The third principle in Canada Steamship Lines Ltd v The King — that where words are wide enough to cover negligence but another head of damage exists, the clause must be construed as not covering negligence — does not represent the law in Australia for the construction of indemnity clauses. The correct approach, following Andar Transport v Brambles, is to construe the indemnity clause strictly in the context of the contract as a whole and, only if ambiguity remains, to construe it in favour of the party providing the indemnity. An indemnity clause using words of the widest import ('all liability relating to the subcontract works') will cover the indemnified party's liability for its own negligence where the clause is a risk allocation provision and there is no ambiguity.
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