Can a telecoms mast block redevelopment?

10 / 12 / 2020

We’re often consulted by developers worried whether a mobile phone mast can stop or delay a redevelopment. Now there is a helpful case providing tips for developers and telecoms companies alike.

In Cornerstone Telecommunications Infrastructure Ltd (“Cornerstone“) v University of the Arts London (“UAL“) [2020] UKUT 0248 (LC) the Upper Tribunal (“UT“) refused to grant Cornerstone permanent rights to install their electronic telecommunications equipment (“Apparatus“) on UAL’s building.

The case considered whether the prejudice suffered by UAL, a land owner (“a Land Owner“), as a result of Cornerstone (an “Operator“) installing electronic telecommunications equipment (“Apparatus“) on their building outweighed the public benefit of accessing the telecommunication networks through its installation.

The Code

The Electronic Communications Code at Schedule 3A to the Communications Act 2003 (“the Code“) regulates the relationship between Operators and Land Owners.

The general position under Paragraph 9 of the Code is that the right to install and operate Apparatus on a Land Owner’s property should only be conferred on an Operator by way of an agreement between the parties. Once installed, the Apparatus has the right to remain at the property unless the Land Owner can satisfy certain grounds justifying its removal (for example, redevelopment of the building) and only once the Land Owner has served at least 18 months’ notice on the Operator.

However the tribunal can order an Owner to grant rights to a Code Operator in some circumstances. The Code tries to strike a balancing act between the potential prejudice caused to Land Owners as a result of installation of Apparatus on their land and the public benefit in having access to high-quality electronic communications services.

The UT also has the power to grant rights on an interim basis.

Background

Cornerstone had Apparatus installed on the roof of two buildings in Elephant and Castle. These buildings were situated in an area earmarked for major redevelopment plans and were due to be demolished.

Cornerstone agreed to remove their Apparatus and sought rights under the Code to install and operate Apparatus on the roof of an alternative building nearby, owned by UAL. UAL’s building was, however, also due to be demolished as part of the same local redevelopment scheme.

The development agreement entered into by UAL stated that once UAL’s new building reached practical completion, UAL would sell its interest in its existing building to the developer and take a 3 year lease-back. The first 18 months of this lease would be rent-free to allow time for UAL to fit out the new building with the intention that the lease will be terminated at some point during this time. The annual rent would then increase to £3 million per annum. Crucially, the lease to UAL would contain a break clause exercisable at any time on the condition that vacant possession was given and the building was returned free from any telecommunications apparatus on the break date.

Prejudice or Public Benefit?

UAL argued that if Cornerstone were granted permanent rights to install Apparatus on their building, UAL could not be adequately compensated by money and any public benefit in accessing Cornerstone’s Apparatus would be outweighed by the severe prejudices suffered by UAL.

UAL would agree that Cornerstone could be granted interim rights under the Code for a period of 5 years to match the timings of the proposed development.

Cornerstone said that the development may not even go ahead in the form intended so the offer of interim rights was not accepted because it would leave the Apparatus at risk of removal in unnecessary circumstances (i.e. before practical completion) which would result in a considerable public disbenefit.

Cornerstone further said that if the Tribunal were to grant interim rights for 5 years, the effect of this would be to circumvent the security of tenure provisions under the Code and lead to a “widespread contracting out” where a Land Owner would offer longer-term interim rights by consent, whilst simultaneously threatening to contest any application for more permanent rights. If the UT granted interim rights for 5 years, Cornerstone argued that this would be an improper exercise of UT’s discretion.

Decision

The UT held in favour of UAL and refused to grant Cornerstone permanent rights under Paragraph 20 of the Code.

Judge Cooke commented that the level of prejudice suffered by a Land Owner must be “very high indeed” to outweigh the public benefit in light of the growing public demand for electronic communications. The significant level of stress and uncertainty caused by litigation, the risk of UAL paying yearly rent of £3 million and being liable to substantial damages to the developer at the end of the lease crosses the boundary between prejudice suffered for the public good and that which is too much to ask. 

The UT rejected Cornerstone’s submission that it did not have jurisdiction to grant interim rights for a period as long as 5 years. The Code does not impose a time limit and, in any event, the UT will be “alert to any attempt to frustrate the policy of the Code if parties agree [temporary] rights when there is no reason why paragraph 20 should not be engaged.”

Code Agreements

The UT also commented on the terms of the draft agreement between Cornerstone and UAL and said that when negotiating Code agreements:-

  • Conduct: parties should not behave as enemies and must act reasonably. The level of hostility between Cornerstone and UAL was “unseemly” and had inflated costs on both sides.
  • Specification: a clear specification of the type of equipment to be installed may be required for open land (for example, to specify the height of mast installation), there is no requirement under the Code to provide this. UT said that adding a detailed specification would invite a future dispute whether an installation represented an upgrade or an addition, and that changes in technology may require a change in equipment.
  • Indemnity: the UT commented that the purpose of the indemnity clause is to manage third party claims against the respondent for unlawful acts of the claimant, rather than being a ‘catch-all’ clause to recover every “conceivable loss or damage whatever the cause“. As such, Land Owners should be mindful to avoid drafting indemnity clauses which are too wide and should be reminded that they may rely on the indemnity offered by the Code.

Comment

The decision provides a great deal of clarity on points often disputed during the negotiation of Code agreements and therefore will be welcomed by all those familiar in dealing with such agreements. It is also a helpful reminder that parties may benefit from cooperation at an early stage and any attempt to obstruct will not be looked at kindly by the UT.

The UT’s comment that any prejudice suffered by a Land Owner must be “very high indeed” in order to prevent the installation of equipment under the Code will provide reassurance to Operators, as will the UT’s assertion that, despite it being capable of grating long-term interim rights under the Code, it will be alert to any attempt to circumvent the policy of the Code.