A Rolling-Break without a Term Certain: Court of Appeal Confirms Licences, Not Implied Periodic Tenancies, Where Fixed-Minimum Terms Are Followed by Open-Ended Notice Rights
Commentary on AP Wireless II (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ 971

1. Introduction

This Court of Appeal decision revisits one of real property law’s most stubborn anachronisms—the “certainty of term” rule. The dispute concerned a 1997 telecommunication site agreement for a phone mast at Fields Farm, Sandbach. The original landowner granted Orange Personal Communications Services Ltd a right to “install and maintain” equipment for at least ten years, with either party thereafter able to terminate on twelve months’ notice “to expire at any time” after the tenth anniversary (cl. 2.1). Both the freehold and the mast operator’s interests were later assigned, so the present litigants are:

• AP Wireless II (UK) Ltd – current site owner/landlord (appellant);
• On Tower (UK) Ltd – current mast operator/occupier (respondent).

Mr Justice Edwin Johnson, at first instance, held that cl. 2.1 did not create a term certain; the purported lease was void and operated only as a contractual licence. AP Wireless appealed, advancing three independent propositions:

1. Invalidating-features argument – Baroness Hale’s dicta in Mexfield confine invalidity to two categories (indeterminate terms and indeterminate fetters), neither of which applied.
2. Interpretation argument – properly construed, the clause produced a valid fixed term (10 years) plus a determinable interest thereafter.
3. Inferred periodic tenancy argument – even if void for uncertainty, the court should imply an annual periodic tenancy (as in Prudential) rather than defaulting to a licence.

If AP Wireless succeeded, security of tenure would arise under Part II of the Landlord and Tenant Act 1954 (and a significantly higher rent would follow). If it failed, the arrangement would remain a Code licence, with lower consideration under the Electronic Communications Code. The Master of the Rolls (Birss MR, giving the only reasoned judgment) dismissed all three grounds.

2. Summary of the Judgment

The Court of Appeal held:

• The requirement that a leasehold estate be limited to a maximum ascertainable duration at its inception remains binding authority (Lace v Chantler, Prudential, Mexfield).
• Clause 2.1 generated an uncertain term; the tenancy might end on any date after 11 March 2007 depending on notice. Because the “certainty” rule exempts only true periodic tenancies (where notice must expire at the end of a recurring period), the agreement was void as a lease.
• Baroness Hale’s paragraph 93 in Mexfield was descriptive, not exhaustive, of invalidating scenarios; it did not salvage the clause.
• On the facts, the better fit was to treat the occupier’s rights as a contractual licence; implying a periodic tenancy would distort the commercial bargain.

Accordingly, the appeal failed; the occupier remains protected only by the Electronic Communications Code.

3. Analysis

3.1 Precedents Cited

The judgment canvasses over a century of authority. Key influence points were:

1. Re Threlfall (1880) – validated annual periodic tenancies arising from attornment clauses; distinguished as the instrument there expressly created a year-to-year tenancy.
2. Lace v Chantler [1944] – sublease “for the duration of the war” void; source of the certainty rule.
3. Prudential Assurance v London Residuary Body [1992] – strip-of-land lease “until required for road-widening” void, but Court implied a yearly tenancy. Lord Templeman’s exposition on the rule and on implied periodic tenancies underpinned the owner’s case.
4. Mexfield Housing Co-op v Berrisford [2011] – confirmed the rule; re-characterised otherwise void monthly tenancy into a 90-year lease (using LPA 1925 s.149(6) for individuals) and, obiter, preferred a contractual licence over a periodic tenancy where that best reflects intention.
5. Avondale Park Ltd v Delaney’s Nursery Schools Ltd [2023] – Lewison LJ re-affirmed Prudential.

While the owner leaned heavily on Breams and Amad v Grant, the Court found those cases inapt because they each involved express language creating periodic tenancies plus a fetter, unlike the present pure “fixed-minimum with rolling break” format.

