Cornerstone Telecommunications Infrastructure Ltd and On Tower UK Ltd v Compton Beauchamp Estates, Ashloch Ltd and AP Wireless II (UK) Ltd

[2022] UKSC 18

The Supreme Court of the United Kingdom

Lord Hodge, DP and SCJ; Lord Sales, Lord Leggatt, Lord Burrows & Lady Rose, SCJJ

Reported by Faith Wanjiku and Bonface Nyamweya

Download the Decision

Contract law- lease- rights under a lease agreement- expiry of a lease agreement- jurisdiction to confer rights in a lease agreement- where Vodafone Ltd had a ten-year lease to a site, running from 2014- where the lease granted Vodafone Ltd the right to install and use the mast- where Telefonica UK Ltd also used the mast- where the lease of Vodafone expired in 2014, and it was served with a notice to quit in 2017- where the Electronic Communications Code, 2017 (the Code) said that an operator of telecommunications equipment could acquire certain rights under the Code by agreement or by order of the Upper Tribunal- whether the Upper Tribunal had jurisdiction to confer rights, under the Electronic Communications Code, 2017 (the Code), in relation to a particular site, on the claimant in circumstances where a 3rd party, namely Vodaphone, was by then in occupation of the site- Communications Act, 2003, schedule 3A; Telecommunications Act, 1984, schedule 2.

Brief facts:

The respondent owned a field at Galleyherns Farm in the Vale of White Horse between Didcot and Swindon. The appellant was a joint venture formed by Vodafone Ltd and Telefonica UK Ltd to own and manage a combined portfolio of such sites. Vodafone Ltd owned a telecommunications mast on the edge of a field. Vodafone Ltd had a ten-year lease to that site, running from 2014. The lease granted Vodafone Ltd the right to install and use the mast. Telefonica UK Ltd also used the mast. The lease of Vodafone expired in 2014, and it was served with a notice to quit in 2017. The Electronic Communications Code, 2017 (the Code) said that an operator of telecommunications equipment could acquire certain rights under the Code by agreement or by order of the Upper Tribunal. The appellant sought those code rights from the respondent. The Upper Tribunal held that, because the respondent was not in occupation of the land (Vodafone Ltd was), the Upper Tribunal had no jurisdiction to make an order. The Court of Appeal refused the appellant’s appeal.

Issue:

Whether the Upper Tribunal had jurisdiction to confer rights, under the Electronic Communications Code, 2017 (the Code), in relation to a particular site, on the claimant in circumstances where a 3rd party, namely Vodaphone, was by then in occupation of the site.

Relevant provisions of the law

COMMUNICATIONS ACT, 2003 Schedule 3A

(3) For the purposes of this code a “code right”, in relation to an operator and any land, is a right for the statutory purposes –

(a) to install electronic communications apparatus on, under or over the land,

(b) to keep installed electronic communications apparatus which is on, under or over the land, (c) to inspect, maintain, adjust, alter, repair, upgrade or operate electronic communications apparatus which is on, under or over the land, (d) to carry out any works on the land for or in connection with the installation of electronic communications apparatus on, under or over the land or elsewhere, (e) to carry out any works on the land for or in connection with the maintenance, adjustment, alteration, repair, upgrading or operation of electronic communications apparatus which is on, under or over the land or elsewhere, (f) to enter the land to inspect, maintain, adjust, alter, repair, upgrade or operate any electronic communications apparatus which is on, under or over the land or elsewhere, (g) to connect to a power supply, (h) to interfere with or obstruct a means of access to or from the land (whether or not any electronic communications apparatus is on, under or over the land), or (i) to lop or cut back, or require another person to lop or cut back, any tree or other vegetation that interferes or will or may interfere with electronic communications apparatus.

9. A code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and the operator.

TELECOMMUNICATIONS ACT, 1984 Schedule 2

2(1) The agreement in writing of the occupier for the time being of any land shall be required for conferring on the operator a right for the statutory purposes –

(a) to execute any works on that land for or in connection with the installation, maintenance, adjustment, repair or alteration of telecommunication apparatus; or (b) to keep telecommunication apparatus installed on, under or over that land; or (c) to enter that land to inspect any apparatus kept installed (whether on, under or over that land or elsewhere) for the purposes of the operator’s system.

