Renewal of Telecoms Leases: New Case from the Upper Tribunal

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Published: 4th August 2021
Area: Property Litigation

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New Telecoms Leases Tribunal Case

 

EE Ltd & H3G UK Ltd v Stephenson & AP Wireless (II) UK Ltd [2021] UKUT 167 (LC)

Just in time for Summer, we have another telecoms ruling in relation to the New Telecoms Code from the Upper Tribunal. This time, its primary consideration was whether Telecoms Operators can seek to replace existing agreements with an entirely new agreement upon renewal.

Background to the Telecoms case

The Operators, EE and H3G, applied for the termination of its Telecoms agreement following its contractual expiry, and requested that the Tribunal replaces the existing Code agreement with a new agreement on its standard terms.

The proposed new agreement included wider sharing provisions, an unfettered ability to upgrade and a substantially lower annual rent of £250 per annum.

The Tribunal was required to consider the following as preliminary issues:

  • Whether the Operators could, in principle, seek a complete replacement of the current telecoms agreement in circumstances where a site-specific requirement for such a change was not put forward; and
  • If the Operators’ application for a replacement agreement failed, the Operators were unable to then seek an alternative remedy, such as varying an existing agreement (to change or add new terms).

The landowner Respondents’ main defence was that the Operators were not entitled to replace the current telecoms agreement with the operator-friendly standard agreement without first seeking to justify a departure from the terms of the current agreement.

The landowners sought to rely on the decision handed down by the Lands Tribunal for Scotland in the case of EE Limited and Hutchison 3G Limited v Duncan (“the Duncan Case”) made on 23 September 2020. In this case the Lands Tribunal inserted a “high bar” where a telecoms operator would be required to show there is a site specific need to replace or modify an agreement in the first place.

What the Tribunal Decided

The Tribunal decided in favour of the Operators and accepted that there is no requirement for telecoms operators to put forward any site specific need or business justification to terminate a current agreement and replace it with a new agreement.

The Tribunal followed the judgment handed down in the appeal of the Duncan Case on 7 May 2021 which removed the “high bar” imposed by the previous decision of the Scottish Lands Tribunal.

The Tribunal also reviewed its approach when considering a renewal of a telecoms agreement and confirmed that the general presumption against a change to the terms of an existing agreement does not apply under the New Telecoms Code (commonly known as the “O’May Principle”).

It was also determined that where an Operator has served a notice seeking a termination of an existing agreement, it would not then be able to request the Tribunal to order an alternative remedy. In other words, an Operator could not then seek a variation of the current agreement.

An Operator would therefore be required to start the renewal process again. However, the Tribunal did state that it would have the discretion to make an alternative order if requested by the Respondent.

 Takeaway points from the ruling

Whilst this ruling may generally favour Operators, there are some important key points that landowners can take away from this case:

This determination related to preliminary issues only – the Trial is yet to take place and this does not mean that the Telecoms Operators will succeed fully in their application for more preferential terms such as unfettered upgrading or the reduced rent sought.

 

Whilst it was held that the “O’May Principle” would not apply to the renewal of telecoms agreements under the New Code, such a principle would apply to the renewal of telecoms agreements under the Landlord and Tenant Act 1954 (”the 54 Act”). As such, if an Operator sought a departure from the terms of a 54 Act Telecoms Lease upon renewal, arguably they would be required to justify the same pursuant to the O’May Principles.

 

Whilst it was held that the “O’May Principle” would not apply to the renewal of telecoms agreements under the New Code, such a principle would apply to the renewal of telecoms agreements under the Landlord and Tenant Act 1954 (”the 54 Act”). As such, if an Operator sought a departure from the terms of a 54 Act Telecoms Lease upon renewal, arguably they would be required to justify the same pursuant to the O’May Principles.

 

Get in contact

If you have been approached by an Operator to renew your telecoms agreement, we can advise you on your legal position, as well as the best strategy and approach for you taking into account the type of agreement you have in relation to your land.

For expert support or advice, get in touch with our property litigation team today.

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