The Court of Appeal's judgment in Potting Shed Bar and Gardens Ltd (formerly Gencomp (No. 7) Ltd) v AP Wireless II (UK) Ltd [2023] EWCA Civ 825 is the latest to provide clarification on the interpretation of the Electronic Communications Code adopting a purposive approach to construe that a party to a new Code agreement need not be an original contracting party and, in doing so, closing another loophole in the Code.

Background

The case concerned a proposed lease renewal by Vodafone of a telecoms mast site in Bingley, Yorkshire.

The original lease had been granted to Vodafone in 2003 by the then owner of the site. In 2018, a subsequent owner of the site granted a concurrent, or interposed, lease to APW. A concurrent, or interposed, lease is one "granted subject to and with the benefit of a lease which is already in existence". In this case, APW became the tenant of the owner and stepped into the shoes of the owner to become the landlord of Vodafone.

Vodafone, wishing to obtain new Code rights following the contractual expiry of its lease in 2018, served a suite of alternative Code notices on each of APW and Gencomp and thereafter applied to the Upper Tribunal for this purpose. But, due to unclear provisions in the Code, the application gave rise to a question: what Code procedure must Vodafone use to achieve this?

The issue

The renewal procedure under Part 5 of the Code can be invoked by either operator or site provider but both must also be a "party to the agreement". It was not disputed that APW was a "site provider" under the Code, as it was bound by the Code rights conferred under the lease to Vodafone, and the question turned on whether APW was to be treated as a party to the lease.

Paragraph 10(3) of the Code specifically provides that a "successor in title" to the original grantor must be treated as a party to the agreement, but paragraph 10 does not contain any similar provision for a person with an interest in land derived from the original grantor or its successor. Vodafone argued that, although the lease was binding on APW, APW was not a party to the agreement and therefore Vodafone could not seek a Part 5 renewal from APW.

APW on the other hand contended that they should be regarded as a party to the agreement even although there is no express provision to this effect in the Code.

Upper Tribunal's decision

The Upper Tribunal was persuaded by Vodafone's argument and held that APW was not a party to the code agreement and that the parties were therefore unable to renew the lease under Part 5 of the Code. This also meant that a site provider in this situation would be prevented from terminating a code agreement under Part 5 of the Code.

Court of Appeal's decision

The Court of Appeal disagreed with the Tribunal's reasoning and allowed the appeal holding that APW was to be treated as a party to the agreement for the purposes of the Code.

The Court of Appeal considered that "party to the agreement" was not intended to be confined to (i) an original contracting party and (ii) a person expressly stated by the Code to be a person treated as a party to the agreement.

This purposive approach to interpretation of the Code followed the guidance given by the Supreme Court in Compton Beauchamp that the Code should be construed in such a way as best to achieve the goal of making the regime work as intended.

Implications

This important judgment plugs another gap in the Code where termination and renewal rights could be blocked where a concurrent, or interposed, lease has been granted. This will be particularly welcome for site providers looking to terminate telecoms leases for redevelopment purposes, where the developer's interest is held under a concurrent, or interposed, lease.

If you are an operator, owner or occupier with concerns or queries about the Code, or how this decision may impact upon you or your business, please do not hesitate to get in touch with a member of our Telecoms team or your usual Brodies' contact.

Contributors

Scott Logan

Legal Director

Lucie Barnes

Partner