12 Days of Christmas 2025 - Day 10

AP Wireless (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ

On Day 10 of our 12 Days of Christmas feature we look back at a case we reported on in our 12 Days of Christmas Special last year (12 Days of Christmas – Day 8 | DLA Piper) and which addressed whether certain telecommunications agreements were leases or licences. This year, this case went back to the Court of Appeal on the question of the importance of a term certain in classifying agreements as either a lease or a licence.

Whether the agreement constituted a lease or licence was significant in its effect as to termination and renewal (in particular the level of rent), with less favourable outcomes for a landowner if the agreement amounted to a licence (as termination/renewal would then be ruled by the Electronic Communications Code, rather than the Landlord and Tenant Act 1954).

The agreement in dispute contained a minimum term of 10 years from 10 March 1997, which thereafter continued subject to a right to terminate on not less than 12 months' notice. At first instance, this 'minimum term' together with its annual break right was originally found to fall short of a “term certain”, and thus the tenancy purportedly created by the parties was found instead to constitute a contractual licence.

On appeal, AP Wireless put forward 3 arguments in support of its contention that the agreement was a lease:

1. The invalidating features argument: That the decision of Baroness Hale in Mexfield Housing Co-Operative Ltd v Berrisford set down two, and only two “invalidating features” for an uncertain term, neither of which were present in this case: (i) a single term of uncertain duration as in Lace v Chantler where the term was for the duration of the war; and (ii) a fetter of uncertain duration on either parties' ability to serve notice terminating the tenancy.

The Court of Appeal’s view was that Baroness Hale’s decision did not lay down any all-encompassing rule as contended by AP Wireless. Instead, what needed to be looked at was the proper interpretation of the contract that the parties agreed, rather than rely on a predetermined list of invalidating features.

2. The interpretation argument: that the agreement created a valid term certain for a minimum of 10 years, terminable by either party giving 12 months' notice expiring on any day after the minimum term.

The court’s view was that the “tenancy” created by the Agreement was void at its inception as on its terms it was capable of lasting for an indeterminate period ending (possibly) on any day from 11 March 2007 for ever after.

3. The inferred periodic tenancy argument: that even if the agreement was held to be void, an annual periodic tenancy ought to have been inferred, rather than defaulting to a contractual licence.

The Court’s view was that it ought to find the 'best fit' for the terms of the agreement. An inference of a contractual licence respected almost all terms the parties had agreed, whereas a yearly periodic tenancy from the start would not mirror those terms of the agreement. Sir Geoffrey Vos (Master of the Rolls) stated: “I do not think that the court should be willing to disregard the intentions of the partis unless there really is no other possible course”.

Lessons Learned

1. This decision reaffirms that a term certain remains an essential ingredient for lease validity, and that parties must hesitate before drafting agreements with open-ended continuation.
2. The Courts are strict in prioritising contractual interpretation: if an agreement does not reflect the terms of a periodic tenancy, this will not be inferred.

And now for your festive joke to brighten your day: Why was the Christmas tree so bad at knitting? It kept dropping its needles.