In On Tower UK Limited v British Telecommunications Plc [2024] UKUT 51 LC, the Upper Tribunal (Lands Chamber) was asked to address key aspects of the Electronic Communications Code.

In On Tower UK Limited v British Telecommunications Plc [2024] UKUT 51 LC, the Upper Tribunal (Lands Chamber) was asked to address:

• The circumstances in which a building purposefully constructed to accommodate electronic communications apparatus can itself constitute electronic communications apparatus for the purposes of the Electronic Communications Code (the Code).
• Whether, where a lease or Code agreement contains a break option, the landowner must serve a contractual break notice or if service of a Paragraph 31 termination notice - under the Code - will suffice. 

Case

The case related to On Tower, which had a lease of a rooftop site at the Kenton Road telegraph exchange, owned by BT. That lease contained a landlord’s break right exercisable upon written notice.

The building was constructed in the 1930s as a telegraph exchange and had become largely obsolete, albeit it housed some telecoms equipment, offices, a kitchen and storage area.

BT served a contractual break notice to terminate the lease mid-way through the term. It also served - on a without prejudice basis - a termination notice under Paragraph 31 of the Code albeit, at that stage, BT did not consider such a notice to be necessary.

Due to errors with the drafting, the break notice was subsequently found to be invalid.

On Tower applied to the Tribunal to determine whether it had Code rights that could prevent or delay its removal from the roof of the building and, assuming it did, whether the Paragraph 31 Notice served by BT was valid to terminate its interest, assuming that in time BT could demonstrate one of the applicable grounds of termination under the Code.

Code Rights

It is well established that the Code only allows Code rights to be obtained against land, not other electronic communications apparatus (ECA).

BT argued that On Tower could not have acquired Code rights in respect of the rooftop site because the building itself constituted ECA. This was because its main purpose was to house electronic communication apparatus. BT supported its contention with reference to the definition of ECA in Paragraph 5 of the Code, which states that ECA can include a building where the sole purpose of that building is to enclose other ECA.

The Tribunal disagreed, concluding that On Tower had acquired Code rights in respect of the roof space.

While the Tribunal acknowledged that Code rights cannot be obtained against other ECA, it found that in this instance the building constituted land against which rights could be secured.

Crucially, it made a distinction between a building’s sole purpose and main purpose. Though the use of the building to house ECA was indeed its main purpose, it was not its sole purpose due to the ancillary offices and kitchen areas, and so it fell outside the definition in Paragraph 5 of the Code.

Termination

Due to the errors in the break notice, it was agreed by the parties that the contractual break option in the lease would not take effect. As the Tribunal had found that On Tower benefitted from Code rights, it needed to consider whether service of a Paragraph 31 notice alone would be sufficient, on its own, to terminate the lease midway through its term.

It held that service of a Paragraph 31 notice without contemporaneous service of a contractual break notice would be sufficient to terminate the lease provided the date specified in the Paragraph 31 notice was a date after the break date specified in the lease. This indicates that a Paragraph 31 notice will be of no effect during the term if there is no break right in the lease.

Comments

The Tribunal’s ruling offers some welcome clarification that a building must house ECA as its sole purpose in order to constitute ECA, in respect of which Code rights cannot be acquired.

However, it means landowners will have limited scope to argue that a building containing ECA also constitutes electronic apparatus in order to defeat any notion that Code rights apply. It seems that the building must be put to no other use, however ancillary or inconsequential that use may be, for the building itself to constitute ECA.

The ruling with regards to the break notice is particularly surprising as it moves away from the long-held notion that contractual break notices must be served in tandem with statutory termination notices in order to effect lease termination - most commonly experienced in practice where “opposed” section 25 notices under the Landlord & Tenant Act 1954 must be coupled with a valid contractual break notice in order to be effective.

It is interesting that the Tribunal has diverted away from this long-established position, particularly given the swathes of case law associated with lease termination under the 1954 Act are often used by the Tribunal as a guide in resolving similar cases under the Code. Nonetheless, this decision may be well-received by landowners as it potentially eases the procedural burden of obtaining possession.

The decisions emanating from the Tribunal in relation to the Code continue to surprise the industry, and landowners and operators should be aware that outcomes are difficult to predict. Legal advice should be sought prior to embarking upon any termination process where an operator is in situ.