Landlord and tenant – Renewal of lease – Telecommunications – Claimant holding lease of telecommunications mast site – Defendant landlord giving notice to terminate lease – Claimant making unopposed application for renewal of lease – Dispute arising over terms including rent payable – Terms determined accordingly
The claimant applied for the renewal under Part II of the Landlord and Tenant Act 1954 Act of a lease of a telecommunications mast site located at New Zealand Farm in the village of Aberford, near Leeds. The claimant was the tenant under the lease, originally granted in 1998 for a term of 20 years, which had been continued since its contractual expiry in December 1997 by the 1954 Act. The defendant was its landlord.
The mast site comprised a small, fenced compound located on the edge of a wooded area close to a major road. Most of the apparatus belonged to other operators, each of whom placed their own apparatus on the claimant’s infrastructure.
The defendant gave notice to the claimant to terminate the tenancy under section 25 of the 1954 Act. The claimant’s tenancy was a “subsisting agreement” within the meaning of schedule 2 of the Digital Economy Act 2017. On renewal under the 1954 Act, the new tenancy would be a code agreement to which the Electronic Communications Code under schedule 3 to the Communications Act 2003 would apply.
There was no disagreement between the parties over the principle that the claimant should be granted a new lease, but they remained in dispute over a small number of non-financial terms, and the rent to be paid.
Held: The terms were determined accordingly.
(1) Section 35(1) of the 1954 Act required the court to have regard to the terms of the current tenancy and to all relevant circumstances when determining any terms which could not be agreed. A party seeking a change from the terms of the current tenancy bore the burden of justifying the proposed change: O’May v City of London Real Property Co Ltd [1982] 1 EGLR 76; [1983] AC 726 applied.
The rent to be paid under the new tenancy would be determined in the usual way applying section 34 of the 1954 Act. The fact that the site was a telecommunications site and subject to the new Code did not alter the principles to be applied. In particular, the rent was to be such as the court determined the site would reasonably be expected to let for in the open market on the terms of the new agreement by a willing lessor disregarding the matters in section 34(1)(a)-(d), including any effect on rent of the tenant’s occupation and any goodwill attached to the holding by reason of the tenant having carried on its business there.
The effect which the Code had had on the rental value of telecommunications sites was well known, but the rent to be determined in this case was an open market rent, not a rent determined on the assumptions required by the Code. Guidance on how an open market in telecommunications sites might behave in light of the Code (and on how the current market differed from an open market) could be found in Vodafone Ltd v Hanover Capital Ltd [2020] EW Misc 18 (CC); [2020] EGLR 35 which adopted a structured approach to valuation.
A properly advised landlord offering a site to the market at large and looking to receive an annual rent which was not supplemented by a premium would expect to better a rent restricted by the artificial assumptions dictated by paragraph 24 of the Code. On the evidence, the court was satisfied that, in aggregate, the parties were likely to settle on an annual rent of £3,200.
(2) The claimant objected to a requirement to notify the defendant whenever it wished to have access to the site.
In On Tower UK Ltd v AP Wireless II (UK) Ltd [2022] UKUT 152 (LC); [2022] PLSCS 133 (Audley House) (a case concerning ground level sites in an industrial location, each occupied under an agreement already governed by the Code, the Upper Tribunal refused to include a notice requirement in a new Code agreement between the same parties. For the same reasons, and to promote the additional benefit of standardisation, the court would refuse to include it in the present case.
(3) No sufficient reason had been given to introduce the proposed obligations to provide health and safety formation before accessing the site. It was important not to generate requirements for the transmission of information where that would be of little or no practical benefit to either party. In Audley House, the Upper Tribunal considered the defendant’s specific concerns about its potential criminal liability under the Health and Safety at Work etc Act 1974. It concluded that in general a site provider which did not conduct its own undertaking on a site could not be liable under section 3 of the 1974 Act, and that a site provider which was not in control of access to a site could not be responsible under section 4: Cornerstone Telecommunications Infrastructure Ltd v University of the Arts London [2020] UKUT 248 (LC); [2020] EGLR 36 followed.
Here, the defendant was not responsible for health and safety at the site and had no relevant obligations to the farm owners. Those requirements were the remnants of a much more elaborate access portal which the defendant initially wished the claimant to use, but that proposal had not been pursued and those vestiges of it served no purpose. No sufficient reason had been given to introduce the proposed obligations to provide information before accessing the site: Audley House followed.
(4) The defendant sought to include a Jervis v Harris clause giving the landlord the right to serve notice on the tenant requiring repairs to be carried out which, if not complied with, would entitle the landlord to go on to the site and undertake the works itself, recouping the cost from the tenant: Jervis v Harris [1996] 1 EGLR 78.
However, there was no evidence of any history of disrepair at this site, and the defendant gave only the flimsiest explanation why it sought the inclusion of such a clause. The defendant had no interest in adjoining land and its suggested clause would not allow it the right to carry out work to any of the structures on the site. Its incorporation in the new agreement would be pointless.
John McGhee QC and Daniel Petrides (instructed by Pinsent Masons LLP) appeared for the claimant; Wayne Clark, Fern Schofield and Mike Atkins (instructed by Hugh James LLP) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of On Tower UK Ltd v AP Wireless (II) UK Ltd
