Terminating agreements under the Electronic Communications Code

United Kingdom

Summary

The Upper Tribunal provides guidance on the timing of service of notices under the Electronic Communications Code to terminate Code agreements and on whom they should be served.

Case

EE Limited and Hutchison 3G UK Limited v Edelwind Limited and Secretary of State for Housing Communities [2020] UKUT 0272 (LC) is another in the increasing line of cases concerning the operation of the Electronic Communications Code, contained in Schedule 3A to the Communications Act 2003. This one, before the Upper Tribunal, concerned the Code’s provisions governing the service of a notice to terminate a Code agreement in terms of when and on whom the notice should be served.

EE and Hutchison (the operators) operated telecommunications equipment on a rooftop site of a building (at 11 Belgrave Road in London SW1) of which Edelwind was the freeholder and the Secretary of State the tenant.

The primary Code agreement relating to the equipment was granted by the tenant to EE under the old Electronic Communications Code, but was governed by the provisions of the new Code under a statutory transitional regime. The freeholder had also granted a “licence” consenting to the tenant entering into the primary Code agreement and agreeing to be bound by it. The latter was treated by the Tribunal as a secondary Code agreement.

EE purported to assign the primary Code agreement to itself and Hutchison in breach of the agreement. It was agreed that the assignment was effective if the agreement was a lease, but not otherwise. The agreement would end contractually in 2024.

Even if a Code agreement ends contractually, to terminate the statutory Code agreement a notice is required under paragraph 31 of the Code. At least 18 months’ notice must be given and expiry of the notice must be after the time at which the contractual agreement could have been brought to an end. A break notice had been served by the tenant to end its lease in April 2021 and paragraph 31 notices were served on behalf of the freeholder and tenant to end the Code agreement in respect of the rooftop equipment in June 2021.

Validity of date in notices

The operators claimed that the paragraph 31 notices were invalid, on the basis that the notices were served too early expiring before the time at which the contractual agreement would have come to an end, which they considered should be the expiry of the agreement in 2024. The freeholder and tenant argued that the contractual agreement (being derived from the tenant’s lease) would end in April 2021 following the lease ending in April 2021 (pursuant to the tenant’s break) and, therefore, the paragraph 31 notices were validly served since they expired after April 2021.

The operators argued that even though the right to break the lease had been exercised by the tenant, it did not mean that the lease would have ended, since there were pre-conditions for the break to be effective. They said that the Tribunal must find on the balance of probabilities that the lease will end in April 2021.

The Tribunal held that on the balance of probabilities the lease will end in April 2021 on the break date. As a matter of fact it is likely that where a tenant serves a break notice, it wishes to end the lease and thinks it will be able to satisfy the pre-conditions. Since the lease will end in April 2021, so will the contractual agreement and as the date in the paragraph 31 notices fell after April 2021, the Tribunal was satisfied that such date was valid. It decided that the particular secondary Code agreement was merely a consent by the freeholder to the rights granted to the operators by the tenant, not an agreement binding the freeholder after the lease ended. So this did not affect the validity of the date in the notices.

Were the notices addressed to the correct parties?

The operators also raised what was called the “recipient point”. They argued that since the primary Code agreement was assigned to both operators, the paragraph 31 notice should have been addressed to both of them, when it was addressed to only one. It was accepted by the Tribunal that an assignment of a lease in breach of a covenant is effective, but not an assignment of purely contractual rights that is in breach. The recipient point, therefore, depended on whether the Code agreement was a lease.

The Tribunal held that the Code agreement was a licence and not a lease, since there was no grant of exclusive possession of the roof (exclusive possession being a requirement for a lease). This was evidenced by the operators having limited access and the tenant generally having unrestricted access. Therefore, the assignment was ineffective and the paragraph 31 notice was addressed correctly.

Outcome

The Upper Tribunal concluded that the paragraph 31 notices were valid. An issue remains to be decided as to whether the ground of termination in the notices has been made out.