[2024] UKUT 00429 (LC)

This licence was granted by Mr N Thornhill to Orange Personal Communications Services Ltd (“Orange”) on 11 March 1997. It is unclear from the documents in evidence for what period the licence was granted, but a previous licence, which the 1997 licence replaced, had been granted for 5 years and thereafter from year to year until terminated by 12 months’ notice. In that earlier licence, there was no restriction on assignment. From references in subsequent documents, it can be inferred that the 1997 licence was on similar terms. The terms were then varied, with an increase in the licence fee, by a supplemental agreement dated 2 November 2000 made between Mr Thornhill and Orange.

A deed of assignment dated 8 August 2012 made between Orange as assignor and Everything Everywhere Ltd (“EE”) and Hutchison 3G UK Ltd (“H3G”) assigned to EE and H3G what was then referred to as “the lease”, subject to payment of the rents and performance of the lease obligations.

On 1 March 2019, EE and H3G assigned the property comprised in “the lease” by a Land Registry form TR1 To Arqiva Ltd (“Arqiva”), subject to a covenant by Arqiva by way of indemnity only to pay the rent and perform the terms of the lease.

Finally, Arqiva assigned its rights, title, interest and benefit in and to the agreement (and many other such agreements) to Arqiva Services Ltd (“On Tower”) by deed of 26 September 2019 (“the 2019 block transfer”), subject to a covenant by On Tower by way of indemnity only to pay the rent and perform the obligations in the agreement. There were no licences to assign, no deed of covenant made with the site provider, and the site provider was not party to any assignment.

Notices dated 30 September 2021 pursuant to para 33 of the Code were served by On Tower on Mr and Mrs Thornhill, as proprietors of the site, on 2 October 2021, seeking a new 15-year lease of the site from 8 October 2022 at a much reduced rent.

On 31 October 2022, APW became the registered proprietor of the site. APW notified On Tower’s agents of the change of landlord on 1 November 2022. It asked for confirmation of the amount of rent payable and the identity of the legal entity that APW should bill for the rent. On the same day, the Thornhills’ solicitors appear to have notified Orange that it should pay all future rent to APW, and on 2 December 2022 APW sent On Tower’s agents a rent authority letter. This (and numerous chasers) were not acknowledged on behalf of On Tower, but it appears from the correspondence that On Tower did pay the rent due from 31 December 2022 to APW.

The FTT was provided with a copy of an invoice from APW to On Tower for the rent due on 29 September 2023 and a rent payment advice from On Tower to APW dated 6 December 2023 for the December 2023 rent.

In this case, it was therefore apparent to the FTT that Mr Thornhill and APW were both willing to accept On Tower as being the person who was in occupation of the site as operator and by whom the rent under the agreement should be paid. On Tower correspondingly accepted that it should pay the rent for the site. It was paying it to Mr Thornhill at the date of the transfer and then paid it to APW, pursuant to Mr Thornhill’s direction. But there was no contractual obligation as between On Tower and Mr Thornhill or APW.

On Tower made a reference to the FTT on 30 May 2023, pursuant to its 2021 notice and para 33(5) of the Code, for an order for a new lease under para 34 of the Code.

In its written submissions, which the FTT directed should be filed in place of a pleaded response to the reference, APW stated that On Tower was not “a party to a code agreement” within the meaning of para 33 and so its reference should be struck out.

This licence was granted by Blackwell Grange Golf Club Ltd (“the Club”) to T-Mobile (UK) Ltd (“T-M”) on 5 July 2007 for a term of 15 years at a fee of £6,500 p.a., subject to review. The terms of the agreement required every assignee to covenant directly with the grantor to observe the terms of the agreement, and required the Club’s consent to an assignee other than a group company.

On 9 May 2008, the Club consented to the assignment of the agreement to T-M and H3G jointly, and the assignment was effected by deed of 13 June 2008 to which the Club was not a party. The assignees made the usual covenant with the assignor to perform the obligations in the agreement by way of indemnity only, but there was no covenant with the Club.

By 2014, the site owner’s interest had become vested in Darlington Borough Council and on 10 June 2015 it gave T-M and H3G licence to assign the agreement to Arqiva. Arqiva covenanted with the Council and with the assignors to pay the rents and perform the obligations in the agreement. The assignment was effected by deed on the same day.

