The Court of Appeal has overturned the Upper Tribunal's original decision that only an original contracting party or their successors in title can operate the termination and renewal procedure in Part 5 of the Code, ruling that paragraph 10 of the Electronic Communications Code 2017 (the Code) is not exhaustive as to who is to be treated as a "party to a code agreement" to serve and receive notices.
Nugee L.J.'s judgment acknowledged the precise wording of the paragraph itself but adopted a purposive interpretation in order to reach the "common sense" outcome that paragraph 10 should include the current parties if the notice provisions were to work effectively. So the current Site Provider and the current Operator can both give and receive notices under paragraphs 30-31, regardless of whether or not they were either original parties or their successors in title.
This decision re-asserts the primacy of Part 5 for dealing with the termination and renewal of existing agreements, minimising the need to use Part 4 instead.
The Electronic Communications Code 2017 came into force to facilitate the installation and maintenance of electronic communications networks. The Code confers rights on providers of such networks and on providers of systems of infrastructure to install and maintain apparatus on, under and over land and results in considerably simplified planning procedures. Among other provisions, it covers the procedure for requiring a change of terms of an agreement which has expired (para 33, Part 5) and the possibility to apply to the Court to impose an agreement (para 20, Part 4).
On 14 July, the Court of Appeal handed down judgment in Vodafone Limited v (1) Gencomp (No 7) Limited (2) AP Wireless II (UK) Limited, which concerns the procedure for renewal of agreements under the Code where the original Site Provider (the freeholder) had granted a concurrent head-lease to a third party (AP Wireless) and was therefore no longer the direct reversioner to the Operator's agreement.
The crux of the issue was whether the new head tenant, AP Wireless, was "party to the code agreement" (defined in paragraph 10) since Part 5 of the Code, dealing with termination and renewal of existing agreements, says notices must be served on or by a party to the agreement. Specifically, Vodafone disputed that AP Wireless could serve or receive notices under Part 5 as it was neither an original party to the agreement nor a successor in title to the original party (because it held its interest in a different capacity, i.e. head-tenant rather than an assignee of the freehold).
The ruling of the Upper Tribunal
The Upper Tribunal had accepted Vodafone's contention that although the lease between the freeholder and Vodafone was binding on AP Wireless, AP Wireless was not a "party to the agreement" as that term is defined in paragraph 10 of the Code, being neither the grantor (which was the freeholder) nor its successor in title (which was now Gencomp). Vodafone argued that paragraph 10 only refers to parties which meet either of those definitions and, based on a normal reading of its wording, paragraph 10 gives an exhaustive definition.
The Upper Tribunal gave a very careful judgment which agreed with that interpretation, whilst noting the result revealed a major flaw in the Part 5 renewal process.
Until Friday, that meant that the correct parties to serve or receive notices under Part 5 or be party to any application under paragraph 33 of the Code or to an order under paragraph 34 of the Code would be Vodafone (the operator) and Gencomp (the successor in title to the original grantor). However, Gencomp no longer had the power to enter into a new agreement due to their lease with APW.
In practical terms, the result was that APW was not able to serve any notices under Part 5 on any site where its head lease was granted after the date of the original agreement, whilst operators in the same circumstances would have to rely on a fresh application under Part 4 of the Code to obtain a new code agreement, instead of using Part 5. On the one hand, that would mean satisfying the paragraph 21 test, on the other, it would reduce the notice period from six months under Part 5 to 28 days under Part 4.
The reasoning of the Court of Appeal
Lord Justice Nugee gave the judgment in the Court of Appeal, and after considering the Code and the effect, under the law of real property, of a head lease having been granted to APW, the Court of Appeal took into account the following factors in accepting AP Wireless' broad interpretation of who is "party to a code agreement" under Part 5 of the Code:
- The Court considered that whether paragraph 10(3) is exhaustive is unclear as a matter of language. The Court, therefore, referred to the decision of the Supreme Court in Cornerstone Telecommunications Infrastructure Ltd (Appellant) v Compton Beauchamp Estates Ltd (Respondent), where it was considered that the correct approach to the interpretation of the Code is to work out how the regime is intended to work and then consider the meaning to be given to specific wording to best achieve that goal.
- On that basis, the Court accepted that the Code was intended to work by affording the Operator a simple route to obtain a renewal by giving notice to the site provider. Limiting "party to a code agreement" to a person who was the original contracting party or only a successor in title (to the same interest as the original party) as indicated in paragraph 10(3), causes difficulty in what was clearly intended to be an uncomplicated process.
- The regime is intended to work in such a way that the person currently entitled to the benefit and burden of the agreement as operator, and the person currently entitled to the benefit and burden of the agreement as site provider, are a "party to the agreement" and can exercise the rights conferred by Part 5 of the Code. That can be achieved by construing paragraph 10(3) as not intended to be an exhaustive definition, so the current Site Provider and Operator fall within the term even though not mentioned in 10(3).
The decision reaffirms the primacy of Part 5 of the Code for terminating and renewing existing agreements, ensuring that the current Operators and Site Providers can use Part 5 regardless of how or when their interests were acquired or created. This decision will allow notices to be served on various sites where it had not seemed possible to use the Part 5 procedure and simplify numerous proceedings issued since the original decision where Operators have had to seek Code rights under both Part 4 and Part 5 of the Code.
Vodafone has requested permission to appeal. It remains to be seen whether it will be allowed and whether the Court of Appeal's decision will be the final word on the matter.
If you are concerned about how the new Court of Appeal judgment may affect you, please contact the telecoms specialists in the Real Estate Disputes team.