A detailed analysis of the age-old lease/licence distinction, but this time in the context of a Code Agreement, was undertaken by Edwin Johnson J in the Upper Tribunal (Lands Chamber) in the appeal case of AP Wireless v On Tower UK Limited [2024] UKUT 263 (LC).
This was an appeal heard in the Upper Tribunal (Land Chamber) on 9 September 2024. The claim related to two agreements entered under the old telecoms code, one in 1997 and the other in 2002, for the installation and maintenance of telecommunications equipment. The points in dispute were two-fold. Firstly, it had to be decided whether either agreement granted exclusive possession of a defined area of land to the telecoms operator and secondly, whether the agreements took effect as leases or licences.
The reason this distinction was so important in the case was because if the agreements were held to be leases, any renewal had to be under the provisions of the Landlord and Tenant Act 1954, which were much more favourable to the site provider than the provisions set out in the new electronic communications code. If, however, the agreements were deemed licences, the new code would apply, which is much more telecoms operator friendly.
The telecommunications apparatus under each agreement were kept in high fenced, padlocked compounds. After looking at the position on the ground, and after considering the wording of the grant clauses, the owner's access rights, the plans, the way the document was executed and the termination provisions set out in the agreements, the Judge concluded that both conferred exclusive possession of a defined area of land to the operators.
Despite this, only one of the agreements was held to take effect as a lease on the basis that the other lacked a sufficient certain term. The latter agreement granted code rights for a minimum term of 10 years subject to termination on any date thereafter on the giving of 12 months' notice. As this term was not sufficiently certain, the agreement did not qualify as a lease.
The label attached to an agreement may be indicative of the type of agreement it is (and, therefore, what legal principles apply), but it is not determinative. The ordinary principles of construction and business common sense also apply to agreements granting code rights. Agreements should be reviewed in their entirety and a view formed on the agreement as a whole.
