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Electronic Communications Code: Costs to be paid by a telecoms company to site provider following variation of its tenancy (Cornerstone Telecommunications Infrastructure Ltd v Gateway Properties Ltd & another company (2023)

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Where parties have agreed to vary the terms of the occupation of a site by a telecoms company, the Upper Tribunal considers whether costs are payable by the occupier to the site provider and how such costs should be assessed.

The background

In Cornerstone Telecommunications Infrastructure Ltd v Gateway Properties Ltd & another company [2023], Cornerstone was a joint venture company comprising Vodafone and another party. Gateway was the site provider, and the second respondent was AP Wireless, which had held a 99-year lease over the roof of a building which was the subject site in these proceedings. Gateway was the successor to AP Wireless, and Cornerstone held a tenancy of the subject site.

Under para 9 of Part 2 of the Electronic Communications Code, contained at Schedule 2 to the Communications Act 2003, 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”

The parties may make such an agreement in writing to confer a code right under para 11 of the Code, or the operator may apply to the Upper Tribunal to require that a code right is conferred on them under para 20 of Part 4.

The present proceedings related to two references made under the Code. As telecommunications operators, and pursuant to earlier proceedings, Cornerstone benefited from ‘code rights’ which permitted it to install and operate electronic communications apparatus on land it did not own. Cornerstone argued that rights which had originally been granted to Vodafone could be renewed by Cornerstone under the Code, despite Vodafone’s 1954 Act rights which Cornerstone acquired.

In separate proceedings, the Supreme Court found that Cornerstone had not been the occupier of land and was not entitled to a renewal or modification of its rights so long as it enjoyed rights under the Landlord and Tenant Act 1954. Cornerstone was, however, entitled to seek new, additional rights under Part 4 of the Code.

Both parties made submissions in respect of costs. Cornerstone was directed by the Upper Tribunal to identify in its pleading the terms of its agreement that it considered were new code rights, and those which were not. Cornerstone did so, identifying four terms that it argued were new code rights. AP Wireless then proposed a variation of the tenancy under the 1954 Act to incorporate those four terms.

The parties entered into a deed of variation of the 1954 Act tenancy. Applications for costs in respect of the references to the Tribunal under the code were made by both parties, who each argued that they had succeeded in the proceedings and were entitled to costs.

The decision

The Upper Tribunal concluded that costs were to be paid by Cornerstone to AP Wireless.

The Court dismissed the references. No evidence had been presented by Cornerstone which entitled it to any relief, and Cornerstone had not achieved the outcome it had sought prior to the updates it had made to its pleading at the request of the Upper Tribunal, and the appropriate course of action was to dispose of the references to give effect to the order for AP Wireless’s costs.

In determining which was the successful party for the purposes of costs, Cornerstone had not succeeded in establishing its argument that it could renew Vodafone’s rights, and had only later submitted its view as to the difference between the rights it already benefited from and the form of agreement it sought.

The Upper Tribunal found that the four additional rights sought by Cornerstone were not the reason it had made the references originally. Had it only requested those additional rights and continued to pay the subsisting rent under the tenancy, AP Wireless was likely to have agreed to such variation of terms without the need for costs to be incurred in making the references. Cornerstone could not therefore be considered as being the successful party.

The 1954 Act tenancy continued in substantially the same terms, AP Wireless continued to benefit from a right to receive rent in a sum greater than that proposed by Cornerstone, and the tenancy would be renewed under the 1954 Act. Cornerstone was therefore liable for costs of references such that they could be determined by the Upper Tribunal.

Advice and action for landlords

The telecoms operator in this case was found to be liable for the costs of references made to the Upper Tribunal, following the dismissal of references and the conclusion that the site provider was the successful party in the proceedings.

The case turns very much on its facts, but Cornerstone’s approach in the proceedings – which saw it change its pleading to identify four new rights instead of simply seeking variations – was ultimately not established satisfactorily. Cornerstone had not established the principles it argued, and the additional rights it was seeking could have been granted by agreement under an application for renewal of the 1954 Act tenancy.

The Upper Tribunal concluded that costs were to be paid by Cornerstone to AP Wireless, dismissing the references and finding that Cornerstone could not be considered the successful party for the purposes of payment of costs.

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