Arifin Zakaria FCJ:

Background

[1] This is an appeal pursuant to the leave granted by this court on three questions of law which read as follows:

a) In a contract that contains a promise by a party (the promisor) to indemnify the other party (the promisee) for loss if there is a breach of the contract by the promisor, whether the promisee has a right to sue the promisor either for breach of contract or on the indemnity, if there is breach of the contract by the promisor. ("first question")

b) Where loss is an ingredient of a cause of action but the parties have agreed, with the concurrence of the trial judge, to try only the issue of liability first:

i) Whether having agreed that the trial is only to determine liability first, a party is precluded from subsequently saying that liability has not been established as loss has not been proved. ("second question")

ii) Whether proof that loss has been sustained without proof of the actual amount of the loss is sufficient for the purpose of completing the cause of action. ("third question")

[2] Before proceeding to consider the questions posed to us, it is necessary to state in brief the facts of the case.

The Facts

[3] The appel