On Tower UK Ltd (formerly known as Arqiva Services Ltd) (Appellant) v AP Wireless Ii (UK) Ltd (Respondent)

1. When the revised Electronic Communications Code with which these appeals are concerned was published in May 2016, the Minister of State for Culture and the Digital Economy described the roll out of digital communications infrastructure as vitally important to citizens across the UK, as digital communications become an ever more essential part of the economic and social fabric of this country. The new Code was, the Minister said, intended to “provide a robust platform to enable long-term investment and development of digital communications infrastructure in the 21st Century”: see the Foreword to the Government’s consultation response “A New Electronic Communications Code”.

1. Under early legislation dealing with the installation of telegraph infrastructure, the necessary apparatus could generally only be placed on land with consent of the landowner. It was recognised, however, that it was not desirable to leave the selection of sites and the negotiation between site owners and telecoms operators to market forces. Legislation was needed to enable the providers of telecoms services to compel landowners either to sell land to them or to grant them rights over land on which they could install the equipment needed to build a telecoms network.

1. A code was introduced as Schedule 2 to the Telecommunications Act 1984 empowering the courts to intervene to require an unwilling landowner to provide the site and setting the terms and conditions on which the operator would install and maintain the relevant electronic communications apparatus (“ECA”) there. That code had been introduced as part of the privatisation programme to open up the telecoms sector to competition by enabling competing operators to develop networks that would compete with and supplement the network that had been developed over many years by the monopoly provider. Schedule 2 to the Telecommunications Act 1984 was substantially amended by the Communications Act 2003 (“the 2003 Act”). I shall refer to that code as amended as “the old code”. It became clear that the drafting and operation of the old code was unsatisfactory and that it was generating problems that risked jeopardising the swift, economic roll out of new technologies as they arose in this fast moving sector.

1. In September 2011 the Minister asked the Law Commission to conduct an independent review of the old code. The Law Commission carried out an extensive consultation exercise. The consultation paper published in June 2012 described how electronic communication depends on a complex array of hardware including networks of masts, cables, wires, servers, routers and exchanges. The hardware sometimes has to be located on land that does not belong to those who own the equipment: “fibre optic cables pass under streets and cross fields; mobile phone transmitters cling to church steeples and shop-fronts; and telephone cabinets are familiar on our roadsides and pavements”.

1. The Law Commission published its Report The Electronic Communications Code (Law Com No 336) on 27 February 2013 (“the Law Commission Report”). The recommendations made in that Report were largely, though not wholly, accepted by the Government in replacing the old code. The current regime for sorting out when, where and on what terms, telecoms operators can acquire the right to install their ECA on a particular piece of land is that set out in the Electronic Communications Code which came into force on 28 December 2017 and which forms Schedule 3A to the 2003 Act (“the Code” or “the new Code”). It was inserted into the 2003 Act by the Digital Economy Act 2017 (“the 2017 Act”) and has effect by virtue of section 106 of the 2003 Act (also amended by the 2017 Act).

1. As well as inserting the new Code into the 2003 Act, the 2017 Act made provision for the transition of the existing arrangements which had been made under the old code and which needed to be carried forward under the new Code. These are set out in Schedule 2 to the 2017 Act (the “transitional provisions”).

1. The three appeals that are before the court concern how the Code works, particularly in combination with the transitional provisions. The main issue is whether and how an operator who has already installed ECA on a site can acquire new or better code rights from the site owner. At the heart of the three appeals is para 9 of the Code. This provides that:

1. The Court of Appeal has decided in two of the judgments under appeal that when the operator installs its equipment on the land, in many cases it will thereafter be the “occupier of the land” for the purpose of para 9. Since an operator who is an occupier cannot enter into an agreement with itself, this means that it is thereafter precluded from applying under the Code for new code rights. That makes sense, the Court of Appeal held, having regard to the overall structure of the Code because the aim of the Code is to ensure that parties to an agreement conferring code rights stick to the bargain they have made. There are other Parts of the Code they can use once their initial agreement has expired if they want to change that bargain, subject to meeting the conditions of those other Parts.

1. The appellants are all operators within the meaning of para 2 of the new Code, pursuant to directions made by Ofcom under the 2003 Act. They have installed ECA on land but their entitlement to keep it there is precarious. They want in effect to improve the nature of their rights by applying for rights under the Code. In this judgment where I refer to the counterparty to the agreement with the operator as “the site owner” or “landowner” that is not intended to indicate that that counterparty has any particular legal interest in the land. I refer to the operator who has ECA already installed on the site as the “operator on site”.

(a)The new Code

1. The new Code is a highly complex instrument of 108 paragraphs. I describe here only those provisions which are relevant to these appeals. There are many other paragraphs of the Code dealing with rights to install ECA over railways, canals and tramways, the right to fly lines over land and conferring rights to carry out street work. I have set out the main provisions with which we are concerned in an Annex to this judgment.

1. Part 1 of the Code introduces the key concepts. The term “operator” used in the Code means a person to whom the Code is applied by a direction of Ofcom under section 106 of the 2003 Act. Such a direction can only be made in respect of that person if the purpose of making it is so the person can either provide an electronic communications network (section 106(4)(a)) or provide a system of infrastructure which it makes available to network providers so that they can provide their networks (section 106(4)(b)). The major mobile phone companies include Vodafone Ltd and the Telefonica group who were formerly joint co-owners of Cornerstone Telecommunications Infrastructure Ltd (“Cornerstone”), one of the appellants in these appeals. Vodafone and Telefonica are operators pursuant to subsection (4)(a) of section 106 of the 2003 Act and Cornerstone is an operator pursuant to subsection (4)(b).

