Interpreting the Electronic Communications Code

April last year witnessed a very rare event in the world of the Electronic Communications Code (Code): a court decision on the interpretation of a part of the Code.  Thekla Fellas, our head of real estate litigation, acted on behalf of Chris Nicholson (Operations) Limited seeking the removal of Arqiva’s telecommunications apparatus from its residential development site at the former Cambridge City Football Club.  The matter came to court on 28 April 2015 before Deputy District Judge Dack at Cambridge County Court.  The court struck out part of the claim relating to the removal of telecoms apparatus on the basis that a paragraph 21 notice cannot be served before the end of the contractual term of the relevant lease and, moreover, cannot be served even where a landlord has already served a section 25 notice under Part II of the Landlord and Tenant Act 1954 (1954 Act) opposing renewal of the operator’s lease (in that case, on the basis of redevelopment pursuant to section 30(1)(f) of the 1954 Act).  Wayne Clark of Falcon Chambers, who was instructed by Fladgate to appear on behalf of Crest, analyses whether the decision of the Deputy District Judge was correct.

Paragraph 21 of the Code

This provides, in so far as is material:

“Restriction on right to require the removal of apparatus
21
(1)     Where any person is for the time being entitled to require the removal of any of the operator’s electronic communications apparatus from any land (whether under any enactment or because that apparatus is kept on, under or over that land otherwise than in pursuance of a right binding that person or for any other reason) that person shall not be entitled to enforce the removal of the apparatus except, subject to sub-paragraph (12) below, in accordance with the following provisions of this paragraph.
(2)     The person entitled to require the removal of any of the operator’s electronic communications apparatus shall give a notice to the operator requiring the removal of the apparatus.
…
(12)     A person shall not, under this paragraph, be entitled to enforce the removal of any apparatus on the ground only that he is entitled to give a notice under paragraph 11, 14, 17 or 20 above; and this paragraph is without prejudice to paragraph 23 below and to the power to enforce an order of the court under the said paragraph 11, 14, 17 or 20.”

In summary, it is considered that:

• a paragraph 21 notice may, depending upon the basis upon which the notice is served, be served before the expiry of the contractual term of a lease/licence; but
• it is unclear whether it is necessary, at the date of service, to have a present entitlement, capable of immediate enforcement, to require removal of the electronic apparatus.

As to the two points:

• As to the first point, it is clear that, on a proper consideration of the terms of paragraph 21, a paragraph 21 notice can be served in circumstances where a tenant’s term or the occupier’s licence has not come to an end by effluxion of time.
• The second issue is not clear-cut on the true interpretation of the Code. The argument centres upon the meaning of the words “is for the time being entitled to require the removal…” The learned judge in the Crest Nicholson case held that those words required the server of the notice, at the date of service, to establish an immediate right at that date to require removal. Thus, a paragraph 21 notice could not be served prior to the expiry of the contractual term (which occurred in the Crest Nicholson decision). This was the case even though, as in that decision, the owner of the land had served a section 25 notice pursuant to the 1954 Act opposing renewal on the grounds of redevelopment, the operator’s lease in that case being one protected by the 1954 Act. The argument for serving a notice before the end of the contractual term is that the words “is for the time being is entitled to require” are not to be read as meaning an immediate entitlement to seek removal of the electronic communications apparatus but permit one to serve a notice where there is an entitlement to seek removal at some future date e.g. by having served or being in a position to serve a notice invoking a right of removal e.g. pursuant to a section 25 notice under the 1954 Act.

Can a paragraph 21 notice be served before the expiry of a contractual term (whether that be of a lease or licence)?

There is no doubt that a paragraph 21 notice can be served in numerous circumstances prior to the expiry of any contractual term of a lease or licence. It is to be noted that paragraph 21 in fact entitles a notice to be served pursuant to its terms in three circumstances:

• where any person is for the time being entitled to require the removal of any of the operator’s electronic communications apparatus from any land under any enactment (which I shall call Category 1);
• where any person is for the time being entitled to require the removal of any of the operator’s electronic communications apparatus from any land because that apparatus is kept on, under or over that land otherwise than in pursuance of a right binding that person (Category 2); or
• where any person is for the time being entitled to require the removal of any of the operator’s electronic communications apparatus from any land for any other reason (Category 3).

It is apparent from a consideration of the wording of paragraph 21(1) that none of the categories is in fact limited to serving a notice only upon expiry of a lease or licence:

• Category 1 permits notice to be served if the person serving the notice is entitled to call for its removal pursuant to “an enactment.” If there is an enactment entitling removal, the term may not have expired e.g. a planning authority may seek removal pursuant to some form of enforcement action or apparatus may be required to be removed following the stopping up or diversion of a highway, under the Town and Country Planning Act 1990, section 256(2).
• Category 2 extends not only to where the right has expired (e.g. by effluxion of time or by forfeiture) but also to a number of situations where the operator’s lease or licence has not come to an end e.g.:
  • the lease or licence remains extant but the relevant right is not binding on the person serving the notice e.g. say the operator has a lease and grants, contrary to the terms of the lease, a sub-right which is not binding on the superior lessor. Thus, rights by title paramount may be exercised by a paragraph 21 notice albeit the sublease continues as between the lessee and sublessee; or
  • the operator does not own the equipment and the owner of the equipment seeks to recover it. (The installation of the equipment does not affect ownership: paragraph 27(4).)
• Category 3 is clearly not confined to the expiry of a lease or licence. One may think of a number of circumstances where the person calling for removal wishes to do so e.g.:
  • apparatus is installed contrary to the terms of a covenant as between him and the lessee and he seeks a mandatory injunction for its removal;
  • the apparatus is said to cause a nuisance; or
  • the apparatus has been abandoned: paragraph 22.

