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13 November 2019

Court of Appeal gives Code operators food for thought - Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited (2019)

The decision of the Upper Tribunal earlier this year in Compton Beauchamp appeared to be a rare victory for landowners over operators.  This has now been confirmed by the Court of Appeal and its decision may cause some difficulties for certain operators going forward. 

What were the key facts here? 

CTIL is a joint venture between Vodafone and Telefonica, which is designed to own and manage a combined portfolio of telecommunications sites for the benefit of the two network operators.  It enjoys rights to install apparatus etc. under the new Electronic Communications Code which was introduced at the end of 2017. 

In Compton Beauchamp, CTIL was seeking to impose a code agreement on the freehold owner of land (Compton Beauchamp Estates Limited - "CBE").  The land already contained a mast and other Code apparatus belonging to Vodafone, installed under a Lease which had expired in 2014.  

What issue was the court asked to decide? 

The principle set out in paragraph 9 of the new Code is that it is "the occupier" of land who can confer code rights - whether voluntarily or through being compelled by the Tribunal.  CBE argued that it was not "the occupier" of the relevant site because of Vodafone's occupation and there was therefore no jurisdiction under the Code to make the order sought by CTIL. 

What was the decision? 

The Upper Tribunal and Court of Appeal agreed that:

  • the only person who can agree to confer a code right on an operator is the occupier of the relevant land
  • if an operator wishes a person other than the occupier to be bound by the agreement, there must either be agreement from that person or else a suitable order from the Tribunal must be sought
  • the question of whether someone is an occupier for the purposes of the Code is a question of fact and requires physical presence on and control of the land 
  • the factual circumstances here led to the conclusion that Vodafone is the occupier of the relevant site here, rather than CBE (and the Court of Appeal noted that it would require "very special circumstances" for it to find that two or more persons - not being joint occupiers - are simultaneously the occupiers of the same parcel of land). 

This meant that CTIL could have agreed with Vodafone for Vodafone - as occupier - to confer code rights on CTIL.  (CTIL raised the risk of a "sweetheart deal" being struck between operators in such circumstances but the Court pointed out that the Code's provisions would allow the Tribunal to amend the terms of any such agreement.)  However, since CTIL's claim only sought code rights against CBE as freeholder (and not against Vodafone as occupier), CTIL's claim was rejected.  The Court confirmed that CBE could not be compelled to grant a code agreement of the site to CTIL given that Vodafone is the occupier.  

Implications of the decision 

The decision means that an extra layer of complication could now be added for Vodafone and/or Telefonica where they want a new code agreement for an existing mast site to be put into place with CTIL.  Although it is possible for Vodafone or Telefonica to grant code agreements directly to CTIL, CTIL would then need to apply to the Upper Tribunal for an order to make the rights bind the landowner.  Moreover, this route will not help operators to reduce rents.

Other interesting points 

The Court discussed the potential for CTIL to seek code rights contingent on Vodafone/Telefonica agreeing to vacate the site and give up its rights, but no such arrangements had been put into place in relation to the site here and so the Court was not prepared to consider this approach. 

The Court of Appeal confirmed that the list of code rights in paragraph 3 of the Code "does not provide for the rights that an operator must have.  It sets limits to the rights that he may have under the Code, with the agreement of the occupier."  It is worth landowners bearing this in mind given that the draft agreements we have seen from some Code operators consistently include the full menu of rights from paragraph 3, with very little willingness shown by those operators to tailoring the rights to suit the specific circumstances of a site.


This article was written by Emma Humphreys. For more information, please contact Emma on +44 (0)20 7203 5326 or at emma.humphreys@crsblaw.com.

 

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