehold owners of the Site and sought to remove On Tower through service of a termination notice under paragraph 31 of the Code. Icon relied on sub paragraph (4) (c) namely that it "intends to redevelop all or part of the land to which the code agreement relates…. and it could not reasonably to do so unless the code agreement comes to an end".

The issue between the parties at the Tribunal was, simply, whether Icon could make out the requisite intention so as to come within sub-paragraph (4) (c) and thus terminate On Tower's code agreement.

The evidence

Much evidence was given as to the planning position, but the tribunal decision did not eventually turn on planning issues. Rather, evidence from Icon as to its business model for the Site was examined in some detail.

Icon's evidence, in brief, was that it had intended to build its own tower near the Site, but following the decision in the different case of Steppes Hill Farm (where Icon had been successful in terminating Vodafone's code agreement on that site) Icon changed plans and decided to seek to build a new mast on the Site.

Icon's main witness was candid that doing so would eliminate the competition from On Tower as a rival Wireless Infrastructure Provider (WIP) . His evidence also clarified financial modelling that had gone into the decision to build the new mast on the Site, which involved persuading the existing MNO's to return to the new mast once it had been built. To do this, various financial incentives would have to be given to the MNO's which APW (as Icon's parent company) agreed to finance, and various levels of such expenditure were considered depending upon how long it would take to get the MNO's to come back. 

Undertakings were given by Icon and APW to build the mast and to provide necessary funding for the MNO incentives.

The tribunal's decision

The Tribunal applied the two stage test on the requisite intention needed that is applicable to the "redevelopment" ground (f) in the Landlord and Tenant Act 1954 (whilst recognising that 1954 Act authorities should not necessarily dictate how the Code should be applied):

• Subjective test: did Icon, subjectively, have the requisite intention to build the new masts on the Site? In view of the undertaken to build given by Icon and the evidence generally, the Tribunal decided that it did;
• Objective test: was there, objectively, a reasonable prospect of Icon being able to bring about the redevelopment? The Tribunal concluded that, on the balance of probabilities according to the evidence given, the MNO's (who were not themselves called to give evidence) would not return to the new tower. Accordingly, Icon did not have a reasonable prospect of being able to carry out the proposed redevelopment. 

As a result, Icon's application failed. It was not found to have the requisite intention to redevelop that would satisfy paragraph 31(4)(c) of the Code.

The judgment also dealt with two other interesting points:

• Conditional intention: following the Supreme Court's decision in the 1954 Act S Franses case, a landlord or site provider cannot have the requisite intention to redevelop if the relevant works would not take place were the operator to voluntarily vacate without asserting Code rights. Because Icon had been candid about its desire to eliminate competition from On Tower, and the fact that Icon's strategy changed, On Tower argued that the new tower would not in fact be built if On Tower voluntarily left. The Tribunal found, however, that Icon's candidness did not make its intention impermissibly conditional.
• Extent of re-development: On Tower argued that the redevelopment proposed essentially involved removal of the existing mast and replacing it with another. Because the Code stipulates that ECA (including a mast) cannot be land, On Tower submitted that no redevelopment of the "land" at the Site (as paragraph 31 of the Code required) was in fact intended. The Tribunal disagreed, saying it was enough to count as "redevelopment of land" for one mast to be removed and another erected. This view followed the decision in Steppes Hill Farm.

Comment

Operators may see this as a useful precedent for resisting similar attempts by site providers, especially WIP's, to oppose the renewal of code agreements through the expediency of a mast replacement scheme. However, it might be argued that the Tribunal's finding that Icon would not be able to get the MNO's to return to the new mast was not conclusive on the issue of objective intention.

The possible financial consequences for Icon if, indeed, the MNO's did not return, might not be decisive as to whether the re-development scheme could be carried out. Given Icon's undertaking to build the new mast, the fact that there might be adverse financial consequences if the MNO's did not return might not be said objectively to affect Icon's practical ability actually to replace the mast and carry out the development. Issues concerning viability of a scheme of development more often go to the subjective limb of the test and the credibility of the evidence – does a landlord/site provider really intend to carry out a development that appears unviable? – rather than the objective limb – are there practical impediments to the landlord/site provider being able to carry out the redevelopment?