AP Wireless II (UK) Limited v On Tower UK Limited

An agreement for the use of land is a lease if, in substance, it grants exclusive possession of defined land for a term at a rent, unless possession is referable to another legal relationship. The label used by the parties and the absence of formal words of demise are not decisive.

In telecommunications agreements, a defined and enclosed compound, restricted landowner access, exclusive use by the operator’s equipment, and provisions binding successors may establish exclusive possession. Code status does not displace ordinary landlord and tenant law.

However, a minimum fixed period followed by termination on notice expiring at any time does not create a term certain or a periodic tenancy. Where that contractual termination scheme is incompatible with a periodic tenancy, the court will not imply one.

The appellant freeholder challenged a First-tier Tribunal decision that two historic telecommunications site agreements were licences rather than leases. The agreements concerned enclosed rural compounds at Sandbach and Lubbards and were subsisting agreements under the electronic communications regime.

The distinction mattered because a lease protected by Part II of the Landlord and Tenant Act 1954 fell outside the First-tier Tribunal’s Part 5 termination and replacement jurisdiction. The First-tier Tribunal had held that neither agreement granted exclusive possession.

The central issues were whether the agreements granted exclusive possession of defined land and whether the 1997 agreement, which had a ten-year minimum period followed by termination on 12 months’ notice expiring at any time, was for a term certain.

1. Appeal allowed in part. The Tribunal set aside the First-tier Tribunal’s determination concerning the 2002 agreement and held that it took effect as a lease to which Part II of the Landlord and Tenant Act 1954 applies. The appeal concerning the 1997 agreement was dismissed.

2. The applicable test was that stated in Street v Mountford [1985] AC 809. The court must construe the parties’ rights and obligations, consider the surrounding circumstances, and then classify the arrangement. A code agreement is not a separate legal category which displaces the ordinary law of landlord and tenant. It may be a lease, licence or other arrangement.

3. Both agreements granted Orange exclusive possession of a defined site. Each site was an identifiable enclosed compound. The operator had extensive rights to install and operate its equipment there, the owner’s access was restricted, the owner could not share use of the site, and the operator could share its use with others. The fencing and security provisions were evidence of physical control even though they also protected telecommunications equipment. Limited redevelopment and relocation provisions did not negate exclusive possession.

4. The 2002 agreement had a 20-year term and rent equivalent. It therefore satisfied the requirements of a lease. Its lack of a deed did not prevent that conclusion, although the precise category of lease was not determined.

5. The 1997 agreement also granted exclusive possession, but clause 2.1 did not create a term certain. It provided a ten-year minimum period followed by termination on 12 months’ notice expiring at any time. That was neither a fixed term followed by a periodic tenancy nor another valid certain term. An annual periodic tenancy could not be implied because it would contradict the parties’ express termination regime. The agreement therefore took effect only as a licence.

• Upper Tribunal (Lands Chamber): Allowed the appeal in part and set aside the First-tier Tribunal’s conclusion on the 2002 agreement. It held that agreement to be a lease protected by Part II of the Landlord and Tenant Act 1954.
• First-tier Tribunal (Property Chamber): By a decision dated 30 October 2023, determined preliminary issues in Code references and held that both agreements were licences rather than leases.