The “Last Chance Saloon” goes out of business

Site providers will breathe a huge sigh of relief as the Upper Tribunal found in favour of a council in a dispute over the Electronic Communications Code and a leaking roof on a residential tower block. Daniel Cuthbert and Ella Carroll explain why.

The appeal in Gravesham Borough Council v On Tower UK Limited (LC-2023-810, [2024] UKUT 151 (LC)) sought to determine whether an operator was entitled to apply for a new Code agreement under Part 4 of the Electronic Communications Code after having lost the right of renewal under Part 2 of the Landlord and Tenant Act 1954 through delay in serving the claim form. The appeal also considered when an unserved claim for a renewal was finally determined for the purpose of section 64 of the 1954 Act as this was important for deciding whether the notice pursuant to paragraph 20 and 27 of the Code was valid.

Background

Gravesham own a residential high-rise block of flats known as The Hive. The rooftop is in considerable need of repair and water is leaking into the top floor flats. Gravesham therefore decided to replace the rooftop in 2019. There is telecommunications equipment on the rooftop which is currently let to On Tower UK Limited (On Tower). 

The lease of the Property had originally been let to Arqiva Limited who transferred the lease to Arqiva Services Limited in September 2019. Arqiva Services Limited ultimately changed its name to On Tower. There were attempts to agree a relocation of the equipment, with Arqiva Limited, including when Gravesham thought it was able to proceed with the relocation and actually installed the scaffolding ready for the works to proceed.  Unfortunately, no relocation took place and no agreement for relocation was in fact reached then or subsequently with either Arqiva Limited or On Tower. Therefore, on 17 December 2021, Gravesham gave notice to On Tower under section 25 of the Landlord and Tenant Act 1954 (1954 Act), terminating the tenancy on 30 June 2022 and notifying On Tower that a renewal of the tenancy would be opposed by the Council. 

Following receipt of the notice, On Tower was entitled to apply to the County Court for a new tenancy of the site under section 24(1) of the 1954 Act. If it did so, the effect of section 64(1) would be that the tenancy would continue until it terminated at the expiry of the period of three months beginning with the date on which the application was “finally disposed of”.

On 28 June 2022, On Tower’s solicitors filed a claim for a new tenancy in the County Court at Birmingham. The Court issued the claim on 12 July 2022 and returned it to On Tower’s solicitors for service on Gravesham. Rule 7.5(1) of the Civil Procedure Rules allows a period of four months for the service of a claim form, which in this case expired on 12 November 2022. Although Gravesham’s solicitors pressed for early service of the claim form, On Tower’s solicitors did not serve the claim early or within the required period. 

On Tower’s solicitors applied for additional time to serve the claim but were refused by the County Court and their claim was dismissed. Accordingly, On Tower lost its security of tenure under the 1954 Act. 

A few days prior to the final hearing to strike out the 1954 Act proceedings, On Tower served a notice pursuant to paragraph 20 of the Code. In doing so, On Tower sought, in effect, to renew the agreement by means of Part 4 of the Code thereby avoiding the consequences of losing the ability to renew the lease pursuant to Part 2 of the 1954 Act.

Following the strike out of the 1954 Act proceedings, on 23 February 2023, Gravesham’s solicitors served notice pursuant to paragraph 40 of the Code,  this is the process by which a landowner might seek the removal of the operators equipment from the land.  Such a removal is not automatic, as some might assume, following successful termination of the agreement.

On Tower then issued proceedings for a renewal under paragraph 20 of the Code in June 2023. Freeths applied to have those proceedings struck out but the FTT dismissed the application on the basis that the operator was in the “Last Chance Saloon” or in other words, that whilst it was not possible to apply for an entirely new Code agreement during the period where the operator had the benefit of a subsisting agreement, capable of renewal pursuant to either Part 2 of the 1954 Act or Part 5 of the Code, it could do so once either of those processes had been exhausted.  

Legal issues

For site providers the decision of the First Tier Tribunal raised significant concerns as to how it might be possible to recover their land from operators. The decision appeared to significantly increase the amount of time that might be needed in order to terminate and seek the removal of an operator.  The decision also appeared to reduce and make uncertain the grounds upon which termination and removal could be sought.    

The 1954 Act as a process for renewal or termination is more beneficial to site providers than the Code. Generally, operators would prefer to renew pursuant to the Code rather than the 1954 Act, especially given the current position with regards to dealing with rent and terms in the 1954 Act as well as the improved grounds of opposition to a new agreement that exist in the 1954 Act.  

Gravesham sought to appeal on three grounds:

1. First, that the only route to the renewal of On Tower’s rights was under the 1954 Act, and having failed under that Act, on a proper interpretation of the statutory scheme, it was not entitled to try again under Part 4 of the Code. 
2. Alternatively, for On Tower to try again under Part 4 of the Code was an abuse of process and its claim should be dismissed. 
3. Alternatively, On Tower’s paragraph 20/27 notice had been served while its tenancy was being continued under the 1954 Act and while it still enjoyed Code rights and was therefore invalid and could not be used to as the basis of an application to the tribunal.

