UK: What Does A Landowner Have To Do To Resist The Imposition Of Code Rights?

Last Updated: 15 August 2019
Article by Emma Broad, Oliver Saunders and Neill Pemberton

EE Ltd v. Sir James H E Chichester [2019] UKUT 164 (LC) considers the ability of landowners to resist the imposition of rights pursuant to the Electronic Communications Code (Code) where they intend to redevelop their land. The landowner in question had conceived a redevelopment plan that was "seriously uneconomic" but which would prevent two mobile operators claiming Code rights over land. Despite having both planning permission and the means to carry out the scheme, the Upper Tribunal found that the landowner did not have a real intention to carry out the works, since its purpose in doing the works was to defeat Code rights. The decision will serve as a stark warning to landowners considering constructing such schemes to avoid Code rights.

Background

EE Ltd (together with another operator) had a lease of a mast site near Christchurch. The lease expired in 2017 and subsequent attempts to negotiate a new lease were unsuccessful. Accordingly, the operators applied pursuant to the Code for an order imposing Code rights on the landowner to allow them to retain their equipment on site.

The legal test that has to be satisfied before an order can be made is set out in paragraph 21 of the Code. It provides that the court may make an order where it is satisfied that both of the following conditions are met:

  • that the prejudice caused to the relevant person (i.e. the landowner) is capable of being adequately compensated by money; and
  • that the public benefit likely to result from the making of the order outweighs the prejudice to the relevant person.

However, paragraph 21(5) of the Code states that "the court may not make an order under paragraph 20 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 landowner claimed that it intended to redevelop the site by installing its own mast. This would come with the added advantage that Code rights cannot be sought over electronic communications equipment such as a mast. As such, if the landowner did replace the existing mast with its own it would be able to negotiate with operators for them to place their equipment on the mast and such agreements would fall outside the protection of the Code, including the constraints on the amount of consideration that would be payable. The landowner's stated reason for wanting to redevelop was to install its own mast to improve the broadband offering to its estate by coupling up with other telecommunications providers.

Decision

The court noted that the relevant provisions of the Code were modelled on the provisions in the Landlord and Tenant Act 1954 (1954 Act) for landlords opposing lease renewals on the grounds of redevelopment. While case law relating to the 1954 Act was not binding authority when interpreting the Code, the principles applicable to the 1954 Act should be adopted where relevant. It made sense to adopt the same approach to testing intention for the Code as had been applied to the 1954 Act.

Taking that approach, the court confirmed that:

  • intention for the purposes of paragraph 21(5) of the Code was a reference to intention as at the date of the hearing; and
  • to satisfy the intention requirement, the landowner needed to demonstrate both:

    • that it had a reasonable prospect of being able to carry out its redevelopment project (objective test); and
    • that it has a firm, settled and unconditional intention to do so (subjective test). In this regard the recent Supreme Court decision in S Franses Ltd v. Cavendish Hotel (London) Ltd was relevant. That case decided that a landlord who opposes the grant of a new tenancy on the grounds of redevelopment but who intends to do the works purely to prevent the tenant from exercising its rights under the 1954 Act only has a conditional intention to do the works and that is not sufficient. The "acid test" is whether the landlord would intend to do the same set of works had the tenant not sought to rely upon its rights under the 1954 Act. Translating that to the Code, this means that operators should not be prevented from getting Code rights where the landowner's scheme of development is contrived purely to prevent the acquisition of Code rights.

On the facts, the court found that objectively the landowner did have a reasonable prospect of being able to carry out the redevelopment project. It had obtained planning permission for its proposed mast and it did have the financial resources to see the project through. However, the court found that the landowner had failed to satisfy the second, subjective, limb of the test. For example:

  • it had failed to satisfy the court that its plans for the mast were in fact viable; and
  • it had not provided convincing evidence of the need for a new broadband provision on the estate and had not raised concerns about the existing broadband offering with the operators.

Instead the court concluded that "in reality the development plans are conceived in order to defeat the claim for Code rights even if we are wrong about the [landowner's] intention, their motivation is perfectly clear". The landowner failed to establish that it intended to redevelop the site and therefore could not use this as a defence to the operators' application for Code rights to be imposed by court order.

Comment

While there are a number of other aspects to this case that have yet to be decided (for example, whether the operators have satisfied both limbs of the test for a court to grant an order imposing Code rights), this interim decision stands out as the first of its kind to consider paragraph 21 of the Code and the ability of a landowner to resist Code rights where it wishes to redevelop. While the courts will not slavishly follow the case law decided in relation to the 1954 Act, they will certainly bear it in mind and they will look behind the viability of a landlord's development plans in order to assess their subjective intentions. It seems that landowners will have to work equally hard to resist Code rights as they might otherwise have to do to oppose a lease renewal pursuant to the 1954 Act.

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