AP Wireless II (UK) Ltd v On Tower UK Ltd

Telecommunications – Electronic communications code – New agreement – Respondent assignee of licence agreements seeking new code agreement rights – First-tier Tribunal deciding as preliminary issue that respondent was person with standing to apply for new agreement – Appellant site provider appealing – Whether assignee of benefit of licence being an operator “who is party to code agreement” within paragraph 33 of Code – Appeal dismissed The appellant was the site provider and the respondent was the assignee of licence agreements in respect of three sites under the Electronic Communications Code. Although the respondent was the assignee, it had not agreed to perform the obligations of the licensee in the code agreement. Under paragraph 10 of the Code, only an operator on whom a code right was conferred, a person with an interest in land who agreed to be bound by code rights or their successors in title, were treated as a party to the agreement able to give or receive notices to seek a new agreement under Part 5 of the Code and seek relief from the court. The respondent made references to the First-tier Tribunal under paragraph 33(5) of the Code, seeking new leases under paragraph 34. The issue for determination as a preliminary issue was whether an assignee of the benefit of a licence agreement was to be treated as a party to that code agreement. The FTT decided in all three cases that, since the respondent had wholly replaced its assignor as the operator on each site, as evidenced by payment of a licence fee to and its acceptance by the appellant, it was appropriate to treat the respondent as the operator who was the party to the code agreement. Therefore, it was a person with standing to apply for new agreements under paragraph 33. The appellant appealed. Held: The appeal was dismissed. (1) There was no requirement to read into paragraph 33, to make it work, words to the effect that it only applied where an assignee had taken all the benefits and all the burdens of the original contracting party. The respondent being currently entitled to the benefit as assignee of the agreements was to be regarded as a “party to a code agreement” with the result that it could invoke paragraph 33: Vodafone Ltd v Potting Shed Bar and Gardens Ltd [2023] EWCA Civ 825; [2023] EGLR 31 considered. The question here was whether, and in what circumstances, someone who was not standing in the shoes of the licensee for all purposes could be treated as a party to the agreement.  (2) The reasoning of the FTT wrongly equated the enjoyment of code rights with being a party to a code agreement. While the code agreement was continued because the code rights were being exercised, and the operator could not enjoy the code rights absent a continuing code agreement, it did not follow that the operator was a party to the agreement. The reasoning of the FTT being flawed, it was necessary to consider the matter afresh. The arguments of the parties were finely balanced. It was difficult to identify an interpretation of the Code that was wholly consistent with all its provisions and also made commercial sense and that provided clarity for its practical application. (3) The need for certainty for operators and site providers alike could be said to support the appellant’s case on the basis that, in the main, each operator and site provider would know which operator had the benefit of the agreement and whether it had covenanted with the site provider to perform the burden of the agreement. Commercial good sense, on the other hand, tended to support the respondent’s case that an operator lawfully in place, which had enjoyed the benefit of the agreement for some time and paid the licence fee to the site provider, was clearly the operator principally interested in the termination, variation and renewal provisions of the Code, not the operator that assigned away all rights to use the site years previously. Having weighed all the arguments and having regard to the evident purpose of Part 5, the better interpretation was that the Code required to be treated as operator whoever was a party to a code agreement, an operator who was a lawful assignee of the benefit of a licence agreement, occupied the site as the operator in place of the assignor, and assumed the primary responsibility for complying with the terms of the licence agreement (including paying the licence fee), whether or not they had made a deed of covenant with the site provider. (4) Who was to be treated for the purposes of the Code as a party to a code agreement was a different question from whether, under the general law, the assignor was a party to the licence agreement or remained liable under its terms. The fact that under Part 5 an assignee was treated as a party to the code agreement did not mean that the assignor was not liable under the agreement as a contracting party or that the assignee had displaced the assignor for all purposes of the general law. It meant that, for the purposes of the application and operation of the Code, the assignee was deemed to be a party to the code agreement in place of the assignor. Where the assignment was lawful, there should not be any difference in the result, so far as the operation of Part 5 was concerned, between a case where the assignee had covenanted with the site provider or its predecessor in title to perform the obligations in the agreement and a case where the assignee had covenanted with the assignor to perform them. In both cases, it was the assignee who had formally taken over from and stood in the shoes of the assignor in connection with the code agreement and its continuation, variation or renewal. (5) Although the terms of the assignment would not necessarily be disclosed to the site provider, the obvious inference to draw from notification of the interest of the new operator and/or payment of the licence fee by the operator, as happened in all three cases on this appeal, was that there has been a formal assignment. The site provider was safe to assume that the assignee was the relevant operator in those circumstances, but in case of any doubt it could inquire. The FTT had reached the right result in all three cases, albeit for the wrong reasons. Toby Watkin KC and Wayne Clark (instructed by Eversheds Sutherland (International) LLP) appeared for the appellant; Kester Lees KC (instructed by Gateley) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of AP Wireless II (UK) Ltd v On Tower UK Ltd