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CTIL v Compton Beauchamps Estates Limited

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CTIL v Compton Beauchamps Estates Limited

CTIL v Compton Beauchamps Estates Limited

Recent decision relating to the Electronic Communications Code: CTIL v Compton Beauchamps Estates Limited

This recent case coming out of the Upper Tribunal (Lands Chamber) addresses a number of issues, the main one being the person upon whom an agreement under the Electronic Communications Code (“Code”) may be imposed. The ruling does also discuss the hot topic of consideration under the Code.

Background

Vodafone is in occupation of a mast on farmland under a lease granted in 2004 for a term of 10 years. The lease is excluded from security of tenure under sections 24 – 28 of the Landlord and Tenant Act 1954. They share use of the mast with Telefonica. Vodafone and Telefonica form two parts of a joint venture – Cornerstone Telecommunications Infrastructure Limited (“CTIL”). CTIL sought the imposition by the tribunal upon the freehold owner of the land – Compton Beauchamp Estates Limited (“CBE”) - of an agreement granting rights under the Code.

The parties disagreed as to the nature of Vodafone’s occupation now that Vodafone’s lease has expired. On the evidence put before it the tribunal decided that Vodafone was in occupation pursuant to the old Code.

Four issues were identified in the case. As I alluded to earlier, the main ones were the person upon whom a Code agreement may be imposed and consideration. I will take each one in turn.

The capacity of the tribunal to impose the agreement sought

This was the main issue and the deciding factor in the case. CTIL sought to have the tribunal impose an agreement on CBE under paragraph 20 of the Code. Paragraph 20 requires notice in writing to be served on “the relevant person” stating the code right being sought. The tribunal decided that the relevant person needs to be an occupier, since Code rights can only be conferred on an operator by an occupier of land. For the purpose of the Code, the tribunal confirmed that this meant somebody in physical occupation of the land, rather than it being a matter of legal status.

Applying this to the facts of the case, it followed that the tribunal could not impose an agreement on CBE, as whilst they were the freehold owner of the mast site, they were not in physical occupation. CTIL should have sought an agreement from Vodafone, who were in occupation.

As a further point, the tribunal suggested a way in which CTIL might have been able to obtain an agreement under the Code which was binding upon CBE. If CTIL had been able to agree with Vodafone that Vodafone would, as occupier, confer code rights on it, CTIL could then have applied to the tribunal for an order under paragraph 20(4)(b) of the Code for those rights to bind CBE.

Consideration

Since the claim by CTIL fell at the first hurdle (the issue discussed immediately above), the tribunal’s discussion of consideration had no bearing on its outcome, but it may be persuasive in future cases.

Had the application by CTIL for an agreement been successful, the tribunal would have had to consider the consideration payable under it. Predictably the parties had very different ideas about what that consideration should be.

CTIL proposed a figure of £2.96 per year. Applying the ‘no scheme’ approach required under the Code, their method was to take the value of arable land in the area per square metre and apply it to the small parcel of land on which the site sits.

CBE put forward £9,500 per year as their suggested consideration. This was arrived at using a combination of the following approaches:
(1) Taking 35% off the rent under a selection of old Code agreements;
(2) Analysis of a group of agreements agreed under the new Code; and
(3) Analysis of transactions involving similar rights granted for non-telecoms purposes (weather stations, air-traffic control stations, etc.).

The tribunal considered CTIL’s approach to be flawed in that it did not take into account the risk factors and disadvantages to landowners in having a telecoms site on their land. Potential difficulties in practice which were mentioned were breaches of bio-security, operators’ vehicles becoming stranded and interference with sporting rights.

CBE’s method of taking 35% from the rent paid under old Code agreements was also not accepted and was described as “fairly arbitrary”.

The other two valuation methods put forward were not dismissed. It was held that if it could be shown that agreements under the new Code had been agreed with regard to the Code, or a coherent basis for adjustment could be suggested, the evidence may be persuasive. Similarly, it was held that the rent from non-telecoms agreements may be useful as it does not need to be adjusted for the ‘no-network’ assumption.

Impact

This case has made clear that where code rights are sought by an operator, they must approach the person in physical occupation of the land. This means that if there is already a mast in place, it is the occupier of the mast who is the “relevant person”, not the freehold owner.

Following on from the EE Limited and Hutchison 3G UK Limited v London Borough of Islington case, which provided the first decision on consideration, this case provides some further guidance. EE Limited and Hutchison 3G UK Limited v London Borough of Islington related to a rooftop site and set out some of the risks and burdens that should be considered when assessing the consideration that the owner of the building should receive. This case considered how consideration might be assessed for a greenfield site. No firm conclusions were reached, but it was suggested that rents agreed for agreements under the new Code and for agreements granting similar rights not related to telecoms might be useful.

For more information on the above, please contact Graham Jones or you can give us a call on 0345 070 6000.

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