(2) A person who is the owner of the freehold estate in any land or is a lessee of any land shall not be bound by a right conferred in accordance with sub-paragraph (1) above by the occupier of that land unless –

(a) he conferred the right himself as occupier of the land; or (b) he has agreed in writing to be bound by the right; or (c) he is for the time being treated by virtue of sub-paragraph (3) below as having so agreed; or (d) he is bound by the right by virtue of sub-paragraph (4) below.

Held:

  1. The operator would be looking for a long initial contractual term for whatever land interest it was to be granted conferring the code rights because the capital investment required to install the electronic communications apparatus was very substantial. The operator needed to be sure it had secure rights for a long period. For an operator wishing to come onto the site for the first time, there was no difficulty in identifying the site owner as the occupier for the purposes of paragraph 9, schedule 3A to the Communications Act 2003. The notice procedure in paragraph 20 could be instigated by the operator and, if the site owner was unwilling to agree to the operator’sproposed terms, the tribunal could settle the terms of the code rights and embody them in a lease or other arrangement which then became an agreement under part 2 of the Landlord and Tenant Act 1954.
  2. The key point AP Wireless submitted was that the initial agreement whether voluntary or imposed by the tribunal should then run its course for that contractual term without either party having the power to change it by adding new rights. The parties were held to the bargain they had agreed or which had been imposed on them by the tribunal for the duration of the initial fixed term. Once the contractual term had expired, the code rights ran on in accordance with paragraph 30(2) of the Electronic Communications Code (Jurisdiction) Regulations 2017 (the Code). Part 5 then applied for the benefit of both parties. Each of the site provider and the operator could apply under paragraph 33 to modify the terms of the code agreement, to remove a code right or confer an additional code right and could, if need be, invoke the jurisdiction of the tribunal to achieve that.
  3. Once part 5 had become available to the parties, it was the only route by which the operator and the site provider could agree to the kinds of changes envisaged by paragraph 33 to the rights that were embodied in the code agreement and by which they could invoke the jurisdiction of the tribunal to settle any dispute between them. The appellants accepted that that was the position in their written case. They pointed out that variations to the Telecommunication Act, 1984, schedule 2 agreements (as opposed to the entry into a new agreement under part 2 conferring additional code rights) could be effected by agreement between the parties at any time under paragraph 11. But they accepted that changes could be imposed by the tribunal only on the application of either party under paragraph 34 in part 5 and therefore only after the expiry of the term of the agreement.
  4. Both the Telecommunications Act of 1984 (old Code) and the Communications Act, 2003, (new Code) indicated that the negotiation of voluntary agreements between the parties for the conferral of code rights was the optimal way for the regime to operate. That was even more central to the new Code in which court orders in default of agreement under paragraph 5 of the old Code were replaced by imposed agreements under part 2 of the new Code.
  5. Given the centrality of code rights to the operation of the whole regime and the creation of that sui generis form of statutory rights which used contractual agreement as their foundation, it seemed to that the fundamental premise of paragraph 9 was that the operator and the occupier of the land were different persons. That was in fact for the same reason given by the Court of Appeal, namely that a person could not contract with himself. But, given the policy underlying the code explained by the government, it would not make sense that the mechanism for creation of new code rights should be disapplied in relation to all those sites - of which there would have been thousands under the old code - where the relevant operator who sought to have new code rights in its favour happened, for historic reasons, to have installed electronic communications apparatus in such a way as to be in occupation of the land itself.
  6. There were good reasons for interpreting the Code so that the rights conferred on the operator during what was expected to be a long initial contractual term of the agreement under part 2 could be supplemented by an application for new Code rights. First, one had to bear in mind that the Code was devised with the knowledge that on the one hand, operators would need a long fixed term interest in the land to justify their investment in installing the electronic communications apparatus on site, but on the other hand that that was an industry in which technology developed very quickly and where the government’s policy was that new improvements to digital infrastructure were rolled out across the country swiftly.
  7. The concern that rights would be frozen during the initial fixed term and could not be supplemented by a new agreement under part 2 had the effect that operators insisted on including all the code rights set out in paragraph 3 in the agreement they sought and which they asked the tribunal to impose. They wanted to future proof the initial lease or licence by including all the code rights permitted by paragraph 3, whether they foresaw needing them or not. That was not the optimum way for the regime to operate. The fact that so many kinds of code rights were enumerated suggested to the court that the parties should be able to choose from that menu which of those they needed to include in the initial fixed term but should be able to add to them, either by agreement or by invoking the jurisdiction of the tribunal, at a later date.
  8. The need to future proof the initial request under paragraph 20 created a further unfairness in assessing the appropriate payments under the agreement. By encouraging the operator to demand all possible code rights from the outset, such a freeze on the rights also obliged the operator to pay at least something for rights that it did not want but which it feared could be needed during the later stages of the initial term. That was inefficient and wasteful, and could serve as a deterrent to the introduction of electronic communications apparatus at some sites, contrary to the policy of the Code.
