AP Wireless II (UK) Limited v On Tower (UK) Limited – A Critical Reminder on Lease Certainty in Telecoms Agreements

A recent Court of Appeal decision in AP Wireless II (UK) Limited v On Tower (UK) Limited [2025] EWCA Civ 921 has provided vital clarification on the distinction between leases and licences in the context of telecommunications agreements. 

Handed down on 25 July 2025, following a hearing on 15 July 2025, the judgment underscores the legal significance of term certainty and the practical consequences this distinction holds under both the Landlord and Tenant Act 1954 (the “1954 Act”) and the Electronic Communications Code (the “Code”).

Why this Case Matters

At its core, this case grapples with a deceptively simple yet legally complex question: can an agreement with a defined minimum term, followed by a rolling continuation subject to termination on notice, amount to a lease? The Court of Appeal has answered with a resounding no and telecoms operators and site providers alike must now take notice.

This conclusion carries major commercial consequences:

• For operators: a licence keeps the agreement within the Electronic Communications Code, allowing applications for fresh Code rights.
• For landowners: classification as a licence prevents the application of the Landlord and Tenant Act 1954, reducing protection and bargaining leverage.

The case is therefore an important reminder to review the drafting of legacy agreements; particularly those that include rolling continuation provisions.

Background: What Was the Dispute?

The dispute began in the First-tier Tribunal (Property Chamber) on 6 October 2023, where On Tower (UK) Limited (“On Tower”) sought to establish that two site access agreements were licences, thereby bringing them within the jurisdiction of the Electronic Communications Code. This would enable On Tower to apply for new Code rights under Paragraph 34(6) of Part 5.

AP Wireless II (UK) Limited (“AP Wireless”), by contrast, contended that the agreements were leases, meaning the 1954 Act would apply instead – a framework far less favourable to telecoms operators, offering greater protection to landowners.

The initial decision held that both agreements were licences, but this decision was appealed and eventually was heard by the Court of Appeal.

The Key Contractual Clause under Scrutiny

At the heart of the case was Clause 2.1 of the agreement dated 11 March 1997:

“This Agreement shall come into effect on the date shown above and shall continue for no less than the Minimum Term [10 years from 11 March 1997]. It may be terminated by either party giving to the other not less than 12 months’ notice in writing to expire at any time on or after the expiry of the Minimum Term.”

This provision raised a pivotal legal question: did this clause create a term certain, which is a necessary condition for a lease at common law?

In the Upper Tribunal (Lands Chamber), Judge Edwin Johnson held that the term was uncertain, and therefore the agreement could not constitute a lease. AP Wireless appealed to the Court of Appeal.

The Court’s Reasoning

Court of Appeal Judgment: The Threefold Argument

The appeal was heard by Sir Geoffrey Vos MR, Lord Justice Moylan, and Lady Justice Asplin, who unanimously upheld the Upper Tribunal’s decision. The Court grouped AP Wireless’s submissions into three core arguments:

1. The “Invalidating Features” Argument

AP Wireless contended that there were no “invalidating features” in the agreement that rendered the term uncertain. They relied on the Supreme Court decision in Berrisford v Mexfield Housing Co-operative Ltd [2011] UKSC 52, where a tenancy agreement lacking term certainty was upheld by construing it as a tenancy for life, converted into a 90-year term under the Law of Property Act 1925. However, the Court of Appeal found that Berrisford was distinguishable, as it applied specifically to tenancies held by individuals, not corporate entities.

2. The “Interpretation” Argument

Here, AP Wireless argued that the agreement had a fixed 10-year term, and thereafter a continuation with a clear termination mechanism (12 months’ notice), which should suffice for term certainty. The Court rejected this, reaffirming that a lease must have a fixed or periodic term from the outset. A rolling continuation subject to notice, without an end date, does not create a term certain.

3. The “Inferred Periodic Tenancy” Argument

Finally, AP Wireless urged the Court to construe the agreement as a yearly periodic tenancy, as was accepted in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386], in circumstances where a lease fails for uncertainty. However, the Court declined to do so, holding that no such periodic tenancy could be inferred from the parties’ conduct or the agreement’s terms.

Key Legal Takeaways

The Court of Appeal’s judgment reinforces a number of important principles:

• A lease must have a term certain at the outset: Even where an agreement specifies a minimum term, if it continues indefinitely thereafter subject to notice, it will not satisfy the requirement of a fixed term.
• Berrisford principles are limited: The workaround created in Berrisford for uncertain terms applies only where the tenant is an individual – not, as here, where both parties are companies.
• No automatic inference of periodic tenancy: Courts will be slow to infer a periodic tenancy in commercial agreements, especially where the parties have structured the agreement as a licence.

Wider Impact: Why This Case Matters

For On Tower, the outcome was commercially advantageous: the agreement was confirmed as a licence, meaning the Electronic Communications Code applied. This allowed On Tower to seek new Code rights through the Tribunal – rights which include strong statutory powers to maintain or modify network infrastructure.

Conversely, had the agreement been classified as a lease, it would have attracted the protections of the Landlord and Tenant Act 1954, including security of tenure, which is generally more favourable to landowners.

More broadly, this decision serves as a wake-up call for stakeholders in the telecoms and property sectors:

• Operators must ensure their agreements are drafted to fall within the scope of the Code where intended.
• Landowners should scrutinise ongoing or legacy agreements for risk of inadvertently granting Code rights via a licence.
• Legal practitioners must be mindful that the form and drafting of the agreement, not just the parties’ labels, will determine whether an agreement is a lease or a licence.

Beyond Telecoms: Broader Applicability

While this case arose in the context of electronic communications, the Court’s analysis of term certainty applies across all property agreements. Any contract that purports to grant exclusive possession but lacks a clear termination point is at risk of failing to constitute a lease. Practitioners should be particularly cautious when drafting rolling or hybrid arrangements.

Next Steps: How We Can Help

Our commercial property team can support you with any current agreements that need to be reviewed as well as ensuring that all future agreements are clear and conform with any requirements needed to constitute as either a lease or a licence.

Please contact us if you have any concerns of questions regarding the AP Wireless v On Tower judgment and we will be able to help you.

Sources:

Court of Appeal Judgment Template

Microsoft Word – On Tower v APW No. 2 PI2 Decision.docx

Microsoft Word – On Tower v APW 322 and 348.docx

Microsoft Word – Berrisford v Mexfield.doc