Upper Tribunal rules in favour of telecoms firms in dispute with council over terms of indemnity for site provider

An agreement between telecoms firms and the London Borough of Hackney should limit the former’s liability to third party claims in respect of surveying whether a residential tower block is suitable for a mast, the Upper Tribunal (Lands Chamber) has said.

Martin Rodger QC, Deputy Chamber President, said that the disputed term was an indemnity to be given by the operators to the site provider. The indemnity proposed by Hackney was in the following terms in paragraph 5.1 of the draft agreement:

"The Licensee shall indemnify the Licensor against all third party liabilities costs expenses damages and losses including but not limited to legal costs and all other legal professional costs and expenses suffered or incurred by the licensor arising out of or in connection with:

5.1.1. this agreement;

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5.1.2 any breach of the LIcensee's undertakings contained in clause 3;

5.1.3 the exercise of any right 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 operators' position was that the indemnity should be modified, and limited in its effect, by the insertion of the words “third-party” in the first line of clause 5.1 so that the indemnity extends only to “all third-party liabilities costs expenses damages etc” so that it would not cover costs, expenses, damages, or losses incurred by the site provider itself. 

Hackney argued that the indemnity should not be limited to third parties.

In EE Ltd & Anor v London Borough Of Hackney (ELECTRONIC COMMUNICATIONS CODE - INTERIM RIGHTS) [2021] UKUT 142 (LC) Mr Rodger said that limiting the indemnity to third party claims did not infringe the requirement in paragraph 23(5)  of the Electronic Communications Code - Interim Rights to fashion terms appropriate for ensuring the least possible loss and damages was caused by the exercise of the code rights. 

He said: “The contractual agreement has to be seen in the context of the other protections offered by the code, in particular the paragraph 25 right to compensation for any losses caused by loss or damage sustained by the site provider as a result of the exercise of the code right.”

This meant the proposed indemnity, if applied to the site provider’s own losses, would sidestep those legal limitations. 

“When Parliament designed the code it saw fit to confer on site providers a right of compensation and not a statutory indemnity against all losses free of those restrictions,” Mr Rodger said.

“It cannot have considered that statutory compensation provided inadequate protection or have intended that paragraph 23(5) should oblige the tribunal to impose an even more comprehensive contractual indemnity.  

“The first consideration which pushes me towards the imposition of only a third-party indemnity is therefore that it seems to me to be consistent with the basic structure and expectations of the code.’

Mr Rodger said he was also influenced by the inclusion in regulator Ofcom’s model form of code agreement of an indemnity clause limited to third party claims.

Mark Smulian

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