Thus it is clear that a person may serve a paragraph 21 notice before expiry of the operator’s lease or licence.

“Entitled to require the removal”: is there a need for there to be an immediate entitlement to require removal?

This is the more difficult part of the argument. It may be said that all of the Categories identified above, when properly considered, are ultimately based upon an immediate right to seek removal at the time the notice is served. In relation to Category 1, the right of removal arises by reason of the enactment; under Category 2 the right of retention on the land has expired; and under Category 3 the breach of the covenant or the nuisance, by way of example, confers upon the server the entitlement, immediately, to seek removal (subject, of course, to establishing the same).

The real difficulty here is with respect to Category 2. Can a notice be served under paragraph 21 prior to the expiry of the contractual term where the only basis upon which one can otherwise seek removal is only after the term has expired which has yet to occur?

There is nothing within paragraph 21 that indicates that the entitlement to require removal must be one which can be enforced immediately by the person serving the notice although it would be suggested that it is necessarily implicit in the words “is for the time being entitled”; one cannot be entitled until the right to possession has accrued and that is only upon expiry of the term.

The Deputy District Judge in the Crest Nicholson decision concluded that there was a need to show an immediate entitlement to require removal at the time of the service of the paragraph 21 notice and this was reflected in the words “Where any person is for the time being entitled….” within paragraph 21(1). However, it may be said that the phrase “for the time being” simply describes or identifies the person who has the entitlement; it is not performing any function with respect to determining the time at which removal may, but for paragraph 21, be enforced. The phrase “for the time being” thus limits the class of person that can invoke paragraph 21. The identity of the person may change e.g.:

• in a case where the landlord of the operator himself has a lease and the lease comes to an end, the landlord is no longer the person for the time being entitled to require removal; or
• under the 1954 Act only the person who qualifies as competent landlord can serve the section 25 notice. Thus the person having the entitlement for the time being to require removal pursuant to the 1954 Act may change depending on who is from time to time the competent landlord.

The argument is that the verb “to require” means, in this context, to have the right to demand removal not as an absolute right as at the date of service but demanding removal by reference to some legal right which is sought to be invoked. All that paragraph 21 is seeking to do is enable the person who asserts an entitlement to seek removal, to initiate the procedure for so doing. He does not have to show at the time of service of the paragraph 21 notice an unassailable right to require removal.

Some support for this view is derived from paragraph 21(12). That subparagraph is important in two respects:

• By its terms it precludes service of a paragraph 21 notice simply because a person would be entitled to serve a paragraph 20 notice. It was accepted in Crest Nicholson v Arqiva that a paragraph 20 notice may be served during the term of a lease or licence. Thus, but for the prohibition in paragraph 21(12), a paragraph 21 could be invoked simply because a paragraph 20 could be served. Thus, it is necessarily implicit that the draftsman was contemplating that a paragraph 21 notice could be served during the term and thus needed to protect the operator against the use of paragraph 21 in circumstances where a paragraph 20 notice could be served.
• The terms of paragraph 21(12) also provide that “this paragraph [i.e. paragraph 21] is without prejudice to paragraph 23 below and the power to enforce an order of the court under the said paragraph 11, 14, 17 or 20”.  An order under paragraph 20 may be obtained prior to the expiry of the operator’s lease or licence. If an order is obtained under paragraph 20 during the term its enforcement will not be precluded by paragraph 21. Accordingly the qualification in paragraph 21, with respect to the enforcement of an order under paragraph 20, recognises that paragraph 21 could operate with respect to an entitlement arising during the continuation of the operator’s lease or licence. The draftsman thus needed to exclude the restrictive effect of its operation where e.g. the owner had obtained an order under paragraph 20 requiring removal.

In summary

In practical terms, whether Wayne’s analysis is correct or not, where does that leave us?

All operators will attempt to use this case in negotiations, but such attempts should be pushed back.  The Deputy District Judge’s decision is the lowest form of court decision and therefore is not binding on any other court.  This means that developers and landowners should continue to serve paragraph 21 code notices in the same way as before.  If an operator fails to serve a counternotice then this will give rise to an additional argument for the developer: that the operator has failed to comply with the provisions of the Code and therefore must remove its equipment.

Thekla Fellas, Partner, Fladgate LLP 

Wayne Clark, Falcon Chambers