1. A “code right” is defined in para 3 of the new Code as a right to do certain things for the statutory purposes. Those purposes are set out in para 4 and are the purposes of providing the operator’s network or providing an infrastructure system. Para 3 specifies nine groups of activities from (a) to (i) which can be the subject of a code right. Some of these sub-paragraphs themselves include many different activities, for example sub-paragraph (c) is “to inspect, maintain, adjust, alter, repair, upgrade or operate electronic communications apparatus which is on, under or over the land”, encompassing therein 21 different activities. Some of the activities are likely to be intrusive from the site owner’s point of view, for example the right to obstruct a means of access to or from land (sub-paragraph (h)), and some less so, for example the right to connect to a power supply (sub-paragraph (g)) or to cut back a tree that interferes with ECA (sub-paragraph (i)).

1. “Electronic communications apparatus” is defined broadly in para 5 as any apparatus used in connection with the provision of the network, lines such as wires and cables, and structures, including buildings if their sole purpose is to enclose other ECA.

1. Part 2 of the Code deals with the conferral of code rights and their exercise. After the introductory para 8, it starts with the key paragraph, para 9, which as I have said, provides that a code right in respect of land may only be conferred on an operator by an agreement between the occupier of the land and the operator. The term “occupier” is defined in para 105 of the Code:

1. Para 10 introduces the concept that a code right can bind someone other than the site owner who confers the right if that person agrees to be bound. This can be a successor in title to the interest that the site owner had when the code right was conferred or someone whose right to the land was carved out of the site owner’s right or granted by the site owner: para 10(2). According to para 10(4), the code right also binds “any other person with an interest in the land who has … agreed to be bound by it”. The Code thereafter deals separately with occupiers who confer code rights and people who are otherwise bound by a code right conferred by someone else.

1. Para 11 sets out the requirements for an agreement under Part 2 which confers code rights or by which someone is bound by code rights. The agreement must be in writing and signed by the parties, it must state for how long the right is exercisable and the period of notice, if any, required to terminate the agreement. Para 11 provides further that any variation of the agreement must also be signed and in writing and must also state the duration of the right and the notice period.

1. The term “agreement under Part 2” is then used extensively in Parts 3 and 4 of the Code to mean primarily an agreement reached between the operator and another person under which either the site owner confers code rights or another person agrees to be bound by code rights. However, as I describe later, there are other situations in which site owners or others have code rights imposed upon them which are not consensual but which are treated as if they were and so are included in the term “agreement under Part 2”.

1. Part 3 of the Code provides for the assignment of code rights and for the upgrading and sharing of ECA. The agreement under Part 2 must not prevent or limit or charge money for the assignment of the agreement to another operator: para 16(1). Para 17 provides for the operator to be able to upgrade and share the ECA if two conditions are met. The first condition is that any changes to the ECA do not have more than a minimal adverse impact on its appearance. The second condition is that the upgrading or sharing imposes no additional burden on the other party to the agreement; including for example having an additional adverse effect on the other party’s enjoyment of the land. According to para 17(5), an agreement is void to the extent that it prevents or limits upgrading or sharing.

1. Part 4 of the Code deals with the power of the court to impose an agreement on a person by which the person confers or is otherwise bound by a code right. Following the making of the Electronic Communications Code (Jurisdiction) Regulations 2017 (SI 2017/1284), the powers conferred on the court by the new Code are in practice exercised by the Upper Tribunal (Lands Chamber).

1. Para 20 provides for the operator to apply to the tribunal for the imposition of an agreement, provided it has first given the occupier an opportunity to agree to grant or be bound by the right:

1. The operator must first give the relevant person a notice in writing setting out the code right, the land to which it relates and the other terms of the agreement that the operator seeks and asking the relevant person to agree to those terms.

1. The recipient of the notice then has 28 days in which to agree to confer the code rights or to be bound by them.

1. If the recipient does not agree, the operator may apply to the tribunal for an order which imposes an agreement between the operator and the recipient.

1. Para 21 sets out the two conditions that must be satisfied before the tribunal may make an order imposing an agreement under para 20. The first condition is that the prejudice caused by the order can be compensated for by money and the second is that “the public benefit likely to result from the making of the order outweighs the prejudice to the relevant person”. In deciding whether that public interest test is met, the tribunal must have regard to the public interest “in access to a choice of high quality electronic communications services” (para 21(4)). Conversely the tribunal may not make the order if it would frustrate the relevant person’s intentions to develop the land (para 21(5)).

1. If an agreement is imposed by an order under para 20, then according to para 22 it takes effect for all purposes of the Code as an agreement under Part 2 between the operator and the relevant person.

1. Para 23 then sets out the terms of the agreement that the tribunal should or may include in the order made under para 20 when imposing an agreement giving effect to a code right. An order under para 20 must require the agreement to include a term as to payment from the operator to the relevant person, it must include a term specifying for how long the code right conferred by the agreement is exercisable and the tribunal must consider whether the agreement should include a term as to the circumstances in which the agreement can be terminated.

