[2024] UKUT 151 (LC)

On behalf of the Council Mr Wills submitted that to allow an operator to utilise Part 4 where it had already tried and failed to obtain renewal under Part 2 of the1954 Act would be inconsistent with the general scheme of the Code. There is no single statement to that effect in the Code, but it is clear from the structure of the Code as a whole. Compton Beauchamp pointed to a purposive interpretation of the Code, as Lady Rose had explained at paragraph [106] when interpreting paragraph 9 of the Code: “The correct approach is to work out how the regime is intended to work”. The Court of Appeal had adopted the same approach in Vodafone Ltd v Potting Shed Bar and Gardens Ltd & Anor [2023] EWCA Civ 825when interpreting paragraph 10 of the Code.To allow an operator to bring a Part 4 claim after it had been unsuccessful in securing a renewal under the 1954 Act would enable it to circumvent the policy that the more favourable basis for renewal allowed by the Code was not to apply retrospectively to agreements which were in existence when the new Code came into force. It would allow a second bite at the cherry once the intended renewal process had been exhausted, and it would give rise to numerous anomalies and absurdities.

Mr Radley-Gardner submitted that there was no jurisdictional bar to an operator claiming new rights under the Code after exhausting its rights of renewal under the 1954 Act. On the contrary, that was what the Code provided for, including in particular in paragraph 40(8). In Compton Beauchamp the Supreme Court had decided that an operator with apparatus installed on a site is not to be regarded as the occupier of that site for the purposes of paragraph 9 of the Code. The operator can agree new code rights with the person who is in a position to grant them, and it can give notice under paragraph 20 requesting a relevant person to confer a new code right on it. It cannot do so during the contractual term of its agreement (unless it seeks additional rights) or while renewal under Part 5 remains available to it, but subject to those restrictions its occupation of the site is no bar to reliance on Part 4. In this case therefore, the fact that On Tower was in occupation of the site on the roof of The Hive did not disqualify it from making an application under Part 4.

There was no reason, Mr Radley-Gardner argued, to distinguish between an operator which has exercised rights of renewal under the 1954 Act without success, and an operator which has agreed under section 38A, 1954 Act that it will not enjoy rights of renewal, or whose occupation is a tenancy at will which has arisen during the course of negotiations, or an oral agreement, neither of which is a subsisting agreement for the purpose of the transitional provisions. On Towerhad been in that position at the site which was the subject of its appeal determined by the Supreme Court together with Compton Beauchamp. Lady Rose had explained why it was entitled to make use of Part 4 of the Code, at paragraph [165]

The consequence of Mr Radley-Gardner’s argument, as he acknowledged, is that any operator faced with a removal application under Part 6 of the Code would be entitled to defend that application by seeking new rights to remain under Part 4. Paragraph 40(8) specifically contemplated that an application under paragraph 20 could be made while a landowner was seeking an order requiring removal of an operator’s apparatus. It directed that no removal order may be made until the operator’s paragraph 20 application has been determined. As Lady Rose had pointed out, this replicated the position under the old Code.

According to Mr Radley-Gardner there were good reasons for the existence of a safety net allowing an operator which had been unable to secure a renewal of its rights in proceedings under the 1954 Act to apply under Part 4. The grounds of opposition to a lease renewal available to a landlord under the 1954 Act are wider than under the Code; for example, there is no equivalent of section 30(1)(g) of the 1954 Act, which allows a landlord to oppose renewal on the grounds of its own intention to occupy the holding. If the ground of opposition on which a landlord succeeded in resisting renewal under the 1954 Act was one of those which would also have provided a ground of opposition under paragraph 31(4) of the Code (substantial breach of agreement, persistent delay in making payment, or redevelopment) an application under paragraph 20 might be struck out as an abuse of process. But if the 1954 Act ground was not one recognised by the Code, it might be necessary, having regard to the public interest in access to a choice of high quality electronic communications services, to seek renewal under the Code. The facts might also change, and a landlord which successfully resisted renewal on the ground that it intended to redevelop the holding might find that it was unable to do so for some reason. It would not be surprising if, in those circumstances, the operator was able to seek renewal under the Code.