  9. Secondly, if the Code was supposed, by the mechanism of paragraph 9, to prevent the operator from being able to change its rights during the initial fixed term, that had only been partly achieved. The 3rd respondent accepted that there were some operators who installed electronic communications apparatus on site but did not thereby become occupiers, for example if they merely fixed antennae to a roof or have an access right over land. Such an operator who was not an occupier was entitled to apply for more code rights against the same landowner (who has retained the status of occupier for paragraph 9) under paragraph 20. The court agreed with the 1st appellant’s submission that that made the application of part 4 of the Code arbitrary - there was no discernible policy reason for limiting paragraph 20 in that way. The Code should not place such an arbitrary restriction on the ability of an operator to apply for additional code rights in relation to a site on which it had installed electronic communications apparatus.
  10. Further, as the appellants point out in their written cases, the construction of paragraph 9 for which the 3rd respondent contended was likely to create more difficulties for operators seeking to install electronic communications apparatus to expand their networks in rural areas than in urban settings. On greenfield sites the code rights would often need to include a right to erect and maintain a concrete plinth and to fix to the plinth a tall mast and power supply. The area would normally be bounded by a fence for the purposes of security and for health and safety reasons. By contrast on rooftop sites there could be no plinth or fence and the code rights could simply grant a right to fix and maintain antennae and power supply directly to the roof. In either case the code rights would include the right to install and maintain power cables to the electronic communications apparatus and to exercise rights of access to maintain the electronic communications apparatus.
  11. Paragraph 20 could only be used to impose additional code rights and not to impose a modification of the rights already conferred in an existing part 2 agreement or in a code agreement to which part 5 applied. The parties should generally be kept to their bargains and just because, for example, an operator had second thoughts about the consideration it had agreed to pay for the grant of code rights, that did not entitle it to ask the tribunal to vary the agreement before the part 5 rights became available (of course, it always had the option of negotiating a consensual variation under paragraph 11).
  12. If the operator needed additional code rights in respect of the land on which its electronic communications apparatus was already installed during the term of an existing agreement in order, for example, to facilitate the roll out of a new network, it could seek an order imposing a new agreement for the grant of such rights if the landowner was not willing to confer them. No reason why one would wish to produce a result whereby the parties to an existing agreement were unable to agree to confer new code rights as well as tomodify the rights in the existing agreement under part 2 by way of a consensual variation of the existing agreement under paragraph 11. That made no sense.
  13. Where an operator requested or applied for code rights under paragraph 20 of the new Code, it was not to be regarded as the occupier of the site for the purposes of paragraph 9 merely because it had electronic communications apparatus installed on that site because of code rights that had previously been conferred on it for that equipment on that site. To hold otherwise would frustrate the way the Code should operate.
  14. Temporary rights were thus intended to be used where the operator had electronic communications apparatus installed on the site but had no code rights entitling him to keep the equipment there but only pending the determination of his application under paragraph 20 to acquire the full code rights needed. As the appellants submit, if an operator with electronic communications apparatus on the land was to be regarded as an occupier of the land for the purposes of paragraph 9 then its application under paragraph 20 for an order was bound to fail. Paragraph 27 could never assist him because his application under paragraph 20 was invalid.
  15. The 2nd appellant’s electronic communications apparatus was present on the site pursuant to an initial lease which fell within part 2 of the 1954 Act but which had been contracted out of the protection of tenure provided by that Act. If its current rights had been contained in a subsisting agreement within the meaning of the transitional provisions, it would have been entitled to use part 5 of the new Code. That was because paragraph 6 of the transitional provisions applied part 5 to subsisting agreements and the 2nd appellant’s agreement would not be in the category of excluded agreements.
  16. The Upper Tribunal held, however, that the 2nd appellant’s rights were no longer embodied in a subsisting agreement because they were in an unwritten tenancy at will. The 2nd appellant could not rely on the transitional provisions because they only applied part 5 to subsisting agreements. The Upper Tribunal’s conclusion that the 2nd appellant was also prevented from using paragraph 20 of the new Code was based solely on the judgments in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2019] EWCA Civ 1755 (Compton Beauchamp) and Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and AP Wireless II (UK) Ltd [2021] EWCA Civ 90 (Ashloch) which had ruled that an operator with electronic communications apparatus on site such as the 2nd appellant was the occupier of the site for the purposes of paragraph 9 and therefore unable to apply under paragraph 20.
  17. Cornerstone in that case was therefore in the same position as an operator who had an existing code agreement granted under the new Code but which was not protected by part 2 of the Landlord and Tenant Act 1954 (the 1954 Act). It was open to Cornerstone to apply for additional code rights under part 4 of the Code even though it is in occupation of the site. But it could not bypass the fact that it had ongoing rights under a tenancy which it was entitled to renew - or bypass the terms of the renewed tenancy once it was granted - by applying in effect for modifications of those rights under part 4. The same nice distinctions could well arise as to whether the paragraph 20 application was really an attempt to avoid the tenancy renewal route and to modify the existing code rights before part 5 became available. It was right that the tenant should be in no better but no worse position than other operators with an agreement under part 2.
  18. The Court of Appeal erred in holding that the proper construction of the new Code results in the tribunal having no jurisdiction to consider an application under part 4 of the new Code from an operator on the grounds that that operator was in occupation of the site because of the presence there of its electronic communications apparatus.
  19. Cornerstone’s appeal in the Compton Beauchamp appeal was dismissed because on the facts assumed before the Upper Tribunal and the Court of Appeal, Compton page 50 Beauchamp was not the occupier of the site to which Cornerstone’s application related and so was not the appropriate recipient of Cornerstone’s notice under paragraph 20(1)(a) of the new Code.

