Landmark telecoms decision for landowners claiming damages

The Court has delivered a landmark decision on whether the Electronic Communications Code (Schedule 2 of the Telecommunications Act 1984, as amended) (“the Old Code”) could provide a telecoms operator with immunity for failing to relocate its telecommunications equipment in accordance with its contractual obligations. In a Judgment handed down on 9 March 2018, one that is equally relevant to the new Code (Schedule 3A of the Communications Act 2003 – “the New Code”), Recorder Sharp QC determined that an operator is not automatically exonerated from a breach of contract as a consequence of its statutory powers.

The decision in PG Lewins Limited v (1) Hutchison 3G UK Limited and (2) EE Limited is important because it means that operators cannot hide behind the Code to prevent landowners from claiming damages if telecoms operators fail to comply with their contractual obligations.

The Facts

The Claimant was a developer converting an office building into residential apartments. The development required the Operators’ equipment to be relocated temporarily onto scaffolding and then returned to a new permanent position on the roof.  In good faith, the parties entered into a detailed contractual arrangement, whereby the Operators agreed to relocate their equipment in stages. The initial relocation to temporary scaffolding was completed problem free. However, the subsequent relocations were delayed and the Claimant complained that the Operators were in breach of contract and had caused them loss. In January 2017, the Claimant sought injunctive relief to force the Operators to complete the works. The Operators expedited the works and the injunction application was settled amicably. But the Operators disputed that they were in breach of contract or liable in damages because, amongst other things, the Old Code provided complete immunity. This issue was determined as a preliminary issue.

The Law

In coming to his decision that the Old Code does not protect the Operators from suit, Recorder Sharp found that the agreement with the Operators which provided for the relocation of the equipment set out the parameters against which the Operators would be granted rights pursuant to the Old Code. In this regard, he relied on Old Code paragraphs 2(5) (which provides that a Code right shall not be exercisable except in accordance with the terms by which it is conferred) and 27(2) (which provides that the provisions of the Old Code shall be without prejudice to any rights or liabilities arising under any agreements to which the operator is a party).

Recorder Sharp also considered the infamous prohibition to force the removal of telecoms equipment contained within paragraph 21 of the Old Code, and the exception to that provision in relation to alterations (as defined in the Old Code) contained in paragraph 20. In this regard, he preferred the Claimant’s position that the phased relocation of the apparatus was an “alteration”, and not a removal as contended by the Operators, and as such paragraph 21 did not apply. He did not accept the Operators’ argument that “removal” meant mere detachment.

He also acknowledged that whilst paragraph 21 could not be “contracted out” of any agreement, he considered that the agreement to relocate the telecoms apparatus took precedence over paragraph 20 without any express requirement for paragraph 20 to be excluded, stating that the prevalence of the terms of the agreement “seems self evident” to him.

Finally, the Operators sought to rely on paragraph 27(3) of the Old Code, arguing that the Operators’ statutory powers meant that it was acting lawfully in refusing to relocate its equipment, as such refusal was in line with the powers granted by the Code. Recorder Sharp preferred the Law Commission’s view that “where a Code Operator has breached the terms of its right, or the obligations to which its exercise is subject, it cannot be said to be lawfully exercising it rights”. Permission to appeal was refused by the trial judge.

The New Code

Despite the repeal of the Old Code and introduction of the New Code on 28 December 2017, the principles established in this case survive the change in legislation. Paragraph 27(2) of the Old Code is repeated at paragraph 100(1) of the New Code, and paragraph 2(5) is repeated at New Code paragraph 12(1). Thus the supremacy of the contractual agreement conferring the Code rights is preserved in the new legislation and means that telecoms operators will need to be more careful to ensure its contractual obligations are complied with, like any other commercial entity. It is hoped that landowners and telecoms operators will continue to work together collaboratively under the New Code regime so as not to prevent or hinder landowners carrying out development.

Clarke Willmott LLP was instructed on behalf of the Claimant who have a specialist telecoms team who act solely for landowners. Kary Withers and Aimee Davies of our Property Litigation team and Tim Calland of Maitland Chambers represented the Claimant.