1. The consideration payable by the operator must be determined in accordance with para 24. This is an important provision because although it provides that the fee must represent the market value of the relevant person’s agreement to confer the right or be bound by the right, that market value must be assessed on the assumption that “the right that the transaction relates to does not relate to the provision or use of an electronic communications network” and that there is more than one site which the buyer could use. These assumptions - sometimes referred to as the “no scheme” basis for valuation - effectively remove from the equation the enhanced value that the rights to the land have to the operator (rather than to anyone else) arising from the use of the land as part of the network. They are thus intended to prevent the relevant person demanding a premium price either because the operator has no choice but to use this particular site or because the site has an enhanced value as a site for ECA comprising part of the operator’s network.

1. Paras 26 and 27 are significant for our purposes because the appellants rely on them as indicators that para 9 cannot bear the meaning given to it by the Court of Appeal:

1. Para 26 is headed “Interim code rights” and allows an operator to apply to the court for an order which imposes an agreement conferring a code right or providing for a code right to bind a person on an interim basis, that is to say for a period specified in the order or until the occurrence of a specified event. Where such an interim order is made, various of the paragraphs of Part 4 apply, including para 22 so that an interim agreement takes effect as an agreement under Part 2.

1. Para 27 is headed “Temporary code rights” and enables an operator which has given a notice under para 20(2) (that is a notice seeking the other person’s agreement to confer or be bound by a code right) also to seek a temporary code right. The conditions which must be satisfied in order for a temporary code right to be granted under para 27 are important because the appellants say they show clearly that the drafter of the Code assumed that an operator could make an application for a code right under para 20 even though it already had ECA installed. This is because the temporary right can be applied for only if the operator has given a notice under para 20(2) to a person and has also sought a temporary right in relation to ECA “which is already installed on, under or over the land”.

1. An agreement under Part 2 between the operator and the occupier who confers the rights has to state for how long the code rights are exercisable. What happens when that initial period comes to an end? That is dealt with in Part 5 of the Code and is significant in these appeals because the Respondents argue that this provides the exclusive route by which operators who are occupiers because they have their ECA installed on land can apply for rights, provided that they can bring themselves within its terms. The answer provided by para 30(2) is, broadly, that if the agreement is a “code agreement” to which Part 5 applies, the operator may continue to exercise that right and the site provider continues to be bound by the right.

1. An agreement is a “code agreement” for the purposes of Part 5 if it is an agreement under Part 2 and does not fall within para 29(2) to (4). Para 29(2) in conjunction with para 29(3) excludes an agreement if its primary purpose is a purpose other than to grant code rights and it is a lease which has security of tenure under Part 2 of the Landlord and Tenant Act 1954 (“the 1954 Act”) or would have such security if the parties had not contracted out of that security pursuant to section 38A of that Act. Para 29(4) provides an equivalent exception under the corresponding Northern Irish provisions. I discuss the interrelation between the Code and the 1954 Act further below.

1. Para 31 then sets out how a site provider can bring the agreement to an end, given that it cannot do so under the terms of the original agreement. The site provider must give notice to the operator under para 31, giving one of the permitted reasons for bringing the agreement to an end. Permitted reasons include substantial breaches of the agreement by the operator or an intention to redevelop the land or where the conditions under para 21 are not met. Once the site provider gives notice of termination, the code agreement will come to an end, unless within three months the operator in receipt of such a notice serves a counter-notice. If a counter-notice is served, the tribunal will then determine whether the agreement should continue and if so on what terms.

1. Para 33 makes provision for the operator or the site provider to require the other party to vary the terms of the code agreement or to confer an additional code right or to replace the existing code agreement with a new one. The tribunal is given extensive powers to set the terms of the code agreement on the making by either party of an application under Part 5.

1. Part 6 deals with the removal of ECA from land. It distinguishes between a landowner who has a right to require the removal of the ECA and a landowner who has a right to enforce the removal of the ECA. The circumstances in which the landowner has a right to require the removal of the ECA are set out in para 37. Para 37 provides that a person with an interest in land has the right to require the removal of ECA on its land if and only if one of four conditions is met. The second condition includes where the code right entitling the operator to keep the ECA on the land has ceased to bind the landowner because he has given a notice under para 32(1) and either the operator has not served a counter-notice or the tribunal has ordered that the code agreement comes to an end.

1. Even if the landowner has a right to require the removal of the ECA under para 37, it cannot actually enforce that right without following the procedure set out in para 40. The site provider must first give notice to the operator requiring the removal of the equipment. If the parties cannot reach agreement, the site provider must apply to the tribunal for an order requiring the operator to remove the ECA or authorising the site owner to sell it. The tribunal can then make one of the orders set out in para 44, and if the operator does not comply, the tribunal can make an order entitling the landowner to remove or sell the ECA.

(b)The old code

1. The old code formed Schedule 2 to the Telecommunications Act 1984 and was amended by the 2003 Act. The structure of the old code is different in some important respects from that of the new Code. The old code is the same as the new in that it envisages that the conferring of rights will be by agreement of the occupier but then provides for the court to intervene on the operator’s behalf if that agreement is not forthcoming. Thus para 2 of the old code provides that the agreement in writing of the occupier for the time being of any land shall be required for conferring on the operator a right to execute any works on that land for the installation or maintenance of ECA.

1. Para 5 provides that where an operator requires any person to agree that any right should be conferred on it, the operator may give notice to that person of the right and of the agreement he requires. The person to whom the notice is given then has 28 days in which to agree, failing which the operator may apply to the court for an order conferring the proposed right and dispensing with the need for the agreement of the person to whom the notice was given: para 5(2). The court must make the order if two conditions are met, similar to the conditions in para 21 of the new Code. The court then sets the conditions on which the right is exercisable including the compensation payable calculated in accordance with para 7.

