Telecoms: is it a lease or a licence?

COMMENT At the tail end of 2022, in On Tower v Allison (Case ref: LC-2022-000322) the First-tier Tribunal gave a decision on whether a telecoms operator was occupying as a licensee or a secure tenant (the matter having been transferred down by the Upper Tribunal). Conversely, the operator argued for the position conferring the least amount of security of tenure in a “traditional” sense, preferring to claim it was a licensee that could avail itself of the Code, with the site provider arguing that there was a secure tenancy within the meaning of the Landlord and Tenant Act 1954.  The facts By an agreement dated 30 January 1997, Orange acquired rights to install telecommunications apparatus on freehold land in Kent, within a fenced compound on land rather than buildings. In turn, the rights under the agreement were passed to On Tower, which wanted to rely on a notice served under paragraph 33 of the Code to require the site provider to enter into a new agreement. Exclusive possession? The FTT paid close attention to the drafting of the 1997 agreement in order to make a finding on whether exclusive possession had been granted to the operator, following Street v Mountford (1985) 274 EG 821; exclusive possession for a term being determinative of a proprietary interest in, or tenancy of, the site. Labels will be irrelevant, but the context – including that the agreement was an “old Code” agreement under Schedule 2 to the Telecommunications Act 1984 – will be highly relevant. The tribunal considered the following, before determining that there was no grant of exclusive possession: At clause B, the agreement conferred rights on the operator to install, operate, maintain, repair and renew equipment on the site, to run an electricity cable to the apparatus and to access the same on foot and by vehicle along a defined route, but stopped short of granting exclusive possession over the site. The right to access the apparatus installed on the site was expressly limited to access on reasonable notice which was necessary to install, operate, maintain, repair and renew. A need to give reasonable notice is inconsistent with the existence of a tenancy.  Undertakings given by the operator focused on the apparatus rather than the site as a whole, and while the compound was fenced, it was fenced for safety rather than to delineate an area over which the operator had exclusive possession.  Clause 7.4 of the agreement conferred rights on the operator to substitute the apparatus, should it wish, which would only be needed if there was an absence of exclusive possession (otherwise, the tenant would have the freedom to do what it wanted on the land within the usual tenant covenants). Clause 7.7 expressly provided that the apparatus shall continue to belong to the operator as if it were a tenant’s fixture, a provision only necessary where the agreement did not amount to a lease. Clause 8.1 dealt with rights concerning other apparatus, and again, would not have been necessary if the operator had the rights of a tenant over the land. Clause 8.2 clearly contemplated shared use of the site, not exclusive possession. Clause 10.1 declared the intention of the parties that the agreement would continue to bind successors. This had to be seen in the context of the agreement being an agreement under Schedule 2 to the 1984 Act, which permitted the binding of successors in title in relation to agreements under the Act whether a lease or a licence. Accordingly, it was not contrary to an intention to create a licence, as would normally be the case.  As such, without exclusive possession, the agreement was not capable of amounting to a lease. Interestingly, it is understood that the site provider did not rely on any factual evidence at all. As a result, the decision of the tribunal was made purely with reference to the terms of the agreement rather than with reference to the de facto arrangements between the parties, either since commencement in 1997 or in the period after the initial fixed-term agreement. Term certain Given that the agreement could not amount to a lease, it was strictly unnecessary for the FTT to determine whether the agreement satisfied the second requirement, a certain term. However, it did so in any event. The FTT held that the agreement was inconsistent with a lease because the parties were able, after the minimum period, to give notice to terminate at any time ending on any date (so long as 12 months’ notice was satisfied); such an arrangement was inconsistent with an annual tenancy.  Result The result was that the tribunal had jurisdiction (the county court alone having discretion over tenancies governed by the 1954 Act) and the case would proceed and be determined in accordance with paragraph 34 of the Code.  There will, no doubt, be numerous agreements in like or similar terms floating around. Allison is yet another case that demonstrates the reach of the Code. While the Product Security and Telecommunications Infrastructure Act 2022 contains a provision which will bring rents for 1954 Act renewals for telecoms apparatus in line with the no-scheme assumption contained in the Code and render this sort of dispute pointless, this is not yet in force. As before, operators will have their preferred route through the Code even now. Laura West is a senior associate (barrister) at Penningtons Manches Cooper Photo © Maxwell Ingham/Unsplash