default or negligence of the contractor and/or
its sub-contractors. It can also happen that the
employer and/or its authorised agents21 are the
parties responsible for the defaults, omissions,
acts or negligence giving rise to claims especially
by third parties. Hence, it is common practice
for the parties to incorporate relevant indemnity
provisions in their contracts to protect themselves
against such claims that are caused by the other.
Accordingly, one party will expressly undertake
the obligation to make good for defined damages,
costs, losses, etc incurred by the other as a
consequence of one or more agreed events or
instances that are attributable to it or caused
by it. 22 Whilst, it is common practice in other
jurisdictions for both parties to provide such
indemnities, in Malaysia, it appears that the
onus lies only on the contractors and the subcontractors.
Indemnity Clauses: Construction
It is trite law that an indemnity clause is strictly
construed by the courts, ie by the application of
the ‘contra proferantum’ rule of construction.23 In
Walters v Whessoe Ltd and Shell Refining Co Ltd,24
Lord Devlin stated:
If a person obtains an indemnity against a
consequence of certain acts, the indemnity
is not to be construed so as to include the
consequences of his own negligence unless
those consequences are covered either
expressly or by necessary implication.
Further and in addition to the above, the
following matters need to be taken due cognisance
of:
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there is a general presumption that unless
very clear words are used,25 the indemnity
will not be held to cover loss or damage
caused by the indemnified party’s own
negligence: AMF International Ltd v Magnet
Bowling Ltd;26
the second exception to the said
presumption is the situation that there is
no other type of loss which the indemnity
clause could have been intended to cover:
Dorset County Council v Southern Felt
Roofing Co Ltd;27
an indemnity clause will also be strictly
construed in a situation where it seeks
to hold a party liable for the defaults of
any persons other than themselves and
over whom they have no control: City of
Manchester v Fram Gerrard Ltd;28
the liability of a party under an indemnity
clause does not crystallise until the loss
or damage suffered by the other party has
been established: County and District
Properties Ltd v C Jenner & Son Ltd; 29
and
since it is from this time that the limitation
period runs under the relevant Limitation
Act or Ordinance,30 that an appropriately
drafted indemnity clause can effectively
extend the period of l [Z]][ۈ