1. Under the old code, however, the outcome of such an application was an order of the court dispensing with the site owner’s agreement and setting the terms on which the code rights were imposed on the site owner. Under the new Code, the outcome of the application to the court is also an order but the order imposes an agreement which sets out the terms on which the code rights can be exercised rather than the order itself setting out the terms and conditions for the grant of the right.

1. The different approach under the old code is reflected by para 5(7) of the old code which provides that, where an order is made dispensing with the need for agreement, the order shall have the same effect and incidents as the agreement of the person whose agreement was dispensed with. Accordingly, the court order can be varied or released by subsequent agreement; in other words, even though the terms are set out in and therefore imposed by an order of the court, the parties may vary or release them by agreement without needing to return to the court for an order varying or releasing the court’s order: see the Law Commission Report para 4.52.

1. What happens when the agreement (whether voluntary or imposed) comes to an end is dealt with by para 21. The old code, like the new Code, also draws a distinction between being entitled to require the removal of equipment (which arises once the operator’s right to keep the apparatus installed ceases) and a right to enforce the removal of the equipment which arises once the operator fails to object to a request to remove the apparatus or where the person entitled to require removal has obtained a court order overriding the operator’s objection.

1. Para 21(1) provides for what happens when a person is entitled to require the removal of the operator’s ECA from any land because the apparatus is kept on the land “otherwise than in pursuance of a right binding that person”. It provides that the person so entitled cannot enforce the removal of the apparatus except in accordance with the provisions of that paragraph. First, the person must give notice to the operator requiring the removal of the apparatus. If after 28 days, no counter-notice is received, then the person is entitled to enforce the removal of the apparatus. The operator can serve a counter-notice either disputing the entitlement of the person to require the removal of the apparatus or specifying the steps that the operator “proposes to take for the purpose of securing a right as against that person to keep the apparatus on the land”.

1. The person to whom the counter-notice is given may then only enforce the removal of the apparatus pursuant to an order of the court. Where the counter-notice specifies steps that the operator proposes to take to secure its rights, the court can only make an order if the operator is not seriously intending to take those steps or if those steps would not secure the right to keep or reinstall the apparatus on the land. If the person obtains a court order entitling him to enforce the removal of the apparatus, he may apply to the court for authority to remove it himself.

1. Para 21(9) of the old code provides:

1. This prevents a landowner from bypassing para 21 by bringing an action for trespass or nuisance.

1. The old code therefore did not contain the equivalent of Part 5 of the new Code. Rather it envisaged that rights under a voluntary agreement or the court’s order dispensing with agreement would run on (with the installation of the apparatus being deemed to be lawful) unless and until a person entitled to require the removal of the apparatus on the expiry of the right took action under para 21 of the old code to require that removal.

1. I note here that if a counter-notice was served by the operator under para 21(4) challenging the right to require the removal of the apparatus, the court was not then empowered by para 21(6) to confer new rights. The court could only either make or decline to make the order entitling the person to enforce the right of removal. The paragraph envisages that the counter-notice will set out what steps the operator will need to take to secure a right to keep the apparatus on the land. Given that one must assume that the landowner in this situation wants the ECA removed, those steps will include making a request under para 5(1) and bringing the issue before the court under para 5(2). That accords with the Law Commission’s understanding of how the old code worked. They note in their description of the procedure under para 21 of the old code, that “steps” may include applying to the court under para 5 to dispense with that person’s agreement for the grant of rights pursuant to the old Code: see para 6.17 of the Law Commission’s Report.

1. What is not clear and what was not addressed directly by the parties is whether under the old code an operator with ECA on the land could only make use of para 5 when the operator was resisting an application for the removal of the ECA under para 21 or whether the operator could use the para 5 avenue at any time during the term of the voluntary agreement or during the currency of the court order imposed under para 5. As regards, the latter situation, there is no provision in para 5 suggesting that the court is somehow deprived of the power that a court inherently has to vary or revoke its own orders on the application of one of the parties. If that power remains, then it is, perhaps, likely that para 5 is available during the term of a voluntary agreement to avoid giving those operators with a court order an advantage over those with an agreement. Such an advantage would cut across the clear preference of the old code for matters being dealt with consensually where possible.

1. Para 6 of the old code (which is broadly equivalent to paras 26 and 27 of the new Code) enables the court to confer temporary rights on an operator who is vulnerable to an application to enforce the removal of his apparatus.

1. What does appear from the old code is that the fact that the operator has the benefit of the security of tenure provided by Part 2 of the 1954 Act does not make any difference to its rights under the old code. It could still apply under para 5 for new rights or para 6 for temporary rights to be embodied in an order of the court (rather than in a new lease) at least in circumstances where the operator was vulnerable to an application by the landowner under para 21 of the old code.

(c)The transitional provisions in outline

1. When the new Code came into force, there were already many thousands of sites with ECA installed by operators on site. The nature of the agreements between the operator on site and the site provider were very varied. Some were parties to a formal lease, some were on site holding over under an expired lease and therefore had either a periodic tenancy or a tenancy at will. Some were on site under a contractual licence which did not amount to a lease. It was therefore important for Parliament to provide when and how the new Code would apply.

