Louise Clark grapples with a decision that highlights difficulties in the Electronic Communications Code when it comes to concurrent leases.
Key points
- Only a site provider which is party to the original agreement, or its successor, can bring Code rights to an end
- The tribunal will take a purposive approach to interpreting the Code
- Those considering a concurrent lease for redevelopment purposes should address Code rights before committing
The decision of the Upper Tribunal (LC) in Vodafone Ltd v Gencomp (No 7) Ltd and another [2022] UKUT 613 (LC); [2022] PLSCS 141 on preliminary issues relating to the renewal of a subsisting agreement has highlighted structural issues with the Electronic Communications Code (contained in Schedule 3A to the Communications Act 2003) where concurrent leases are concerned.
The background
Gencomp was the freehold owner of the Old Fire Station, a bar and restaurant in Bingley, West Yorkshire. In 2003, Vodafone was granted a lease of parts of the tower for its electronic communication apparatus. The lease expired in 2018 and Vodafone sought to renew its rights under the Code for a further 10 years. In June 2018, the then freeholder granted a concurrent lease of parts of the tower to APW, subject to Vodafone’s lease, for a term expiring in 2058. As a result, APW became Vodafone’s immediate landlord and entitled to the rents and profits and the benefit of the covenants under the 2003 lease.
Neither respondent objected to the renewal of Vodafone’s rights but they disagreed on how it was to be achieved. Vodafone argued that only Gencomp as freeholder could grant it new rights under the Code with APW being bound by them. APW argued that only it could grant new rights to the claimant which would be binding on Gencomp.
The law
Code rights can only be conferred by occupiers of land but others with an interest in or over land may be bound by them. A code right may only be conferred on an operator by agreement between the occupier of the land and the operator (paragraph 9) and since the Supreme Court decision in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18; [2022] EGLR 28 it is clear the operator seeking a code right is different from the occupier of the land.
Three categories of persons may be bound by a code right: successors in title to the occupier’s interest; those who have an interest, derived from the occupier’s interest, created after the code right was conferred; and anyone else in occupation whose right was granted by the occupier, their successor or the holder of a derivative interest (paragraph 10). However, only a successor in title is to be treated as a party to the agreement.
What procedure must Vodafone follow to obtain a new code agreement?
If Vodafone’s occupation of the site is ignored, as Compton Beauchamp requires, APW was the occupier for the time being of the tower under the Code and as such, was in a position to enter into a voluntary agreement with Vodafone under paragraph 9. It also had sufficient rights under the concurrent lease to enable it to grant easements equivalent to those enjoyed by Vodafone under the 2003 lease. Such an agreement would operate as a surrender of the 2003 lease by operation of law and the rights conferred by APW on Vodafone would bind Gencomp because they had already been granted under the concurrent lease. By contrast, Gencomp was not the occupier of the tower and so not in a position to confer new code rights on Vodafone which were not subject to the prior rights of APW under the concurrent lease.
Since the negotiation of voluntary agreements is the optimal way for the code regime to operate, it might be expected that the Tribunal’s power to impose agreements under Part 4 and to terminate and modify agreements under Part 5 would operate in a similar way to the negotiation of voluntary agreements. However, the machinery in Part 5 only allows for participation by the original conferring party and its successors. Only “a site provider who is party to a code agreement” is entitled to seek to bring it to an end or to vary its terms by serving notice on “the other party to the agreement” (paragraphs 31 and 33).
Similarly, an operator is not entitled to give a notice to a concurrent lessee under paragraph 33 since they are not “the other party to the agreement”. APW was not entitled to be treated as a party to the 2003 lease because of its concurrent lease and nor was it the successor in title to the lessor’s interest.
The tribunal considered that a purposive approach was required. Where, as here, Part 5 was not available to the occupier of the land who might be able to establish grounds of termination but could not give notice, Part 4 could apply even though, as a continuing agreement under paragraph 30, the application of Part 4 would ordinarily be excluded.
The tribunal had jurisdiction to impose an agreement on Vodafone and APW conferring code rights under paragraph 20 of the Code and that such rights were binding on Gencomp. It could also impose a tripartite agreement in that form. However, there was no jurisdiction to order any of the parties to enter into a conferring agreement under paragraph 34.
Conclusion
The Code breaks down when it encounters a concurrent lease. An operator whose immediate landlord is a concurrent lessee must invoke Part 4 to obtain a new agreement. However, a concurrent lessee who wishes to redevelop a building over which code rights have been granted by a superior landlord has no obvious means of bringing the code rights to an end. Alternative structures for development may need to be considered.
Louise Clark is a property law consultant and mediator