With regards to the first ground, the Judge found that an operator which has exhausted its rights of renewal under the 1954 Act was prevented from making a further application for rights under Part 4 of the Code.  Accordingly, the First Tier Tribunal did not have jurisdiction to entertain On Tower’s reference under Part 4 and should have struck it out under rule 9(2)(a) of the FTT Rules.  

In coming to this decision the Judge found that interpreting a sequential scheme of renewal designed to allow access to the greater prize (a renewal pursuant to Part 4 of the Code) only after the applicant has failed to secure the lesser prize (a renewal pursuant to Part 2 of the 1954 Act) would not be a rational scheme, and was not the scheme Parliament intended when it enacted the transitional provisions. On Tower had relied heavily on the fact that paragraph 40(8) of the Code specifically contemplated that an application under paragraph 20 could be made while a landowner was seeking an order requiring removal of an operator’s apparatus.  The Judge found that this reliance was misplaced, and that paragraph 40(8) of the Code did not, in itself, authorise the making of an application under Part 4. All that this provision was indicating was that there would be circumstances under which an application under Part 4 might coincide with a removal application under Part 6.  

With regards to the second ground, the Judge found that if he were wrong with regards to the first ground of appeal and that an operator who had tried unsuccessfully to obtain a renewal of its Code rights by proceedings under the 1954 Act was not barred from making a further claim under Part 4 of the Code then he would not have been prepared to strike out for abuse of process. This was for two reasons, firstly, if the first ground of appeal had not been successful then it would mean that the opportunity to bring a second claim was part of the design of the Code and it would therefore need something more than bringing that second claim to amount to abuse. Secondly, if it is not an abuse of process to claim the same remedy in a second civil action that has been dismissed on procedural grounds which do not themselves involve any misconduct or abusive behaviour, the Judge could not see how it could be an abuse of process to claim a different remedy in a second set of proceeding unless there was something else which amounted to abuse.

With regards to the third ground, the Judge found that On Tower was not entitled to serve notice under paragraph 27 of the Code to secure temporary rights because its tenancy was continuing.  Requirement of paragraph 27(1)(c) was that a claim for temporary code rights was only available after an existing agreement had come to an end. Accordingly, such a notice could not be served whilst a tenancy was being continued by Part 2 of the 1954 Act. 

He further found that On Tower was barred from serving a valid notice under paragraph 20 of the Code while its tenancy was being continued by the 1954 Act. Following, Compton Beauchamp, paragraph 20 and Part 4 of the Code could not be used by an operator in situ to obtain a modification (or renewal) of its existing code rights. 

Section 64(1) of the 1954 Act provided that, where an application had been made for a new tenancy under Part 2 of the Act and the effect of a notice to terminate the tenancy would be to terminate it earlier than the expiry of three months “beginning with the date on which the application is finally disposed of”, the effect of the notice was to terminate the tenancy at the expiry of that period of three months and not at any other time.  By section 64(2), the date on which the application is “finally disposed of” means:

“… the earliest date by which the proceedings on the application (including any proceedings on or in consequence of an appeal) have been determined and any time for appealing or further appealing has expired, except that if the application is withdrawn or any appeal is abandoned the reference shall be construed as a reference to the date of the withdrawal or abandonment”.       

The Judge agreed with the First Tier Tribunal that had found that the 1954 Act proceedings were not “determined” when the time for service of the claim form expired. The Judge found that the word “determined” implied more than an administrative termination; it suggested a judicial decision and that finality had been achieved.  Accordingly, On Tower was not entitled to seek temporary rights pursuant to paragraph 20 of the Code or make a valid request for a new tenancy pursuant to paragraph 20.

Conclusion

This decision will be a huge source of relief to landowners. The potential impact of the First Tier Tribunal’s decision on the ability of landowners to be able to recover their land from operators was significant. The position presented by On Tower ran the risk of effectively removing the grounds of termination in the 1954 Act and in Part 5 of the Code and replacing those grounds with the test set out in paragraph 21 of the Code. Landowners were therefore faced with extremely lengthy and costly process for removal with significantly reduced chances of success. Whilst it remains very difficult to remove an operator from land those prospects have at least increased following the successful outcome of this appeal. This is also a huge source of relief to Gravesham who will now proceed to repair its rooftop after nearly five years.

Daniel Cuthbert is a Partner and Ella Carroll is a Senior Associate at Freeths. With Jonathan Wills of Landmark Chambers, they acted for Gravesham Borough Council in the first appeal from the First-tier Tribunal on the Electronic Communications Code.