How broad should indemnities in Code agreements be?

The latest case on the scope and effect of the Electronic Communications Code, EE Ltd v Hackney London Borough Council [2021] UKUT 142 (LC); [2021] PLSCS 106, resulted from a dispute about the terms of an interim agreement enabling Code operators to obtain access to the roof of a building in London so that they could determine whether it was a suitable replacement for an existing mast site nearby. The only dispute between the parties related to the form of indemnity sought by the landowner. The Code operators wanted to limit the indemnity sought so that it extended only to “third-party liabilities costs expenses damages and all other legal professional costs and expenses suffered or incurred by the licensor” arising out of or in connection with the agreement, any breach of the Code operators’ undertakings and the exercise of any rights granted by, or the enforcement of, the agreement. In other words, the indemnity – as amended – would not cover costs, expenses, damages, or losses incurred by the landowner itself. The landowner relied on a comment made in EE Ltd v Islington LBC [2018] UKUT 361 (LC) concerning the approach to the terms of an agreement imposing interim Code rights, which “should put the full risk of the operation on which the operator wishes to embark on the operator and none of the risk on the site provider”. But the operators argued that the agreement already included detailed and elaborate protections for the landowner limiting access to the land and requiring those conducting surveys to have appropriate qualifications, to have undergone training, and to be supervised – as well as regulating how the investigations were to be undertaken. The operators were also obliged to make good any damage to the property to the landowner’s reasonable satisfaction. Consequently – or so they argued – there was no need for a comprehensive, open-ended contractual indemnity as well. Furthermore, paragraph 25(1) of the Code includes a statutory right to compensation. The tribunal noted a suggestion in CTIL v University of the Arts [2020] UKUT 248 (LC) that the indemnity should regulate and manage third party claims against the site provider arising from the unlawful acts or omissions of the operator. It accepted that the suggestion did not form part of the core reasoning in that case, which concerned a permanent – and not an interim – agreement, but noted too that the Ofcom model form of Code agreement includes an indemnity clause that is limited to third party claims. Parliament had intended Ofcom to influence the terms of Code agreements by example – and, although the tribunal was not bound by Ofcom’s model form of agreement, it should have regard to it The statutory right of compensation is controlled or restricted by overarching legal principles of causation, remoteness of damage and mitigation of loss. By contrast, the proposed indemnity, if it were to be applied to the landowner’s own losses, would sidestep the legal limitations that parliament had imposed when it conferred a right of compensation, as opposed to a statutory indemnity, on landowners. Parliament was clearly satisfied that compensation for loss and damage was a sufficient remedy for landowners. Consequently, the tribunal would impose an agreement that included the words “third party” in the indemnity clause to ensure that the proffered indemnity extended only to third party claims.   Allyson Colby is a property law consultant