1. The Law Commission’s Report which contained recommendations for the reform of the old code discussed how the transition to any new regime should be managed. The Report recognised that reform was needed because the old code was making the roll out of electronic communications more difficult. But they also noted at para 1.25 of the Report that existing practices had already become established and that “any radical change to the basis of the Code and of dealings between Code Operators and Site Providers is likely to cause considerable economic loss, and may also generate practical and economic problems for the operation of the electronic communications network.” The Report advised, therefore, that it would not be practicable or appropriate simply to apply the revised Code to existing arrangements, affecting rights which had already arisen. In some cases, there would be disruption to carefully negotiated agreements by which the parties had sought to strike a balance within the context of the old code.

1. The Government accepted the Law Commission’s recommendation of a radical overhaul of the old code and that the revised code should not be applied retrospectively. At para (xii) of the Executive Summary of the Government’s consultation response in May 2016, the Government said:

1. It is important in my judgment to note, however, that in the section of the response setting out more detail on this point, the issues that had been raised in the consultation for and against retrospectivity focused more on the retrospective application of the proposed “no scheme” basis of valuation and the application of the right to upgrade and share the ECA rather than on the issues that are raised in this appeal: see para 51 of the response.

1. Turning to the transitional provisions that were adopted, a key term for their operation is the definition of a “subsisting agreement”. This means an agreement for the purposes of para 2 or 3 of the old code or an order in force under para 5 of the old code. It is important for the purposes of these appeals to note here that it was common ground between the parties that in order for an agreement to be a “subsisting agreement” for the purposes of the transitional provisions, it had to be an agreement in writing because para 2 of the old code required such agreements to be in writing. This was the conclusion reached by the Upper Tribunal in the On Tower case. But it is also important to note that there is nothing in Schedule 2 to the 2017 Act which limits all the transitional provisions set out there to subsisting agreements. The term “subsisting agreement” is used in some of the paragraphs in the transitional provisions but not in others.

1. Broadly, the effect of the transitional provisions is that a subsisting agreement takes effect once the new Code comes into force as if it were an agreement under Part 2 of the new Code, subject to some modifications made in the remaining paragraphs of Schedule 2.

1. The primary provision which is limited to subsisting agreements is para 2 of the transitional provisions. Para 2 provides that a subsisting agreement carries on as an agreement under Part 2 of the new Code and a person bound by it is to be treated as bound pursuant to Part 2 of the new Code. This is subject to some modifications, in particular (as presaged by the Government response to the consultation) Part 3 of the new Code prohibiting a ban on assignments and allowing the upgrade and sharing of ECA is disapplied to subsisting agreements (para 5(1)).

1. Paras 11 and 20 of the transitional provisions deal with pending applications made by an operator or landowner under the old code but not yet disposed of as at the date when that code is replaced by the new Code (which was 28 December 2017). These paragraphs are not limited in their application to subsisting agreements but apply in any case where the request or notice they deal with has been served under the old code.

1. Para 11 of the transitional provisions deals with where there is a pending request by an operator for the conferring of old code rights under para 5(1) of the old code. Where such a request has been made by an operator but no application has been made to the court by the time the new Code comes into force, the notice is treated as if it had been made under para 20(2) of the new Code. If an application to the court had already been made at that time, the application goes forward and is dealt with under the provisions of the old code but any order made by the court has effect as an order made under para 20 of the new Code: see para 12 of the transitional provisions.

1. Para 20 of the transitional provisions deals with a pending process for the removal of apparatus under para 21 of the old code. Where before the old code was repealed, a person had given notice under para 21(2) of the old code requiring the removal of apparatus, para 21 of the old code continues to apply to the processing of that notice. But the references to steps that the operator specifies in its counter-notice that it intends to take to secure a right to keep the apparatus on the land “are to be read as including any corresponding steps that the operator could take under the new code or by virtue of this Schedule”.

(d)The relationship between the codes and the Landlord and Tenant Act 1954

1. Part 2 of the 1954 Act gives security of tenure to business tenants. Very broadly, it ensures that a tenancy granted for business purposes will continue in effect pursuant to section 24 of the 1954 Act, despite the expiry of its term, unless and until it is either brought to an end on the grounds prescribed in section 30 of the 1954 Act or a new tenancy is granted by the parties or arises through a court order pursuant to section 29 of that Act. An order renewing the lease under section 29 may be made at the request of the tenant under section 26 of the 1954 Act, or in response to a failed attempt by the landlord to bring the tenancy to an end after serving notice under section 25. Section 38A of the 1954 Act (inserted as from 1 June 2004 by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (SI 2003/3096)) allows the parties to a business lease to contract out of the Part 2 protection so that the lease will not have security of tenure.

1. In many cases the code rights are granted under an agreement which does not fall within Part 2 of the 1954 Act at all, for example because it is a licence and not a lease. But in many cases, as in the circumstances of these appeals, the initial conferring of code rights will be by way of a business lease within the 1954 Act with the operator either benefiting from, or contracting out of, security of tenure.

1. The Law Commission Report discussed the relationship between the old code and the protection conferred on some operators if the agreement by which their code rights were conferred was a lease to which Part 2 of the 1954 Act applied. The Report noted at para 6.56 that where code rights are conferred by the grant of a lease, that lease will be protected by the 1954 Act unless the parties have contracted out. This runs parallel with the protection given to the operator by para 21 of the old code (which prevented the landowner from enforcing the removal of the apparatus without an order of the court). The Law Commission doubted that this dual protection was necessary or helpful to either party and noted also that it was common practice for leases to operators to be contracted out of the 1954 Act protection.

