The Court of Appeal has held that a telecoms agreement granted for a minimum term of 10 years, terminable on 12 months’ notice in writing, was void as a lease because it was not for a certain term. It was held to be a contractual licence and therefore a lower fee was payable as rent.
Facts
The case in question was AP Wireless II (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ 971. A telecoms agreement was entered into by the owner of Fields Farm, Sandbach, Cheshire permitting Orange to install and maintain telecoms equipment and a phone mast on the owner’s land. It was granted for a minimum term of 10 years with a right for either party to terminate at any time after that on 12 months’ notice.
AP Wireless purchased Fields Farm and On Tower (UK) Limited took over as telecoms provider. A dispute arose between the parties about the level of rent payable. AP Wireless argued the agreement was a valid lease and was renewable under the Landlord & Tenant Act 1954 (“1954 Act”). A lease would result in a higher rent being paid to the owner than if it was a licence.
In contrast, AP Wireless argued the agreement was a licence and would be renewable under the Electronic Communications Code. This would result in a licence fee being payable that would be lower than rent under a lease.
Decision
The Court of Appeal held the agreement was not a valid lease and was, therefore, a contractual licence. The term granted was uncertain because it could not be known when the agreement would end until notice to terminate was served. English law states that for a lease to be valid, it must be granted for a determinable period of time and give exclusive possession of land to the tenant.
If it failed as a lease, AP Wireless argued that the agreement was a periodic tenancy based on the regular payments of rent and that exclusive possession of the land was granted to On Tower. However, the Court decided that the agreement was also not a periodic tenancy and this argument failed.
Conclusion
Due to the uncertainty of the term, the Court held that the agreement was a contractual licence and its view was that the parties had intended it to be a licence from the start. The warning message for landowners is to ensure that any lease is granted for determinable period of time and with exclusive possession being given to the tenant.
This decision will benefit telecoms operators because of the lower fees payable under a licence, compared to higher rents payable for a mast site lease. Telecoms operators will be encouraged to know that mast agreements are often contractual licences. Operators will push for renewal under the Electronic Communications Code, rather than under the 1954 Act, in order to pay lower licence fees.
