The court has determined the terms of an unopposed lease renewal of a telecommunications site on an estate in the Ashdown Forest in EE Ltd and another v Richard Morriss and others [2022] EW Misc 1 (CC); [2022] PLSCS 4.
Pending the appeal to the Supreme Court in Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2021] EWCA Civ 90, telecommunications sites occupied under tenancies governed by the Landlord and Tenant Act 1954 must be renewed under the 1954 Act, but any new tenancy granted on a renewal will be subject to the Electronic Communications Code made under the Communications Act 2003.
The parties agreed a term of 10 years, but before the new rent payable could be determined there remained a number of terms to be settled under section 35 of the 1954 Act, which requires the court to have regard to the terms of the current tenancy and all relevant circumstances. The burden of persuading the court to depart from the terms originally agreed lies with the party proposing the change: O’May v City of London Real Property Company Ltd [1938] AC 726.
Provisions in the original agreement for rent review, for an uncapped indemnity against third-party claims and a non-interference covenant were included in the renewal lease as there was insufficient justification to change them. The court refused to include a new provision giving the defendants a right to seek compensation for any diminution in value because of the tenant’s apparatus and settled an access policy based on notice procedures due to the requirements of the defendants’ business rather than continuing the unrestricted access rights of the original agreement.
Unrestricted rights for the installation and upgrading of equipment sought by the claimants were granted, but the court included a qualified restriction on increasing the height of the mast to address the defendants’ legitimate concerns about interference with their use of the site for “hostile environment training”.
The current tenancy included a break clause permitting termination on three months’ notice at any time if the site ceased to be suitable. The court balanced the claimants’ wish to retain flexibility to respond to future operational needs as technology changes with the defendants’ requirements for certainty by including an unconditional break clause exercisable on three months’ notice expiring on the fifth and subsequent anniversaries of the term.
The rent payable under section 34 of the 1954 Act is to be a market rent with disregards for the impact of the tenant’s occupation and improvements. The new tenancy will be one to which the Code applies, and it will confer Code rights on the tenant. The transactional evidence demonstrated a clear pattern, and capital payments are an established feature of the market for the lettings of new sites. In almost all cases where no capital payment was made, the rent agreed was £2,250; where capital payments were included, a lower rent was paid, usually £1,000. Consequently, capital payments – commonly £15,000 – must be reflected in the rent. While the claimants sought an annual rent of £950 and the defendants argued for £12,000, the court determined the figure at £3,500.
Louise Clark is a property law consultant and mediator