1. The new Code deals with this relationship in Part 5 by para 29 which explains when Part 5 applies to agreements under Part 2 of the new Code. Para 29 excludes from the application of Part 5 agreements which are leases which:

1. do not have as their primary purpose the grant of code rights and which

1. fall within Part 2 of the 1954 Act (even if the tenant does not in fact benefit from the protection of Part 2 because it has contracted out of that protection under section 38A).

1. A mirroring provision was inserted by the 2017 Act as subsection (4) of section 43 of the 1954 Act, providing that Part 2 of the 1954 Act does not apply to a tenancy the primary purpose of which is to grant code rights under the new Code provided the tenancy was granted after the new Code comes into force. Thus where a business lease of the kind usually falling within Part 2 of the 1954 Act is granted after the new Code came into force on 28 December 2017, it will be covered only by Part 5 of the new Code (and not by Part 2 of the 1954 Act) if its primary purpose is the granting of code rights. But it will not benefit from Part 5 if its primary purpose is a purpose other than the granting of code rights, whether or not the parties have contracted out of protection under Part 2 of the 1954 Act pursuant to section 38A.

1. The transitional provisions dealing with subsisting agreements which had the benefit of dual protection under the old code and under Part 2 of the 1954 Act are complex. First, as I have described earlier, the subsisting agreement may be one which is not troubled by this issue because it is, for example, an easement or licence. In that case it takes effect by virtue of para 2 of the transitional provisions as an agreement made under Part 2 of the new Code. It follows that an operator under an existing licence or easement can renew that licence or easement under Part 5 of the new Code.

1. Where the subsisting agreement made under the old code was a business tenancy falling within Part 2 of the 1954 Act it will not be affected by the new section 43(4) of the 1954 Act because that only applies to leases agreed after the new Code comes into effect. Such old code leases are dealt with in para 6 of the transitional provisions as follows:

1. If the protection of Part 2 of the 1954 Act is in fact available to the tenant (because it did not contract out under s 38A), the tenant must then rely on the 1954 Act rights and cannot use Part 5 of the new Code. Part 5 of the new Code is excluded under para 6(2) of the transitional provisions. This is the case whether the grant of rights was the primary or subsidiary purpose of the lease.

1. If the grant of code rights was only the subsidiary purpose of the lease then Part 5 of the new Code is also excluded: para 6(3) of the transitional provisions. This exclusion applies if the tenant in fact has the protection of Part 2 of the 1954 Act but also applies even if the tenant has in fact contracted out of the Part 2 protection by an agreement under section 38A. The tenant in those circumstances cannot rely on Part 5 of the new Code as conferring greater rights than the tenant bargained for under the 1954 Act.

1. If the primary purpose of the lease is the grant of code rights, then if the tenant has agreed under section 38A to exclude renewal rights under the 1954 Act, it is allowed to use Part 5 of the new Code: see para 7 of the transitional provisions which is not excluded by any provision in para 6.

1. Where the tenant who has the protection of Part 2 of the 1954 Act exercises the right to renew the lease, the new lease, once granted, will no longer be subject to Part 2 of the 1954 Act if its primary purpose was to grant code rights because it will fall within the new section 43(4) of the 1954 Act. It will not be a “subsisting agreement” within the meaning of the transitional provisions so there will be nothing to exclude the application of Part 5 of the Code.

1. Leases of land in Scotland fall outside para 6 of the transitional provisions, because there is no equivalent in Scotland of Part 2 of the 1954 Act; so all leases of land in Scotland will be in the same position as leases of land in England and Wales where the tenant does not have security of tenure.

(a)The Compton Beauchamp appeal

1. The first of the Court of Appeal’s judgments under appeal to this court is the judgment in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2019] EWCA Civ 1755; [2020] RVR 20 handed down on 22 October 2019. Lewison LJ gave the substantive judgment with which Simon and David Richards LJJ agreed. That judgment was on appeal from the decision of the Upper Tribunal (Martin Rodger QC, Deputy President and P D McCrea FRICS). The Upper Tribunal decision is at [2019] UKUT 107 (LC); [2019] RVR 247. I shall refer to this appeal as the Compton Beauchamp appeal and to the Court of Appeal’s judgment as the Compton Beauchamp Judgment.

1. The facts of the Compton Beauchamp appeal are as follows. The site concerned is on the edge of an arable field at Galleyherns Farm in the Vale of White Horse between Didcot and Swindon. Vodafone Ltd entered into a lease in March 2004 with Compton Beauchamp Estates Ltd, the freehold owner of the site (“Compton Beauchamp”). The lease entitled Vodafone to install a telecommunications mast on a concrete base in a fenced compound. The term of the lease was ten years and the lease was contracted out of the protection of the 1954 Act. The lease did not demise any part of the land itself but granted Vodafone the right to install and use the mast and ancillary apparatus.

1. Cornerstone is a joint venture formed by Vodafone and Telefonica. It was set up in 2012 to own and manage their combined portfolio of telecoms sites on the basis that Cornerstone would then provide the sites to Vodafone and Telefonica.

1. Vodafone’s lease expired on 25 March 2014. It is common ground between the parties that a tenancy at will then arose for the benefit of Vodafone by the middle of April 2014. Telefonica started to share the ECA in 2016. Importantly for our purposes, there was no assignment of any rights at the site from Vodafone to Cornerstone.

