Two new telecoms judgments include the first UK Electronic Communications Code termination decision

The Upper Tribunal has issued its first judgment dealing with the termination provisions in the Electronic Communications Code, Vodafone Limited v Icon Tower Infrastructure Limited and AP Wireless II (UK) Limited, alongside the County Court issuing a related judgment under the Landlord and Tenant Act 1954, Vodafone Limited v AP Wireless II (UK) Limited. The decisions followed a joint hearing to determine related preliminary issues in the two cases.

The sites involved

The first case, relating to an existing Vodafone telecommunications site known as Steps Hill, is the first termination claim under Part 5 of the Code to go to trial. Vodafone had initially sought to renew its existing Code agreement. Following this, Icon (the landowner, which is also a designated infrastructure provider under the Code) sought to terminate Vodafone's existing Code agreement without renewal, requiring Vodafone to remove its apparatus.

The second case, relating to an existing Vodafone telecommunications site known as Pound Hill, concerned Vodafone's request to renew its existing lease of the site under the Landlord and Tenant Act 1954.

Issues in the Code proceedings

The Code allows operators to exercise Code rights in relation to their apparatus and to renew these rights, unless and until terminated by landowners on four specified grounds. Icon sought to rely on three of the four possible termination grounds in the Steps Hill proceedings:

1. Breach. Icon alleged Vodafone had substantially breached the alienation provisions in its existing Code agreement due to its relationship with Cornerstone, an established infrastructure provider and a competitor of Icon, with which Vodafone has a longstanding relationship;
2. Redevelopment. Icon had recently constructed its own electronic communications mast near to Vodafone's existing site. Icon argued this constituted redevelopment which could not reasonably be done without terminating Vodafone's existing Code agreement; and
3. Public benefit. Icon sought to prove that Vodafone's site caused prejudice to Icon (in relation to the potential future operation of Icon's new site) which was not outweighed by the public benefit of Vodafone's existing site remaining in situ.

Issue in the 1954 Act proceedings

AP Wireless (APW), the landowner in this case and a group company of Icon, were not actively seeking to terminate Vodafone's existing lease of the Pound Hill site. However, again relying on allegations concerning the relationship between Vodafone and Cornerstone, APW sought to require Vodafone to prove that it was in occupation of the Pound Hill site for the purposes of its business, as is required in order to pursue renewal proceedings under the Landlord and Tenant Act 1954.

Outcome

Vodafone were successful on all grounds and can therefore renew its existing agreements for both sites.  The Upper Tribunal determined that Icon did not prove any of the three termination grounds alleged in the Code proceedings. The County Court determined that Vodafone had also proved that it was in business occupation of the Pound Hill site in the 1954 Act proceedings.

The decisions

1. Breach and business occupation. The tribunal and court reviewed the key contractual agreements between Vodafone and Cornerstone (which were subject to a confidentiality ring in the proceedings) and the factual background to the sites, and found that there was no breach of the alienation provisions for the purposes of the Code proceedings and that Vodafone remained in business occupation of the Pound Hill site for the purposes of the 1954 Act proceedings.
2. Redevelopment. The tribunal reviewed each element of Icon's development of its telecommunications mast site and concluded that Icon could not show the requisite intention to redevelop required to secure the termination of Vodafone's existing Code agreement in the Code proceedings.
3. Public benefit. The tribunal concluded that any prejudice to Icon caused by Vodafone remaining on its existing site at Steps Hill would be capable of being adequately compensated by money, and the public benefit of Vodafone's existing site outweighed any such prejudice to Icon for the purposes of the Code proceedings.

Key takeaways

As the Code proceedings were the first time the Upper Tribunal has considered  the termination grounds under the Code, this judgment has provided a number of helpful principles of wider application which will be of interest to the industry, especially regarding redevelopment. 

In particular, the tribunal determined that, as a matter of general principle, the following works do not qualify as relevant redevelopment works for the purposes of the redevelopment ground of termination under the Code:

• Works to land with insufficient geographical or physical proximity to the land on which the operator's electronic communications apparatus is installed.
• Works that have already been carried out or that will not be carried out within a reasonable time, such that there is no/insufficient "intention" to do the works in the future.
• Works to electronic communications apparatus, which is not considered land under the Code. This means that, generally, the demolition of a telecommunications mast or other electronic communications apparatus, without more, is not relevant for the purposes of the termination ground.
• Works that will not be done by or on behalf of the landowner (referred to as the "site provider" in the Code), such that it is not that site provider who intends to do the works.

General principles

Other general principles from the judgments include:

• Business occupation. Applying principles from existing case law, the court determined that telecommunications sites fall within the types of land where day-to-day human activity is not particularly relevant to the question of business occupation.
• Public benefit. The tribunal determined that an operator having access to lower Code rents by applying the valuation methodology under the Code was itself a public benefit, which would be lost even if a potential alternative site (in this case Icon's telecommunications mast) without that benefit is available. The tribunal also reinforced earlier case law that wider public disbenefits of the operator remaining on its current site (if any) are not relevant, only prejudice to the landowner is relevant.

Osborne Clarke comment

This decision will be welcomed by operators. The Upper Tribunal's strict interpretation of the Code termination grounds ensures that operators' Code rights will continue unless and until validly terminated under the specified grounds, aligning with the overall Code regime and providing operators with greater certainty around their existing telecommunications sites.