Real estate

UK tribunal clarifies Electronic Communications Code renewals involving concurrent lessees

Published on 15th Sep 2022

Judgment guides on a 'gap' in the telecoms regime when site providers grant a concurrent lease to a third party

In Vodafone Ltd v Gencomp (No 7) Ltd & AP Wireless II UK Ltd, the Upper Tribunal (Lands Chamber) considered how an operator in situ can renew its rights under the Electronic Communications Code where the site provider has granted a concurrent lease to a third party, who would have the right to occupy the property in the event that it was vacated by the operator.

Since the introduction of the Code in 2017, landowners and operators have sought further guidance from the tribunals on how the Code operates in the context of renewing agreements for existing sites – that is, where operators have already installed apparatus. One of the issues around renewing agreements was determined recently by the UK Supreme Court and there has been a flurry of decisions in the  tribunal and the courts relating to renewals under the Code.

Mind the gap

The tribunal agreed with the operator's position that the Code does not permit the agreement to be renewed with a concurrent lessee using the Code renewal procedure under part 5 of the Code.  Accordingly, there is a "gap" in the structure of the Code where a concurrent lease has been granted over a property subject to Code rights granted by a superior landlord.

The case has brought much needed clarity to this gap. The tribunal determined that, in circumstances where there is a concurrent lease, the operator can seek a new agreement under part 4 of the Code instead; taking a lead in part from the recent Supreme Court decision, which also identified circumstances in which part 4 can be used to renew agreements and seek new Code rights during the term of an existing agreement.

This means that operators will be able to secure new Code agreements more swiftly against concurrent lessees, only needing to serve a 28-day paragraph 20 notice on the concurrent lessee before they can issue proceedings in the tribunal for the  grant of a new Code agreement. The tribunal also determined that a concurrent lessee is unable to bring an existing Code agreement to an end under paragraph 31 of the Code.

The site and the parties

In 2003, the freeholder of a tower in Bingley granted a lease to the operator Vodafone (the applicant) who took occupation of the site for its electronic communication apparatus. Since then, the freehold has been sold a number of times and is now in ownership of the first respondent (Gencomp (No 7) Limited).

In 2018, after the Code came into force, but before the expiry of the original lease to Vodafone, an earlier freeholder granted a concurrent lease of parts of the tower to the second respondent, AP Wireless II (UK) Limited (APW). This concurrent lease was granted subject to and with the benefit of Vodafone's original lease and, on the grant of this concurrent lease, APW became Vodafone's immediate landlord.

Vodafone wanted to renew the agreement by way of termination and replacement with a new Code agreement and served a number of notices under paragraphs 20 and 33 of the Code on both Gencomp and APW.

The tribunal listed a hearing to determine, amongst other points, who was the correct party to grant the new Code agreement sought and under which  part of the Code the new Code agreement should be granted.  

Part 4 conferral by the concurrent lessee 

The tribunal agreed with Vodafone that only a site provider who is party to the existing Code agreement can confer a new Code agreement under part 5 of the Code. This is either the original contracting party (if their interest in the relevant land is unchanged) or their successor in title (in this case, Gencomp). Concurrent lessees (in this case, APW) are not successors in title to the original contracting party's interest in the land under paragraph 10 of the Code, and so are not a party to the existing Code agreement and cannot grant rights on renewal under part 5 of the Code.

Due to the existence of a concurrent lease, the original contracting party or its successor in title (as the case may be) also cannot validly confer the new Code agreement under part 5, as any rights granted by it would need to be subject to the concurrent lease.

In light of this, the tribunal decided that the renewal should proceed under part 4 of the Code. The conclusion was similar to one reached by the Supreme Court, but in different circumstances, where a gap in the code was identified and a solution using the terms of the Code was implemented.

In that case, the Supreme Court determined that the applicant operator's occupation should be disregarded in determining who is the occupier for the purposes of conferring Code rights under part 4. The tribunal endorsed the parties' agreed position that this also applies when determining who was the occupier under the old code. 

Subsisting agreements generally

The tribunals application of the Supreme Court decision to existing agreements predating the Code means that, outside of a concurrent lease scenario, an operator is not locked out of renewing Code agreements under part 5, by reason of its occupation of the land at the time that the existing Code agreement was entered into.

Further, the tribunal agreed with Vodafone's position that the existence of an existing Code agreement is material which can demonstrate that the party who granted it was in occupation at the material time, which must be rebutted by a party seeking to assert the contrary.  

Terminating existing agreements

Paragraph 31 of the Code sets out how an existing Code agreement can be terminated and is contained in part 5. As a consequence of the tribunal's determination that concurrent lessees are not a party to the existing Code agreement for the purposes of part 5, a concurrent lessee is unable to terminate an existing Code agreement under paragraph 31. Again, this can be done either by the original contracting party (if they have retained their interest in the site) or their successor in title, provided that they can demonstrate one of the required grounds for termination. 

Tripartite Code agreements 

Contrary to the argument advanced by APW, the tribunal determined that it has jurisdiction to grant tripartite agreements under the Code (that is, between an operator, a site provider and another party). Whether it is appropriate to do so depends on the facts of a given case. 

Osborne Clarke comment

Given the apparent gap in the drafting of the Code, the tribunal's decision has given operators and site providers certainty as to who should confer new Code agreements in a renewal situation, where there is a concurrent lease.

However, an application for permission to appeal this decision has now been submitted by APW, the concurrent lessee, to the tribunal for determination. 
 

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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