Further to our previous articles covering the First-tier Tribunal and Upper Tribunal decisions in this case, this recent Court of Appeal decision confirms that telecoms operators who take an assignment of the benefit of a licence granting Code rights are parties to a Code agreement for the purposes of Part 5 of the Electronic Communications Code.
The Electronic Communications Code (the Code) is a statutory code regulating the rights of telecommunications operators to install and maintain their apparatus on public and private land. The current version of the Code is contained in Schedule 3A to the Communications Act 2003.
The Electronic Communications Code (the Code) is a statutory code regulating the rights of telecommunications operators to install and maintain their apparatus on public and private land. The current version of the Code is contained in Schedule 3A to the Communications Act 2003.
"Code rights" (ie. rights of installation and maintenance under the Code) can be acquired by an operator either by written agreement with the occupier of land (under Part 2 of the Code) or by an agreement imposed by court order (under Part 4 of the Code). When Code rights are acquired under Part 2 of the Code, the agreements granting the Code rights are subject to the provisions of Part 5 of the Code and are referred to as "Code agreements".
Part 5 of the Code governs the termination and modification of such Code agreements. In particular, paragraph 33 in Part 5 entitles operators or site providers who are "party to a code agreement" to give notice to the other party to seek to change the terms of, or terminate and replace that agreement. If the parties cannot agree on the proposals in the notice, then an application can be made by the operator or site provider to the Tribunal for one of the available orders under paragraph 34. These include orders for modification, termination and/or replacement of the relevant Code agreement.
Paragraphs 33 and 34 were central to matters in dispute in On Tower UK Limited v AP Wireless. On Tower, a telecoms operator, had, by virtue of assignment, acquired the benefit of two telecoms site licences in Cheshire and County Durham. Both licences were Code agreements. Invoking Code rights under paragraph 33 of the Code, On Tower gave notice to AP Wireless, the site provider, requesting new leases of the sites at much reduced rents. Eventually, On Tower made applications to the First-tier Tribunal for orders for new leases of each of the sites in accordance with the Tribunal's power under paragraph 34.
AP Wireless contested the first-instance application to the Tribunal, on the basis that On Tower was the assignee of a licence for both telecoms sites and only the benefit of licences could be assigned, without the corresponding burden (which, as a matter of contract law, cannot be assigned). For this reason, AP Wireless contended, On Tower had not become "party to" the Code agreements, and so was not entitled to request a new lease under paragraph 33, or to seek an order from the Tribunal for one under paragraph 34.
The First-tier Tribunal found in favour of On Tower, finding that assignment of the benefit of the licences alone was sufficient to make On Tower party to a Code agreement – quoting the 2013 Law Commission report on the Code, the assignment had put one operator "in the shoes" of another, even if the burden of the licences had not been assigned.
AP Wireless appealed against the decision in the Upper Tribunal. There, the judge agreed that burden was required in order to be party to a Code agreement, but did not accept AP Wireless' position that an assignee must become liable to the site provider for performance of the agreement obligations. In the Upper Tribunal's view, the operator who is party to the Code agreement (and therefore has the burden of it) was to be determined by reference to who has "primary responsibility" for performing the obligations. Accordingly, the appeal was dismissed.
AP Wireless appealed again, which is what brought the case to the Court of Appeal (and this decision). At the appeal, AP Wireless maintained the position that an assignee operator could not "stand in the shoes" of the assignor until it was under a direct obligation to the site provider to perform the obligations of the Code agreement. On Tower, on the other hand, requested that the First-tier Tribunal's decision be upheld (ie. that assignment of the benefit was enough for it to be "party to" the agreements), or alternatively that the burden had also passed to it on benefit and burden principles, or by virtue of paragraph 12(1) of the Code (i.e, that the assigned Code rights were only exercisable in accordance with the terms subject to which they were conferred).
The Court of Appeal focussed on the question of whether assignment of benefit alone is enough to make an operator party to a code agreement. It concluded that it was.
Whilst acknowledging that in conventional contract law, an assignee of the benefit of a contract does not become a "party" to it, Lord Justice Newey (with agreement from Lords Justice Holgate and Foxton) was of the view that Parliament's intention in drafting the Code should be taken into account. Newey LJ found that the Code's reference to a "party" to a Code agreement was intended to be broader than those who would be viewed as parties under contract law.
In arriving at this conclusion, Newey LJ had regard to the judgment in Vodafone Ltd v Potting Shed Bar and Gardens Ltd (formerly known as GENCOMP (No 7) Ltd) [2023] EWCA Civ 825, [2024] 1 WLR 141, which held that "parties" to a Code agreement cannot have been intended to refer only to the original parties, given that it will be the parties "currently entitled" to the benefit and/or burden of such an agreement who will need to enforce and/or have the benefit of Code rights against each other.
Additionally, Newey LJ pointed to numerous provisions of Part 5 of the Code which, by their wording, suggest that they were intended to be exercisable by those currently entitled to the benefit and burden. It would not for example make sense for notice to be served on a former site provider who had assigned their interest in an agreement, or for a site provider to seek to end an agreement for substantial breaches or delays in making payment by anyone other than the current operator.
Ultimately, Newey LJ concluded that an operator being assigned only the benefit of a Code agreement was sufficient. Nowhere in the Code does it expressly require an assignee to assume the burden of a Code agreement (APW's argument), nor for them to assume primary responsibility (the argument of the Upper Tribunal); conversely, Newey LJ referred to the stated aims of Parliament, in drafting the Code, "to make it easier for communications providers to deploy and maintain their infrastructure". In Newey LJ's words, "treating the operator who is now exercising the code rights in question as a “party to [a code/the] agreement” within the meaning of Part 5 serves those aims".
The Court of Appeal's decision confirms that the First-tier Tribunal was right to find that assignees of telecommunications licences can be "parties to a Code agreement" for the purposes of Part 5 of the Code. This should provide helpful clarity to any telecoms operators or site providers who are not original parties to a Code agreement but who are seeking to negotiate a new or modified agreement.
