Court of Appeal provides clarification on the Electronic Communications Code & Concurrent Leases

The plethora of case law clarifying the interpretation of the Electronic Communications Code (“Code”) introduced by the Digital Economy Act 2017 continues to expand with the latest decision from the Court of Appeal. In Potting Shed Bar Gardens Ltd (formerly known as Gencomp (No.7) Limited) v AP Wireless II (UK) Limited [2023] EWCA Civ 825 the Court of Appeal held that AP Wireless (“APW”) were to be treated as a party to a Code agreement where they had been granted a concurrent lease of a telecoms site . A concurrent lease is a lease that is “slotted in” above an existing lease usually running at the same time as the existing lease. The decision provides welcome clarity for landowners who have granted concurrent leases and closes a potential gap in the legislation.

Facts

In this case, Vodafone, had a lease of a site at the Old Fire Station, Bingley, Yorkshire. In 2018, the landlord (formerly known as “Gencomp”) granted a concurrent lease to APW, the effect of which was that it became the landlord of, and was entitled to receive rents from, Vodafone. The reason for granting such an interest to APW is that they are a mobile phone mast site lease investment firm. Therefore, landlords of telecoms sites receive a lump sum payment in exchange for the right to receive future rent associated with the telecoms agreement.

The contractual term of Vodafone’s Code agreement had come to an end and it wanted to renew its lease under the Code. However, it was unclear what procedure it should follow and whether it should renew it with the freeholder, Gencomp, or with the tenant under the concurrent lease, APW.

First Instance Decision

The Upper Tribunal found that there was a gap in the legislation such that APW was not a party to the Code agreement and so was prevented from taking steps to bring it to an end.

The problem was that the Upper Tribunal found that as APW did not fall within the definitions with the relevant part of the Code it could not make use of Part 5 of the Code which relates to continuation, renewal and termination. However, Gencomp could not make use of this part of the Code either because, due to the concurrent lease, it did not have the right to possession and occupation and so could not confer them on Vodafone. Part 4 of the Code (relating to the power of the Tribunal to impose a Code agreement) could not fix this gap for a landowner but it did mean that the operator could make use of it to seek a new Code agreement.

This obviously caused an issue for landowners who would be unable to bring Code agreements to an end where a concurrent lease was in place. The Tribunal granted permission to appeal this decision to the Court of Appeal.

Decision on Appeal

The Court of Appeal reversed the Upper Tribunal’s decision. It found that whilst APW would not be considered a successor in title to Gencomp it should be treated as a party to the Code agreement, entitling it to a right to terminate the Code agreement under Part 5. This was because the relevant paragraph of the Code containing the definition of who was a party to the Code agreement was not to be considered exhaustive. As a matter of property law, irrespective of the operation of the Code, the original Code agreement was binding on APW and it should therefore be regarded as a party to the agreement.

Comment

This decision provides a welcome solution to what was a potentially significant gap in the Code. It is especially important for landowners and tenants under concurrent leases who can now be reassured that they do have the power to terminate an existing Code agreement. This decision also builds on the guidance given by the Supreme Court in Compton Beauchamp in respect of the approach to be taken when interpreting of the Code. The Courts should consider how and why the regime was intended to work and not simply look at the legal language used.