[2024] UKUT 151 (LC)

Code rights in respect of land may be acquired by an operator in one of two different ways. Under Part 2 of the Code they may be conferred by an agreement between the “occupier of the land” and the operator; paragraph 9 states that: “A code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and the operator”. “Occupier” is explained by paragraph 105(1) and means “the occupier of the land for the time being”. In Compton Beauchamp the Supreme Court held that it was a fundamental premiss of paragraph 9 that the “operator” and the “occupier of the land” are different persons.

Where an operator and an occupier of land are unable to agree, the alternative way for the operator to acquire code rights is under Part 4 of the Code. A court (or in England and Wales, a tribunal) may impose an agreement between an operator and an occupier of land which confers code rights on the operator by making an order under paragraph 20. By paragraph 22 an agreement imposed by an order under paragraph 20 “takes effect for all purposes of this code as an agreement under Part 2…”.

Under Part 4, an operator need not give a site provider more than 28 days’ notice before making an application for a code agreement to be imposed (paragraph 20(3)). If the operator can establish that the public interest conditions in paragraph 21 are satisfied the grounds on which a site provider can resist the imposition of an agreement are limited to proving that it intends to redevelop the site and would be unable to do so if an agreement was imposed. If the tribunal decides that an agreement should be imposed, it will include terms for the payment of consideration determined in accordance with paragraph 24. The basis of valuation will include an assumption favourable to the operator that the right that the transaction relates to does not relate to the provision or use of an electronic communications network (paragraph 24(3)(a)).

Part 5 of the Code is about the termination and modification of agreements. To guarantee continuity in the provision of telecommunications services to consumers Part 5 provides for the statutory continuation of Code agreements after their contractual expiry date. By paragraph 30(2), where code rights would otherwise cease to be exercisable because the agreement conferring them has come to an end, the agreement is prolonged so that the operator may continue to exercise the rights. An agreement may only be terminated by a site provider who has given at least 18 months’ notice. The operator may then give a counternotice and apply to the Tribunal for an order continuing the agreement on the same or modified terms or terminating the agreement and imposing a new one (paragraph 34). The landowner is entitled to resist such an application but will only succeed if it establishes one of the statutory grounds (which include the ground that the test in paragraph 21 is no longer met.

The continuation of Code agreements by Part 5 of the new Code contrasts with the effect of the “old Code” (the statutory predecessor of the Code in Schedule 2 to the Telecommunications Act 1984). An old Code agreement came to an end in accordance with its terms. Continuity of service was ensured by paragraph 21 which restricted the rights of landowners to require the removal of electronic communications apparatus from their land and deemed its presence after the expiry of a Code agreement to be lawful.

In Compton Beauchamp Lady Rose explained at paragraphs [118] to [129] that Part 4 of the Code does not apply to code agreements which are being continued by paragraph 30, but that before Part 5 becomes available parties may agree the grant of additional rights which an operator does not yet enjoy, or the operator may ask the tribunal to impose them under paragraph 20. But “paragraph 20 can only be used to impose additional code rights and not to impose a modification of the rights already conferred in an existing Part 2 agreement or in a code agreement to which Part 5 applies” (paragraph 130).

Lady Rose acknowledged (at paragraphs [134] and [135]) that by permitting Part 4 to be used to obtain additional code rights, but not to secure modifications of existing code rights, the interpretation of the Code she preferred “may create the need in some cases for nice distinctions to be made”. It would be for the tribunal to determine when an application was really for new code rights or was an illegitimate attempt to improve on the bargain struck at the start of the agreement by dressing up a modification of the existing agreement as a request for new rights. She added, at paragraph [135], that:

In Crawley Borough Council v EE Ltd and another [2022] UKUT 158 (LC) the Tribunal (Judge Cooke) explained that one of the reasons why the old Code was regarded as unsatisfactory was that it was very difficult for landowners to get rid of electronic communications apparatus on their land which was not supposed to be there – either because there had never been an arrangement for it to be there, or because rights had expired. Part 6 of the Code addresses this problem by providing a right for landowners to require removal of apparatus which is not covered by any Code right. Paragraph 37 begins by posing a question, which it then answers, as follows:

Paragraph 40 explains how the right to require removalconferred by paragraph 37 is to be enforced. If the site is not vacated following the service of a notice the landowner can apply to the Tribunal under paragraph 40(6) for an order requiring the operator to remove its apparatus. In Crawley v EE the Tribunal decided that where the circumstances in paragraph 40 were met the making of a removal order is not discretionary and involves no balancing of the interests of the landowner and those of the operator or the wider public. But that is subject to the following important qualification in paragraph 40(8):

The termination and modification provisions in Part 5 are subject to transitional provisions contained in Schedule 2 to the Digital Economy Act 2017. These were outlined by Lady Rose in Compton Beauchamp at paragraphs [46] to [55]. An agreement in writing which was a code agreement for the purpose of the old Code, and which remained in force when the new Code commenced is described in the transitional provisions as a “subsisting agreement”. By paragraph 2(1) of Schedule 2, a subsisting agreement had effect after the new Code came into effect as an agreement under Part 2 of the new Code, subject to the modifications made by the Schedule. Those modifications provide that a subsisting agreement does not benefit from the provisions about assignment, sharing and upgrading in the Code.

The transitional provisions also dispense with the duplication of rights of renewal under the Code and the 1954 Act which had been a feature of the old Code. By paragraph 6(2) of Schedule 2, Part 5 of the Code does not apply to a subsisting agreement if it is a lease of land to which Part 2 of the 1954 Act applies which has not been contracted out of the security of tenure provisions of that Act by an agreement under section 38A. In contrast, a subsisting agreement which is a contracted out lease is not excluded from Part 5.

The Supreme Court rejected the argument of the operator in the Ashloch appeal (one of those decided together with Compton Beauchamp) that it had a choice either to seek a new tenancy under the 1954 Act or to apply for the imposition of code rights under Part 4 of the new Code. Lady Rose had dismissed that suggestion at paragraph [167]:

The transitional provisions say nothing about the application of Part 4 of the Code to subsisting agreements so, having regard to paragraph 2(1) of Schedule 2, it must be taken that Part 4 applies to a subsisting agreement as it would to any agreement under Part 2 of the Code.