From “Could” to “Must”: Court of Appeal Clarifies the Actual-Exercise Requirement for Site-Provider Break Rights Under Paragraph 31 of the Electronic Communications Code

Introduction

The Court of Appeal’s decision in On Tower UK Ltd v British Telecommunications PLC ([2025] EWCA Civ 844) is the first appellate ruling to address the relationship between a contractual break clause in a Code agreement and the statutory termination mechanism contained in paragraph 31 of the Electronic Communications Code (“the Code”). The dispute arises out of apparatus operated by On Tower UK Ltd (“OT”) on the roof of a British Telecommunications PLC (“BT”) telephone exchange in Harrow. Two central questions were posed:

Must a site provider actually exercise a break clause before relying on it as the spring-board for a paragraph 31 termination notice?
Was BT’s contractual break notice, and consequently its paragraph 31 notice, valid on the facts?

The Court answered Yes to the first (breaking with the Upper Tribunal’s contrary view) and No to the second, thereby overturning the Upper Tribunal on Issues 2 and 3.

Summary of the Judgment

Break clause must be exercised. A paragraph 31 notice is effective only if, apart from the statutory continuation under paragraph 30, the agreement would already have ended by contract—either by effluxion of time or by a valid break/quit notice. Mere “exercisability” of a break clause is insufficient.
BT’s notices invalid. BT’s break notice failed because it relied on an incorrect termination ground (sub-clause 5.8(b)(v) rather than 5.8(b)(i)), and its paragraph 31 notice consequently fell with it.
Precedential reach. The ruling harmonises Parts 4 and 5 of the Code with the Supreme Court decision in Cornerstone v Compton Beauchamp [2022] UKSC 18, confirming that Part 5 powers arise only once the contractual tenure has actually ceased.

Analysis

1. Precedents Cited and Their Influence

Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18 – Provided the structural key: Part 5 remedies become available only after contractual expiry + statutory continuation. The Court of Appeal used this to anchor its interpretation of paragraphs 30–35.
Marks & Spencer plc v BNP Paribas [2015] UKSC 72 – Cited below for implying a requirement to specify grounds in a break notice; endorsed implicitly by the Court of Appeal.
PACCAR Inc v CAT [2023] UKSC 28; Quintavalle [2003] UKHL 13; Bloomsbury [2011] UKSC 25 – Authorities on purposive statutory interpretation, underpinning the Court’s methodological approach.
Landlord & Tenant Act 1954 cases (Wood, Scholl) – Discussed and distinguished; the 1954 Act’s substitutionary model was deemed inapplicable to the Code.

2. Legal Reasoning

The Court’s reasoning pivots on a textual and purposive reading of the interplay between paragraph 30 (continuation), paragraph 31 (termination by site provider), and paragraph 33 (modification). Key strands:

Conditional vs. unconditional language: “Would” in 31(3)(b)’s first limb (effluxion of time) denotes inevitability; “could” in the second limb denotes elective contractual termination. The Court held that “could” presupposes a valid exercise of the contractual power, not its mere availability.
Statutory sequence: Contract –> Break/expiry –> paragraph 30 continuation –> paragraph 31 termination. Skipping the contract step collapses the scheme and conflicts with Compton Beauchamp.
Protection of the “bargain”: Allowing mere exercisability would let site providers sidestep contractual safeguards (timing, conditions precedent, compensation clauses) negotiated with operators.
Consistency across Part 5 tools: The same “could have been brought to an end” formula appears in 31(3)(b), 33(3)(b), 34(15)(a), and 35(1)(a). A uniform reading is required; otherwise operators could hijack one-way landlord breaks to trigger unilateral modifications—an outcome rejected as contrary to legislative design.

3. Practical & Doctrinal Impact

Higher threshold for site-provider terminations. Landlords/site providers must now serve a valid contractual break notice (or wait for contractual expiry) before relying on paragraph 31.
Increased certainty for operators. Operators retain contractual security until the bargain is genuinely at an end, bolstering infrastructure investment stability.
Drafting consequences. Expect sophisticated break clauses to proliferate, including clearer conditions precedent and express linkage with statutory rights. Parties may add wording that exercise of a contractual break automatically serves as a paragraph 31 notice (or vice-versa) to streamline process.
Tribunal case-management. The Lands & First-tier Tribunals will need to scrutinise the validity of underlying contractual notices before entertaining Part 5 applications.
Alignment with property law orthodoxy. The decision dovetails with the Privy Council’s confirmation in Ramsbury [2024] UKPC 40 that leases can be brought to an end by acceptance of repudiatory breach—again reinforcing that Part 5 only bites once contractual tenure has ended.

Complex Concepts Simplified

Electronic Communications Code (“the Code”): A statutory regime that grants telecoms operators rights to install and keep equipment on land, sometimes without the landowner’s consent.
Paragraph 30 Continuation: Think of it as automatic “holding over”: even if the contract ends, the operator’s rights persist until the Code’s procedures are followed.
Paragraph 31 Notice: A landlord/site-provider’s formal notice to end the Code-continued arrangement. Must specify an approved ground (breach, payment delay, redevelopment, or “no longer entitled”).
Break Clause: A contractual provision allowing one party to bring a lease/licence to an end early, usually on stated grounds and after giving notice.
Exercisable vs. Exercised: “Exercisable” means the right is available but not yet used; “exercised” means the required steps (notice, conditions) have actually been taken, making the termination effective.

Conclusion

The Court of Appeal has settled an important ambiguity in the Electronic Communications Code: a site provider cannot bypass contractual machinery by relying on the mere existence of a break clause when deploying a paragraph 31 notice. The clause must be activated, and the contract must genuinely have reached its end for the statutory security-of-tenure regime to give way to the termination provisions. The ruling restores contractual primacy, reinforces the internal logic of Parts 4 and 5, and provides much-needed clarity for the burgeoning telecoms infrastructure sector. Future litigation is likely to focus not on whether this principle applies, but on whether particular contractual notices and conditions meet the “validly exercised” threshold.

“From ‘Could’ to ‘Must’: Court of Appeal Clarifies the Actual-Exercise Requirement for Site-Provider Break Rights Under Paragraph 31 of the Electronic Communications Code”