Reforming the Electronic Communications Code – PLA response

 

The definition of land and ownership of property

Q.1: What is your understanding of the meaning of “land” in the existing Code?

The land, buildings and fixtures in the ownership of the landowner or occupier over the part or whole of which the operator is being conferred rights.

Q.2: Assuming there was no definition of land and no provision about the ownership of property in the revised Code and that general principles of land law apply:

a. Which, if any, of the following fixtures are likely to become part of the land on general land law principles?

  1. Masts
  2. Poles
  3. Cabinets
  4. Underground conduits and ducting

Whether a fixture forms part of the land depends on numerous factors and can only be decided on a case by case basis. Relevant factors will include who brought the fixture onto the land (landowner or tenant/licencee), for what purposes it has been brought onto the land, the extent to which it is affixed/can it be removed and reused. In the case of leases, the terms of the lease will likely set out what forms part of the retained land, the demised land and what is the position as to fixtures and their removal at the end of the lease. It is not therefore possible without further detail to conclude which of the examples given would become part of the land.

b. Does the statutory regime of the revised Code (which makes provision for rights to install apparatus on land, and have it removed from land and specifies the purpose for which such apparatus is installed on land) affect your answer in (a)?

No.

As a slight aside, we question whether reference in paragraph 97 of the draft code to “property” should in fact be Electronic Communications Apparatus if the concern being addressed is that such apparatus could become part of the land. This provision is altering the well-understood principles concerning fixtures and in doing so the drafting should be as clear as possible. The use of “property” is undefined and to avoid confusion we suggest that the draftsman use terms defined and used elsewhere in drafting such as Electronic Communications Apparatus.

Q.3: Should the revised Code be explicit or say nothing about the definition of land and the ownership of property? Please give reasons.

We do not think that the Code should seek to alter the principles of land law and the ordinary principles of land law should apply. To do otherwise could result in a conflict between the drafting of this legislation and long established principles. This could lead to uncertainty, between these principles as they apply to ordinary landlord and tenant or licencee and licensor situations and situations where one party of such agreements is a code operator. We can see no necessity for the principles of land law to be sidestepped in the case of code operators. There are other more proportionate methods to achieve the objectives of the Code.

Q.4: If you think the Code should be explicit, should the definition of land be defined as:

  • not including electronic communications apparatus?
  • including electronic communications apparatus?
  • including some electronic communications apparatus (e.g. masts) but not other apparatus (e.g. cables or conduits)?
  • including the electronic communications apparatus of infrastructure providers (those whose activities fall within the ambit of paragraph 4(b) of the revised Code – i.e. those who provide infrastructure systems), but as not including the apparatus of other Code operators (those whose activities fall within paragraph 4(a) of the revised Code – i.e. those who operate networks)?

In responding to the above points, please provide reasons. Please also include in your responses any views or evidence on the impact of the definition on network deployment, the market, competition and/or legality (e.g. compliance with the EU regulatory regime).

We do not consider that land should be defined and the general principles of land law should apply.

How consideration is to be determined.

Q.5: Does paragraph 23 of the revised Code meet the aim of providing a clear and workable definition of market value? Please provide evidence to justify your answer.

No comment save that we would suggest that the views of those engaged in valuing such market value are fully considered and taken into account as clearly the definition of market value will be of the utmost importance to both landowners and code operators.

Q.6: Some stakeholders have argued that the provisions that do not allow the new.

Automatic rights (to assign code rights or to, share and upgrade apparatus) to be included in the basis for valuation are unworkable in practice. What evidence can you provide that either supports or challenges this view?

In the case of rent reviews and lease renewals it is generally accepted that valuation assumptions that do not reflect the actual agreement between the parties tend to lead to disagreements and disputes. The presumption of reality is to be preferred. We therefore suggest that this be fully explored in light of feedback from those engaged in such valuations as to whether it is workable in practice.

Q.7: Does paragraph 23 of the revised Code prevent or reduce the scope for charging above market value for Code rights? Please provide evidence to justify your answer.

We repeat out comments in response to Q.5 and Q.6.

Upgrading and sharing electronic communications apparatus.

Q.8: Do you consider that the proposed automatic power to upgrade and share apparatus will have a positive effect on network sustainability?

No comment.

