New Tribunal judgment concerning the Electronic Communications Code and concurrent leases

The Upper Tribunal (Lands Chamber) (Tribunal) has handed down judgment in the case of Vodafone Limited v Gencomp (No.7) Limited and AP Wireless II (UK) Limited [2022] UKUT 223 (LC). 

The case concerned a tower in Bingley which is used by Vodafone as a site for its electronic communications apparatus:

• Vodafone was granted a lease in 2003 (the Original Agreement) by the then owner of the freehold (Publico). The contractual term of the Original Agreement expired in 2018
• The freehold of the building was sold a number of times, and is now in the ownership of Gencomp
• In 2018, after the Code had come into force but before the term of the Original Agreement expired, an earlier freeholder granted a concurrent lease of parts of the tower to APW, both subject to and with the benefit of the Original Agreement. When this was granted, APW became Vodafone's immediate landlord.

The dispute centred around how renewal of Vodafone's rights ought to be achieved:

• Vodafone argued that only Gencomp could grant it new rights under the Code, which rights should be made binding on APW
• APW argued that it is the only party capable of granting Code rights to Vodafone, and that those rights should then be made binding on Gencomp (or, due to the terms of APW's lease granted by Gencomp, were automatically binding on Gencomp).

A significant issue which the Tribunal was required to address was the procedure to be followed by an operator to obtain a new Code agreement where a concurrent lease has been entered into by the site provider after it entered into the original Code agreement.

The Parties' arguments

Vodafone argued that it was entitled to serve a notice under paragraph 33 of the Code and subsequently seek an Order under paragraph 34 of the Code as against Gencomp, on the basis that due to the drafting of the Code:

• A paragraph 33 notice can only be served on the 'other party to the agreement', and
• Paragraph 10 of the Code only makes provision for the 'other party to the agreement' to be the party who granted the Code rights or their successor in title. Therefore, Vodafone argued it was impossible for APW to be a party to the agreement.

APW argued that it was entitled to be treated as a party to the agreement and was entitled to give notice under paragraphs 31 or 33 of the Code, and that therefore the Tribunal could make an Order under paragraph 34 of the Code requiring APW to confer code rights on Vodafone, as:

• It would be irregular if, as Vodafone's immediate landlord, APW was not the appropriate party to enter into a new agreement in accordance with paragraph 33 of the Code; or alternatively
• APW should be viewed as a successor in title (and therefore be treated as a party) to the Original Agreement as it was a successor to the reversion to that agreement.

The Tribunal judgment

The Tribunal noted that:

• The optimal way for the Code to operate was for operators and site providers to enter into consensual agreements
• If a consensual agreement were to have been reached, it would be between Vodafone and APW, APW being the occupier for the time being of the site. APW also, in this case, had sufficient rights to authorise Vodafone to make use of rights granted to it by Gencomp
• Gencomp, having demised the site to APW, would not be the occupier for the time being of the site and so would not be entitled to grant Code rights to Vodafone or indeed any rights to occupy the site.

The Tribunal preferred Vodafone's submissions, and held that it had jurisdiction to impose an agreement on Vodafone and APW under paragraph 20 of the Code, but no jurisdiction to order any of the parties to enter into an agreement under paragraph 34 of the Code. The Tribunal identified that the result in this case exposed a lacuna in the drafting of the Code as:

• Vodafone was only entitled to serve a paragraph 33 notice and seek an order under paragraph 34 as against Gencomp, but there is no way Gencomp can grant rights to Vodafone because it has already granted those rights to APW, and now has no rights to possession or occupation of the site. The Tribunal therefore could not make an Order requiring Gencomp to grant rights to Vodafone, as that Order would be of no effect
• Vodafone was not entitled to serve a paragraph 33 notice and seek an order under paragraph 34 against APW as they were not a party to the agreement
• As a result, the Tribunal considered that it would not be possible for Vodafone to acquire new Code rights over the site using the Part 5 procedure
• Additionally, it would not be possible for a concurrent lessee to bring an agreement to an end by serving notice under paragraph 31 of the Code, as only a site provider who is a party to a Code agreement may give such notice. As matters stand,, a concurrent lessee has no obvious way to bring Code rights granted by a superior landlord to an end.

The Tribunal pragmatically considered that the solution was for Vodafone to seek a new agreement under Part 4 of the Code, making use of the exception identified by the Supreme Court in Compton Beauchamp, that an operator who was already in occupation of the land could seek additional Code rights under Part 4 even if Part 5 was not available to it.

Conclusion

The Tribunal's conclusion that where a concurrent lease has been granted Part 5 of the Code is not available to the parties exposes a lacuna in the drafting of the Code that may require legislative action to fix. As the Tribunal observed, the Landlord and Tenant Act 1954 contains comprehensive provisions dealing with situations where the immediate landlord is not the freeholder, and it may be that those drafting the Code did not consider such a situation.

The current position is therefore that:

• An operator seeking to renew or modify Code rights in a situation where a concurrent lease has been granted, cannot use the Part 5 procedure and instead will have to use the Part 4 procedure and serve a paragraph 20 notice seeking an order against a site provider which was not a party to the agreement by which the rights were originally conferred
• A site provider who was not a party to the agreement by which the rights were originally conferred cannot access a mechanism under the Code to bring that agreement to an end.

This reasoning could be applied to other situations, for example where a site provider agrees to grant further Code rights but cannot obtain consent from, for example, a mortgagee, a superior landlord or another party who is required to consent to the grant of Code rights. The Tribunal would be unable to make an order against the third party under Part 5 of the Code, and so the operator would have to look to Part 4 of the Code. Additionally, if Part 5 is only available as against parties to the original Code agreement, this may limit its effectiveness where an operator seeks to renew rights of access over (separately owned) neighbouring land, in addition to renewing its code agreement.

Despite the pragmatic approach of the Tribunal in attempting to overcome the difficulties in the drafting of the Code, this decision creates uncertainty for both operators and site providers, the most likely solution to which appears to be further amendment of the Code.

Attributed to Mark Barley and George Napier.