The Good, the Bad and Disclosure - Arqiva Services Ltd v AP Wireless II (UK) Ltd

A new decision has been made by the Upper Tribunal (“UT”) relating to the Electronic Communications Code (“Code”) dealing with two preliminary issues.  Those issues were:

1. Did Arqiva occupy the site under a subsisting agreement within the meaning of paragraph 1(4) of Schedule 2 to the Digital Economy Act 2017?
2. Did the UT have jurisdiction to impose an agreement on the parties under paragraph 20 of Schedule 3A to the Communications Act 2003?

It was important to answer these questions as there remained some ambiguity as to the process an operator should use to obtain a new agreement where that operator was already in occupation. This case dealt with some of the uncertainty that followed on from the cases of Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited and AP Wireless II (UK) Limited [2019] UKUT 338 (LC) (“Ashloch”) and Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited [2019] EWCA Civ 1755 (“Compton”).Please click here to see the case on the Upper Tribunal website.

The Good 

The good news from the perspective of a site provider is that the UT found that Arqiva:

1. Did not have a subsisting agreement.
2. Could not use the process for a new agreement in paragraph 20 as Arqiva was in situ.
3. Could not, at that particular point in time, seek temporary rights pursuant to paragraph 27 and even if Arqiva could obtain temporary rights under paragraph 27, they could not use paragraph 27 as a means to then obtain a new agreement pursuant to paragraph 20.

This is important because it means that some existing sites occupied by operators might not be able to move onto a new agreement governed entirely by the Code. It appears to consign some sites to be forever locked into terms that predated the introduction of the Code unless a new agreement can be voluntarily agreed between the site provider and the operator.

It is broadly accepted that the position before the introduction of the Code was better for site providers.  This is particularly the case in respect of the amount of consideration (rent) that is likely to be paid and the process that needs to be followed in order to remove an operator from a site.

Following the cases of Compton and Ashloch, operators became concerned as to what could be done in the rare circumstances where they were occupying property prior to the Code pursuant to either a periodic tenancy or a tenancy at will.  Prior to this case, it had been thought that the more prejudicial position for the operator would be a periodic tenancy which had become protected by the Landlord and Tenant Act 1954 (“LTA 1954”).  A periodic tenancy created a potentially difficult scenario for the operator who had been told in Ashloch to use the process for renewal in the LTA 1954 but could not unilaterally start that process by serving notice pursuant to section 26 of the LTA 1954.

It was felt that where the operator was occupying pursuant to a tenancy at will following a “subsisting agreement”, the UT could have dealt with a renewal of the agreement pursuant to Part 5 of the Code.  However, the UT has made clear that neither a tenancy at will nor a periodic tenancy which is not in writing is a “subsisting agreement”. Operators occupying on either basis will not have rights under the old code and cannot now avail themselves of the renewal process pursuant to Part 5 of the Code and, as they are in occupation, they cannot use the process for a new agreement in Part 4 of the Code. There remains one potential route left for the operator to secure rights under the Code. An operator could look to reach an agreement with another operator and then seek to have that agreement imposed on the landowner.  However, the UT poured some cold water on this approach by saying:“It is not at all clear that they can obtain rights by agreement, because it is not clear that paragraph 34(8) will stretch that far.”

The Bad

The Bad news for a site provider is that in this decision the UT makes clear that they disagreed with the approach that the Court of Appeal had taken in Compton.  The making of this order has confirmed the severest consequences to flow from the cases of Ashloch and Compton.  This is despite the opportunities given to the UT to potentially find a way through those difficulties. Site providers, as well as operators, would like to see the Code work but they would like to see it work fairly. With this decision the UT appears to hope for Compton to be overturned and, it appears the decision has been written with the forthcoming appeal to the Supreme Court in mind.

Nevertheless, it should be remembered that prior to Ashloch and Compton operators did not appear to want to renew their agreements either pursuant to the Landlord and Tenant Act 1954 or pursuant to paragraph 33 of the Code even in circumstances where they were already in occupation pursuant to a subsisting agreement.

The UT appears to see little prejudice to a site provider between a renewal under Part 5 and a new agreement under Part 4.  However this is not a view shared by site providers as the notice period between the two is considerably shorter (28 days rather than 6 months) and the UT does not need to consider the terms of the original agreement when considering what new agreement to impose.  Site Providers are also concerned that the paragraph 20 process could be started at any time even during the course of the agreement.

Disclosure

As part of the process for considering the questions set out above, the UT decided that Arqiva occupied pursuant to a tenancy at will rather than a periodic tenancy.  At the beginning of the hearing AP Wireless sought disclosure of documents held by Arqiva that might have been important to answer that question. AP Wireless became aware, not long before the hearing, that Arqiva had entered into licence agreements with other operators and thought that these might have shed light as to whether Arqiva considered they had a tenancy at will or a periodic tenancy. However, the UT decided that disclosure would not be ordered as the request was late and the UT was unconvinced that the documents would assist the UT in making a decision on that point.

This is not the first case where information has been received late in the process and which has made the site provider consider that further disclosure might be necessary.  A similar situation arose in the case of Cornerstone Telecommunications Infrastructure Limited v Richard Gregory Keast [2019] UKUT 116 (LC) (“Keast”).  In that case, Mr Keast became aware late on in the process (having received a plan marked “CTIL Mast”) that some or all of the apparatus on the site might not have belonged to Vodafone, who was the tenant, but instead to Cornerstone Telecommunications Infrastructure Limited who was the party seeking the new agreement.  Mr Keast sought to amend his pleadings so that it was not accepted that Vodafone owned all of the equipment and sought further disclosure.  The UT declined to allow the amendment on the basis that it was too speculative.

A potential problem arises in these type of proceedings as the directions often do not provide for standard disclosure. The most common order for disclosure in these cases is for the parties to disclose the documents they intend to rely on only.  In the absence of standard disclosure (where a party is supposed to disclose documents that may also harm their case and which includes an ongoing duty to disclose) a party to UT proceedings lacks the comfort of knowing that all information relevant to his case is being provided by the other party.  Following these decisions, it is important for the parties to carefully consider what order for disclosure should be sought at the outset and what concessions should be provided in circumstances where the party might not have a clear picture of what has happened at a site.  The safest course of action appears to be to seek standard disclosure at the outset and to put the operator to proof on all matters where the site provider might lack adequate information.