The Upper Tribunal (Lands Chamber) has ordered the terms of a new lease of an existing telecommunications mast site near Truro, Cornwall, under paragraph 34 of the Electronic Communications Code considering in particular the principles for determining the rent payable in EE Limited and Hutchison 3G Ltd v David Paul Stephenson and AP Wireless II (UK) Ltd [2022] UKUT 180 (LC).
The claimants were both operators under the Code. The site – owned by the first respondent with an intermediate lease to the second respondent – comprised a fenced compound of 18.2 sq m in one corner of an arable field which hosted a 17m monopole and ground-level cabinets.
Many of the new lease terms were agreed: a term of 10 years, at a rent to be determined by the Tribunal, subject to review to RPI after five years and a tenant break clause exercisable after five years. Under paragraph 34(11) of the Code, the new lease is to contain such terms as the Tribunal thinks appropriate under paragraph 23. The rent payable under paragraph 24 is the amount that a willing buyer would pay a willing seller for the agreement in a transaction at arm’s length on various assumptions including that it does not relate to the provision or use of an electronic communications network (the “no-network” assumption).
Terms
The Tribunal permitted the claimants’ unrestricted rights to install, renew and upgrade the electronic communications equipment. To concede to the second respondent’s requirements that any upgrades should comply with the conditions in paragraph 17 – no adverse impact, or only minimal impact on appearance and impose no additional burden on the landlord – would obstruct the achievement of the objectives of the Code. The rights guaranteed by paragraph 17 are the minimum upgrading terms rather than a ceiling On Tower UK Ltd v Green [2022] 4 WLR 27.
The Tribunal took the same view in relation to similar attempts to limit the right to share to the tenant’s equipment and not the site. Such restrictions were inconsistent with the objectives of the Code. The lease would contain an explicit statement that the landlord does not agree to be bound by any Code rights acquired by sharers.
Rent
The Tribunal recommended that in preparing evidence, parties avoid an analysis of comparable Code transactions since use of the land for Code purposes is specifically excluded as a consideration under paragraph 24 and often the rents represent only part of the financial terms agreed between the parties. The structured approach set out in Cornerstone Telecommunications Infrastructure Ltd v London and Quadrant Housing Trust [2020] UKUT 282 is to be preferred. This requires:
- An assessment of the alternative use value of the site for the most valuable non-operator use;
- Inclusion of an allowance for any additional benefit conferred on the tenant, for example a manned security gate; and
- Adjustment to reflect any greater adverse effect on the willing lessor than the alternative use value.
On Tower valued a rural mast site at £750 per annum and the Tribunal saw no reason to depart from that figure in this case.
Louise Clark is a property law consultant and mediator
