Success for site provider as Upper Tribunal confirms Paragraph 40(8) of the Code is not “Last Chance Saloon”

In November 2023, we shared our thoughts on the First-Tier Tribunal (“FTT”) decision in On Tower UK Limited v Gravesham Borough Council, in which it was held that an operator could seek an order imposing a new Code agreement under Part 4 of the Electronic Communications Code even where it had failed to successfully renew its lease of the same site under Part 2 of the Landlord and Tenant Act 1954. In a decision which will be welcomed by the site provider community, the Upper Tribunal (“UT”) has now reversed the FTT’s initial findings on appeal – see the full UT judgment here.

Reminder of Background and FTT decision

• As a reminder of the background to the Reference, it involved a rooftop telecoms site on an eight-story residential building. The Respondent Council was the freeholder.
• The apparatus had been in place since 1997 under a 1954 Act protected lease which had been assigned to the Claimant operator, On Tower. The lease had contractually expired in 2017 but was continuing under the 1954 Act.
• The Respondent needed to carry out roof repairs to fix persistent leaks which were affecting flats in the building. The repairs necessitated removing the apparatus. The ‘lift and shift’ of the apparatus could not be negotiated by consent.
• Following the service of a section 25 notice by the Council in December 2021, the operator issued court proceedings for a new tenancy in July 2022 but due to procedural failures, did not serve them within the 4-month deadline by November 2022.
• On Tower applied to the court for permission to extend the time for service but its application was dismissed and its 1954 Act claim was struck out in February 2023.
• A few days before the final order for dismissal was made by the court, On Tower served a paragraph 20 notice on the Council seeking a new Code agreement under Part 4 of the Code along with a paragraph 27 notice seeking temporary Code rights. It then issued a Reference to the FTT under paragraph 20 of the Code in June 2023. In July 2023 the Council sought to strike out On Tower’s application.
• In a surprising decision, the FTT dismissed the Council’s application to strike out On Tower’s claim under Part 4 of the Code, holding that an operator whose right of renewal under the 1954 Act had become exhausted was entitled to pursue a claim for new rights under the Code. Although an operator does not have concurrent rights under the Code and 1954 Act and could not select which regime to use, it could still use use them consecutively.

Council’s Appeal

The Council appealed the FTT’s decision on 3 grounds:

1. The only route to renewal of On Tower’s rights was under the 1954 Act and having failed, it was not entitled to try again under Part 4 of the Code; or
2. For On Tower to have another go under Part 4 of the Code was an abuse of process; or
3. On Tower’s Code notices under Paragraphs 20 / 27 had been served while its tenancy was continuing under the 1954 Act and it still enjoyed Code rights and were therefore invalid and could not be used as the basis of a Tribunal application under Part 4 for new Code rights.

Upper Tribunal Decision

Ground 1 – allowed

• In considering the first ground of appeal, the UT considered the intended operation of the 2017 Code and the policy reflected in the Law Commission Report and Government consultation response which preceded it. It was clearly intended that rights of renewal would be available to an operator either under the Code, or under the 1954 Act, but not under both. This had also been confirmed by the Supreme Court in Compton Beauchamp.
• The UT was satisfied that the proper interpretation of the Code requires that an operator which has exhausted its rights of renewal under the 1954 Act is prevented from making a further application under Part 4 of the Code. On this basis, the FTT did not have jurisdiction to entertain the reference under Part 4 and should have struck it out.
• The UT clarified that the direction under paragraph 40(8) of the Code (i.e. that on a removal application the Tribunal may not make an order if an application under Part 4 for new Code rights has been made) does not of itself authorise the making of such application, with Martin Rodger KC stating that the most that could be said about paragraph 40(8) is that it “indicates that there will be circumstances under which an application under Part 4 may coincide with a removal application under Part 6”.

Ground 2 – refused

• The Tribunal noted that On Tower was seeking to bring new proceedings having suffered the dismissal of its original claim on purely procedural grounds (i.e. failure to serve in time), rather than after an examination of its merits. Referring to Aktas v Adepta [2011] , the UT noted that a merely negligent failure to serve a claim form in time is not of itself an abuse of process meaning a second claim raising the same cause of action should be struck out.
• On this basis, the UT held that the appeal on ground 2 was refused.

Ground 3 – allowed

• The Tribunal considered whether the operator was entitled to serve notices under paragraph 20/27 of the Code while its tenancy was ongoing.
• There was detailed consideration of the operation of section 64(1)of the 1954 Act, which provides that once an application for a new tenancy has been made, the effect of a notice to end the tenancy is to terminate the lease on the date that is three months after the date on which the application is ‘finally disposed of’. Section 64(2) the 1954 Act further explains this means the date by which the proceedings have been ‘determined ‘and any period for appeal has expired.
• The Upper Tribunal agreed with the FTT that the reference to the term ‘determined’ implied more than an administrative determination and required a judicial decision to have been made.
• On the basis the paragraph 20/27 notices were served prior to the court striking out On Tower’s 1954 Act claim, On Tower had not been entitled to serve the notices. On this basis, On Tower had commenced its Part 4 claim under the Code without having first made a valid request under paragraph 20. This was therefore a further free-standing ground for dismissing the reference.

Success for Site Providers

• This is an important decision for the site provider community. Property owners are already justifiably concerned about the impact of telecoms equipment on their ability to redevelop property, or as in the case of Gravesham BC, to even carry out essential roof repair works.
• The decision of the FTT undoubtedly was a cause for uncertainty and meant site providers who had already been through lengthy and expensive proceedings under the 1954 Act could potentially then be faced with an application under Part 4 for a new Code agreement. The clarification and reversal of the original decision is therefore welcomed.