Q.9: Are the conditions that must be met in order for the power to share or upgrade to be exercised (in paragraph 16(2)-(4) of the revised Code) appropriate to balance interests of site providers and operators, and the need to ensure network sustainability? In particular:

  • Is the ‘exclusive possession’ requirement necessary or does it place inappropriate restrictions on the ability to share and upgrade?
  • Is it appropriate to allow upgrading and sharing provided there is minimal adverse impact on the appearance of the apparatus?
  • Is it appropriate to allow upgrading and sharing provided there is no additional burden on the site provider? Is the meaning of “additional burden” clear and appropriate?
  • Should there be fewer, additional or no conditions attached to the exercise of the power to upgrade and share?
    Please give reasons and provide your views on the practical implications of the imposition of conditions.

We do not believe that Code Operators should benefit from an ancillary right at all to share or upgrade their apparatus. It is important for landowners to understand who is in occupation on their land, what apparatus is on their land, who has access to it and whether it remains the same as originally authorised. On many buildings the Code Operator’s apparatus is not the only equipment present. Consequently, it is important that the landowner knows what equipment is on its land so that any works required to the building or other equipment do not inadvertently interfere with electronic communications apparatus. As most Code operators occupy land either under a lease or a licence, it is likely that the landowner will be liable for any interference with the equipment by third parties. If a landlord does not know what apparatus is installed and who is benefitting from it, and he grants licence to a third party to do works that inadvertently interfere with apparatus he did not know was installed, the current drafting would offer no protection to the Landlord.

Further in circumstances where a Code Operator has obtained an order pursuant to Part 4 of the revised Code, a Code Operator should be restricted to the equipment for which the order was sought and should not be permitted to upgrade or share without landowner’s consent.

It is open to the Code Operator and the landowner to agree the terms of the agreement permitting the installation of the equipment. We do not consider that Code Operators are at any disadvantage in an arms length negotiation and if a Code Operator wishes to be able to share the equipment and or assign its rights to another Code Operator they can negotiate such terms. We do not consider that legislation should be passed that make any term restricting such rights void.

We believe that provided the Code Operators have an ability to alter the equipment, subject to landlord’s consent, this should be sufficient to balance the interests of both parties. Section 19 of the Landlord and Tenant Act 1927 means that where the landlord’s consent is required, such consent cannot be unreasonable withheld.

If contrary to our view Code Operators are granted the right to share their apparatus, again it should go no further than an ability to share (or assign) with landlord’s consent, such consent not to be unreasonably withheld or delayed.

Further, if, contrary to our views, Code Operators are to be given an automatic right to share or upgrade their equipment, the conditions set out in paragraphs 16(2) to (4) of the revised Code as drafted will cause uncertainty and confusion. For example, “Exclusive possession” is a term only appropriate for leases, and not licences / wayleaves where, by definition, exclusive possession is not granted. Further the terms “minimal adverse impact” and “additional burden” are vague, uncertain, subjective terms which will be interpreted differently by either party and will not alleviate the issues referred to above. The practical implications of the imposition of these conditions from a landowners perspective is that it will be faced with uncertainty as to who is using the equipment, when and how the equipment will be upgraded and what impact that will have on its use of retained surrounding land. The upgrading or sharing is not limited to the physical structure of the existing equipment meaning that the demise to the tenant code operator under a lease could be extended which would operate as a surrender and re-grant of the lease in ordinary circumstances. It is also unclear whether the landlord can object to any planning application made by the Code Operators for the changes to apparatus as a result of the upgrading and sharing. A landowner’s rights in relation to planning applications should be preserved.

Q.10: Are there any other issues that arise from the exercise of the power to share or upgrade?

Yes. See response to Q.9. Further we consider that payment for sharing and/or upgrading may be appropriate in certain circumstances, not forced, but where market forces dictate and as a matter of negotiation between the parties. It should be open for landowners and Code Operators to agree that if site sharing and upgrading is to be permitted then payment is to be made.

It appears to us that if the assumption on market value is that (1) the site is not unique and (2) there is no right to share or upgrade then the landlord should be able to realise the value of sharing on the site at the point where there is sharing. If there is to be no consideration paid to the landlord for the ability to share after acquisition of Code rights then the assumption that there is no right to share should be removed. Otherwise the operator is getting a windfall at the expense of the landowner and this does not represent a reasonable balance between the interests of the landowner and the interests of Code Operators.

Contracting out of the revised Code

Q.11: Are the provisions referred to in paragraph 96(2) in relation to which there can be no contracting out sufficient? If not why not?

