Electronic Communications Code - indemnities in an interim rights case…
The Upper Tribunal (Lands Chamber) (UT) has found in favour of the operators, by limiting the scope of an indemnity sought by the site provider in an imposed agreement conferring interim Code rights.
Background
The operators applied to the UT to impose an agreement conferring Code rights to allow them to carry out a multi-skilled visit (or survey) (MSV) on the rooftop of a mixed-use building owned by the London Borough of Hackney (the site provider). The purpose of the survey was to consider if the building might be suitable as a replacement site to house the operators' mast which had to be relocated from a nearby site due to its redevelopment.
The indemnity sought
The parties agreed that a MSV could take place, and the terms of the proposed Code agreement were largely agreed save for one outstanding issue relating to the indemnity to be given by the operators. The site provider sought the imposition of a wide indemnity provision as follows:
"[The operators] shall indemnify [the site provider] against all liabilities costs expenses damages and losses including but not limited to legal costs and all other professional costs and expenses suffered or incurred by [the site provider] arising out of or in connection with:
- 5.1.1 this agreement
- 5.1.2 any breach of [the operators'] undertakings contained in clause 3;
- 5.1.3 the exercise of any rights given under clause 2;
- 5.1.4 the enforcement of this agreement
such indemnity to be limited to £10,000,000 (ten million pounds)".
The parties' positions
The operators sought to limit the scope of the indemnity, so that it extended only to "all third-party liabilities costs expenses damages etc" and did not cover any costs of or losses sustained by the site provider itself.
The operators argued that the site provider's “comprehensive, open-ended” indemnity was unnecessary due to the "detailed and quite elaborative protections for the site provider" which limited the need for any indemnity for losses which might in theory be sustained by the site provider. The operators further highlighted that the comprehensive indemnity sought by the site provider overlapped with paragraph 25(1) of the Code which provides a statutory right to compensation.
The site provider contended in response that a claim for compensation may result in some irrecoverable costs, and we are in the very early days of the Code and there have, as yet, been no reported Tribunal decisions dealing with claims for compensation under paragraph 25. The site provider considered the indemnity sought was relatively standard and uncontroversial. The site provider referred to observations in EE Ltd v Islington LBC [2018] UKUT 361 (LC) as to the correct approach to the terms of an agreement imposing interim Code rights – namely that "the full risk of the operation on which the operator wishes to embark" should be put "on the operator and none of the risk on the site provider".
The UT's decision
The UT recognised that whilst it has discretion to impose a Code agreement with such modifications as it thinks fit, the Code agreement must include terms which the UT thinks appropriate "for ensuring that the least possible loss and damage is caused by the exercise of the Code rights" to the site provider. However, this did not mean that the broad indemnity sought by the site provider should be awarded. The UT also had regard to the site provider's right to compensation under paragraph 25 of the Code, which meant that there was already protection for the site provider on legal and other professional expenses without having to duplicate this in the form of an indemnity. The indemnity was accordingly limited in favour of the operators.