The 2nd appellant’s appeal allowed.

Relevance to the Kenyan jurisprudence

The Land Act of 2012, in section 2 defines a lease as the grant, with or without consideration, by the proprietor of land of the right to the exclusive possession of his or her land, and includes the right so granted and the instrument granting it, and also includes a sublease but does not include an agreement for lease. The same section 2 further notes that a lessee means a person to whom a lease is granted and includes a person who has accepted a transfer or assignment of a lease while lessor means a person by whom a lease is granted and includes a person who has accepted the transfer or assignment of the reversion of a lease.

The issue of lease is common in Kenyan cases. For example, in Ukwala Supermarket (Eldoret) Limited v Amritral Sojpar Shah Wholesalers Limited[2017] eKLR, the court held that:
 

I do find that there was no written agreement between the plaintiffs and the defendant.  What existed was a contract between the defendant and previous owners and therefore, written agreement was not binding to the plaintiff.  I do agree with the plaintiff that the relationship between the plaintiff and defendant was a periodic tenancy.  A periodic tenancy is a tenancy that continues for successive period until the tenant gives the landlord notification that he wants to end the tenancy.  The period depends on how the rent is paid.  For calendar month, it becomes monthly tenancy.  If rent is paid quarterly, it becomes a quarterly tenancy and if paid yearly, a yearly tenancy.

Moreover, in Ram International Limited v Maasai Mara University[2021] eKLR the court held that since the relationship between the plaintiff and the defendant was a periodic tenancy, the relationship could be terminated by either party giving notice of not less than the period of the tenancy according to section 57 (4) of the Land Act.

This means that the case is noble since it expands the Kenyan jurisprudence regarding a leased site to include the right to install and maintain power cables to the electronic communications apparatus and to exercise rights of access to maintain the electronic communications apparatus.