3.2 Legal Reasoning

The Master of the Rolls adopted a three-stage methodology:

1. Interpret the contract first. On ordinary meaning, cl. 2.1 furnished (i) immediate commencement, (ii) an inviolable 10-year floor, (iii) a right for either side to end the holding on 12-months’ notice to expire at any time thereafter. The arrangement, therefore, was neither a true fixed term of 10 years nor a periodic tenancy; it was a single indeterminate term.
2. Apply the certainty rule. Because the maximum possible duration could not be known on the grant date, the interest failed to create a lease at law or in equity. Periodic-tenancy exceptions did not apply because the notice was not tied to a recurring period.
3. Decide the fallback estate. Following Lord Neuberger’s Mexfield analysis of “best fit for inferred intention”, the court compared two possibilities:
   • Year-to-year (or day-to-day) periodic tenancy implied by occupation and rent; vs.
   • A contractual licence governed by the same commercial terms.
   The licence better matched the parties’ explicit bargain—especially the open-ended break clause, quarterly “Tariff” dates unrelated to any putative periodic cycle, and cl. 2.1’s wording. Inserting an implied periodic tenancy would re-write the agreement (e.g., impose common-law six-month notice and rent-day expiry rules) contrary to commercial expectations.

3.3 Impact

The decision has several practical and doctrinal consequences:

• Telecoms industry – Hundreds of pre-Code mast site agreements with similar rolling breaks may now be treated as licences. Operators gain the Code’s rent basis, landlords lose bargaining power under the 1954 Act.
• Commercial leasing practice – Drafting of “minimum term + rolling landlord/tenant break at any time thereafter” clauses must expressly convert into a periodic tenancy if that is what the parties intend; otherwise, the lease may fail.
• Evolution of uncertainty doctrine – The Court signalled no appetite to dilute the rule (despite Lord Browne-Wilkinson’s and Lord Neuberger’s dissatisfaction). Legislative, not judicial, reform is impliedly invited.
• Licence vs periodic tenancy default – AP Wireless lends appellate weight to the Mexfield dictum that the court’s default position is the arrangement that best accords with expressed intention, frequently a contractual licence. The old assumption that possession + rent = periodic tenancy is no longer safe.

4. Complex Concepts Simplified

• Term certain – The rule that, to create a lease, parties must be able to state the maximum date on which the tenancy will end at the moment of grant. E.g., “20 years from 1 Jan 2025” is certain; “until redevelopment” or “until either party gives 12-months’ notice” is not.
• Rolling break clause – A right enabling either (or one) party to terminate a holding at any time after a specified trigger, provided a minimum notice period is given.
• Periodic tenancy – A tenancy that automatically renews for successive periods (week, month, year) until ended by notice expiring at the end of one of those periods.
• Contractual licence – A purely personal right to occupy land; it does not create an estate but is enforceable as a contract. It can coexist with exclusive possession if the certainty rule prevents an estate arising.
• Implied periodic tenancy – A leasehold interest inferred by law where the occupier is in possession, pays regular rent, and no other estate exists, but only if such implication aligns with parties’ intentions.
• Electronic Communications Code – Statutory regime (Schedule 3A, Communications Act 2003) that governs rights and valuation for electronic communications apparatus; tends to depress rents relative to open-market leases.
• Part II, Landlord and Tenant Act 1954 – Grants business tenants security of tenure and open-market rent review upon renewal, generally more favourable to landlords than Code valuation.

5. Conclusion

AP Wireless II v On Tower cements two propositions of lasting importance:

1. A lease comprising a fixed minimum term followed by an unrestricted break exercisable on notice “to expire at any time” remains invalid for uncertainty; a periodic-tenancy exception is not engaged.
2. Where a purported lease fails for uncertainty, courts will now examine which fallback—periodic tenancy or contractual licence—best reflects the contractual framework; the latter will often prevail, especially where the instrument’s detailed mechanics sit uneasily with periodic-tenancy conventions.

While many practitioners might have expected the law’s archaic rigidity to yield, the Court of Appeal has instead hewed to precedent, leaving reform to Parliament. Draftsmen should therefore continue to provide express periodic machinery (e.g., “thereafter from year-to-year terminable by either party on six months’ notice expiring on an anniversary of the term”) if the goal is to sustain a lease after an initial fixed period. Absent that, the “rolling-break” device risks demoting the occupier’s interest to a mere contractual licence—exactly the result in this case.