We consider that the ability to contract out of the Code should be akin to the ability to contract out of the Landlord and Tenant Act 1954- i.e. an agreement can be made between a landowner and a Code Operator to install apparatus for a fixed period of time.

Q.12: Should there be exceptions to the no contracting out principle? If so, what are these?

Please see response to Q.11.

Q.13: If there are exceptions, should these be subject to criteria or regulated in some way (for example by a requirement for the court to approve the arrangements)?

Please see response to Q.11.

The role of land registration.

Q.14: Are the principles set out in paragraph 10 of the revised Code sufficient to ensure that Code rights bind the land as against a successor in title as if the Code rights were interests in the land, without the need for registration?

No. Please see response to Q16.

Q.15: If you consider that paragraph 10 is sufficient, is it necessary to provide that some Code rights should be treated as overriding interests, given that overriding interests are not registered? Does it matter if Code rights in leases and agreements other than leases are treated differently?

Please see response to Q16.

Q.16: Should the binding nature of Code rights on successor in title and others who acquire an interest in the land depend on whether the Code rights are registered under applicable land registration legislation?

In our view it should. If Code rights are to be binding on a purchaser in the same way as an interest in land but without any requirement for land registration, this undermines the Land Registration Act 2002. Code rights should be treated in the same way as overriding interests, binding on successors and an overriding interest only until they are registered. However the intention of the Land Registration Act was to incorporate such rights in the register. If the interests created by the Code are required to be registered under the land registration legislation they should not be legal interests until registration has taken place, as is the case for other registerable interests.

The proposal that Code rights under leases are to be registered but others are not is likely to cause confusion. It is better to have a consistent approach that all such interests should be registered to be effective against successors in title.

Q.17: If your view is that Code rights should be subject to land registration legislation, what should be the consequences of a failure to register a lease containing Code rights (assuming it is required to be registered under the general law) against a successor in title?

It follows from our view expressed above that a failure to register a lease containing Code rights would mean that the Code rights do not bind a successor in title.

Q.18: If there is no requirement to register Code rights under applicable land registration legislation, what will be the impact on the successors in title, i.e. purchasers of land, given Code rights will not appear on title documents?

If there is no requirement to register Code rights, purchasers of land would have to take land subject to Code rights of which they are unaware and this in our view cannot be right. The existence of Code rights has an impact on valuation and asset management, redevelopment plans, ability to grant interests to third parties etc. It will not always be obvious from inspection that Code rights are in existence and yet sellers may well respond to pre-contact enquires requiring the purchaser to rely on its inspection of the property.

Q.19: Are there other ways to protect purchasers of land apart from registration of Code rights under land registration legislation, for example by including questions about Code rights and electronic communications apparatus in standard form inquiries before the transaction is completed?

Yes but see comments made in response to Q18. Plus errors/non-disclosure can be made in replies to enquiries and the only remedy will then be as against the seller and this should not be the case as the Land Register should provide clarity and certainty to a purchaser of property.

Q.20: In Scotland, if the Code right is not in a registrable lease, should the Code right nonetheless be registrable in the property register?

No comment.

Transitional arrangements, savings and retrospectivity.

Q.21: Should any provisions of the existing Code continue to apply to existing Code agreements or apparatus installed under the existing Code once the revised Code comes into force? If so, which ones and why?

In our view the provisions of the existing Code should continue to apply to all existing Code agreements. To provide otherwise would undermine the negotiations between the parties which took place before the existing Code agreements were completed. It would be unfair to now impose on those agreements the potentially substantially different effect of the revised Code which may well have had a significant effect on those negotiations.

Q.22: Should any provisions of the revised Code continue to be applied to existing Code agreements or apparatus installed under the existing Code once the revised Code comes into force? If so, which ones and why?

No. Please see response to Q21.

Q.23: Should the agreement of the parties be required in order for the provisions of the revised Code to apply to existing Code agreements or apparatus installed under.

the existing Code once the revised Code comes into force? If so, which provisions should require such agreement and why?

In our view if the parties wish to voluntarily agree that the revised Code will apply to an existing Code agreement or apparatus installed under an existing Code agreement they should be free to do so and all provisions should require such voluntary agreement of both parties.

Q.24: Should the provisions of the existing Code continue to apply (notwithstanding an existing Code agreement coming to an end) pending new Code agreements (or a court order for such rights) being sought under the revised Code once it comes into force?

In our view the revised Code should apply only to a new Code agreement or a court order for such a right but the existing Code should continue to apply pending this stage.