A recent judgment by the Court of Appeal, reversing an earlier decision by the Upper Tribunal, has brought welcome clarity to a complex area under the Electronic Communications Code.
In July, the Court of Appeal reversed the decision of the Upper Tribunal (Lands Chamber) in Vodafone Ltd v Gencomp (No 7) Ltd and another [2022] UKUT 613 (LC); [2022] PLSCS 141 in a decision which, due to a change of name from Gencomp, is known as Vodafone Ltd v Potting Shed Bar and Gardens Ltd and another [2023] EWCA Civ 825; [2023] PLSCS 123.
The Court of Appeal accepted the argument of the appellant, AP Wireless, that the meaning to be ascribed to the words “site provider who is a party to a code agreement” should not be constrained to the category of persons described in paragraph 10 of the Electronic Communications Code.
The Code
The issue arose because Vodafone found itself unable to easily renew its rights under the Code by virtue of changes in the positions of senior interest holders. It wanted to serve a paragraph 33 notice, but found that there was no easy answer as to who could properly be described as “the other party to the agreement” and therefore the recipient of the notice.
As a result, it was required to serve no fewer than 14 notices, one on every possible entity that might fit the bill. The number of potential parties was so unclear because, following the entry into a rooftop agreement with Vodafone for a period of 15 years in 2003, the identity of the freeholder changed twice and a new interest, in the form of a reversionary lease, was created. That reversionary lease was granted to AP Wireless.
Paragraph 33 is the correct gateway for an operator who wants to acquire new rights, and provides that such a notice may only be served on “the other party to the agreement”.
Paragraph 10 applies, extending the meaning of that phrase to cover only one other class of person other than the original contracting party to the agreement – namely, successors to the original contracting party.
Vodafone argued that, in order to renew its rights, the route for it to do so was to serve a paragraph 33 notice on the current freeholder, cutting out AP Wireless entirely.
Notwithstanding this, Vodafone was apparently concerned that, even having done so, an interest holder could come out of the woodwork down the line and argue that any agreement was imposed without proper jurisdiction. In determining the issue at first instance, the deputy president of the UT found that the Code “broke down” when it encountered a concurrent lessee because of the drafting of paragraph 10.
Subparagraph 10(2) identifies three different categories of person who will also be bound by code rights conferred by the original contracting party.
Subparagraph 10(3) picks out only one of those, namely, a successor in title who is bound by a code right by virtue of subparagraph (2)(a), and provides they are to be “treated as a party to the agreement”.
The other two categories – namely, successors, and those whose interest in land is created after the right is conferred and is derived directly or indirectly out of the interest of the original contracting party (to include their successors and those whose interest is then created from that interest) – are not treated as a party to the agreement.
What was decided?
The UT held that a concurrent lessee was not a successor in title who is bound by a code right (the scope of paragraph 10(3)). As such, the UT held that AP Wireless would have been unable to terminate the agreement by serving notice under paragraph 31 should it have wished to do so – a step which is only open to a “party to an agreement”.
For the same reason, an operator is not entitled to give notice to a concurrent lessee under paragraph 33 as they are not “the other party to the agreement”.
AP Wireless appealed against this decision. They were successful on appeal, with the Court of Appeal holding that the list of persons described in paragraph 10 was not exhaustive. As such, AP Wireless would be the correct party to receive Vodafone’s paragraph 33 notice and capable of being bound by any order under paragraph 34.
The Court of Appeal rejected the argument that because the Code has been described as a “self-contained” code of sui generis statutory rights (see Lady Rose in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18; [2022] PLSCS 99 and Sir Terence Etherton in Cornerstone Telecommunications Infrastructure Ltd v University of London [2019] EWCA Civ 2075; [2019] EGLR 58), it should exist in a vacuum.
The court held that the regime contained in the Code was 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 parties to the agreement and can exercise the rights conferred by Part 5 of the Code”.
It came to this conclusion because often rights are conferred by contract (wayleaves) as well as by proprietary rights (leases).
Accordingly, it determined that the purpose of paragraph 10 was to make code rights binding in circumstances where they were not granted by lease, but existed only in contract. As such, paragraph 10 could not be exhaustive.
In argument, the court remarked that the law concerning leases had been worked out over centuries, and that as a result paragraph 10 had been drafted with contractual arrangements in mind. The decision will provide certainty to all sides involved in these sorts of arrangements.
Laura West is a senior associate (barrister) at Penningtons Manches Cooper
