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24th July 2019

A Landlord’s attempt to “outwit” the Code fails

By Sarah Finch

Since the new Telecoms Code (“the Code”) came into effect in December 2017, there has been speculation that the right to object to a new lease, on the grounds of redevelopment under Paragraph 20 of the Code, would require the same type of evidence as when objecting to redevelopment under s.30(1)(f) of the Landlord & Tenant Act 1954 (“the 1954 Act”)

In the interim decision in the case of EE Limited and Hutchison 3G UK v Meyrick 1968 Combined Trust of Meyrick Estate Management [2019] the Tribunal stated that the case law in the 1954 Act should be applied, including the acid test in S Franses Limited v The Cavendish Hotel (London) Ltd [2018] [ https://www.hamlins.com/a-case-of-cruel-intentions-for-landlords/ ].  Despite the decision in those cases not binding on the Tribunal it was nevertheless held that they were relevant to the Code.

Background

The Meyrick 1968 Combined Trust of Meyrick Estate Management (“the Landlord”) owned a vast estate in Hampshire on which EE Limited and Hutchison 3G UK (“the Operator”) had 4 masts. The leases relating to each of these masts were excluded from the protection of the 1954 Act and the parties had been negotiating the terms of the new leases since they expired.  The Operator had stated that they were willing to enter into new leases, under the old code, prior to the Code coming into force.  The negotiations were ultimately unsuccessful.

On 29 March 2018, the Operator served a notice pursuant to Paragraph 20 of the Code seeking Code rights and commenced proceedings in the Tribunal.

Paragraph 21(5) of the Code enables an occupier of land to resist the imposition of Code Rights where it plans to redevelop the site.  The Landlord relied on this paragraph stating that it had plans to redevelop the estate which consisted of the Landlord installing its own masts to provide wireless broadband for the estate as well as providing spaces on the mast for an operator to install apparatus for its mobile network.    As operators can only obtain Code rights over land as opposed to equipment, by leasing a space on a mast the Landlord would be able to negotiate its own terms and be free to charge a higher rent – in other words it would be free of the constraints of the Code.

As a preliminary issue, the Tribunal was asked to consider whether there was an intention to redevelop.  The Operators agreed that the Tribunal was bound by the case law relating to s.30(1)(f) of the 1954 Act.

Held

The Tribunal found that the principles relating to s.30(1)(f) of the 1954 Act should be adopted.  This requires a landlord to show that, on the date of the hearing:

  • it has a firm, settled and unconditional intention to carry out the redevelopment; and
  • there is a reasonable prospect of bringing about the redevelopment.

The second test had been satisfied as the Landlord had obtained planning permission for the masts and had the necessary the finances.  However, in relation to the first test, the Tribunal was not satisfied that the Landlord had an unconditional intention to carry out the redevelopment and, applying the “acid test” in the case of Franses v Cavendish (i.e. the Landlord’s intention to redevelop must be independent of the Operator seeking Code Rights), it found that the Landlord’s real motive for the redevelopment was to prevent the Operator from acquiring Code Rights.

As the Landlord was not able to show that it had the intention to redevelop, the Tribunal found that the Landlord could not rely on Paragraph 21(5) of the Code .

Conclusion

We now have guidance as to what principles will be applied when a Tribunal considers what constitutes redevelopment under the Code, which will include scrutinising the landlord’s motives/intention to redevelop to ensure that they are not engineered as a means of defeating Code rights.

In the coming months there may be other cases in which a Landlord may try to circumvent the Code, however, as this case shows, the Tribunal will impose Code Rights wherever possible in order to further the aims of the Code i.e. a digital communications infrastructure with better connectivity for all.

A Landlord’s attempt to “outwit” the Code fails

Have a question? Contact Sarah

Have a question? Contact Sarah

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