Upper Tribunal Considers the Interaction Between the Electronic Communications Code and the Landlord and Tenant Act 1954

7th February 2020 Commercial Litigation

CTIL v Ashloch and Another [2019] UKUT 338 (LC)

The Electronic Communications Code (the “Code”) came into force in December 2018. Since that time there has been much uncertainty as to the interpretation of the Code and little by way of judicial guidance.

The recent Upper Tribunal decision has provided guidance as to the relationship between the Code and the 1954 Act. This is the first judicial consideration of that relationship and is therefore a significant judgment.

The Code

Under the provisions of the Code, Code Rights can be inferred on an operator by way of agreement (under Part 2 of the Code) or by Order of the Tribunal (under Part 4 of the Code).

Part 5 of the Code deals with the termination, renewal and modification of Code Agreements. Those provisions do not apply where there is an existing 1954 Act lease which has the benefit of security of tenure. Where that is the case the lease is to be terminated or renewed in accordance with the provisions set out in the 1954 Act.

Facts

Ashloch (represented by JMW in these proceedings) is the freeholder of a block of flats in Birmingham. Part of the rooftop to the building was leased to Vodafone under a lease dated 2002. The contractual term had expired in 2012 but is protected under the 1954 Act.

CTIL is a joint venture company formed to operate telecommunications sites. It initially sent Ashloch a Notice under Paragraph 20 of the Code seeking a new Code Agreement over the site occupied by Vodafone at a very heavily reduced rent. Ashloch subsequently entered into a lease agreement in respect of the rooftop site with AP Wireless II (UK) Limited (“APW”). CTIL sent a new Paragraph 20 Notice to APW and Ashloch on that basis.

The Paragraph 20 Notice (and proceedings relating thereto) was defended by both Ashloch and APW on the basis that (amongst other things) APW was not in occupation of the site over which Code Rights were sought, but rather Vodafone was.

For commercial reasons on February 2019 Ashloch agreed with CTIL to be bound by any Code Agreement imposed on APW by the Upper Tribunal (subject to certain terms). From that point on it took no active role in the proceedings.

In April 2019 the Upper Tribunal rules in the matter of CTIL v Compton Beauchamp Estates (2019). In that Judgment the Upper Tribunal held that a Code Agreement can only be imposed under Part 4 of the Code on the person actually occupying the land in question. That had a significant bearing on the present case, bearing in mind that neither Ashloch nor APW were in occupation: Vodafone was.

As a result, Vodafone assigned their lease to CTIL, a new Paragraph 20 Notice was served and the proceedings were amended by CTIL.

APW alleged in response that it was not open for CTIL to use Part 4 of the Code in these circumstances and that, as a consequence of them holding over under the original Vodafone lease, their rights were limited to seeking a new tenancy under the 1954 Act. CTIL argued (amongst other things) that it had a choice as to whether to proceed under the 1954 Act or under Part 4 of the Code.

Judgment

Following a preliminary issue hearing in October 2019 it was held that the Upper Tribunal does not have jurisdiction under Part 4 of the Code to impose Code rights over land in favour of an operator which already occupies that land under a tenancy that is continued after its contractual expiry date by the 1954 Act.

The Tribunal held that an operator in situ under a subsisting agreement is in the same position as an operator in situ under an agreement made under Part 2 or Part 4 of the Code which does not confer on them the right to give Notice for a new agreement under Paragraph 20 except for some limited purposes.

Impact

If the operators are forced to rely on the 1954 Act for new agreements they are faced with the weaker position that Act brings them as compared to the Code. For example, by reference to the rents payable and the general terms of any agreement entered into.

The Judgment has provided some much needed clarification on the relationship between the 1954 Act and the Code. It has however created significant uncertainty for operators, who are reportedly finding themselves in a position where occupiers holding over under 1954 Act protected tenancies are unwilling to negotiate new agreements.

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Layla Kelly is a Senior Associate Solicitor located in Manchesterin our Commercial Litigation department

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