Appeal court clarifies Electronic Communications Code interpretation

Michael Smith, Ian Morgan, and Joseph Green of Pinsent Masons, who specialise in resolving disputes relating to the Code, were commenting after the Court of Appeal clarified that the holder of a “concurrent lease” is to be considered “party to an agreement” entered in to by a telecoms operator with the original landlord in respect of rights to install, maintain and operate electronic communications apparatus on the site.

In the case considered by the Court of Appeal, Vodafone was seeking to obtain a fresh agreement under the Code to operate electronic communications apparatus (ECA) on the site of an old fire station in the town of Bingley in Yorkshire.

Vodafone entered in to an agreement to install ECA in 2003 with the previous owner of the freehold for the site, Publico. That 15-year agreement was entered into under the ‘old’ 2003 Code – with the ‘new’ 2017 Code providing enhanced rights for operators.

Before Vodafone’s existing agreement was due to expire in November 2018, another company, AP Wireless II (APW), obtained a concurrent lease from the then freehold owner, Potting Shed Trading (PST). The concurrent lease was granted in June 2018 for a term of 40 years. The effect of that agreement was that APW was entitled to the payment of rents due by Vodafone under its original lease.

Subsequently, Gencomp acquired the site from PST and was registered as the freehold owner of it in 2020.

Vodafone sought to renew its lease and served notices on Gencomp but not APW on the basis it did not regard APW as being either a “successor in title” or a “party to the agreement” between it and the original site provider, as required by the Code. APW alleged that it was the relevant party for notices to be served on as it was Vodafone’s direct landlord by virtue of the concurrent lease.

The issues were considered in the first instance by the Upper Tribunal (Lands Chamber). It interpreted paragraph 10 of the Code, which deals with who is bound by Code rights, as being exhaustive, favouring Vodafone’s interpretation that APW was not a “successor in title” to the freehold title or a “party to the agreement”. However, on appeal by APW, the Court of Appeal took a different view. Whilst it agreed that APW was not a “successor in title” to the original grantor, it held that the Code does not exhaustively define who is to be treated as a ‘party to the agreement’ and that the issue should be determined by reference to “how the instrument” – i.e. the Code – “is intended to work and why” and not simply the language used in the relevant provisions.

The Court of Appeal therefore decided that “the persons who are currently entitled to the benefit and burden of an agreement are the parties to the agreement for the purposes of the Code”. It further held that “one should construe the Code in such a way as best to achieve the goal of making the regime work as intended” and allowed APW’s appeal, considering that it is a “party to the agreement” constituted by Vodafone’s lease for the purposes of the Code.

Morgan said the court had reflected on the lack of clarity in the wording of the Code on who is bound by code rights, highlighting how it had described the Code as “a lengthy and highly complex set of provisions”. He said the Court of Appeal centred on a ‘purposive’, common sense or practical interpretation of the relevant provisions of the code, drawing on case law from the UK Supreme Court in the process.

Morgan said: “This decision is likely to come as a further signal boost for operators and infrastructure providers alike, because in following the Supreme Court’s guidance in the cases of Compton Beauchamp, Ashloch and Queen’s Oak Farm, it represents further heavy hitting authority to the effect that, despite its apparent complexity, the Code should be applied in a purposive and common sense way, placing front and centre the Code’s aims to drive long-term investment and growth in digital communications infrastructure, essential for the future of UK plc.”

Smith said it was not surprising that the Court of Appeal had taken a purposive approach to interpreting the Code in light of the Supreme Court’s decision.

“No amount of interpretative gymnastics on the Code could have defined APW as a ‘successor in title’ to the freehold interest, whilst the term ‘party to an agreement’ has a lot more flex in it as a legal concept,” Smith said. “The Code does not say ‘original’ party to an agreement and hence the Court of Appeal felt able to interpret this term in a way so as to make the Code work as intended.”

Green added: “It seems the obvious decision that the Code should be read in such a way that the persons who are currently entitled to the benefit and burden of an agreement are the parties to the agreement for the purposes of the Code, but the fact it took the Court of Appeal 68 paragraphs to sufficiently explain the intricacies of the Code before it considered it possible to deliberate the position where a freeholder grants a concurrent lease, shows how complex the provisions of the Code are and how useful this guidance will be for both operators and site providers.”