EE and H3G Ltd v (1) Edelwind and (2) Secretary of State for Housing Communities  UKUT 0272 (LC)
The Upper Tribunal (Lands Chamber) has handed down a decision on the validity of two notices under paragraph 31 of the telecommunications Code. The validity of the notices was a preliminary issue in the reference, which concerns the respondents’ attempts to determine the claimant operators’ code rights.
The first respondent was the freehold owner of a building of which the second respondent was lessee. There were two code agreements: firstly an agreement between the second respondent and the first claimant, by which the former conferred code rights on the latter (‘the primary code agreement’), and secondly an agreement between the previous freehold owner, the second respondent and the first claimant, by which the freeholder gave consent to the grant of code rights and agreed to be bound by the terms of the primary code agreement (‘the secondary code agreement’).
Two notices under paragraph 31 of the Code (one on behalf of each respondent) were served on the first claimant, seeking to end the code agreements due to a stated intention to redevelop. The claimants argued that the notices were invalid firstly because of the date for termination they specified and secondly because they had not been served on the second claimant.
The date point
Although the Claimant was not informed of this for months after the notice was served, the second respondent had served notice under a break clause in its lease. Accordingly, the lease would determine prior to its contractual expiry date, subject to the conditions of the break being fulfilled (the rent being paid up and vacant possession given). It was common ground that when the second respondent’s interest ceased, so too would the primary code agreement, save for continuation under the Code. This was the effect of well known authority, Pennell v Payne  QB 192, CA.
The date specified in the notices for termination of the code agreements was after the break date in the second respondent’s lease but before its contractual expiry date. Paragraph 31(3)(b) of the Code requires the date for the termination of the agreement to be ‘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.’ Accordingly, if the lease would not end on the break date, the date specified in the notices would be during the currency of the primary code agreement and therefore premature, invalidating the notices.
The claimants argued that this meant the Tribunal needed to be satisfied, on the balance of probabilities, that the second respondents’ lease would end on the break date and that the respondents had not provided sufficient evidence to allow the Tribunal to conclude, on the balance of probabilities, that the conditions in the break would be satisfied. The first respondent argued that ‘would’ indicates conditionality and so the Tribunal only needed to be satisfied that the lease would probably end on the break date.
The Tribunal accepted the claimants’ contention as to the standard of proof, namely that it had to be shown on a balance of probabilities that it would end, not simply that it would probably end, but considered that in this case the standard was met. The notices were therefore not invalid by reason of the date specified.
The Tribunal rejected a further argument advanced on behalf of the claimants that the secondary code agreement would continue after the primary code agreement had determined. Although the secondary code agreement was not derivative from the second respondent’s lease, on its true construction, it was not intended that this secondary code agreement would subsist after the primary code agreement came to an end.
The recipient point
It was common ground that an assignment of a lease in breach of covenant was effective (Old Grovebury Manor Farm v Seymour  1 WLR 1397, CA) but that a purported assignment of a licence in breach of covenant would not be effective.
The claimants argued that both code agreements were leases; the respondents that they were licences. The Tribunal, having considered the terms of the agreements, concluded that they were both licences, not leases. Accordingly, there had been no assignment to the second claimant and there was no need for notices to be served on it.
The Tribunal also heard argument on the precise effect of the deed of assignment, and although the points did not arise for decision, the Tribunal did indicate that it would not have been willing to imply a term into the deed of assignment that the secondary code agreement (which had not been mentioned) was also being assigned.
It having been determined that the notices were valid, the matter will now proceed to a trial of the second preliminary issue, namely whether the respondents can make out the requisite intention to redevelop.
Stephanie Tozer QC, instructed by Winckworth Sherwood, appeared for the claimants. Wayne Clark, instructed by Baker & McKenzie, appeared for the first respondent.
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