Landowner fails to make out intention to redevelop under the Telecoms Code

The Upper Tribunal has given its first decision concerning intention to redevelop under the Electronic Communications Code 2017, holding that a landowner had not demonstrated the requisite intention.

Under the Code, a mobile operator can apply to the tribunal for conferral of a range of Code rights. One defence available to a landowner is to rely on paragraph 21(5) of the Code which provides that Code rights cannot be conferred if the tribunal:

‘thinks that the [landowner] intends to redevelop all or part of the land to which the Code right would relate … and could not reasonably do so if the order were made’.

The scope of paragraph 21(5) and the intention that needs to be demonstrated for reliance on it has not been examined by the tribunal since the Code came into effect at the end of 2017. So this recent decision has been eagerly awaited.

Facts

In EE Ltd and Hutchison 3G UK Ltd v Trustees of the Meyrick 1968 Combined Trust of Meyrick Estate Management  the mobile operators had applied to the tribunal for the imposition of Code rights in relation to land in Hampshire. The operators occupied four mast sites but leases of all of them had expired and negotiations for renewal had been ongoing since 2016. In March 2018 the operators commenced proceedings for the grant of Code rights. The landowners objected, relying on paragraph 21(5).

The landowners’ plans for redevelopment had taken shape over a period of time but the latest scheme involved the replacement of six monopole masts with four taller lattice masts. The height of the new masts would make it possible to install fixed wireless access broadband to serve the estate and various mobile network operators would be invited to place their antennae on the new masts.

Intention and paragraph 21(5)

The tribunal accepted that the landowners would be unable to redevelop their site if Code rights were granted to the operators but the particular issue it needed to decide was that of intention.

It has long been a point of consideration and debate among commentators quite how the intention to redevelop under paragraph 21(5) has to be established and how it can be proved. Section 30(1)(f) of the Landlord and Tenant Act 1954 contains similar wording in relation to a landlord’s right to object to the renewal of a business tenancy and the operators argued that the tribunal was bound by the case law relating to that section. The landowners disagreed and the tribunal found a middle ground, albeit one that favoured the operators’ perspective.

The tribunal held that the core idea of the two provisions is essentially the same and that paragraph 21(5) is modelled on the 1954 Act provision. However it is a new provision which means that the case law associated with the 1954 Act is not binding authority. Nonetheless, the principles applicable to the 1954 Act should be adopted where they are relevant.

With that the tribunal identified three key tenets applicable to the 1954 Act legislation and applied them in the context of paragraph 21(5):

• where a landowner’s intentions have changed over time, it is the intention at the date of the hearing that is relevant
• what is required is a firm intention to carry out a redevelopment plan and a realistic prospect of being able to do so
• a redevelopment conceived purely to prevent the acquisition of Code rights which the landowner would not pursue if Code rights were not sought will not satisfy the test in paragraph 21(5).  This proposition derives from the recent Supreme Court decision in S Franses Ltd v The Cavendish Hotel (London) Ltd, which we considered in our article Supreme Court finds for tenant in Cavendish Hotel dispute.

This meant that the landowners would be successful only if they could demonstrate both that they had a reasonable prospect of being able to carry out their redevelopment project and that they had a firm, settled and unconditional intention to do so.

Decision

The tribunal found in favour of the landowners on the first limb of the test: with planning permission already granted and substantial resources to hand, the landowners had a reasonable prospect of being able to carry out their development project.
But the landowners failed the second limb of the test: the tribunal found they did not have the necessary firm, settled and unconditional intention to put their scheme into effect. It concluded:

‘ … [the redevelopment plan] is not a viable plan. It involves the loss of mobile coverage for much of the Estate … the evidence for the need for new provision on the Estate is far from convincing. Even if there is a need, there is considerable evidence that this is not the only way to meet it, nor indeed the best way...

We find it wholly implausible that the [landowners] … would waste their resources on it. In reality the redevelopment plans are conceived in order to defeat the claim for Code rights. Even if we are wrong about the [landowners’] intention, their motivation is perfectly clear.’

As this was only a preliminary issue in the case, the tribunal will now need to consider whether and which Code rights should be imposed and on what terms including the consideration and the compensation to be paid by the operators.

Commentary

In this latest decision it is once again clear that the tribunal will adhere to the central policy of the Code, which favours connectivity and the public interest in a choice of high quality electronic communications services. Landowners are not able to evade this by pleading development schemes designed specifically to defeat the grant of Code rights.

Looking to the future, the tribunal’s decision is a helpful clarification of the effect of paragraph 21(5) and how the extensive case law developed under the 1954 Act should be applied to the issue of ‘intention’ under the Code.

Whether the outcome would have been the same in Scotland will remain unknown until a case on the point is decided. As the Code applies to Scotland, similar principles ought to apply to its interpretation and yet the 1954 Act does not apply north of the border.

EE Ltd and Hutchison 3G UK Ltd v Trustees of the Meyrick 1968 Combined Trust of Meyrick Estate Management [2019] UKUT 164 (LC)