[2024] UKUT 00429 (LC)

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 (“Gencomp”), the Court of Appeal had to decide whether a concurrent lessee of a site of electronic communications apparatus was “a party to a code agreement”, within the meaning and for the purposes of Part 5 of the Electronic Communications Code (“Part 5” and “the Code” respectively). The agreement in question was a tenancy that had previously been made in writing between the site owner as lessor and an operator as lessee. The effect of the concurrent lease was that the concurrent lessee became the landlord of the operator under the tenancy for the duration of the concurrent lease.

It decided that a concurrent lessee of the lessor’s interest does become a party to the code agreement, in place of the lessor, as also would an assignee of the operator’s interest as tenant of a site. That was because, put shortly, the concurrent lessee and the assignee of the lease each “stood in the shoes of” the original party to the code agreement for all relevant purposes. Nugee LJ, giving the only reasoned judgment of the court, explained that the benefit and burden of the code agreement passed to the concurrent lessee, under landlord and tenant law, just as the benefit and burden of the covenants in a lease (other than personal covenants) pass to an assignee of the original tenant or landlord.

Although, as a matter of the general law, that would not make a concurrent lessee or the assignee a “party” to the original agreement, and although the Code does not expressly deem such a person to be “a party to the code agreement”, it was necessary, to make the Code work in the way that it was clearly intended to work, for such a person to be treated as “a party to the code agreement” for the purposes of Part 5.

Nugee LJ said that it was not obvious what the answer to the problem would be if the code agreement in question had been a licence rather than a tenancy. If it had been a licence, the concurrent lease would not, as a matter of the general law, have made the concurrent lessee the licensor, or given it the benefit of the obligations owed by the licensee. But the Court did not need to decide that question in order to dispose of the appeal before it.

This Tribunal now has to decide a similar question, which is whether an assignee of the benefit of a licence agreement is to be treated as a party to that code agreement. This was raised as a preliminary issue (“the First Issue”) in three references before the First-tier Tribunal (Property Chamber) (“the FTT”). AP Wireless II (UK) Limited (“APW”), the site provider in all three cases, contends that the FTT was wrong to decide that On Tower UK Limited (“On Tower”), the assignee of a licence agreement in each case, was a party to each code agreement and so was a person with standing to apply in each case for a new agreement under para 33 of the Code.

It should be noted, parenthetically but importantly, that the First Issue cannot now arise in relation to licences entered into on or after 28 December 2017. That is because para 16(4) of the Code (which applies only to agreements made on or after that date and not retrospectively) makes the burden of all code agreements, whether leases, licences or wayleaves, pass on an assignment, and para 16(5) (which applies similarly) provides for release of the original party. That means that the conclusion in Gencomp would apply equally upon an assignment of the licensee’s interest.

Nevertheless, code agreements were and still are often made as long-term licences or wayleaves, and the draftsman of the Digital Economy Act 2017, which brought the new Code into force, with transitional provisions, clearly recognised that “subsisting agreements”, as the Code calls them, would continue for some considerable period. The three cases before the FTT were cases of pre-28 December 2017 licences and so are subsisting agreements.

The FTT decided in all three cases that since On Tower had wholly replaced its assignor as the operator on each site, as evidenced by payment of a licence fee to and its acceptance by APW, it was appropriate to treat On Tower as the operator who was the party to the code agreement, in place of the assignor.

APW contends that the FTT was wrong, and that – applying the general law and the ratio and reasoning in Gencomp – it is only in a case where the assignee of a licence has covenanted with the site provider to perform the obligations of the licensee in the code agreement in full, for the remainder of the period of the agreement, that it can be treated as the party to the code agreement for the purposes of Part 5 in place of the assignor.

If APW succeeds on its appeal on the First Issue, On Tower has two alternative arguments on the question of whether in law it was bound by the obligations of the licence agreements, and so “stood in the shoes of” the original licensees and fell to be treated as a party to those agreements. The first of these arguments (based on para 12(1) of the Code) was upheld by the FTT as an alternative basis for its decision; the second, which relies on the benefit and burden principle, was rejected by the FTT. I will refer to these as “On Tower’s Alternative Arguments”.

There is a separate issue for decision in this judgment, which is whether the FTT was correct to conclude in a different case before it that On Tower had adduced sufficient evidence of its interest as tenant under a code agreement, such that it had standing to invoke the provisions of Part 5 in that case (“the Second Issue”). The Second Issue was raised as a preliminary issue in two different references before the FTT, and APW appeals the decision in one of those cases, where it was held that On Tower had sufficiently proved its status.