Benefit-Only Assignees as “Parties to a Code Agreement” for Part 5 (Termination/Modification) Applications under the Electronic Communications Code
1. Introduction
On Tower UK Ltd v AP Wireless II (UK) Ltd [2026] EWCA Civ 43 is a Court of Appeal decision on the meaning of
“party to a code agreement” in Part 5 of the Electronic Communications Code (“the Code”) in Schedule 3A to the Communications Act 2003.
The case arose in the common modern context of legacy (“subsisting”) telecoms site licences granted before the 2017 Code, later assigned through multiple operators.
The dispute concerned two sites (Sandbach, Cheshire; and Blackwell Grange Golf Club, Darlington). Historic licences granted to telecoms operators had been assigned to
On Tower UK Limited (“On Tower”). On Tower served notices under paragraph 33 seeking modification/renewal on significantly reduced
“no scheme” valuation terms, and then referred the matter under paragraph 34. The landowner/reversionary party, AP Wireless II (UK) Limited (“APW”),
sought strike-out, arguing On Tower was not a “party to a code agreement” because (as an assignee of a licence) it had acquired only the benefit of the licence, not
the contractual burden.
The legal issue was therefore sharply framed: can an operator who holds only the benefit of a Code licence (without being directly liable to the site provider
for the licence covenants) be a “party to a code agreement” for Part 5 purposes, and thus able to invoke paragraph 33?
2. Summary of the Judgment
The Court of Appeal (Newey LJ, with Holgate LJ and Foxton LJ agreeing) dismissed APW’s appeal.
The Court held that, for Part 5 of the Code, an operator with merely the benefit of a code agreement is a “party to [a code/the] agreement”.
This result upheld the outcome reached below (FTT refusal to strike out; UT dismissal of APW’s appeal), but on different reasoning.
The Upper Tribunal had adopted a more fact-sensitive test focused on whether the assignee had “assumed the primary responsibility for performing the obligations”
(including via covenants between assignee and assignor). The Court of Appeal rejected that as the governing test and preferred a purposive, functional construction:
Part 5 is intended to operate between the site provider and the operator currently exercising the Code rights, even where contractual “burden”
has not moved by novation.
3. Analysis
3.1 Precedents Cited
Vodafone Ltd v Potting Shed Bar and Gardens Ltd [2023] EWCA Civ 825, [2024] 1 WLR 141 (“Gencomp”)
Gencomp was central, providing the Court’s interpretive backdrop: the Code “draws a distinction between those who are parties, or treated as parties,
to code agreements and those that are merely bound by code rights”. In Gencomp, APW acquired the reversion via a concurrent lease and was held to be a “party” for Part 5.
APW relied on Gencomp’s language that the regime is intended to work such that the person entitled to the “benefit and burden” is the “party”.
The Court of Appeal in On Tower treated Gencomp as not determinative in a “split benefit/burden” scenario because Gencomp involved a lease
structure where benefit and burden were aligned; Nugee LJ had expressly stated (Gencomp, para 83) that the contractual licence scenario was “not obvious” and was not decided.
The Court nonetheless extracted from Gencomp an important structural point: Part 5 assumes there is a single operator “party” at the time of notices/applications;
it is not designed for multiple parallel “parties” (original licensee plus assignees). That functional “single counterparty” assumption supported treating the current operator
as the Part 5 “party”, even if classic contract-law party status is absent.
Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18, [2022] 1 WLR 3360 (“Compton Beauchamp”)
The Court used Compton Beauchamp for interpretive method. Lady Rose’s statement (para 106) emphasises purposive construction: determine how the regime is
intended to work, then give contested terms the meaning that best achieves that function. On Tower deployed this to argue that “party to a code agreement” should be read to
capture the operator actually running the site under continued Code rights.
The Court also relied on Compton Beauchamp for a structural limitation: Lady Rose stated (para 18) that Part 4 does not apply to code agreements continued under paragraph 30(2).
This undermined APW’s “they can just use Part 4” answer to operators excluded from Part 5.
Bexhill UK Ltd v Razzaq supplied orthodox contract doctrine: assignment transfers the benefit but does not make the assignee a party to the underlying contract
without novation. This mattered because the sites were held under historic licences (not leases), where the “burden” does not automatically pass with assignment.
The Court accepted this general-law starting point, but held that the Code’s use of “party” is not confined to contract-law parties and must be read in its statutory context.
Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021] UKSC 16, [2022] AC 690
This authority was cited for a general interpretive proposition: modern statutory interpretation gives central importance to identifying legislative purpose.
It supported the Court’s willingness to adopt a construction that best fits the Code’s policy aims (network deployment and continuity) even where textual fit is not perfect.
Other materials referenced
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The Electronic Communications Code (Law Com No 336): used as contextual background, including the “stand in the shoes” formulation and the idea that
operator changes should be “immaterial” to the site provider “in most cases”.
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Explanatory notes to the Digital Economy Act 2017 and the DCMS consultation materials: used to frame the reform objectives and the “no scheme” valuation
regime that typically reduces consideration compared to pre-2017 agreements.
3.2 Legal Reasoning
(a) The statutory problem: Part 5 functionality vs contractual orthodoxy
The Court identified a tension between:
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Contract law: benefit-only assignees of licences are not “parties” and are not directly liable on covenants without novation.
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Part 5 mechanics: the “party to the agreement” is the person on whom notices are served, who counter-notices, and who applies for orders; the regime
assumes a single operator counterparty at any given time.
(b) Textual and operational cues in Part 5 pointing to the current operator
The Court emphasised that paragraph 31/32/33/34/35 operate most sensibly if the “party” operator is the one currently exercising Code rights:
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Paragraph 32 (counter-notice and application): it would be “strange” if the right to resist termination and apply under paragraph 34 sat with an
original operator long gone from the site, potentially defunct.
