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

A tenancy is void for uncertainty where the agreement creates a minimum fixed term but permits termination on notice at any time thereafter, so that its ultimate duration cannot be ascertained at inception. The court must first interpret the agreement; it cannot assume that a periodic tenancy exists merely because rent and exclusive possession are present. Where the tenancy is void, the court should identify the arrangement that best fits the parties’ communicated intentions. A contractual licence on the agreed terms may be preferable to inferring a periodic tenancy, particularly where the latter would contradict important contractual provisions.

The owner of a telecommunications site appealed from the Upper Tribunal (Lands Chamber), which held that an agreement for the installation and maintenance of telecommunications equipment did not create a term certain and that the purported tenancy was void, taking effect as a contractual licence. The Upper Tribunal decision is reported at [2024] UKUT 263 (LC).

The agreement provided for a minimum 10-year term, terminable by either party on at least 12 months’ written notice expiring at any time after that minimum term. Rent and exclusive possession were accepted. The owner argued that the agreement created a valid term certain or, alternatively, that an annual or daily periodic tenancy should be inferred. The central issues were the effect of the termination clause and the proper legal consequence of the tenancy’s uncertainty.

1. Appeal dismissed. The agreement did not create a valid term certain. Clause 2.1 created a tenancy for a minimum term of 10 years from 11 March 1997, terminable by either party on at least 12 months’ written notice expiring at any time on or after 11 March 2007. Its duration could therefore not be ascertained when the agreement was made.
2. The court rejected the owner’s argument that Baroness Hale’s statement at [93] of Mexfield established two, and only two, invalidating features. That statement did not lay down an exhaustive rule. The proper sequence was first to interpret the agreement and then to ask whether the term was certain.
3. The agreement did not create an annual periodic tenancy, a 10-year term followed by a yearly tenancy, or a 10-year term followed by a daily tenancy. Its language referred to a minimum term, not a tenancy from year to year, and contained no words creating a later periodic tenancy. The rent calculation and Payment Days did not support those constructions.
4. Following the approach in Mexfield, once the purported tenancy was void, the court had to choose between inferring a tenancy and giving contractual effect to the parties’ intentions. The relevant question was what a reasonable observer, knowing what the parties had communicated, would regard as their likely intention. A periodic tenancy from the outset was inconsistent with several express terms. A contractual licence on the agreement’s terms was the better fit and preserved almost all of them.
5. The conversion of the arrangement into a 90-year term under section 149(6) of the Law of Property Act 1925 was unavailable because the parties were not individuals. The contractual-licence reasoning in Mexfield had been obiter, but the court followed its thrust. The judge was right to give effect to the agreement as a contractual licence.

1. Court of Appeal (Civil Division): appeal dismissed. The court upheld the Upper Tribunal’s decision that the agreement took effect as a contractual licence: [2024] UKUT 263 (LC).
2. Upper Tribunal (Lands Chamber): Mr Justice Edwin Johnson, President, held that the agreement did not create a term certain and that the purported tenancy was void, taking effect as a licence: [2024] UKUT 263 (LC).
3. First-tier Tribunal (Property Chamber): Judge D Jackson, whose decision was the subject of the appeal to the Upper Tribunal. The judgment does not state a citation for that decision.