Court of Appeal Upholds Landlord’s Decision Against Operators Over Telecoms Rents
The war between landowners and operators rages on, but certain key battles have been won by landowners in the courts.
The recent landmark decision by the Court of Appeal in the trilogy of appealed telecoms cases has thrown out an appeal by telecoms operators in Cornerstone Telecommunications Infrastructure Limited –v- Ashloch Limited and A P Wireless II (UK) Limited. It supported landlords in their ongoing legal battle against operators. The Court upheld that an operator which occupies under an existing tenancy previously protected as a business tenancy by the Landlord and Tenant Act 1954 must renew under the 1954 Act and not Part 4 of the Electronic Communications Code when that agreement comes up for renewal.
The case is welcome news for landlords as the renewal provisions of the 1954 Act are more favourable for landlords than under the Code. The Code offers operators more advantageous valuation provisions based on ‘no network’ assumption (in which the value of the network in assessing rent is disregarded) together with automatic rights to upgrade and site share.
The Court, in doing, supported the first major challenge by landlords to operators in Cornerstone Telecommunications Infrastructure Limited –v- Compton Beauchamp, which decided that only an operator in physical occupation of land could be conferred Code rights under the Code. That meant that Cornerstone, in the Compton decision, were denied Code rights, although that decision is due to be appealed to the Supreme Court in 2021.
So how does a 1954 Act rent sit with a Code rent? The first case which wrestled with the interaction of the Code and the 1954 Act was Vodafone Limited –v- Hanover Capital Limited. Although only a county court decision, the Court found that a strict Code approach would have produced an annual rent of £2,250.00 a year. However, the Court considered evidence of site sharing between operators and as a result had regard to a competitive bidding process in the hypothetical world. This bidding process would, in effect, push up what a tenant operator is willing to pay to a level commensurate with historic pre-Code comparables. The Court here agreed a rental at £5,750.00 per year.
So we know that a telecoms lease having 1954 Act protection may increase rent. Other possible factors affecting rent include whether the mast site has an alternative use value (to something other than telecoms, such as car parking or storage), and assessing whether the telecoms installation causes any particular loss or damage to the landowner concerned (such as added security costs, or loss of rent).
The legal war continues to be played out. More cases are expected. Currently landlords are receiving hostile notices from operators’ solicitors seeking to reduce rents. Many of those landlords are being threatened with hefty litigation costs.
The war is not yet won, but what is clear is that the operators have not had it all their own way with certain key decisions being determined in favour of landlords. Moreover, the meagre rents being offered by operators just a couple of years ago, at levels of £50.00 a year, will not be tolerated by the courts.
These decisions provide useful guidance for landlords and landowners negotiating a telecoms lease or agreement upon renewal. It is hoped that negotiations will be kick-started following these recent cases and also that 5G roll out, which has stalled as a result of the cases, will get back on track.
Tim Clark is a Solicitor and Head of Telecoms law at Waldrons Solicitors. Contact: firstname.lastname@example.org Telephone: 01384 811811. Waldrons acts exclusively for landlords and landowners against telecoms operators.