The New Electronic Communications Code: First Court of Appeal Judgment

The New Electronic Communications Code: First Court of Appeal Judgment

Michael Upton, Advocate, M.C.I.Arb., Faculty of Advocates - the Scots Bar

Cornerstone Telecommunications Infrastructure Ltd. v. Compton Beauchamp Estates Ltd., [2019] E.W.C.A. Civ. 1755: Court of Appeal, 22nd October 2019

October saw the first Court of Appeal judgment about the new Electronic Communications Code (enacted by the Digital Economy Act 2017, amending the Communications Act 2003). The Code allows Ofcom-recognised operators to apply for compulsory rights to install electronic-communications apparatus on property. In England, application is to the Upper Tribunal; in Scotland, to the Lands Tribunal. Where the Tribunal grants an operator’s application, it may do so by imposing a deemed agreement on the land-owner (or other person with prior rights in the land, such as a tenant - but for shorthand here we will refer to land-owners).

A defined list of rights to install, maintain and undertake ancillary matters in connection with apparatus are ‘Code rights’, in the enjoyment of which an operator has considerable security of tenure, whether they arise from voluntarily or compulsory agreement.

However, one basic point was at issue in Compton Beauchamp Estates: agreement with whom? With whom need an operator seek voluntary agreement? Against whom must it seek a Tribunal order for a compulsory agreement? 

An operator can seek a right over a new site, or to prolong the use of an existing telecoms site, where for instance an earlier agreement has expired. That was the situation here. The site was already occupied by an operator, whose lease had expired. It remained on site, using a telecommunications mast. CTIL applied to the Tribunal for rights to use it. 

A special feature was that the occupier-operator was Vodafone; CTIL is a joint venture between Vodafone and 02.

The Court of Appeal refused CTIL’s appeal against the Upper Tribunal’s dismissal of its application. It agreed with the Tribunal that CTIL were mistakenly seeking an order against the land-owner, where the Code required them to seek it from the occupier - here, their own JV partner.

Lewison L.J. held that the Code can be used, either to compel someone to grant rights, or to have them bound by rights which someone else has granted. Where use of a site was sought, that someone should be its de facto occupier: “Code rights may be granted by an occupier who has no interest in the land”. The Code’s focus is on an occupier granting rights, because he is both most affected and most easily identified.  Indeed, said Lewison L.J., “it is not self-evident that a squatter cannot grant Code rights … Whether such a grant binds anyone else is a different question”. 

The answer is that it would not: in order to have the land-owner bound compulsorily by a right granted by a mere occupier, the operator must apply to the Tribunal. “In that situation, the operator will already have the rights conferred upon it by the agreement with the occupier. The purpose of the application … will be to extend the class of person bound by the rights.” (judgment paras. 28, 30, 36 & 39).

Without a voluntary or compulsory agreement with the occupier, CTIL’s application lacked that necessary foundation stone.

The Court said that the hypothetical mischief of collusive or ‘sweet-heart’ deals between an operator-occupier and an applicant-occupier (e.g., if they were members of one corporate group, or a JV, or otherwise in a commercial relationship) is avoided, by their inability to bind the land-owner. If the applicant-operator asked the Tribunal to compel a land-owner to agree to such a ‘sweet-heart’ agreement, the Tribunal’s powers would extend to modifying the operators’ agreement, so as to mitigate its effect on the land-owner.

The Court accepted that prima facie, its analysis created a conundrum - where the existing occupier (e.g. following the expiry of a lease) is the operator who seeks a new right. “It is legally impossible to enter into a contract with oneself” said Lewison L.J. (para. 58) - but the Code has separate provisions for the renewal of rights over an existing site as opposed to a new grant (Part 5 of the Code), which he construed as regulating both voluntary and compulsory cases, and in effect in such cases as directing the operator to apply to the land-owner - thus side-stepping the problem of supposing that an operator must apply to itself as the occupier (judgment paras. 60-65).

Lewison L.J. summarized what should be done where an existing site is occupied by an operator and another operator wishes to use it: the occupier-operator and the applicant-occupier should reach agreement, and then ask the land-owner to consent. If the land-owner declines, the applicant-operator may apply to the Tribunal, for an order that its rights over the land occupied by the occupier-operator should bind the land-owner, and, if need be, for an order conferring on the applicant-operator any rights it seeks over other land which is occupied by the land-owner himself (judgment para. 89).

Otherwise the land-owner is not legally bound by what the occupier has granted. 

However, the Court of Appeal did not need to consider what in practice a land-owner may actually do to remove an operator who has been granted Code rights by a mere occupier, without either the land-owner’s agreement or a Tribunal order against him.  Where apparatus is on land under a grant by someone with no property rights - where a property lawyer might say ‘nemo dat quod non habet’ - it is far from the case that a land-owner can simply seek decree to recover vacant possession. The Code places important restrictions on the removal of apparatus. This was touched on in my article here on 8 October, but it is a discussion for another day.

No one would claim that applying the Code is easy. This judgment outlines practical courses of action which are consistent with its complex provisions. But it does not lay to rest all questions. Lewison L.J. held that if an occupier is incapable of granting a right sought by an operator, then the operator must seek it from whoever else has it in his gift; for instance, he said, where the occupier is not in a position to secure an electricity supply, which the operator needs, then the operator will have to obtain the necessary right by agreement or compulsion from a third party who has it in his gift (para. 39). That seems to make sense, but it does prompt the question - if nemo dat quod non habet applies to a right to connect to an electricity supply, why not to other, more general Code rights to use land? If you can answer that, you should apply to be an Accredited Specialist in Electronic Communications Law.