Significant Supreme Court decision on Electronic Communications Code

Summary

The Supreme Court has handed down an important decision that facilitates an operator with existing electronic communications apparatus at a site being able to obtain new/additional rights under the Electronic Communications Code in respect of the site.

Context

The current Electronic Communications Code (“Code”), which came into force on 28 December 2017 and is contained in Schedule 3A to the Communications Act 2003, provides a regime for sorting out when, where and on what terms, telecoms operators can acquire the right to install their electronic communications apparatus (“ECA”) on a particular piece of land.

When the Code was published, the then Minister of State for Culture and the Digital Economy said that it was intended to “provide a robust platform to enable long-term investment and development of digital communications infrastructure in the 21st Century”.

Over the last four and a half years operators and property owners and occupiers have been exploring through the courts and tribunals the sometimes uncertain boundaries of the new legislation, to the backdrop of the Code’s policy objective of promoting the roll out of digital communications infrastructure.

In this case (parties’ details and link to judgment at the end of this article), the Supreme Court was asked to decide on a particularly controversial issue - whether and how an operator who has already installed ECA on a site can acquire new or better code rights from the site owner/occupier. At the heart of this is paragraph 9 of the Code, which provides that: “A code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and the operator.”

The Court of Appeal had previously decided in Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited [October 2019] and in Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited and AP Wireless II (UK) Limited [February 2021] that when an operator installs its equipment on the land, in many cases it will thereafter be the “occupier of the land” for the purpose of paragraph 9 and since an operator who is an occupier cannot enter into an agreement with itself, it is precluded from applying under the Code for new code rights.

In its judgment the Supreme Court decided on appeals against those 2 Court of Appeal decisions and an Upper Tribunal decision on the same issue which had had to follow the approach taken by the Court of Appeal and had therefore been granted permission to leapfrog straight to the Supreme Court. The outcome was crucial for operators generally who were unable to seek new/additional Code rights on many sites where the operator already had ECA installed, which may have been installed pursuant to agreements under the old Electronic Communications Code that had expired. So the decision is relevant not only to agreements under the new Code, but also to installations pursuant to old Code agreements, whether or not the new Code applies pursuant to transitional provisions in Schedule 2 to the Digital Economy Act 2017.

Supreme Court’s decision

The decision was favourable to the operator community, although not all the operators were successful on their particular appeal.

The key point from the decision was that an operator which has ECA installed on a site is not to be regarded as the occupier of that site for the purposes of paragraph 9. The operator can, therefore, during the existing term of an agreement under Part 2 of the Code (such as a wayleave or a lease) or when there is a current Code agreement to which Part 5 (the termination and modification of agreements) applies:

• agree new/additional Code rights with the site provider or occupier of the site
• give notice under paragraph 20 of the Code requesting the site provider or occupier to confer new/additional Code rights on the operator and
• apply to the Upper Tribunal under that paragraph for an order imposing an agreement conferring such rights (under Part 4 of the Code - power of tribunal to impose a Code agreement).

Lady Rose (who gave the judgment on the Supreme Court’s behalf) said that to understand the meaning of “occupier” in paragraph 9, the correct approach is to determine how the regime for ECA installations is intended to work and then consider what meaning should be given to the word “occupier” so as best to achieve that goal.

Given the centrality of Code rights to the operation of the whole regime and that the creation of such rights uses a contractual agreement (such as a wayleave or a lease) as their foundation, the fundamental premise of paragraph 9 is that the “operator” and the “occupier of the land” are different persons. This is because a person cannot contract with itself. Given the policy objectives underlying the Code, it would not make sense that the mechanism for creation of new Code rights during the existing term of a Code agreement should be disapplied in relation to those many thousands of sites, where the operator who seeks the rights happens, for historic reasons, to have installed ECA in such a way as to be in occupation of the land itself.

