the Respondent had objected to the award of interests. [38] The lynchpin of his submission was that what was held by the Court of Appeal there in the Far East Holdings' case (supra) was a mere obiter and not the ratio of the case where the power of an Arbitrator to award pre-award interests in concerned. [39] The Court of Appeal had in Far East Holdings' case (supra) set out the argument on interest before the Arbitrator as follows at pp 796-797: "Interests [87] The arbitrator was urged by learned counsel for MUIP to award interests, even though no interest was pleaded, on the ground that MUIP had been deprived of the extra dividends it would have received had it been permitted to exercise both 29 options, and for the loss of dividends suffered by MUIP due to the additional allotment of 22,096,868 shares to FEH. It was also submitted that pre award interest could be awarded under s 74(1) and (2) of the Contracts Act 1950. FEH and KAOP on the other hand had submitted that no interest should be awarded because MUIP had not pleaded for interest and the facts on the claim for interest were not pleaded. It was further submitted that based on s 33(6) of the Act, the arbitrator has no power to award pre award interest. Additionally, FEH and KAOP contended interest is ‘haram’ in ‘hukum syarak’. [89] The arbitrator is of the view that his jurisdiction to award pre award interest is based on the common law position and s 11 of the Civil Law Act 1956 which confers a discretion on the court to award pre judgment interest. Section 11 of the Civil Law Act 1956 states as follows: Power of Courts to award interest on debts and damages. In any proceedings tried in any Court for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which 30 judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment: Provided that nothing in this section: shall authorise the giving of interest upon interest; shall apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or shall affect the damages recoverable for the dishonour of a bill of exchange. [90] Having considered the case authorities and the submissions made, the arbitrator awarded MUIP pre award interest at 4% pa. Based on s 33(6) of the Act, the arbitrator awarded post award interest also at 4% pa." [40] With respect to post-award interest, the Court of Appeal affirmed the decision of the High Court in setting aside the post-award interest on ground that it was not pleaded as can be seen below: "[99] With regard to post award interest, it is not disputed that MUIP had not pleaded for such interest either in the 31 statement of claim or in the originating summons filed at the High Court. We are of the view that in the absence of any prayer for interest, which learned counsel for MUIP must be taken to be aware of, the arbitrator ought not to have awarded post award interest. We agree with the submissions by learned counsel for FEH and KAOP that parties must be bound by their pleadings. The learned judge is correct in setting aside the post award interest." [41] I am not unaware of the Federal Court's dicta in Yusof bin Sudin v Suruhanjaya Perkhidmatan Polis [2011] 5 MLJ 465, where, having considered several dictionary meanings on obiter dictum held at p. 502E-F: “[76]… The term obiter dictum in Latin means remarks or comments in passing. These remarks or comments are judicial observation and are not binding. In other words, they are remarks or comments made by judge in a decision that do not form part of the legal reasoning in reaching the decision. …” [42] It was also argued that the Federal Court in Lim Eng Chuan Sdn Bhd v United Malayan Banking Corp [2013] 3 MLJ 161 had refused to followed its earlier decision in Kimlin Housing 32 Development Sdn Bhd (Appointed receiver and manager (in liquidation) v Bank Bumiputra (M) Bhd [1997] 2 MLJ 805 on the ground that the relevant part of the decision in Kimlin was merely obiter dictum. [43] In Kimlin, the question posed concerned the power of sale by a Receiver and Manager ("R&M") appointed under a debenture in respect of a charged land under the National Land Code. However, the (then) Supreme Court went on to hold at p. 823 that: “… no power of sale can be conferred by way of a debenture or power of attorney or otherwise, but proceedings must be brought by the charge to obtain a judicial sale in accordance with the rigid procedure laid down in the Code...” (emphasis added) [44] On the other hand, in Lim Eng Chuan Sdn Bhd, the question posed was the power of sale by an attorney appointed pursuant to a power of attorney (“PA”) clause in the debenture. The Federal Court held at p. 169F-G: “We agree with the majority in the Court of Appeal that the other part of the judgment in Kimlin which referred to ‘power of attorney or otherwise’ and ‘power of attorney’ is at best, only obiter dictum, albeit when the questions posed there 33 concerned only the R&M, since the debenture did not contain a PA clause.” [45] Applying legal principles above, Mr Ben Chan argued that that part of the judgment in Far East Holdings (supra) commenting on s. 33(6) of AA 2015, is at best, only obiter dictum and not binding. The question posed there concerned where the claim for interests was not specifically pleaded and was objected to by the opponent, which is unlike here. [46] However, on the point of pre-award interest, the Court of Appeal did not decide on the point of