Real Estate update and 2024 expectations

The Electronic Communications Code (ECC)

Update 2023 – Changes to notices under the ECC

The ECC confers rights on code operators to install and maintain electronic communications apparatus on public land, and even grants operators the right to sometimes apply to court for an order allowing them to install and maintain such apparatus on private land, if the private landowner has not agreed to this. These rights are subject to conditions and restrictions, and Ofcom has the role of enforcing compliance by operators with any of the requirements.

The Product Security and Telecommunications Infrastructure Act 2022 allows changes to be made to the ECC to allow for the expansion of mobile and other networks across the UK. Section 69 of the 2022 Act amends the ECC to reflect that alternative dispute resolution (ADR) should be considered when an operator and a site provider are unable to reach an agreement.

Under the ECC, code operators must give notices in certain situations, such as where they wish to exercise some of their rights, and these notices must be in a form prescribed by Ofcom. In September 2023 Ofcom consulted on proposed changes to certain notices under the ECC.

Following the consultation, these notices must now contain information about the availability of alternative dispute resolution when the operator and relevant person are unable to reach agreement, and must also explain the possible consequences of refusing to engage in alternative dispute resolution.

This law change shows a clear intention to resolve issues as quickly and efficiently as possible to enable a prompt expansion of telecommunications networks across the UK

What to expect in 2024 – Widening the jurisdiction of the First-tier Tribunal

The Electronic Communications Code (Jurisdiction) (Amendment) Regulations 2023 (SI 2023/1220) (Regulations) have been made and will come into force on 6 April 2024.

These Regulations amend the 2017 regulations to give the First-tier Tribunal jurisdiction for all proceedings under the ECC in England and Wales. There is no longer a restriction that relevant proceedings in England and Wales must be commenced in the Upper Tribunal. Again this shows a clear intention to streamline the process into 2024 and beyond.

Service charges

Recent 2023 case – Are litigation costs recoverable under a service charge clause?

In Kaushal Corporation v Maria Carmel O’Connor (By her son and Litigation Friend Justin Marciano) [2023] EWHC 618 (KB), the owner of a commercial property, KC was the landlord under a lease of the property and Red Rooster Restaurants Limited (RRR) was the tenant. The defendant was the sole shareholder and director of RRR and when RRR took an assignment of the lease in 2005, the respondent provided a personal guarantee for RRR’s obligations under the lease.

The claim related to a service charge clause in the original lease  which to some extent allowed the landlord to recover costs and fees incurred by the landlord under the lease. This clause covered legal charges incurred by the landlord incidental to and/or in contemplation of any application or request for any approval or consent required by the lease.

RRR wanted to assign the lease to someone else and put forward three prospective assignees to KC for approval. All three were rejected. RRR went into liquidation and its liquidator brought proceedings against KC, on the basis that KC had unreasonably refused to grant consent for the proposed assignments. That action was dismissed and RRR was ordered by the judge to pay 90% of KC’s costs. RRR was in liquidation so it did not pay these costs and, subsequently, KC sought payment from the guarantor of RRR.

The judge found that litigation costs do not fall within the service charge clause, and that in situations where the construction of a clause would expand a tenant or guarantor’s liability considerably, this should be construed narrowly. So, costs relating to an application for approval or consent could be recovered but  the costs of litigation could not.

What to expect in 2024

We have witnessed a surge in energy prices due to the current economic climate, creating a ripple effect that extends to various sectors, including real estate. As energy costs escalate, landlords are finding themselves grappling with higher operational expenses, which filter down to tenants.

In an attempt to offset these rising costs, landlords are increasingly seeking to recover these expenses through their service charges.

Tenants will need to scrutinise their service charge provisions and challenge any unjustified increases in their service charge costs. We suspect that landlords and tenants will continue to attempt to mitigate their respective costs in 2024 and may need to work together more to navigate these challenges.