Peter Humpherson, Principal Associate in the property disputes team, looks at a significant ruling on the lease renewal of a telecommunications site
There have been several significant cases since the introduction of the ‘new’ Electronic Communications Code (“Code”) – including a recent County Court hearing which will be of interest to those negotiating new leases.
The new Code sets out to regulate the relationship between landowners and communications operators.
It grants operators statutory rights to install, operate and maintain electronic communications apparatus including telephone masts, on public and private land.
This means that, if an operator can meet the ‘public benefit test’, a landowner can be forced against their will to host electronic communications apparatus on their land and to recover compensation.
This has severely disrupted the market and limited landowners’ ability to charge premium prices for the operator’s use of their property.
In EE Limited & Hutchison 3G UK Limited v Richard Morriss, David Holroyd Tayler & Pippingford Estate Co. Limited [2022] EW Misc 1, the County Court decided the terms of a lease renewal of a telecommunications site, where the existing lease was protected by the Landlord and Tenant Act 1954.
The lease expired on 1 August 2014, following which the Claimants were continuing to ‘hold over’ per the 1954 Act. Leases of this nature are renewed under the 1954 Act but are then subject to the statutory regime set out in the Communications Act 2003.
It is widely accepted that the basis of valuation under the 1954 Act is more favourable to a site owner than that set out in the new Code, but the Judge was required to decide how, if at all, a 1954 Act valuation exercise in a matter such as this should take into account the valuation principles of the Code.
The parties were miles apart on the issue of rent. The Claimants suggested £950 per annum and contended that the Court should favour the structured approach in Vodafone Ltd v Hanover Capital Ltd [2020] EW Misc 18 (CC). The Defendants sought £12,000 per annum and contended that the Court should consider comparable market evidence more in line with s.34 of the 1954 Act.
The Court decided in favour of the Defendants (though not fully, as to value) and found that “where a rent is to be determined under section 34 of the 1954 Act the adoption of the structured approach resorted to in Hanover is only necessary where reliable transactional evidence is missing…”
Though a County Court decision, the case offers useful pointers for those negotiating new leases.
Further in the telecommunications lease sphere, it is worth noting that the Supreme Court hearing in Cornerstone Telecommunications Infrastructure v Ashloch [2021] EWCA Civ 90, concerning powers to confer rights on operators occupying under 1954 Act protected tenancies, concluded in February 2022 and judgment is awaited. Clearly it will be a landmark case for owners and operators alike.
