Lease Renewals: O’May principles in practice

Vodafone Ltd v Gravesham BC concerns a county court lease renewal decision where ‘other terms’ of the lease were to be determined pursuant to section 35 of the Landlord and Tenant Act 1954 (“1954 Act”).  Practitioners in this area will be familiar with the leading case of O’May v City of London Real Property which established the key principles that the party seeking changes to the current lease terms must justify them and that such changes must be fair and reasonable in all the circumstances. They cannot simply be advantageous to one party. 

The Vodafone case is interesting as it brought into play the defendant council’s concerns arising from the Building Safety Act 2022 and Vodafone’s requirements as a telecoms operator.  The subject property was a “higher risk” building under the 2022 Act and consequently the council was concerned about its health and safety obligations. Despite this, on balance and exercising its discretion under section 35 of the 1954 Act, the court largely found in favour of Vodafone in respect of the various points in dispute which included the following (the other disputed clauses relating to Vodafone’s specific requirements as a telecoms operator):

• RAMS approval/approval of works: the lease already contained a mechanism to seek approval for tenant works but the Council wanted greater control.  The court rejected this, considering that the current lease terms were sufficient.
• Dispute resolution – the parties agreed to a dispute resolution provision but not on its terms.  Rather than preferring either party’s proposal, the court rejected the inclusion of such a clause entirely, which is perhaps surprising.
• Fire safety – the council failed to put forward sufficient evidence to support its case for use of fire-resistant cables and suchlike, despite the implications of the 2022 Act.  Consequently, the court refused to include such terms, which would have imposed more onerous obligations on Vodafone.  Evidence of market practice would have assisted the council in its case.
• Notice periods for lift and shift – Vodafone sought a longer notice period for the exercise of lift and shift rights, arguing that it was reasonable, given the nature and complexity of telecoms equipment and the planning required to relocate it. The court took a pragmatic approach and agreed.

As a county court decision, this is not binding but will serve as useful guidance for future cases.  In short, where landlords seek additional controls on the basis of increased statutory duties, it remains important to provide the necessary evidence. The court will still look to ensure that any changes are fair and reasonable in all the circumstances. 

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