1. The tenancy at will was terminated by Compton Beauchamp by service of a notice to quit on 20 October 2017. The old code prevented Compton Beauchamp from removing the ECA by deeming the presence of Vodafone’s apparatus on the land to be lawful (para 21(9) of the old code) and requiring Compton Beauchamp to apply for a court order under para 21(6) of the old code to remove it. Compton Beauchamp also served a notice on Vodafone under para 21 of the old code requiring Vodafone to remove the ECA. Vodafone served a counter-notice under para 21(4) of the old code.

1. Vodafone did not, however, pursue its acquisition of rights relying on the transitional provisions after the new Code came into effect at the end of December 2017. Instead, Cornerstone served a notice on Compton Beauchamp under para 20 of the new Code seeking longer term rights combined with a notice under para 27 of the new Code seeking temporary rights. Compton Beauchamp refused to grant the rights and Cornerstone applied to the Upper Tribunal. The parties to those proceedings agreed on the grant of the temporary rights without prejudice to their contentions as to jurisdiction and the possession proceedings in the County Court were stayed.

1. The Upper Tribunal held that the Tribunal had no jurisdiction to impose an agreement on Compton Beauchamp conferring code rights on Cornerstone under para 20 of the Code. They held that there was no jurisdiction because the person in occupation of the site was not Compton Beauchamp but Vodafone. The Upper Tribunal noted that paras 26 and 27 of the new Code expressly contemplated that rights could be granted to an occupier which was itself in occupation. They went on:

1. On appeal the Court of Appeal also held in the Compton Beauchamp Judgment that the Tribunal had no jurisdiction but went further in its reasoning. They upheld the Upper Tribunal’s finding that whether a person is an occupier for the purposes of the Code is “a question of fact rather than legal status; it means physical presence on and control of the land”: para 54.

1. The Court recognised that there was a difficulty where the operator is already on site and wishes to renew or vary his rights. They acknowledged, as the Upper Tribunal had, that “The Code clearly envisages that a sitting operator may enter into an agreement conferring new or varied code rights. It also clearly contemplates that a sitting operator may apply to the [Upper Tribunal] for interim or temporary code rights under either paragraph 26 or 27”: para 57. However, this presented a difficulty, given the wording of para 9 of the Code and the fact that it is legally impossible for someone to enter into a contract with itself.

1. Cornerstone had submitted that the solution to this conundrum was that the operator can never be an occupier when it is itself seeking a fresh right or another operator is seeking that right; in such a situation the new code right should be sought instead from the landowner or such other person who is also in occupation of the land. But the Court of Appeal held that that solution was impossible to square with the wording of the Code. The solution was instead provided by Part 5, at least principally. The use of the term “site provider” in Part 5 rather than “occupier of the land” got over the problem of the operator and the occupier being the same person. This meant that “in many cases an application by an operator in situ need not be made under paragraph 20; but may be made under paragraph 34”: para 61. If such an application were made and approved then the deeming provisions in para 34(8) could be applied not only to code agreements imposed by the tribunal but also to those entered into voluntarily by the operator and site provider.

1. The Court of Appeal then had to address how to reconcile that with paras 26 and 27 of the Code. The Court held that there was nothing in those paragraphs that undermined the essential principle that code rights can only be conferred by agreement with the occupier. They rejected the submission that Compton Beauchamp was also the occupier of the site even if Vodafone was in occupation: paras 80-81. The Court of Appeal concluded by saying, at para 89:

(b)The Ashloch appeal

1. The second appeal before us is from the decision of the Court of Appeal in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and AP Wireless II (UK) Ltd [2021] EWCA Civ 90 handed down on 29 January 2021. I shall call this appeal “the Ashloch appeal” and the Court of Appeal’s judgment, “the Ashloch Judgment”.

1. The site with which this appeal is concerned is the roof of a building called Windsor House in Birmingham. A ten year lease was granted in June 2002 to Vodafone by the then owner of the property. It is common ground that Part 2 of the 1954 Act applied to the lease and that Vodafone had been entitled to apply to the court for a grant of a new tenancy under Part 2 of the 1954 Act, that is to say, there was no agreement under section 38A contracting out of the right of renewal.

1. In 2012 the fixed term of the lease expired but Vodafone remained on site and the tenancy continued by virtue of section 24(1) of the 1954 Act. Ashloch Ltd acquired the freehold subject to the tenancy in 2016 and in 2018 AP Wireless II (UK) Ltd (“AP Wireless”) acquired a 99 year lease of the rooftop, also subject to the tenancy. On 28 December 2017 the new Code came into force.

1. In 2019, following the Court of Appeal’s decision in Compton Beauchamp, Cornerstone took an assignment of Vodafone’s continuation tenancy. It no doubt hoped by that means to avoid the three-party situation that had occurred in Compton Beauchamp. A direct relationship of landlord and tenant was therefore established between Cornerstone and AP Wireless. Cornerstone then served a notice under para 20 of the Code, calling on AP Wireless to enter into a new agreement under Part 2 of the Code.

1. In the proceedings before the Upper Tribunal AP Wireless relied on two arguments. The first was that, following Compton Beauchamp, Cornerstone was prevented from applying under para 20 because it was the occupier of the site. Secondly it argued that the transitional provisions applied limiting them to their rights under the 1954 Act so that the only way for Cornerstone to obtain new code rights over the site was by applying to the County Court for a new tenancy under section 24(1) of the 1954 Act.

