For the avoidance of doubt, in sub-paragraph (1)—

• “costs” includes—

  1. a

     expenses and charges;

  2. b

     staff costs and overheads; and

  3. c

     legal costs;

• “losses” includes physical damage.

The undertaker must make reasonable compensation for liabilities, claims and demands arising out of or in connection with the authorised development or otherwise out of the matters referred to in sub-paragraph (1)(a) and (b).

For the avoidance of doubt, in sub-paragraph (3)—

• “claims” and “demands” include as applicable—

  1. a

     costs (within the meaning of sub-paragraph (2)) incurred in connection with any claim or demand; and

  2. b

     any interest element of sums claimed or demanded;

• “liabilities” includes—

  1. a

     contractual liabilities;

  2. b

     tortious liabilities (including liabilities for negligence or nuisance);

  3. c

     liabilities to pay statutory compensation or for breach of statutory duty; and

  4. d

     liabilities to pay statutory penalties imposed on the basis of strict liability (but does not include liabilities to pay other statutory penalties).

The Agency must give to the undertaker reasonable written notice of any such claim or demand.

The undertaker may at its own expense conduct all negotiations for the settlement of the same and any litigation that may arise therefrom.

The Agency must not compromise or settle any such claim or demand or make any admission which might be prejudicial to the claim or demand without the agreement of the undertaker which agreement must not be unreasonably withheld or delayed.

The Agency must at all times take reasonable steps to prevent and mitigate any such claims, demands, proceedings, costs, damages, expenses or losses.

The Agency must, at the request of the undertaker, afford all reasonable assistance for the purpose of contesting any such claim or action, and is entitled to be repaid its reasonable expenses reasonably incurred in so doing.

The fact that any work or thing has been executed or done by the undertaker in accordance with a plan approved by the Agency, or to its satisfaction, or in accordance with any directions or award of an arbitrator, shall not relieve the undertaker from any liability under the provisions of this Part of this Schedule.

Nothing in this paragraph imposes any liability on the undertaker with respect to any costs, charges, expenses, damages, claims, demands or losses to the extent they are attributable to the neglect or default of the Agency, its officers, servants, contractors or agents.