In a significant decision under the Electronic Communications Code (Code), the First-tier Tribunal has considered whether a site provider sufficiently demonstrated a firm and settled intention to redevelop the site pursuant to Paragraph 21(5) of the Code, a provision that allows a site provider to oppose the grant of Code rights where it intends to redevelop the land.
Having carried out a rigorous analysis of the site provider's intentions and despite the site provider satisfying a number of the tests laid down in case law under both the Code and the Landlord and Tenant Act 1954, the tribunal found that it had failed to make out its case for redevelopment, which resulted in an order for the imposition of a new Code agreement in the operator's favour. Ultimately, the tribunal held that Icon could not rely on the redevelopment defence under Paragraph 21(5) as its intention was not genuine.
Operators seeking Code rights will welcome the tribunal’s robust approach, which reinforces the principle that speculative or tactical redevelopment will not defeat their Code rights. This will also be a blow to the ambitions of lease aggregator model in the telecommunications market to move from an interposed party in arrangements between operators and traditional landowners and into the tower infrastructure space.
Background
Icon Infrastructure Limited (Icon), the freehold owner of a site occupied by On Tower UK Limited (On Tower) under a tenancy at will, identified a redevelopment opportunity to replace On Tower’s existing 22.5m telecommunications mast with its own 25m structure. On this basis it was resisting On Tower's application for an order for the imposition of a new Code agreement, relying on Paragraph 21(5) which provides the court may not make an order… if it thinks that the relevant person intends to redevelop all or part of the land to which the Code right would relate and could not reasonably do so if the order were made.
The tribunal undertook a forensic assessment of the intention to redevelop by Icon under the following headings:
Intention
In order to succeed, Icon needed to demonstrate both a subjective and objective intention.
The subjective test is met if Icon could show a firm and settled intention which is not likely to be changed. The tribunal found this to be satisfied by the undertakings provided by Icon to carry out the intended redevelopment which were evidence of "the fixity of its intention."
To satisfy the objective test, Icon needed to show that it had an objective intention to bring about the relevant redevelopment by their own act or volition and that there must be a real as opposed to "merely a fanciful chance" of achieving this objective. The tribunal was satisfied that Icon had secured planning approval for the redevelopment and there was evidence of sufficient financial backing. APW had "more than sufficient funds" and had provided an undertaking to finance the redevelopment, however, Icon failed to demonstrate that there was a reasonable prospect that MNOs would migrate to its new tower. Icon had not entered into discussions with potential tenants, and its business plan relied on unverified assumptions about their willingness to migrate which ultimately undermined the credibility of its redevelopment claim.
Conditionality
The tribunal applied the “acid test” from S Franses Ltd v The Cavendish Hotel to assess whether Icon would proceed with the redevelopment if the operator vacated voluntarily. This test is designed to distinguish genuine redevelopment from tactical manoeuvres and whilst it was acknowledged that Icon had made no secret of a desire to remove a competitor from the site, the tribunal found that this was consistent with their investment led strategy and held in Icon's favour on this count.
Reasonable time
When it came to whether Icon would be in a position to carry out its redevelopment within a reasonable time, the tribunal accepted that it could take up to 26 weeks for the works to be carried out but felt that this was not unreasonable in the circumstances.
Meaning of redevelop
Despite arguments from On Tower to the contrary, the tribunal did accept that replacing a mast could constitute redevelopment under the Code.
Although clearing a number of hurdles, the tribunal held that Icon could not rely on the redevelopment defence under Paragraph 21(5), as its intention was not genuine within the meaning of the Code. On Tower therefore met the conditions for the imposition of a Code agreement.
This decision serves as a cautionary reminder to site providers that any purported intention to redevelop under Paragraph 21(5) will be scrutinised rigorously. Planning permission and funding alone are insufficient. A genuine, settled intention to redevelop, supported by credible commercial evidence, is essential.