Mr Radley-Gardner also relied on the lengths to which, he suggested, operators would be driven if the safety net of an application under Part 4 was not available to them in response to a removal application. At paragraph [126] of her judgment in Compton Beauchamp Lady Rose agreed with the concerns expressed by Judge Cooke in her decision in this Tribunal in the On Tower case (then known as Arqiva Services Ltd v AP Wireless II (UK) Ltd [2020] UKUT 195 (LC)) at paragraph [160] that an operator unable to seek renewal could make an application under paragraph 20 in relation to an immediately adjacent site in the same ownership, and move its apparatus a few yards sideways, or could shut down its equipment and the service it provides and move out of occupation, so as to be in a position to serve a paragraph 20 notice.

I do not accept Mr Radley-Gardner’s submissions. They appear to me to be inconsistent with the intended operation of the Code, as described by the Supreme Court in Compton Beauchamp, and to contradict the policy reflected in the Law Commission’s report, the Government’s response, and the transitional provisions, that rights of renewal are available to an operator either under the Code, or under the 1954 Act, but not under both.

The Law Commission recommended that operators with rights under the old Code should not immediately acquire the benefits of the new Code when it came into force. That recommendation was the subject of government consultation, and in its response to that consultation, A New Electronic Communications Code, published in May 2016, the relevant Department (DCMS) stated that it had “not been sufficiently convinced the public benefits of retrospective application are such that they outweigh interference with carefully negotiated arrangements under the existing Code”. Instead it looked forward to “a steady phasing in of Code rights” and promised “a clear and robust set of transitional provisions”.

The “phasing in of Code rights” envisaged by the government’s consultation response includes the phasing in of the provisions on termination and modification in Part 5. The transitional provisions prohibit renewal under Part 5 in the case of agreements which already enjoy rights of renewal under the 1954 Act. In Compton Beauchamp, at paragraph [167], Lady Rose rejected the operators’ argument that an operator with a subsisting agreement protected under the 1954 Act should have the option of renewing its rights under Part 4 of the new Code: “The intention of the Government, following the recommendation of the Law Commission, was that such an operator should not get the retrospective benefit of the new Code, in particular the substantial benefit of the no-scheme valuation of the rights.”

Nowhere in her comprehensive discussion of renewal under the Code did Lady Rose suggest that the assignment of operators to one route of renewal or the other applies only until the right of renewal under the 1954 Act had been exhausted. The reasoning of this Tribunal and the Court of Appeal in Ashloch, which Lady Rose found “persuasive”, focused on what I had suggested would be the “astonishing” consequences if, contrary to the recommendations of the Law Commission, operators could choose to renew under the Code instead of under the 1954 Act. The Code is much more favourable to operators than the 1954 Act; it allows a much shorter notice period, a considerably more generous basis of assessment of rent, and a less restricted approach to other terms. Whether under Part 4 or Part 5 it also provides more limited grounds of opposition for the site provider. In my judgment the suggested operation of the Code proposed by On Tower would result in a truly absurd state of affairs in which an operator obliged first to seek renewal under the less favourable regime of the 1954 Act would know that, if they failed, they would then gain access to the more desirable reward of a renewal under Part 4 of the Code. It would become pointless for a site provider to resist renewal under the 1954 Act on any ground other than redevelopment (since only redevelopment would avail them in the event of a subsequent application under Part 4). Even if operators did not succumb to the temptation to manage a 1954 Act application incompetently, so as to secure its dismissal, landlords would soon appreciate that it would be in their own interests to waive or forgive any procedural defect or default (whether deliberate or inadvertent) which might otherwise cause the renewal to fail.

In short, a sequential scheme of renewal designed to allow access to the greater prize only after the applicant has failed to secure the lesser would not be a rational scheme, and I have no doubt that it is not the scheme Parliament intended when it enacted the transitional provisions.

The suggested equivalence between an operator who has no right of renewal under the 1954 Act because they have agreed to contract out, and the operator whose right of renewal has been pursued unsuccessfully, is a false one. The Code allows each operator one route to the renewal of their rights. The policy choice to require those with security of tenure under the 1954 Act to seek renewal under its provisions necessarily entailed the possibility that any particular renewal might not succeed. The only reason to instal a safety net to protect against that eventuality would be if the priority to be given to the public interest in maintaining the operator’s network was intended to trump the right of the landlord to resist a renewal on 1954 Act grounds. But if that had been the balance Parliament had intended to strike it would surely have given operators access to Part 4 of the Code straight away, without transitional provisions designed to phase it in, rather than creating an unwieldy and expensive two stage process.

