Judgment handed down in Vodafone Limited v (1) Gencomp (No 7) Limited (2) AP Wireless II (UK) Limited
The Upper Tribunal has handed down judgment in Vodafone Limited v (1) Gencomp (No 7) Limited (2) AP Wireless II (UK) Limited, a case concerning the procedure for renewal of agreements under the Electronic Communications Code in the context of a concurrent lease. The decision has potentially significant ramifications for holders of concurrent leases of telecommunications sites, particularly in a development context.
The operator, Vodafone, had begun occupying the site by virtue of a lease entered into with the then-freeholder. Since that original lease was granted, a concurrent lease had been granted to the second respondent, and the freehold had been transferred to the first respondent.
The operator wished to have a new or renewed agreement, and served a number of notices under paragraphs 20 and 33 of the Code, to cover all possible permutations regarding the appropriate party to confer code rights and who should be bound by them. The Tribunal determined a number of preliminary issues relating to those points.
The Tribunal determined that:
- As under the new Code, under the old Code (contained in schedule 2 to the Telecommunications Act 1984), it was necessary for rights to have been granted by the occupier of land for the time being (discounting the occupation of an operator already in occupation) for them to be code rights. Therefore, that was a necessary precondition for any agreement to be a ‘subsisting agreement’ for the purposes of the transitional provisions, contained in schedule 2 to the Digital Economy Act 2017). However, in most cases, where there is a formal agreement such as a lease, it would be a proper inference from that situation that the grantor of the original rights had been in occupation at the time. Accordingly, it was likely to be an exceptional case where the operator would not be able to discharge the burden of proof.
- The Tribunal had no jurisdiction to order any of the parties to enter into a conferring agreement under paragraph 34.
The freeholder was not able to do so because code rights are to be conferred by the ‘occupier’. Disregarding the occupation of Vodafone (as per the Supreme Court’s decision in Cornerstone v Compton Beauchamp [2022] UKSC 18), the occupier was the concurrent lessee, not the freeholder, which was not in a position to confer a right to possession.
As for the concurrent lessee, the Tribunal rejected the argument that the parties referred to in paragraph 10 of the Code are not exhaustive of those who are to be treated as a ‘party to the code agreement’ for the purposes of the Code, in particular for the purpose of service of notices under paragraphs 31 and 33. Accordingly, the concurrent lessee was not a ‘party to the code agreement’ and could not grant rights on renewal under part 5, nor would it assist for it to be bound by rights granted by the freeholder, as those rights themselves would be insufficient.
However, the concurrent lessee, being the occupier, was in a position to grant new rights, or to have an agreement imposed upon it by the Tribunal under part 4.
- The Tribunal had jurisdiction to order the parties to enter into either a bipartite or tripartite agreement.
A number of points emerge from the decision:
- For an operator whose immediate landlord is a concurrent lessee, renewal under part 5 of the Code is not possible. Instead of serving notice under paragraph 33, such an operator should serve notice under paragraph 20 on their immediate landlord to obtain a new agreement (and if that agreement is to be imposed by the Tribunal, must pass the paragraph 21 test). It is not yet apparent what will happen to the existing agreement in those circumstances.
- As the Tribunal noted, the decision leaves concurrent lessees who may wish to redevelop land subject to code agreements in potentially significant difficulty, as they will not be a ‘party to a code agreement’ for the purpose of serving a paragraph 31 termination notice. Alternative structures for redevelopment plans may have to be considered.
- The Tribunal has previously determined a number of part 5 renewals where rights were to be conferred by a concurrent lessee – by way of recent example, EE & H3G v Stephenson [2022] UKUT 180 (LC) and On Tower UK Limited v AP Wireless II (UK) Limited [2022] UKUT 152 (LC). It would appear that the Tribunal does not have jurisdiction in any similar references currently proceeding through the system.
Wayne Clark and Fern Schofield appeared for the Second Respondent. Graham Read QC appeared for the Claimant. The judgment can be found here.
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