Scrutiny of Landlords’ Intention to Redevelop where Telecoms Equipment is Located

December 17, 2019

The decision earlier this year in EE Ltd and Hutchinson 3G UK Ltd v the Trustees of Meyrick 1968 Combined Trust of Meyrick Estate Management [2019] UKUT 164 (LC) illustrates the difficulties for landlords/landowners who attempt to reject the imposition of rights for telecoms operators provided under the new Electronic Telecommunicates Code introduced under Schedule 3A of the Communications Act 2003 (“the Code”) by relying on the statutory ground for refusal. The relevant ground in this case was the proposed redevelopment of their lands where the telecoms apparatus is located.

Background

The term of existing mast leases, located on a site owned by the landlords, had expired and negotiations with the operator (EE) for the new leases had broken down. EE served notice on the landlord under paragraph 20 of the Code which requires the landlord to confer the Code rights on an operator. The landlords resisted the imposition of rights by referring to paragraph 21(5) of the Code which provides that a court may not order the imposition of the Code rights:

“…if it thinks that the relevant person 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 landlords claimed they wanted better broadband on their estate and proposed replacing EE’s masts.

Decision

Despite the landlords having planning permission for the installation of new masts on their lands, the Upper Tribunal (Lands Chamber) decided the landlords did not have a firm and unconditional intention to carry out their proposed works. The proposed development was not financially viable and the landlords had not proved a need for faster broadband, nor considered alternative ways to improve broadband, other than the proposed development. It was clear that the landlords’ redevelopment plans was an attempt to frustrate EE’s application for the imposition of the Code rights, consequently allowing the landlords to negotiate higher rents with EE.

Analysis

This is the first reported case where the “redevelopment ground” has been used to try and oppose the Code rights being relied on by a telecoms operator. The Upper Tribunal held that the landlords needed to show the following to successfully oppose the imposition of the Code rights:

  1. they had a reasonable prospect of being able to carry out the works (an objective test); and
  2. they had a firm, settled and unconditional intention to carry out the works at the date of the hearing (a subjective test).

In this case, the landlord was able to satisfy the objective test (number 1 above) as they had planning permission and the financial resources, but could not satisfy the subjective test as the Tribunal was not convinced that the landlords genuinely intended to redevelop the lands, especially as there was no evidence to show support for this recommended development. In doing so the Upper Tribunal followed the Supreme Court Decision in S Franses Ltd v The Cavendish Hotel (London) Ltd [2018] UKSC 62.

This decision confirms that the Tribunal will apply the same kind of scrutiny under the Code as is applied under the similar provisions found under 30(1) (f) of the Landlord and Tenant 1954 Act (in NI the equivalent provision is found under Article 12 (f) of the Business Tenancies (Northern Ireland) 1996 Order) where a landlord is relying on redevelopment reasons for their opposition to the imposition of the Code rights.

Landlords should seek legal advice at the earliest stage, to enhance their prospects of implementing their proposals for redeveloping lands, especially where telecoms apparatus is located.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Commercial Property Team at Cleaver Fulton Rankin for further advice or information.

Shane Conlan, Senior Solicitor, Commercial Property Team, Cleaver Fulton Rankin, Solicitors.