Paragraph 40(8) of the Code – the “last chance saloon” for telecoms operators?

Background 

The case of On Tower UK Limited v Gravesham Borough Council involved a rooftop telecoms site on an eight-story residential building. The Respondent Council was the freeholder. The equipment had been in place since 1997 under a 1954 Act lease and had been assigned to the Claimant telecoms operator, On Tower.

The Respondent needed to carry out roof repairs to fix persistent leaks, but the repairs necessitated removing the Claimant's apparatus. The parties discussed “lift and shift” of the apparatus, but negotiations stalled during the pandemic.

Following the service of a section 25 notice by the Council in December 2021, the operator issued court proceedings for a new tenancy in July 2022 but failed to serve them within the 4-month deadline (i.e. by November 2022). Despite applying for permission to extend the time for service, its 1954 Act claim was dismissed in late February 2022.

A few days before the order for dismissal was made, the Claimant operator served a paragraph 20 notice on the Council seeking a new Code agreement. It then issued a Reference to the First Tier Tribunal under paragraph 20 of the Code in June 2023. In July 2023 the Council sought to strike this application out.

Decision

The First Tier Tribunal held that although the 1954 Act and Code renewal processes could not run concurrently, it did have jurisdiction to hear the operator’s application for the new Code agreement in this case, as the original lease was not a subsisting agreement under the Code (the operator’s lease had already terminated under section 64 of the 1954 Act by that point). The circumstances were distinguished from those in Compton Beauchamp where the agreement was subsisting. On this basis the strike-out application was refused.

The Tribunal held that where operators have no existing agreement, they are not left without recourse, and paragraph 40(8) of the Code acts as a "last chance saloon" where an operator finds itself vulnerable to removal under Part 6. This provision confirms that the Tribunal cannot determine any removal application until any outstanding paragraph 20 application is determined.

The court also confirmed that the operator’s paragraph 20 application was not an abuse of process. The County Court in the 1954 Act regime had been asked to consider a procedural issue rather than one of substance/merit, therefore the Claimant operator could not be said to be relitigating any issues.

Commentary - no “second bite of the cherry”

Property owners are already justifiably concerned about the impact of telecoms equipment on their ability to redevelop their property. The code sets out an 18-month termination right where the landlord has a settled intention to redevelop, in reality however a developer might expect vacant possession to take significantly longer to achieve, as an operator can delay for a further 6 months or more as part of the Part 6 removal process.

The decision is therefore likely to be concerning to site providers as, on face value, it might suggest (as was argued by the Council) that paragraph 40(8) gives operators a “second bite of the cherry”.

We are pleased that the Tribunal has clarified that where an operator’s lease is terminated under the 1954 Act (following the landowner successfully opposing on ground (f)) any further application under Part 4 of the Code would be liable to be struck out, as it would not have a reasonable prospect of success. In this case, the court in the 1954 Act proceedings had not considered any merits of the operator’s renewal application, the failure to serve proceedings was purely a procedural issue. We would hope that the same approach would be taken where a Code agreement by evidencing one of the statutory grounds for termination.  

We also welcome the Tribunal’s confirmation that it will scrutinise operators’ conduct to avoid paragraph 40(8) being used to facilitate any abuse of process. The example given, being an operator which deliberately brings about the termination of its lease under the 1954 Act, so that it may seek a new agreement under the Code on more favourable terms pursuant to paragraph 40(8).