pleading, or rather the absence of it. Instead, the Court of Appeal dealt with the issue of the jurisdiction of the Arbitrator to grant pre-award interest. In other words, even if there had been pleaded pre-award interest, the Arbitrator could not have granted it. The Court of Appeal was of course, at liberty, to decide the question posed from the underlying perspective of the undergirding power of an Arbitrator to award pre-award interest. The reasoning of the Court of Appeal is as follows at pp 788-789: "[98] On the issue of interests, we agree with the learned judge that the Arbitrator has erred in law in awarding pre and post award interests. Having considered the Act, we find that 34 under s 33(6), the Act has made specific provision for post award interest, but does not provide for pre award interest. Clearly the Act does not contemplate the awarding of pre award interest. We agree with the submissions by learned counsel for FEH and KAOP that when the Act specifically provides for post award interest but is silent on pre award interest, then implicitly the Legislature did not intend to confer on an arbitrator the power to award pre award interest. Therefore we agree with the learned judge that the award of pre award interest ought to be set aside." (emphasis added) [47] However, as the basis for the Court of Appeal holding that the Arbitrator ought not to have awarded pre-award interest stems from a lack of power of the Arbitrator to do so in law, it would be difficult if not impossible to argue that the said decision is a mere obiter dicta. It is very much the ratio of the case where pre-award interest is concerned, being the answer to a specific question raised in a reference under section 42 of the Arbitration Act 2005 which substantially affects the rights of the parties to the Arbitration. [48] If the issue is that of the far greater matter of a lack of power on the part of an Arbitrator to award pre-award interest, then it 35 does not quite matter even if the issue was not submitted upon by the Respondent (the Plaintiff here) in the Arbitration proceedings or that it was not pleaded. In the present case the Claimant had specifically pleaded for both pre-award and post-award interests. [49] Learned counsel for the Claimant was anxious about the fact that if Far East Holdings case (supra) is understood to have laid down the law that an Arbitrator has no power to award pre-award interest, that will put Malaysia out of alignment and inconsistent with the modern general law adopted by other Commonwealth countries on the subject under consideration. He argued with considerable concern that it would definitely not be a good move and would infringe the good judicial policy that there should be uniformity in the common law of the Commonwealth to provide for consistency: United Asian Bank Bhd v. Tai Soon Heng Construction Sdn Bhd [1993] 1 MLJ 182, 193H-I, SC. [50] Recently the Federal Court was asked to restate the law with respect to the standard of proof in civil fraud. The Federal Court spoke of the need to realign our law with that of other Commonwealth countries: His Lordship Richard Malanjum CJSS opined in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ 1 as follows: 36 “[47] In view of the positions of the law in the respective common law jurisdictions as summarised above, we agree with both learned counsel for the parties in this appeal that the position of the law on the standard of proof for fraud in civil claims in this country is far from satisfactory. With respect, there is merit in the submission of learned counsel for the defendant that the adoption of the criminal standard of proof for fraud in civil claims is due to the misinterpretation or even a blind adoption of the judgment of Lord Atkin in Narayanan Chettyar v Official Assignee of the High Court, Rangoon. [48] As such, in our judgment the time has come to realign the position of the law in this country on the standard of proof for fraud in civil claims. While learned counsel for the defendant seemed to favour the adoption of the Singapore position, learned counsel for the plaintiff urged us to adopt the principle in In re B (Children). [49] With respect, we are inclined to agree with learned counsel for the plaintiff that the correct principle to apply is as explained in In re B (Children). It is this: that at law there are only two standards of proof, namely, beyond reasonable doubt for criminal cases while it is on the balance of 37 probabilities for civil cases. As such even if fraud is the subject in a civil claim the standard of proof is on the balance of probabilities. There is no third standard. And ‘(N) either the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts’.” [51] A far more persuasive argument would be that Malaysia would be out of sync with other countries that apply the UNCITRAL Model Law, and more so with respect to International Arbitration. As stated in the Explanatory Note to the Arbitration Bill 2005, one of the avowed aims of the legislation is to encourage international uniformity in the Arbitration regime under the UNCITRAL Model Law dated 21 June 1985. [52] Jurisdictions in England, Australia, India and Singapore allow an Arbitral tribunal to award pre-award interest as they have understood that the Arbitral tribunal derives its powers not from the Arbitration legislation but from the submission to the tribunal