1. The Upper Tribunal (Martin Rodger QC Deputy President) decided the issue of jurisdiction as a preliminary issue. Cornerstone’s primary submission was that the Code did not exclude the tribunal’s jurisdiction to impose a new agreement under Part 2 conferring code rights over a site in favour of an operator which was already in occupation of all or part of the same site. Where, as in the instant case, the operator was occupying the site under a subsisting agreement to which the 1954 Act applied, the operator had a choice either to apply for a renewal of the lease under that Act or for new code rights under Part 2 of the Code. Cornerstone argued that Compton Beauchamp dealt only with the position of a landowner (in that case Compton Beauchamp) who was not in occupation (because Vodafone was).

1. The Upper Tribunal recognised that the appeal in Compton Beauchamp was not specifically concerned with the question whether there is jurisdiction to require a freeholder to confer code rights on an operator where that operator is itself in occupation of the land: para 62. That was because the operator applying under para 20 of the Code in the earlier case was Cornerstone but it was Vodafone that was the occupier. It also noted, however, that Lewison LJ in Compton Beauchamp addressed the point that the Code clearly contemplates that a sitting operator can apply to the tribunal for interim or temporary code rights under paras 26 and 27 of the Code. The Compton Beauchamp Judgment said that these paragraphs were a limited exception to the general para 9 rule that an operator in occupation of the site cannot apply for rights under para 20.

1. Having considered and rejected all Cornerstone’s arguments, the Upper Tribunal concluded at para 87 that Compton Beauchamp presented Cornerstone with an insurmountable obstacle:

1. On appeal to the Court of Appeal, the court recorded that Mr Seitler QC (appearing for Cornerstone in the Ashloch appeal) argued that the interpretation placed upon Part 4 of the Code in Compton Beauchamp did not allow for the possibility that during the currency of an agreement conferring code rights, the operator might wish to seek additional code rights or to modify code rights already granted. Lewison LJ said that he thought this could be done by an agreed variation to an existing agreement under para 11 of the Code. But could it be done in the absence of agreement, by the operator invoking Part 4? He held at para 69 that it could not.

1. As to the identity of the occupier, the Court of Appeal found that even if Cornerstone as an applicant under para 20 was not to be treated as the occupier, it did not follow that AP Wireless was the occupier. AP Wireless did not appear to have any physical presence on the roof and under the terms of the tenancy, AP Wireless was not entitled to interfere with Cornerstone’s exclusive possession of the property comprised in the tenancy. The Court summarised the effect of the Compton Beauchamp decision as holding that “at least in the case of an operator holding under a lease, the operator is the occupier even if it does not have a physical presence on the ground”: para 84.

1. Lewison LJ then summarised the effect of the transitional provisions, concluding that one way or another the operator under a subsisting agreement has the right to apply to renew it, either under Part 5 of the Code or under Part 2 of the 1954 Act, but not both: para 98.

1. He concluded by saying that many of Cornerstone’s complaints about the disadvantages to operators in renewing leases under Part 2 of the 1954 Act compared with renewal under the Code were in reality complaints about the way the transitional provisions work, rather than defects in the Code itself. He recognised that the definition of subsisting agreements in the transitional provisions may have left some operators “out in the cold”, particularly those who occupy under an unwritten tenancy at will. But that was, he held, a consequence of the transitional provisions and the Government’s position that the new code should apply only to new agreements.

(c)The On Tower appeal

1. The third appeal before us is the leapfrog appeal in On Tower UK Ltd (formerly known as Arqiva Services Ltd) v AP Wireless II (UK) Ltd. I shall refer to this as the On Tower appeal and to the Upper Tribunal’s judgment, Arqiva Services Ltd v AP Wireless II (UK) Ltd [2020] UKUT 195 (LC) issued on 19 June 2020, which is the subject of the appeal, as the On Tower judgment.

1. AP Wireless is the freehold owner of Queens Oak Farm in Towcester and has been since 2015. On Tower UK Ltd (“On Tower”) originally entered into a lease to install ECA at the Farm in January 1997. The initial term of the lease was 20 years. Supplementary leases were entered into in 2000 and 2005 in respect of additional land to add to the first demise and those leases were granted for the residual term of the 1997 lease. The leases excluded the application of Part 2 of the 1954 Act.

1. All the leases expired on 20 October 2016. On Tower remained on site and made payments of rent and other sums and its customers continued to operate from the site under licence agreements. The new Code came into force on 28 December 2017. In July 2019, On Tower gave written notice seeking orders under paras 20 and 27 of the Code but this did not result in agreement. On Tower therefore applied to the tribunal.

1. Whilst the case was still awaiting a final hearing, the two Court of Appeal judgments in Compton Beauchamp and Ashloch were handed down. The Upper Tribunal (Judge Elizabeth Cooke) therefore ordered the hearing of two preliminary issues in the On Tower case:

1. did On Tower occupy the site under a “subsisting agreement” within the meaning of the transitional provisions?

1. did the tribunal have jurisdiction to impose an agreement on the parties under para 20 of the new Code?

1. As regards the first issue, the Upper Tribunal considered whether, following the expiry of the initial terms of the leases, On Tower had a tenancy at will, a periodic tenancy or a contractual licence. The Upper Tribunal held that it had a tenancy at will: para 66. The Upper Tribunal then held that, since this was not in writing, it was not a “subsisting agreement” within the meaning of the transitional provisions: para 84. I note that before the Upper Tribunal it was On Tower which argued that its agreement was not a subsisting agreement and that it had no right to use Part 5 of the new Code. Its argument was that it should be able therefore to use Part 4. The Upper Tribunal considered that to include an unwritten tenancy at will in the term “subsisting agreement” would require too much violence to the wording.