The litigation in EE Ltd v Edelwind Ltd [2020] UKUT 0272 (LC) concerned the termination of Code rights granted by a tenant. After weighing the arguments, the tribunal decided that notices served by the tenant and its landlord had not been premature. However, the operator claimed that it had assigned the Code agreement to itself and another Code operator and that the termination notices were invalid because they should have been addressed to both Code operators.
The assignment in question was in breach of the terms of the Code agreement because the Code rights granted were personal to the operator. But the law is clear. An assignment of a lease in breach of covenant is effective. But the assignment of purely contractual rights in breach of covenant is not: Old Grovebury Manor Farm v W Seymour Plant Sales & Hire (No 2) [1979] 1 WLR 1397.
So, if the Code agreement created a lease, the assignment was effective and the termination notices should have been addressed to both Code operators. But, if the Code agreement created nothing more than a licence, the notices served by the landlord and tenant were valid.
The Code agreement stated that it did not create the relationship of landlord and tenant between the tenant and the operator. But it is trite law that an agreement that grants exclusive possession, for a term, is a lease – even if the parties state otherwise. A fork is a fork, even though the parties call it a spade: Street v Mountford [1985] UKHL 4.
The Code agreement was for a period of 20 years. But did it grant exclusive possession?
Many rooftop Code agreements are accompanied by a plan with a red line around one or more areas reserved to the operator. But this Code agreement took the form of an agreement conferring rights on the operator, enabling it to obtain access to the rooftop during specified hours. The agreement did include a drawing showing the proposed location of the telecommunications equipment. But there was no indication that the operator was to have exclusive use of any area and the operator could not move its equipment around without consent. In addition, the agreement did not prevent the tenant from obtaining access to the roof, or to its own equipment there.
So the tribunal decided that this was not a lease, despite the creation of exclusion zones around equipment for protection from non-ionising radiation and provisions prohibiting access to an equipment cabin (which the tribunal regarded as consistent with the creation of a licence because the provisions would have been unnecessary had the operator enjoyed exclusive possession of the rooftop).
The right to inspect the equipment on notice was about inspection – and not possession. A title warranty, provisions for fee review, and the restrictions on alienation were also consistent with a licence. And a provision recording that the agreement was contracted out of Part II of the Landlord and Tenant Act 1954 was no more determinative in itself than a declaration that an agreement creates a licence, and not a lease.
Consequently, the notices were valid. However, the operator had raised a further question about the redevelopment intentions, which remains to be decided.
Allyson Colby, property law consultant
