Contractual telecoms code agreements need to be terminated before terminating statutory rights

On Tower UK Limited v British Telecommunications PLC [2025] EWCA Civ 844

The Court of Appeal (CoA) has allowed an appeal brought by On Tower UK Limited against an earlier Upper Tribunal (Lands Chamber) decision [2024] UKUT 51 (LC).

The case concerned the interpretation of the termination provisions of agreements under paragraph 31 of the 2017 Electronic Communications Code (Code).  Paragraph 31 states:

How may a person bring a code agreement to an end?

1. A site provider who is a party to a code agreement may bring the agreement to an end by giving a notice in accordance with this paragraph to the operator who is a party to the agreement.
2. The notice must—
   1. comply with paragraph 89 (notices given by persons other than operators),
   2. specify the date on which the site provider proposes the code agreement should come to an end, and
   3. state the ground on which the site provider proposes to bring the code agreement to an end.
3. The date specified under sub-paragraph (2)(b) must fall—
   1. after the end of the period of 18 months beginning with the day on which the notice is given, and
   2. after the time at which, apart from paragraph 30, the code right to which the agreement relates would have ceased to be exercisable or to bind the site provider or at a time when, apart from that paragraph, the code agreement could have been brought to an end by the site provider.
4. The ground stated under sub-paragraph (2)(c) must be one of the following—
   1. that the code agreement ought to come to an end as a result of substantial breaches by the operator of its obligations under the agreement;
   2. that the code agreement ought to come to an end because of persistent delays by the operator in making payments to the site provider under the agreement;
   3. that the site provider intends to redevelop all or part of the land to which the code agreement relates, or any neighbouring land, and could not reasonably do so unless the code agreement comes to an end;
   4. that the operator is not entitled to the code agreement because the test under paragraph 21 for the imposition of the agreement on the site provider is not met.

Factual Background

BT granted a lease to On Tower for electronic communications apparatus on the roof of one of BT's telephone exchanges. The Upper Tribunal held (and this was not appealed) that the lease was a Code agreement.

On 3 October 2022 BT sought to terminate the agreement by (a) serving a contractual break notice terminating the lease on 8 November 2023 and (b) serving a notice pursuant to paragraph 31 of the Code purporting to terminate the Code agreement on 8 April 2024.

On Tower served a counter-notice stating that it did not want its Code rights to terminate.  The matter was brought to the Upper Tribunal.

Termination of Code Agreements

Paragraph 31 of the Code provides that, if a site provider wishes to terminate a Code agreement it must do so by serving notice. The notice must expire at least 18 months after service (paragraph 31(3)) and after the Code right "would" have ceased to be exercisable or after it "could" be brought to an end.

Upper Tribunal's Decision

BT focused on the use of "could" in paragraph 31(3)(b), arguing that the fact that there was an exercisable right (i.e. the contractual break option) meant the site provider could terminate the agreement before the end of the contractual term. By that analysis, BT could serve a statutory termination notice under paragraph 31 of the Code, even without serving a valid contractual break notice.

The Upper Tribunal, accepting BT's arguments, found that for the service of a termination notice under paragraph 31 of the Code, it is sufficient for it to be an exercisable break right; there is no legal requirement for a valid break notice to be served.

On Tower appealed.

Court of Appeal Decision

The Court of Appeal rejected BT's argument and allowed On Tower's appeal.

The CoA (at para 40 of its judgment) accepted the point made by the Upper Tribunal that paragraph 31(3)(b) of the Code is in two halves. The first half referring to the termination notice expiring after effluxion of time, when the contractual Code agreement "would" expire and the second half referring to termination of the Code agreement by some other method, i.e. contractual break notice.

The question was whether the break notice actually needed to be served.

At para 66 of the judgment, the CoA held that both BT and the Upper Tribunal "invested the word “could” with more meaning than it could possibly bear in this context". The word "would" is used in paragraph 31(3) of the Code to refer to termination of the Code agreement by effluxion of time.  The word "could" is used to provide for the scenario where a site provider could bring about early termination of the contractual Code agreement.

The CoA, taking into account the purpose of the Code and the language used by Parliament in the drafting, held that the use of "could" in the conditional tense, still meant that the condition must be satisfied, i.e. the break notice must be served, and did not allow for termination under paragraph 31 of the Code merely because of the theoretical existence of an early break option.

The CoA ran through hypothetical examples of Code agreements being terminated under paragraph 31 of the Code by a site provider due to the existence of a conditional break right even where the conditions in the break right were not satisfied e.g. payment of a premium or an operator applying to Court to modify or vary its Code rights under Part 5 of the Code. Such scope to modify or vary Code rights can only apply after the contractual term has ended (Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18), but if the Upper Tribunal's decision had stood in this case, it would have meant an operator could immediately apply for variations based on the simple existence of a break right.

Commentary

This CoA decision is welcome and overturns the confusing misinterpretation of the Upper Tribunal. The Code requires termination notices to expire after (a) at least 18 months' notice and (b) after the contractual Code agreement has actually ended.

Code agreements must therefore contain their own termination provisions, which will need to be satisfied, before a site provider can terminate statutory rights under the Code.

Termination of Code agreements by site providers must follow actual termination of the contractual Code agreement.