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Arqiva v AP Wireless: Here come the loopholes

03/07/2020

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United Kingdom

In Arqiva Services Ltd v AP Wireless II (UK) Ltd [2020] UKUT 0195 (LC) the Chamber was asked to consider how the UK's new Electronic Communications Code (which came into force on 28 December 2017) applied where a lease, initially outside the protection of the Landlord and Tenant Act 1954, had expired before the New Code took effect and the parties were continuing to negotiate a new arrangement when the New Code came into force.

  In summary

In an important first instance decision, the Upper Tribunal (Lands Chamber) has ruled that, where a telecoms lease ended before the new Electronic Communications Code (which came into force on 28 December 2017) took effect, and the operator remained in situ by agreement while the parties tried to agree a new lease, the New Code offered them no protection under its transitional provisions, or more generally. 

The operator was left with an unprotected occupation terminable at will and, if they wished to use the compulsory acquisition powers of the New Code, they would need to move to a new site even if only a few metres away.

It is expected that the decision will be appealed as the Chamber noted that the New Code appears to have a significant gap when it comes to what to do with unprotected pre-New Code existing sites. 

This is not an isolated case as many renewals were paused whilst the parties waited for clarity on the New Code's impact particularly on rents.

Further detail

In Arqiva Services Ltd v AP Wireless II (UK) Ltd [2020] UKUT 0195 (LC) the Chamber (Judge Elizabeth Cooke) was asked to consider how the New Code applied where a lease, initially outside the protection of the Landlord and Tenant Act 1954, had expired before the New Code took effect and the parties were continuing to negotiate a new arrangement when the New Code came into force. In other words, was there a "subsisting agreement" in place to which the transitional provisions of the New Code applied and, if not, then what was the position?

In this instance, a series of 1954 Act excluded leases expired in October 2016 and the parties then entered into negotiations for their renewal with rents being demanded and Arqiva continuing to pay them. 

As is typical, the negotiations seem to have started at a reasonable pace but petered out and became subsumed in a larger negotiation covering all Arqiva/AP Wireless sites. Arqiva served notices under the New Code's Paras 20 and 27 in July 2019.

A common issue in landlord and tenant law is deciding what the relationship is between landowner and occupier, where a tenant stays on by agreement and continues to pay rents, after their non-1954 Act protected lease expires. 

The case law on this is quite settled, if a little difficult to apply with certainty. In general, while the parties are actively negotiating a new lease, an implied (and this point will become important later) tenancy at will, with its terms loosely based on the expired lease, will arise.

However, if the parties cease negotiations and rents keep being demanded and paid, the arrangement will convert to a periodic tenancy. If and when the negotiations ceased and the transition occurred from tenancy at will to periodic tenancy is often the issue. The key here being that, if a periodic tenancy arose pre-New Code, it would not have been excluded from the 1954 Act and so Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [[2019] EWCA Civ 1755] would apply, as it would be a 1954 Act protected telecoms agreement. Tenancies at will, written or implied, are also excluded from being 1954 Act protected leases.

In this instance, the court did not consider that there had been a cessation of negotiations so that the relationship between Arqiva and AP Wireless was based on an implied tenancy at will.

Had the court found there to be a 1954 Act protected periodic tenancy, it would have applied Compton Beauchamp and determined that any renewal would be under the 1954 Act and not the New Code.

The next question was whether there was a "subsisting agreement" other than a 1954 Act protected lease.  Despite a creative argument that the old leases had been continued into the tenancy at will, the court held that an implied tenancy at will failed the requirements of the transactional provisions of Part 5 of the New Code. The tenancy at will was a separate agreement and it had not been reduced to writing.

Arqiva was therefore left occupying a site with telecoms equipment but no Code rights from October 2016 on the basis of a tenancy at will which could be determined at any time and for any reason. It was therefore vital to establish if Arqiva could make use of Para 20 of the New Code to have the court impose a New Code agreement on the landowner to protect the equipment it had installed.

With reluctance, the court found itself bound by the Court of Appeal in Compton Beauchamp, suggesting "a wrong turn may have taken", and that they could not use Para 20 (and/or Para 27 for temporary rights) to impose a New Code agreement because the telecoms equipment was already in situ.

The court clearly felt that Compton Beauchamp was not in keeping with the general tenor of the New Code and confirmed they would be supportive of an appeal of their decision.

If you would like to discuss the implications of this decision for your business, our real estate, TMT and communications specialists will be pleased to assist you.
 
 

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