Out-Law News 4 min. read

Court: telecoms code does not always supersede contractual agreements

A telecoms operator cannot rely on its statutory right to retain equipment on third party property to avoid a landowner's claim for damages for breach of a contractual 'lift and shift' provision, a county court has ruled.

While the decision relates to an agreement governed by the old Electronic Communications Code it will remain relevant because the new Electronic Communications Code which came into effect in 2017 contains similar provisions, according to property disputes expert Pierre Smith of Pinsent Masons, the law firm behind Out-Law.com.

"In circumstances where we know that the government, when drafting the new Code, appears to have made a conscious decision to leave 'lift and shift' provisions to be agreed between the parties, the principles established will remain relevant," he said.

The decision was handed down in March 2018, but has only recently been published.

PG Lewins, a property developer, was converting an office building in Bristol into residential apartments. It had contracted with telecoms operators Hutchison 3G and EE (the operators) to relocate their equipment from the roof of the building while the work took place, in a three-stage process. The initial relocation to temporary scaffolding was completed without difficulty but subsequent relocations back onto the roof were delayed.

In January 2017, the developer sought injunctive relief to force Hutchison 3G and EE to complete the works. They also claimed that the mobile operators were in breach of contract and had caused them loss. Hutchison 3G and EE expedited the works, and the injunction application was settled amicably. However, they disputed that they were in breach of contract and liable for damages. They claimed that the Code provided them with complete immunity, as the developer had not complied with the relevant notice provisions and the operators had a statutory right of occupation, an argument frequently run by the operators but till-now not tested in court.

The Code governs the relationships between landowners and operators of electronic communications services licensed by Ofcom. It gives operators certain rights to install, inspect and maintain electronic communications apparatus including masts, cables and other equipment on public and private land, even where the operator cannot agree the necessary rights with the landowner.

The Digital Economy Act introduced a new Code which was effective from 28 December 2017 that was intended to support the government's vision for the UK's digital future. The old Code had been criticised by both the industry and judiciary as being "poorly drafted, containing contradictions and opaque language", according to Christopher Sharp QC, sitting as recorder, or judge, in the present case.

In his decision, the judge considered the relationship between the old Code and a contractual agreement freely entered into by the parties. He found that whilst the operators were granted rights under the old Code, the site provider's agreement with the operators regarding the ability to "lift and shift" apparatus, which was deemed to be an 'alteration' rather than a 'removal', defined the parameters of those rights. In support, the judge pointed to paragraph 2(5) of the old Code which provides that a Code right "shall not be exercisable except in accordance with the terms subject to which it is conferred". In addition, paragraph 27(2) of the old Code provides that the provisions of the old Code "shall be without prejudice to any rights or liabilities arising under any agreement to which the operator is a party". In other words, courts will strive to give effect to contractual terms freely agreed by the parties.

Recorder Sharp QC said that the operators' argument "in effect amounts to contending that they entered into an agreement they knew they would not and could not be bound by". "This would seem surprising," he said.

"Moreover, I do not accept that the provisions of the agreement between the parties fetters or prevents the proper exercise of the [operators'] functions insofar as those are exercised for statutory purposes, or in the public interest ... [T]he Code provided for separate contractual rights and liabilities and expressed the provisions of the Code to be without prejudice to them," he said.

Property disputes expert Pierre Smith said that the judgment would be welcomed by telecoms practitioners given the dearth of case law on the "outdated and impenetrable piece of statutory drafting" that was the old Code.

"There have been no more than a handful of reported cases on the old Code, save for planning decisions, the last of which was Crest Nicholson v Arqiva and EE in May 2015," he said.

"Recorder Sharp QC has been required to grapple with the longstanding debate over what trumps what - the contractual agreement between the parties or the statutory provisions of the Code - as well as the issue of whether a temporary relocation is actually a 'removal'," he said.

"This case provides a helpful reminder to all that 'lift and shift' provisions will require vigilant drafting and will involve a collaborative balancing exercise between the realistic timescales by which an operator could be expected to move their apparatus and the need to be able to carry out redevelopment or improvement works expeditiously," he said.

"It will now be interesting to see how amenable the Lands Chamber of the Upper Tribunal for England and Wales or in Scotland, the Lands Tribunal for Scotland, to whom disputes under New Code will be addressed to instead of the County court, will be to use its powers to impose 'lift and shift' provisions where an agreement cannot be reached and how those provisions will take shape - including, importantly, the timescales by which an operator could be expected to comply," Smith said.

The case was Re PG Lewins Limited -v- Hutchison 3G UK Limited (1) EE Limited (2), case no: D00BS179 in the Bristol County Court.

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