Telecoms operator held entitled to new lease under code
A telecommunications operator whose lease of a site for an apparatus installation had expired and was continuing by tacit relocation, was entitled to apply to the Lands Tribunal for Scotland for an order giving effect to a proposed new draft lease, in the absence of agreement with the site owner, without requiring to show that the previous agreement was unduly onerous and restrictive, the Inner House of the Court of Session has held.
Lord Justice Clerk Lady Dorrian, Lord Malcolm and Lord Doherty gave the decision in allowing an appeal by EE Ltd and another company against a decision of the Lands Tribunal refusing for want of a relevant case their application for an order giving effect to a draft lease of a site in North Lanarkshire owned by John Duncan. An earlier lease between the parties had expired in 2012 but had continued from year to year by tacit relocation. EE had sought agreement to a new lease containing provisions designed to update the agreement in accordance with the minimum provisions imposed by the new Electronic Communications Code contained in sched 3A to the Communications Act 2003, as amended by the Digital Economy Act 2017. This allowed financial provisions more favourable to EE. The owner refused.
In nine decisions of which the present appeal was a test case, the Lands Tribunal held that while the new code was designed to facilitate matters such as installations by specified third parties, that did not mean that a new lease was available simply for the asking. Paragraph 34(13) of the code required the tribunal to have regard to, among other matters, “the operator's business and technical needs”, and it had not been suggested that any new provisions were required to give the agreement business or technical efficacy, or to improve consumer service.
Giving the opinion of the court allowing the appeal, Lord Malcolm said the court disagreed with the tribunal “in its assertion that the operators required to do more than point to the current arrangements as being out of step with the minimum rights available under the new code, for example in terms of assignation, upgrading, sharing and rent. Such would not be necessary if an application was made under part 4 [of the code] for a new site. We can identify nothing which points to a need for it in respect of applications concerning subsisting agreements made under the old code”.
He observed: “Parliament has identified certain minimum code rights for operators, including sharing/upgrading abilities and reduced outlays resulting from valuation on a no scheme basis. The view was taken that these are required if network operators and infrastructure providers are to be in a position to deliver the modern low cost electronic communications system which Parliament wants and which business and the public at large expect... we understand the phrase 'business and technical needs' where it appears in para 34(13) to be a generic term which, whatever else, includes the benefits for operators mandated by the new code. We agree with the operators' submission that it can be construed as a reference to matters which are reasonably required from a business and/or technical point of view”.
Paragraph 30 of the code was important and enabled operators to maintain continuity of an installation on an old site while seeking the benefits available under the new provisions. “The tribunal was not being asked to cancel a contract, but rather to replace it with one in tune with the provisions of the new code. None of this implies a presumption in favour of the site provider's interests which has to be overcome by reference to a specific need or justification.”
Concluding that the tribunal had erred in setting a “high bar” for the applicants, he stated: “The tribunal's analysis would severely curtail the legislative intention to create the opportunity to bring old agreements into line with new code arrangements. These aims are of a piece with those of the new code as a whole. The overall scheme of this part of the code is inimical to the proposition that significant weight should be given to the existing rights and obligations of the parties.”
The court observed that within certain constraints the tribunal had power to make such order as it considered appropriate, including by way of modification of an applicant's proposals. It further held, in relation to a cross appeal by the owner, (1) that the six months' notice required to be given by the operator did not require to take effect on the anniversary date of the expiry of the original lease; and (2) that notwithstanding the operation of tacit relocation, the parties' relationship continued to be governed by an agreement in writing so as to come within the tribunal's jurisdiction.
The case was remitted to the tribunal for further procedure in accordance with the guidance in the opinion.