What length of term will the court award when an operator renews under the Landlord and Tenant Act 1954?
The Electronic Communications Code 2017 ended the double protection conferred on operators, thanks to the interaction between the Landlord and Tenant Act 1954 and the previous Code. But the 1954 Act remains relevant where operators are in occupation after the contractual expiry date of a tenancy, which has then been continued under the Landlord and Tenant Act 1954.
In such cases, the operator must apply to the county court for a new tenancy under the 1954 Act. But any new tenancy entered into for Code purposes will be renewable under the Code, and the 1954 Act will no longer apply: Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd [2019] UKUT 338 (LC); [2019] PLSCS 216.
Vodafone Ltd v Hanover Capital Ltd [2020] EW Misc 18 (CC); [2020] PLSCS 162 is the first case in which the court has had to address a claim for the renewal of a 1954 Act tenancy over a site since the introduction of the new Code. The litigation concerned a 22.5m mobile telephone mast with associated telecommunications equipment cabinets. Vodafone occupied the site under a five-year lease, granted in 2008 in return for a premium of £10,000 and a peppercorn rent. The parties had agreed almost all the terms of the new tenancy – but not the rent, the length of the term and the details of a tenant’s break clause which was to be included.
Vodafone wanted a three-year term, with a rolling break clause exercisable on six months’ notice – not least because it was concerned that it would be required to pay a rent that was much higher than would be achievable under favourable assumptions in paragraph 24 of the Code. But Hanover was suggesting a 10-year term with a tenant’s break after five years, which it sought to make conditional on Vodafone vacating the site, in order to prevent it from terminating the new tenancy simply so that it could substitute better terms for its own benefit.
The county court noted that, although the duration of the current tenancy may be a relevant consideration, there is no presumption in favour of repeating it, nor any onus of justification on a party seeking a longer, or shorter, term. The length of term likely to be granted in the open market is also of limited assistance. Each case will depend on its own facts and the court must balance the protection to which the tenant is entitled, in the interests of its business, with the need to be fair to the landlord.
The court noted that, if it were to accede to Vodafone’s request, the tenancy might not continue for more than six months, because Vodafone would be able to terminate it immediately, if so desired. And this would be unfair to the landlord after the enormous expense and disruption of the current proceedings. So the judge decided on a 10-year term, with a break clause exercisable on six months’ notice expiring on the fifth anniversary of the term and at annual intervals thereafter.
The break clause was to be conditional on all outstanding rent being paid and on the tenant not being in material breach of covenant. But Vodafone would not be required to give vacant possession, which would enable it to renegotiate and modernise both the agreement and its apparatus, as required.
Allyson Colby, property law consultant
