Breaking badly: Site provider's break notice and Telecoms Code Rights

The Court of Appeal’s recent decision in On Tower UK Ltd v British Telecommunications Plc discussed the validity of a site provider’s break notice where both contractual provisions of a lease and provisions in the Electronic Communications Code (‘the Code’) are involved.

Where both break option rights in a lease and termination rights in the Code are applicable, it poses the question as to whether the lease break conditions must also be met in addition to serving a Paragraph 31 Code Termination Notice. The Court of Appeal has clarified ~ the termination procedure in Part 5 of the Code does not override the contractual requirement to serve a break notice.

Take note

If there is a contractual break option, valid notice must be served and any conditions to the valid exercise of the option complied with, in addition to service of a Paragraph 31 Code Termination Notice.

The facts:

Lease between On Tower UK Limited (‘OT’) as tenant and British Telecommunications PLC (‘BT’) as Landlord. The lease granted rights to OT to install and keep telecoms apparatus on the rooftop of BT’s telephone exchange building.
The lease included a break clause allowing BT to terminate under specific conditions.
BT served a Paragraph 31 Termination Notice and a contractual break notice (on the grounds of redevelopment).
OT argued that BT had failed to serve a valid break notice under the conditions set out in the lease and therefore the Paragraph 31 Termination Notice was invalid.
BT contended that the Paragraph 31 Code Termination Notice was sufficient alone to terminate the lease without the need to exercise the contractual break clause.
The Court rejected BT’s interpretation that a break clause merely needed to be “exercisable” in theory without in fact having to actually be exercised in order for a valid Paragraph 31 Termination Notice to be issued under the Code.
The Paragraph 31 notice was therefore invalid as BT had to first have served a valid break notice and complied with the break pre-conditions before a Paragraph 31 Termination Notice could validly terminate the lease pursuant to the Code and therefore BT had not lawfully terminated the lease.

This decision is welcome clarification that contractual lease break conditions must first be met before a lease, which is subject to the Code, can be terminated via Paragraph 31.

If you require any Telecoms advice whether you are a site provider or operator, please contact our Telecoms Team who can assist with litigation and transactional advice.

This article has been co-written by Zoe Wright, Angela Mildenhall and Emily Hunter.