Telecoms Update – Court of Appeal uphold’s Tribunal Decision in CTIL v Ashloch
This article was published on: 15th February 2021Matt Pugh
The Court of Appeal has handed down judgment in a case being closely monitored by the telecommunications community, Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited and AP Wireless II (UK) Limited .
The Court has upheld that an operator which occupies under a tenancy protected by the Landlord and Tenant Act 1954 (“1954 Act”) cannot apply to the Court for a new agreement under Part 4 of the Code. At least, not yet.
An operator with a protected 1954 Act tenancy must renew under that Act and will only then be able to obtain Code rights (which include advantageous valuation provisions and automatic rights to upgrade and site-share), when that agreement comes up for renewal again. The case is of welcome news to landowners, as the renewal provisions of the 1954 Act are more favourable to them.
The decision forms of a part of a trinity of test cases[i] which are currently being driven through the higher courts by the operators following decisions which have caused practical difficulties in obtaining new or renewed Code agreements.
As the Court explained in paragraph 104 of its judgment, however, “Many of [the operator’s] complaints about the disadvantages to [them] in renewing leases under Part II of the 1954 Act, compared with renewal (or acquisition of rights) under the Code are, in reality, complaints about the way that the transitional provisions work, rather than defects in the Code itself.”
The Court also followed its decision in the Compton Beauchamp case[ii], in which it was pivotally decided that only the occupier of land may confer Code rights under Part 4. An operator who already has an agreement and is in situ on land is the occupier and cannot contract with itself. Cornerstone’s perceived attempts to re-argue the issues in Compton Beauchamp were given short shrift by the Court – see para 109 of the Judgment.
Furthermore, to temper the legislative overhaul and the expansion of operator-friendly Code rights, the Code was tailored by Parliament with specific transitional provisions. These were designed, the Court surmised, to afford some primacy to existing 1954 Act agreements and only gradually bring those agreements under the new regime. Both the Court, and the Tribunal at first instance, noted that Parliament’s intention was for existing arrangements to be allowed to “run their course” and that operators must “honour their [previous] bargains whilst they last.”
The operators have appealed Compton Beauchamp and the case is due to be heard by the Supreme Court later this year. The question which the Supreme Court will have to decide is how an “occupier” of land is correctly defined. The outcome of this decision may have the effect of overruling this judgment, depending on the views of the Supreme Court.
In addition, it may be that Parliament will at some stage legislate to amend the Code and change the position.
Last month, a government consultation on changes to the Electronic Communications Code was launched by the Department for Digital, Culture, Media & Sport. One specific area of review concerns whether there is a need to explicitly resolve the uncertainty as to how existing agreements are impacted by the Code. The consultation states that the current lack of clarity is serving to escalate tensions between operators and landowners and this is frustrating, rather than facilitating, the roll-out of new site agreements to support the increasing demand for network infrastructure. That consultation remains open for submissions from interested stakeholders until March 2021. Our previous article considers some of the key proposals.
At least for now, landowners can continue to insist that renewals of existing 1954 Act tenancies are dealt with under the 1954 Act and not the Code. However, the case heightens the importance of the appeal decision in Compton Beachaump. It is also likely to affect the responses to, and potentially the outcome of, the Government’s recent consultation.
The Court of Appeal was satisfied that the Code’s transitional provisions do what they are designed to do and enable 1954 Act protected tenancies to gradually segue into the new Code world.
Whatever the eventual outcome of Compton Beauchamp and the consultation review are, consensual deals are to be preferred and are key to unlocking the Code’s potential at a swifter pace.
For those consensual deals to be realised, it is essential that both operators and landowners are willing to recognise each other’s concerns when freely negotiating new agreements.
Whilst the law may ultimately force a resolution as to what can be done about pre-existing agreements, this will take some time, offers no guarantee of outcome and arguably should not be the key focus.
Instead, parties are likely to be able to move forwards quicker and more constructively if their efforts are placed in approaching negotiations on a more flexible basis.
[i] The ‘trinity’ comprises: Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited  EWCA Civ 1755; Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited and AP Wireless II (UK) Limited  UKUT 338 (LC); Arqiva Services Limited v AP Wireless II (UK) Limited [UKUT 0195 (LC)
[ii] Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited  EWCA Civ 1755
Author: Amy Chadwick, Associate