LC-2023-000815 - [2024] UKUT 263 (LC)

The Judge commenced the Decision, at Paragraphs 1-10, with an introduction to the preliminary issues which he had to decide. The Judge identified the preliminary issues as whether each of the Agreements was a lease to which Part II of the 1954 Act applied. The Judge then reviewed, by reference to a number of cases, the case law on the lease/licence distinction, at Paragraphs 11-19, and summarised the evidence of Mr Powell in his witness statement, at Paragraphs 20-22.

At Paragraph 23 the Judge identified his approach to resolving the lease/licence question, in relation to each of the Agreements:

“23.

I now turn to deal with the factors identified by the parties which it is said point in the direction of either a lease or a licence.”

The Judge then proceeded to work through the provisions in each of the Agreements, considering whether they pointed to each of the Agreements being a lease or a licence.

The Judge dealt with the Term Issue at Paragraphs 24 and 25. The Judge concluded that the 1997 Agreement has been made for a term certain, and had not been prevented from taking effect as a lease for this reason:

“24.

Clause D of the 1997 Agreement provides “The Minimum Term is 10 years from the date shown above”. Clause 2.1 provides:

“This Agreement shall come into effect on the date shown above and shall continue for no less than the Minimum Term. It may be terminated by either party giving to the other not less than 12 months’ notice in writing to expire at any time on or after the expiry of the Minimum Term”.

25.

The initial term of 10 years is certain. As was said in Berrisford (FC) v Mexfield Housing Cooperative Limited [2011] UKSC 52 the periodic tenancy that arises on expiry of the Minimum Term without fetter on giving notice is also a term certain. I find that the 1997 Agreement is for a term certain.”

At Paragraph 75 the Judge came to his conclusions. At Paragraph 75 the Judge made specific reference to Lord Templeman’s statement, in his speech in Street v Mountford [1985] AC 809 (at 826H-827B), that it may sometimes appear from the surrounding circumstances that the right of exclusive possession of the relevant premises is referable to a legal relationship other than a tenancy, and to the examples given by Lord Templeman of such other relationships. The Judge then went on, at Paragraph 76, to cite from the decision of the Upper Tribunal in EE Limited and Hutchison 3G UK Limited v London Borough of Islington [2019] UKUT 53 (LC), where the point was made, at [43]-[45], that rights under the Code, and under the Old Code, could be granted by way of lease or licence.

At Paragraph 77 the Judge made the following observations of the nature of the legal relationship created by each of the Agreements:

“In the case of the 1997 and 2002 Agreements I am not concerned with residential accommodation where there is, for the very good reason of providing protection for a person occupying property as their home, often a bright line between lease and licence. In the context of this reference, I am concerned with “a legal relationship other than a tenancy”. That does not mean that that other legal relationship must be a purely personal contractual right. The 1997 and 2002 Agreements are long term arrangements for the installation and operation of electronic communications apparatus. Bearing in mind the rapid speed of development of electronic communications it is entirely understandable that the parties intended that those long term agreements should be assignable and bind successors in title. Indeed, that is exactly what has happened to both agreements. The provisions allowing for sharing and upgrading are standard terms in telecommunications agreements. They are vital to enable the parties to meet the challenges of a rapidly developing technology. To seek to use the lease/licence distinction, to say that an agreement is either one or the other is simply inappropriate in the modern world of electronic communications. Lord Templeman speaking in 1985 could not possibly have anticipated the technological changes that have taken place since that time. He did however leave the door open to legal relationships other than a tenancy. As the Upper Tribunal observed in Islington there is a diverse spectrum of telecommunications rights which can be granted. Sometimes a lease is the most convenient way forward equally there are situations where there is no grant of exclusive possession.”

At Paragraphs 78 and 79 the Judge explained that he had considered, separately, the totality of the rights and obligations contained in each of the Agreements. Some pointed to exclusive possession. Some were more consistent with a legal relationship other than a tenancy. The Judge added that he had disregarded any labels attached by the parties:

“78.

In order to discover the intention of the parties I have considered the totality of rights and obligations contained in both the 1997 and 2002 agreements separately. In doing so I have considered the surrounding circumstances at the time the agreement was entered into. As set out above some clauses point towards exclusive possession, others are more consistent with a legal relationship other than a tenancy. I have disregarded any labels attached by the parties.

79.

As in Edelwind “the parties have expressed themselves both ways”. Length of term, inspection (1997 Agreement only), chattels (per Gilpin v Legg), assignment and successors in title all point strongly to exclusive possession and a lease. Other terms such as absence of covenant for quiet enjoyment, warranty of title, repair, rates and insurance are neutral.”

The Judge came to his decision at Paragraphs 80 and 81:

“80.

My decision is finely balanced. There are clearly clauses to be found in “Terms and Conditions” attached and incorporated into the 1997 Agreement and contained in Schedule 1 to the 2002 Agreement which are resonant of a lease. However, those terms and conditions are, in my judgment, outweighed by clause B to both Agreements. The intention of the parties was that the operator would be granted a bundle of rights in connection with the installation and operation of PCN/Telecommunications Equipment. There is no grant of exclusive possession with a corresponding interest in land. The “lift and shift” provisions provide a qualified right for the site owner, in consultation with Orange, to more the Site to another location within the Premises (of which the Site forms a part). The Plans attached to the agreement do not demarcate the site. The Plans are in fact technical drawings of the PCN/Telecommunications Equipment. The quite extraordinary fencing and the almost “Orwellian” security observed by Mr Powell are not intended to demarcate the site or keep the landlord out. Fencing and security is present to protect the PCN/Telecommunications Equipment in both the 1997 and 2002 Agreements. The Site is secondary.

81.

I find that neither the 1997 nor the 2002 Agreement grant exclusive possession. That does not mean that they grant purely personal contractual rights either. Both are telecommunications agreements. Such agreements are not leases to which Part 2 of the Landlord and Tenant Act 1954 applies.”

The Judge thus decided that the Agreements were not leases to which Part II of the 1954 Act applied.