which clothed the tribunal with the implied powers to award interest. It follows that if the particular Arbitration statute is not the source of the Arbitral tribunal's power to award interest, then it does not quite matter if the Arbitration statute is silent on pre-award interest for so 38 long as it does not prohibit the award of pre-award interest. The award of pre-award interest would also fall within "usages of the trade applicable to the transaction" as envisages under section 30(5) of the Arbitration Act 2005. It would not be presumptuous to postulate that the attractiveness of having Malaysia as the seat of Arbitration would suffer if there can be no award of pre-award interest in a dispute that comes before it for Arbitration. [53] Mr Ben Chan then made the valiant argument that the decision of the Court of Appeal was made per incuriam. This Court must resist every temptation to go down that road of judicial indiscretion. Based on established principles of stare decisis, it is not for this Court to say that a higher Court has decided a matter per incuriam. Both judicial decorum and discipline would require this Court to follow the ratio laid down by a higher Court as in the Court of Appesl here. I need to go no further than the quote the dicta of his Lordship Edgar Joseph Jr FCJ in Co-operative Central Bank Ltd (In Receivership) v Feyen Development Sdn Bhd [1997] 2 MLJ 829 at pp 835-837 as follows: "In the first place, we should like to deal with a point of wide ranging importance and this concerns the principle of stare 39 decisis, which is a cornerstone of our system of jurisprudence. In Harta Empat, the Court of Appeal in effect held that Feyen was not binding on it because it had overlooked certain provisions of the Code, to wit, ss 241(3) and 301(c). It was on the basis of this that the Court of Appeal relegated Feyen to mere obiter dicta. It is elementary that where, for example, a statute or a rule having statutory effect which would have affected the decision was not brought to the attention of the earlier court, the decision will have been given per incuriam (see the third exception, per Lord Green MR in Young v Bristol Aeroplane Co Ltd [1944] 1 KB 718). On the other hand, obiter dictum is a mere chance remark by the court and is used in contradistinction to ratio decidendi – the rule of law for which a case is authority. Clearly, the Court of Appeal meant to say that our decision in Feyen was given per incuriam. The question therefore arises: is it open to an intermediate court of appeal, such as the Court of Appeal in this country, to disregard a judgment of a final court of appeal 40 such as the Federal Court on the ground that it was given per incuriam? Our task in answering this question has been made considerably easier by the assistance derived from the remarks of Lord Hailsham in Cassell & Co Ltd v Broome & Anor [1972] AC 1027, which indicated the reaction of the House of Lords to the Court of Appeal's refusal to follow a previous decision of the House on the ground that it had been given per incuriam. Touching on the repercussions of the Court of Appeal advising judges of first instance to ignore decisions of the House of Lords, Lord Hailsham said this (at p 1054B-D): I am driven to the conclusion that when the Court of Appeal described the decision in Rookes v Barnard as decided 'per incuriam' or 'unworkable', they really only meant that they did not agree with it. But, in my view, even if this were not so, it is not open to the Court of Appeal to give gratuitous advice to judges of first instance to ignore decisions of the House of Lords in this way and, if it were open to the Court of Appeal to do so, it would be highly undesirable. The course taken 41 would have put judges of first instance in an embarrassing position, as driving them to take sides in an unedifying dispute between the Court of Appeal or three members of it (for there is no guarantee that other Lord Justices would have followed them and no particular reason why they should) and the House of Lords. But, much worse than this, litigants would not have known where they stood. None could have reached finality short of the House of Lords and in the meantime, the task of their professional advisers of advising them either as to their rights, or as to the probable cost of obtaining or defending them, would have been, quite literally, impossible. Whatever the merits, chaos would have reigned until the dispute was settled, and, in legal matters, some degree of certainty is at least as valuable a part of justice as perfection. And in a famous passage (at p 1054D-E), Lord Hailsham concluded this part of the case by saying: The fact is, and I hope that it will never be necessary to say so again, that in the hierarchical system of courts which exists in this country, it is necessary 42 for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers. Where decisions manifestly conflict, the decision in Young v Bristol Aeroplane Co Ltd [1944] 1 KB 718 offers guidance to each tier in matters affecting its own decisions. It does not entitle it to question considered decisions in the upper tiers with the same freedom. In our view, every word of what Lord Hailsham said regarding the status of judgments and relevance of precedent in the House of Lords, the circumstances, the duty of the Court of Appeal to accept loyally the decisions of the