Reasons for the decision

Lady Rose’s reasons for interpreting the Code in this way included:

• This is an industry in which technology develops very quickly and the Government’s policy is that new improvements to digital infrastructure are rolled out across the country swiftly. The concern that rights will be frozen during the initial fixed term of the Code agreement and cannot be supplemented by additional rights has had the effect that operators insist on future proofing agreements by including all the permitted Code rights from the outset, whether they foresee needing them or not. This is not the optimum way for the regime to operate, potentially obliging the operator to pay for a right that it does not currently need.
• There would otherwise be arbitrary distinctions between operators whose installations involve them being an occupier and those who do not (for example, if they merely fix antennae to a roof or have an access right over land). The consequence of such a distinction would, in view of the nature of a typical installation, disadvantage operators seeking to expand their network in a rural setting as opposed to an urban one. This appears contrary to the Government’s policy objective to “deliver the coverage that is needed, even in hard to reach areas”.
• To decide otherwise risks causing more disputes between the operator and the occupier, which will then need to be settled by the tribunal.
• Operators would otherwise be encouraged to engage in the wasteful and pointless expense of either moving to a neighbouring sub-optimal site or removing the ECA, applying for new Code rights under paragraph 20 and then moving the equipment back on to the site, which practically speaking was a work-around for the current position

Application of the decision

The Supreme Court decision will enable operators who are occupiers by virtue of their ECA installation, to agree new/additional Code rights with the site provider or other occupier, or to use Part 4 to seek the imposition of such rights. This would run alongside an existing agreement under Part 2 or a current Code agreement to which Part 5 applies.

Part 4, however, can only be used to impose new/additional Code rights and not (merely) to modify rights already conferred in an existing Part 2 agreement or Code agreement to which Part 5 applies. While paragraph 11 of the Code allows for the negotiation of a consensual variation to an existing agreement, the parties should generally be kept to their bargain and not be entitled to ask the tribunal to modify or vary the agreement before Part 5 rights become available (which is when the Code rights cease to be exercisable under a Part 2 agreement).

The question is begged as to when a right sought is a new or additional right as opposed to a modification or variation of an existing right? Lady Rose considered that the tribunal in most circumstances would be able to determine the answer to that question and would be astute to ensure that an operator whose application under Part 5 for new rights or a right to continue an agreement has already been rejected by the tribunal, cannot have a second bite at the cherry by making an application under Part 4.

The interpretation that the Supreme Court gave to paragraph 9 and the meaning of occupier within it means that it is only the occupation of the operator who seeks to have a new Code right conferred on it, which is ignored. If another person, who happens to be an operator is the occupier of the land, then the operator seeking the new code right has to approach that person to seek their agreement. This point impacted on the outcome of one of the appeals.

Outcome of the appeals

Despite the Supreme Court siding with the position of the operator in its interpretation of paragraph 9 the outcome of the three appeals was mixed.

The operator failed in its appeal in the Compton Beauchamp case, since another operator (Vodafone) rather than the site provider (Compton) was the occupier (and its status as occupier was not disregarded despite being an operator since Vodafone was not the operator seeking new Code rights). Compton was, therefore, not the occupier and was unable to confer Code rights. Vodafone itself had not pursued the relevant statutory process.

On Tower was successful with its appeal so that the Upper Tribunal will have jurisdiction to determine its application for new Code rights.

In the Ashloch case, the Supreme Court agreed with the Upper Tribunal and Court of Appeal that the effect of the transitional provisions under the Digital Economy Act 2017 is that an operator with a subsisting agreement protected under the Landlord and Tenant Act 1954 does not have the option to renew its rights under the new Code. Such an operator must instead exercise its rights under the 1954 Act. The Supreme Court invited submissions from the parties whether the appeal should be passed to the Upper Tribunal to consider whether the application was for new Code rights or instead a renewal of rights under the 1954 Act. (Note that there is no equivalent in Scotland of Part 2 of the 1954 Act).

Supreme Court judgment delivered on 22 June 2022 in

Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd

Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and AP Wireless II (UK) Ltd

On Tower UK Ltd (formerly known as Arqiva Services Ltd) v AP Wireless II (UK) Ltd