Protected Tenants and the Electric Communications Code

The Court of Appeal has handed down its judgment in CTIL v Ashloch Limited and AP Wireless II (UK) Limited [2021] EWCA Civ 90. This article looks at the most important implications of the judgment for business tenants protected under the Landlord & Tenant Act 1954 (“the Act”).

Background: The Telecoms Code

Under Section 2 of the Electronic Communications Code (“the Code”), the Code applies to all written agreements in existence on 28 December 2017 (when the Code came into force). However, under Part 5 of the Code (which concerns the termination and modification of agreements), the Code shall not apply if the written agreement is a lease protected under Part II of the Act.

Facts

CTIL was the assignee of a former tenant that – at the time of the assignment – was “holding-over” under s24 of the Act. CTIL wanted to renew the lease with favourable terms that incorporated new rights under the Code (“code rights”). Aware that Part 5 of the Code did not apply to protected leases, CTIL served a “Paragraph 20” notice under Part 4 of the Code. The notice requested that the Tribunal impose a fresh agreement with code rights. The landlord, AP Wireless, argued that CTIL could only renew the lease through the Act – not the Code.

The Upper Tribunal (UT) found that CTIL, as an occupying “Operator”, could not rely on Part 4 of the Code to renew its protected lease.

CTIL appealed the UT’s decision to the Court of Appeal, arguing that (notwithstanding the fact that the Code’s transitional provisions prevent Part 5 from applying) Part 5 did not expressly prevent an occupying Operator from relying on Part 4 of the Code.

Court of Appeal

The Court of Appeal rejected CTIL’s argument. Referring to an earlier decision in CTIL v Compton Beauchamp Estates [2019] EWCA Civ 1755, the Court held that Part 4 code rights can only be conferred by an occupier for the time being – an operator in situ is precluded from relying on Part 4 and must follow the renewal process under the Act. CTIL was precluded from renewing its lease under Part 4.

Implications

The major implications of the Court of Appeal’s judgment are that:

1. An operator occupying premises under a protected lease that was granted prior to 28 December 2017 can only renew that lease in accordance with the renewal process under the Act.
2. Only occupiers for the time being can confer code rights; Operators in situ, however, are precluded under Part 4 of the Code.

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