The benefit of the agreement was then further assigned by Arqiva to On Tower under the 2019 block transfer, to which the Council was not a party. On Tower covenanted with Arqiva by way of indemnity only to perform the obligations in the agreement. No licence from the Council or APW appears to have been applied for (probably because On Tower was then a group company of Arqiva), and no covenant was made by On Tower with the site provider to comply with the obligations in the agreement.

Prior to the 2019 block transfer, the Council had notified Arqiva’s agents on 24 June 2019 that all future rents should be paid to APW, to which it had transferred ownership of the site. A rent authority letter was sent by APW to Arqiva on 13 September 2019 and on the same day Arqiva confirmed that APW should bill it for the rent. In this instance, therefore, APW’s interest as site provider preceded On Tower’s interest in the agreement. There were however two invoices from APW to On Tower before the FTT, dated 5 July 2023 and 13 November 2023, which show that APW had recognised by 2023 that On Tower was the person with the benefit of the agreement that should pay the rent, and it was common ground that On Tower had indeed paid rent to APW.

There was, however, no deed by which On Tower agreed with APW to pay the rent or perform the obligations of the licence agreement.

On 14 July 2022, On Tower served notice on APW pursuant to para 33 of the Code, seeking a new agreement commencing on 23 January 2023, for a term of 15 years at a much lower rent.

On Tower applied to the FTT on 30 May 2023, pursuant to the notice and para 33(5) of the Code, for an order for a new 15-year lease under para 34 at a much reduced rent. In its written submissions, APW stated that On Tower was not “a party to a code agreement” within the meaning of para 33 and so its reference should be struck out.

Following the decision of the FTT on the First Issue and the Second Issue, this Tribunal allowed an appeal against the FTT’s earlier decision that the Lubbards Lodge agreement was a licence. It held that in law the agreement created a lease. At the date of the hearing, it was not known whether On Tower would seek to appeal that decision. As things stand, pending any further appeal, the Lubbards Lodge agreement is outside the scope of the First Issue, because it is a lease not a licence. My treatment of the First Issue in relation to a licence of Lubbards Lodge is therefore contingent on the FTT’s conclusion being reinstated. Considering a third property does in any event provide a slightly different pattern of facts, which helps to inform the decision on the issues before me.

The agreement in this case was made between David Pinkerton and Andrew Pinkerton and Orange on 21 January 2002 for a term of 20 years at a rent of £4,000 p.a., subject to review. It allowed Orange to share the site with group companies, and (with the owners’ consent) with an unconnected party, but there was no restriction at all on assignment of the benefit of the agreement.

By 19 October 2019, APW had become the site owner and EE and H3G the occupiers. On that date, APW granted licence by deed to EE and H3G to assign the agreement to Arqiva. Arqiva was a party to the deed and covenanted with APW that while the agreement was vested in it, it would pay the rents and observe and perform the covenants on the part of the assignors. In the deed of assignment, made on the same day, Arqiva covenanted in similar terms with EE and H3G but by way of indemnity only.

On 24 October 2019, Arqiva wrote to APW asking for permission to assign the agreement to On Tower (which at that time was part of the Arqiva group). There does not appear to have been a deed permitting this later assignment, which was completed by deed on 15 November 2019 (to which APW was not a party), in which On Tower gave Arqiva the usual indemnity covenant.

On 17 August 2022, On Tower gave APW notice pursuant to para 33 of the Code seeking a new agreement from 24 February 2023. It then applied to the FTT under para 33(5) on 30 May 2023 seeking a new agreement for a term of 15 years, at a much reduced rent. APW denied that On Tower was a party to a code agreement and sought to strike out the reference.

The documents before the FTT established that APW became the site owner on 22 June 2017. It sent a rent authority letter to EE’s agents on 26 June 2017, who responded to say that all future payments would be made to APW. There are two invoices for rent from APW to On Tower dated 21 January 2023 and 13 November 2023, and a rent payment advice from On Tower to APW dated 6 December 2023.

There was no specific evidence of demand by APW or payment of rent by On Tower to APW before the date of the para 33 notice or the application, but it was not in dispute that On Tower paid rent to APW. Unlike Arqiva, however, On Tower had no contractual liability to pay rent – though, if the agreement was a lease not a licence, it became subject to the obligations in the lease with effect from the date of the assignment.