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Paragraph 33 (modification): the operator with the live network interest is the natural applicant and also the natural recipient of a site provider’s
modification notice—service on an original operator could fail to reach the operator actually on the land.
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Paragraph 34(13) (tribunal’s regard to “the operator’s business and technical needs”): those needs will be those of the present operator, not a historic one.
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Paragraph 35 (interim orders): again, practical utility points to the current operator as the party entitled to seek or resist interim arrangements.
(c) The countervailing textual difficulty: termination grounds based on operator breaches
APW argued that paragraph 31(4)(a) and (b)—termination for substantial breaches or persistent payment delays—implied the “party” must be the person legally obliged to
perform/pay under the agreement. The Court accepted that reading “benefit-only” into “party” creates “difficulties” with literal phrasing, but held that a purposive
construction can treat those grounds as referring to whether obligations have been performed in fact during the period the current operator has been operating the site.
The Court also noted a structural safety valve: where a benefit-only operator’s application might prejudice an operator who remains contractually burdened, paragraph 34
allows the Tribunal to terminate and substitute a new agreement—an outcome that would end legacy burdens.
(d) Rejection of the Upper Tribunal’s “primary responsibility” test and APW’s covenant/novation requirement
The Court preferred a rule anchored in the statute’s structure rather than private arrangements:
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Upper Tribunal approach: whether the assignee has “assumed the primary responsibility” for obligations could depend on inter-operator covenants unknown
to site providers. The Court found this weak on certainty and operability.
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APW’s approach: requiring a deed of covenant/novation with the site provider is not mentioned in the Code and yields awkward consequences (e.g. a prior
assignee might remain the “party” even after onward assignment if later assignees do not covenant; operators could time covenants tactically just before applications).
(e) Legislative purpose: continuity and ease of deployment
The Court gave significant weight to the Code’s policy objective: to “make it easier for communications providers to deploy and maintain their infrastructure” and, in Part 5,
to enable continued exercise and orderly modification/termination of rights after contractual expiry (paragraph 30 continuation). The “benefit-only” construction best served that
objective by keeping Part 5 workable for the operator actually operating the apparatus.
3.3 Impact
(a) Practical rule established
The decision establishes a clear operational rule for Part 5:
an operator who has acquired the benefit of a Code licence by assignment can be the “party to a code agreement” for Part 5, even if the burden has not passed by novation.
(b) Consequences for legacy (“subsisting”) agreements
The case is especially significant for subsisting agreements where paragraph 16 (assignment) is disapplied by transitional provisions, leaving general-law assignment principles
(benefit without burden) in play. Without this judgment, operators on legacy licences risked being shut out of Part 5 procedures, forcing workarounds (or creating stalemates).
The Court’s approach prevents Part 5 from becoming inoperable across large numbers of historic wayleaves.
(c) Effects on landowners/site providers
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Service and engagement: site providers should treat the operator currently on site/exercising rights as the relevant Part 5 counterparty, reducing the risk that
notices are served on defunct or remote historic entities.
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Valuation and renegotiation pressure: by keeping paragraph 33 available to current operators under legacy licences, the judgment facilitates migration to
lower “no scheme” consideration, a point of significant commercial sensitivity for landowners.
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Litigation framing: strike-out arguments based solely on “no burden transfer = no Part 5 standing” are likely to fail where the operator can show it holds the
benefit and is the active operator.
(d) Tribunal practice
The Court’s approach favours a bright-line, functional identification of the Part 5 operator rather than fact-heavy inquiry into private covenants among operators. That is likely
to influence case management, evidence requirements, and preliminary issue litigation in the Tribunal.
4. Complex Concepts Simplified
- Electronic Communications Code (“the Code”)
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A statutory regime governing telecoms operators’ rights to install and keep apparatus on land and the mechanisms to impose, renew, modify, or terminate arrangements.
- Code rights
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Statutory-purpose rights listed in paragraph 3 (installing, keeping, maintaining, upgrading, sharing apparatus, etc.).
- Code agreement
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For Part 5, broadly an agreement between occupier (site provider) and operator conferring Code rights (paragraph 29), including historic agreements continued by paragraph 30.
- Site provider
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The person bound by Code rights as a result of a code agreement (defined through paragraph 30 mechanics), typically the landowner/occupier side.
- Part 4 vs Part 5
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Part 4 is about imposing Code rights where there is no agreement. Part 5 is about termination/modification of existing (and continued)
agreements. The Supreme Court in Compton Beauchamp indicates Part 4 is not the route for agreements continued under paragraph 30(2).
- Assignment, benefit and burden, novation
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Under general contract law, assignment usually transfers benefit (rights) but not burden (obligations). Novation is the process by which all
parties agree to replace one contracting party with another, transferring obligations as well.
- “No scheme” valuation
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Under paragraph 24, consideration is assessed as market value under assumptions that strip out the special value of telecoms use and statutory sharing/assignment rights,
typically reducing rents compared with pre-2017 commercial levels.
5. Conclusion
On Tower UK Ltd v AP Wireless II (UK) Ltd [2026] EWCA Civ 43 resolves a key uncertainty in Part 5 of the Code for legacy telecoms licences:
an operator need not have assumed the contractual burden of a code agreement to be a “party to a code agreement” for Part 5; holding the benefit is enough.
The Court reached this position by prioritising the operational logic and statutory purpose of Part 5—ensuring continuity, workable notice procedures, and effective tribunal
oversight—over strict contract-law notions of partyhood. The judgment is likely to shape how tribunals treat standing in modification/termination disputes and will materially
affect negotiations and litigation concerning the renewal and re-pricing of pre-2017 telecoms site arrangements.