Changing the terms of an agreement under the Electronic Communications Code
Operators are serving notices on landlords demanding new agreements at fairly nominal rents under paragraph 33 of the Electronic Communications Code. If a renewal cannot be agreed with the site provider, then that paragraph allows the operator to apply to the Lands Tribunal for an order pursuant to paragraph 34 (orders the court may make) imposing a new agreement under the Electronic Communications Code (the Code).
There are however potential hurdles for an operator to overcome in any such application as telecoms expert Ian Thornton-Kemsley, a consultant for Strutt & Parker, explains:-
“In Scotland a lease continues automatically under the principle of tacit relocation. Tacit relocation, literally silent renewal, is the principle by which leases may continue beyond their contractual end date if the parties do nothing to terminate them. Termination is typically achieved by serving a formal notice to quit. If no notice to quit is given, the lease continues (typically) from year-to-year, based on the implied agreement of the parties. Generally speaking, the period of notice currently required in Scotland is a minimium of 40 days prior to the next term date but for a lease of electronic communications apparatus it is now governed by the Code”.
Under the new Code a landlord must give 18 months written notice and will only be able to bring the agreement to an end on certain limited grounds such as multiple breaches of lease, multiple incidents of failing to pay rent or for redevelopment. Where the unexpired term of the lease was less than 18 months when the new Code came into effect on the 28th December 2017 the notice period is a minimum of three months or the unexpired term whichever is the greater. This sets strict parameters for any notice in terms of paragraph 33 (3).
Mr Thornton-Kemsley points out: “If the notice is incorrectly served there may be a problem for operators in that two cases, CTIL –v- Compton and CTIL –v- Ashloch, indicate that a landlord who is not in occupation may not be able to grant new rights”.
“As in other parts of the new Code the wording reflects wording in the English Landlord & Tenant Act 1954 in order that existing case law can apply. One incidence of this appears to be paragraph 34 (12) which requires the Tribunal to take into account the terms of the existing agreement in any order under these provisions. This is identical to wording in the 1954 Act considered in the House of Lords case O’May –v- City of London Real Property Co Ltd  2 AC 726, in which it was held that the court should not generally use its discretion to change lease terms: the new lease should be the same as the old lease. If a party wanted to change any terms, the onus is on them to show that any change is fair and reasonable”.
While there is test of public need in the provisions of paragraph 33 as is required by paragraph 21 any interference with private property rights must be fully justified in terms of ECHR which of course has legal force in Scotland through the Human Rights Act 1998 and the Scotland Act 1998. This will be a matter the Tribunal will also have to consider in such applications
Mr Thornton-Kemsley considers that in many instances operators are serving such notices to obtain lower rents and there is little evidence to show how the public will benefit from the exercise of such rights.