Nor do I believe that consideration of the position under the old Code is of assistance. As Lady Rose pointed out in Compton Beauchamp, at the end of paragraph [165], there was nothing in the old Code which precluded an operator vulnerable to an application to remove its apparatus from applying for fresh rights to be imposed by order of the court under paragraph 5 of the old Code. But Lady Rose drew attention to that opportunity in the context of her explanation of the position of an operator which did not have a subsisting agreement, and which would otherwise have had no right to seek code rights. She was not considering the rights of an operator which had enjoyed rights under the 1954 Act but had exhausted them without securing new rights under the Code. In any event, the policy of the Code was to end the duplication of security of tenure which was a feature of the previous arrangements when the old Code and the 1954 Act provided protection to the same agreements.

Mr Radley-Gardner’s reliance on paragraph 40(8) of the Code also seems to me to be misplaced. The direction that, on a removal application, the tribunal may not make an order in relation to apparatus if an application under paragraph 20(3) has been made in relation to the apparatus and has not been determined does not in itself authorise the making of an application under Part 4. The right to make such an application must be found elsewhere. The most that can be said is the paragraph 40(8) indicates that there will be circumstances under which an application under Part 4 may coincide with a removal application under Part 6.

The circumstances in which a removal application may be made are listed in paragraph 37 of the Code. One is where a code right entitling an operator to keep the apparatus on the land has come to an end or has ceased to bind the landowner as mentioned in paragraph 26(7) and (8) of the Code (paragraph 37(3)(a)). Once an agreement conferring interim code rights under paragraph 26 has come to an end, if no new agreement has been imposed under paragraph 20, paragraph 26(8) gives the landowner who was party to the agreement the right to require the operator to remove its apparatus from the land. Paragraph 40(8) regulates the sequence in which the tribunal must determine the removal application and any pending application under paragraph 20 to grant new rights (which may be either temporary or permanent).

Mr Wills pointed out a number of other circumstances in which a removal application may be made against an operator which is in a position to apply for Code rights under Part 4. The former tenant under a tenancy contracted out of the 1954 Act which ended before the commencement of the Code, and which had not yet been replaced by a new agreement would be one. An operator which had mistakenly installed apparatus on land believing it had the right to do so, when it did not, would be another. It will also be remembered that, in Crawley BC v EE, at paragraph [8], Judge Cooke explained that the old Code was unsatisfactory in part because it was very difficult for landowners to get rid of apparatus which should not have been on their land, including where there had never been an arrangement for it to be there. These are the sorts of circumstances in which an operator who is already occupying land may apply under paragraph 20 while the landowner seeks a removal order.

I therefore do not think paragraph 40(8) advances On Tower’s argument.

Nor do I consider that the greater opportunities available under the 1954 Act for a landlord to oppose the renewal of a tenancy justify interpreting the Code so that it provides a fall back in the event that renewal under the 1954 Act is denied. On the contrary, as I have already said, the policy decision to require renewal under the 1954 Act, where that route is available to the operator, must have entailed an acceptance that some renewal applications would fail. If that possibility was too unpalatable to feature during the transition to the new Code, the transition arrangements would surely have been designed differently.

Finally, the risk that, without the safety net of an application under Part 4, operators might be driven to the wasteful expedients which were a concern to Judge Cooke in Arqiva v AP Wireless at paragraph [160], and Lady Rose in Compton Beauchamp, at paragraph [126], seems to me not to have anything like the same force in this case. The issue in Compton Beauchamp was whether an operator in situ was to have any right of renewal at all. That issue concerned the fundamental structure of the Code and affected a substantial part of the existing electronic communications networks of all operators at “sites across the country”, as Lady Rose put it. The issue in this case is not about how the Code is intended to work on site after site across the country; it is about what happens on the relatively rare occasions when an operator is unable, for whatever reason, to obtain renewal by the route which the designers of the transitional provisions intended to be the primary route. The risk that, in that event, a particular operator might have to make alternative arrangements, including seeking new rights on an adjoining site, or vacating the existing site and then seeking to re-occupy it, is not a matter of wider significance.

I am therefore satisfied that the proper interpretation of the Code requires that an operator which has exhausted its rights of renewal under the 1954 Act is prevented from making a further application for rights under Part 4 of the Code. In my judgment the FTT did not have jurisdiction to entertain On Tower’s reference under Part 4 and should have struck it out under rule 9(2)(a) of the FTT Rules.