Following a significant change in the rules governing telecoms operators at the end of 2017, there have been several decisions issued by the tribunals on how the new (UK-wide) rules should be interpreted. A recent case report provides some helpful guidance on points that may affect landowners’ negotiations and contracts with telecoms operators, most notably on the way rents for telecoms sites are to be determined.
The case was CTIL v Compton Beauchamp Estates Limited, the decision in which was published on 3 April 2019 by the Upper Tribunal in England. There were two main issues of interest in the case.
CTIL is a joint venture of Vodafone and Telefonica. Whenever either Vodafone or Telefonica have a telecoms lease up for renewal, CTIL tend to take over the site. In the Compton Beauchamp case, Vodafone’s contractual lease of the site was terminated by the landowner, but Vodafone remained in lawful occupation of the site under the authority of the Telecoms Code. CTIL issued Code notices seeking that the landowner be ordered by the court to grant them Code rights, and therefore compulsory access, to the site (see our previous article - When can a Telecoms Operator gain compulsory access to your site?).
The first issue in the case was whether CTIL’s application was competent. The landowner argued that the compulsory access notice was invalid because Telecoms Code rights can be granted only by an occupier of a site. Since Vodafone occupied the site, the landowner did not occupy it, and therefore the landowner could not grant the rights that CTIL sought.
The tribunal agreed with the landowner, and went further by confirming that Vodafone, as occupier, could not on its own grant to CTIL Code rights that would bind the landowner. In order to obtain the rights they sought, CTIL would first have to obtain a grant of rights from Vodafone, then ask the tribunal to order that the landowner should be bound by them. Because CTIL had not done that, their application for compulsory access was refused.
The tribunal also held that CTIL could not fix their existing application by obtaining from Vodafone and undertaking to remove from the site if new Code rights were granted to CTIL.
This part of the decision is likely to affect other cases in which CTIL seek to take over seamless occupation of a site from Vodafone or Telefonica. Though the court pointed to a better way in which they can do that, their existing cases may well be affected and it is a point landowners may wish to be aware of if they receive a Telecoms Code notice from CTIL.
The second, and probably more important, issue in the Compton Beauchamp case was about the amount of remuneration the landowner would be awarded by the tribunal. The tribunal heard evidence about what rent should be imposed on the Operator. CTIL contended that only a small rent should be payable in terms of the valuation scheme introduced by the new Telecoms Code. Their valuation was based on taking the value of the entire property and from that working out the value of the particular plot they wished to use. They then took 2% of that sum as the rent. 2% was used for the calculation because it was said to be a standard rental yield percentage. This calculation produced a very low figure indeed: only around £3.00 a year.
The landowner’s calculation was based on a series of adjustments made by their surveyor, Ian Thornton-Kemsley, rental rates at other sites, and the value of the land to occupiers other than Telecoms Code operators.
The tribunal declined to make a decision on this issue because they did not have to: CTIL’s application was dismissed for other reasons; however, the court did comment on the opposing approaches. It criticised the Telecoms operator’s approach as producing an improbably low sum for rent that landowners would never, but for the Code, freely agree to because it produced so little benefit in return for substantial burdens and risks. It also held that their method of calculation was unreliable and, by implication, should not be used. It appears rent should be substantially higher than the nominal rents sometimes now being proposed by Telecoms Operators.
On the other hand, the landowner’s method of calculating the rent was also criticised as relying to some extent on assumptions rather than evidence, but generally the tribunal supported the idea of using leases to non-Code parties as a guide for what should be payable by Code operators.
The case offers hope to landowners that there are technical defences to Telecoms Operators demanding access to sites, and that landowners may be able to negotiate better rents than some operators have been offering under the New Code. Evidence will be the key to obtaining a more reasonable rental figure. We can assist with any aspect of Telecoms matters in Scotland.
