Cracking the code
The Upper Tribunal provide clarification on the relationship between the Electronic Communications Code and the Landlord and Tenant Act 1954
Background: The Code in context
The Electronic Communications Code (the Code) came into force in December 2017. It created a legislative regime giving telecommunications operators statutory rights to install and maintain relevant electronic communications infrastructure on, under, or over land. In practice, the Code provides the legal basis for the installation of equipment supporting fundamental services such as broadband, television and phone. Due to these services being so commonplace and essential in the modern world, and against a commercial backdrop where the rollout of 5G technology is seen as key in facilitating economic growth, the application of the Code is of considerable importance to the property sector.
The Code is however still in its infancy and practitioners, operators and landowners alike are learning how the Code interrelates with existing legislation. The Law Commission when drafting the Code noted in particular that the interactions between the Code and the Landlord and Tenant Act 1954 (the 1954 Act) would need to be considered. The 1954 Act is a key piece of property legislation which provides business tenants with security of tenure i.e. the right to continue to occupy premises after their lease has expired, provided that the parties have not agreed that the provisions of the LTA 1954 will not apply by the process of contracting out.
Until recently, the relationship between the Code and the 1954 Act has been a matter of some educated guesswork. However, a recent decision of the Upper Tribunal has helped to clarify the position.
Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2019]
The claimant (C) was a Joint Venture between Vodafone and Telefonica (O2). Whilst two rivals in certain areas of the market the two companies had joined to form a network sharing partnership. The land was subject to a pre-existing agreement between Vodafone and its landlord, which had not been contracted out of the security of tenure provisions. C sought a new lease from the starting point of more beneficial Code terms and attempted to use the regime in the Code.
In denying C relief, the Court held that: –
- The UT did not have jurisdiction under Part 4 of the Code agreement to impose such an agreement between an Operator and a land owner where the Operator occupies the land pursuant to an agreement already in existence.
- Part 5 of the Code cannot be employed to the aid of an Operator where the Operator is carrying on under the Security of Tenure provisions of the 1954 Act.
As a result of the above C would have to use the 1954 Act regime to terminate that lease and apply for a new tenancy under the same regime. The full transcript can be found here.
Implications
The Upper Tribunal’s determination that C had to rely on the provisions in the 1954 Act is significant in that the starting point to agree terms was less commercially beneficial for C than they might have been should C have been able to use provisions under the Code. For instance in determining rent section 34 of the 1954 Act serves to determine rent under a new tenancy on terms which substantially replicate the open market rent. In contrast to this the rent determination provisions in the Code (paragraph 24) hold that the market value determination does not relate to the provision or use of an electronic communications network- this strips out the value of the intended use as to provide electronic communications infrastructure which would be beneficial to an operator.
Conclusion
Landowners, Operators and practitioners alike now have further clarification on the their rights with regard to when there is a subsisting agreement is in place to which the 1954 Act security of tenure provisions apply, and which procedure to use in which circumstances (i.e. the 1954 Act or the Code). They are also now better informed of the commercial implications of the regime they may have to use due to varying starting points for negotiation.
For more information please contact our Litigation Team.