House of Lords and the chaotic consequences which would follow should the Court of Appeal fail in this duty apply with full force, mutatis mutandis, to this country and we adopt what his Lordship said. Clearly, the Court of Appeal in Harta Empat flew in the face of the principles enunciated by Lord Hailsham and we can only express the hope that it will not be necessary for the Federal Court hereafter to have to remind the Court of Appeal of those principles." (emphasis added) 43 [54] What is spoken of as applying to the Court of Appeal vis-a-vis a Federal Court's decision applies with equal force to the High Court vis-a-vis a Court of Appeal's decision. Whether Parliament is presumed to know the law on pre-award interest in an Arbitration before the enactment of the Arbitration Act 2005 [55] The Defendant submitted that Parliament is presumed to know the law at any time it exercises its legislative authority upon a subject. See Luggage Distributors (M) Sdn Bhd v Tan Hor Teng [1995] 1 MLJ 719, 754, CA. In the present context, the Parliament is presumed to have known the general law relating to the Arbitrator’s power and the jurisdiction to grant pre-award interest when enacting the AA 2005. [56] I agree that it is a well-established principle of statutory interpretation that a statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words that point unmistakably to that conclusion. The Federal Court in Malayan Banking Bhd v Chairman of Sarawak Housing Developers’ Association [2014] 5 MLJ 169 held at p. 178: 44 “[23] If the Act wishes to take away that right, words must be used that point unmistakably to that conclusion (National Assistance Board v Wilkinson [1952] 2 QB 648). Devlin J in clear terms said: It is a well-established principle construction that a statute is not to be taken to effecting a fundamental alteration in the general law unless it uses words that point unmistakably to that conclusion … It is another principle of statutory interpretation that the court leans against an interpretation which produces unjust and arbitrary consequences." [57] It is clear that nowhere in s. 33(6) nor in any part of the AA 2005 has Parliament taken away the general law on the Arbitrator’s power and jurisdiction to award pre-award interest. On the contrary, s. 33(6) of the AA 2005 confines itself merely to post-award interest and the Arbitrator’s discretion in determining the rate. By applying the well-established canon of statutory interpretation, when the legislature exercised its legislative authority on the AA 2005, it must have intended not to effect a fundamental alteration of that general law that an Arbitrator has power and jurisdiction to award pre-award interest. 45 [58] Moreover s. 30(1) of the AA 2005 mandated that the Arbitral tribunal “shall decide the dispute in accordance with the substantive law of Malaysia.” Section 11 of the Civil Law Act 1956 is one such substantive law that the Arbitral tribunal must have in mind. Whether the awarding of pre-award interest is an error of law that justify the intervention of this Court [59] It may safely be argued, as the Defendant here did, that when the parties submitted the dispute to the learned Arbitrator for consideration, there was an implied term in the submission that the learned Arbitrator should have the power to award, inter alia, pre-award interest as would be available in a court of law under s. of the Civil Law Act 1956. It is also settled law that when parties entered into a contract they must be deemed to have contracted in the knowledge of general law (Bishop v Bonham [1988] 1 WLR 742, 750H). When the parties entered into the Contract in the present case, they must be deemed to have done so in the knowledge of the general law that the learned Arbitrator has the power to make pre-award interest. The Defendant then concluded that it is highly unconscionable and inequitable for the plaintiff in attempting to alter the score at the end of the game unilaterally. 46 [60] The Defendant further contended that the objection by the Plaintiff on the pre-award interest could have been avoided by the Plaintiff by incorporating a suitable term into the Contract, which it had failed. It could have been done so easily because the Plaintiff was the sole author of the Contract. In effect, what the Plaintiff attempted to do now is to ask the Court to re-write the parties’ contract by incorporating a term which is not in existence. The fundamental principle is that a court cannot re-write the parties’ agreement: Ong Thye Peng v. Loo Choo Teng [2008] 1 CLJ 571, 594D-F, FC. [61] The Defendant had with considerable persuasion, positioned its argument in this fashion: "The matter relating to the claim of interest was expressly referred to the learned Arbitrator for consideration. It is a well-established law that when parties refer a matter expressly to the Arbitrator for consideration and to the extent that he makes an error of law, the parties must take the consequences." [62] As authority for that legal proposition, it is sufficient to quote the following passage from the decision of the Federal Court in The Government of India v. Cairn Energy India Pty Ltd [2011] 6 MLJ 441, 462: 47 “[53] And as Scrutton LJ put it ‘… if you refer a matter expressly to the arbitrator and he makes an error of law you must take the consequences; you have gone to an arbitrator and if the arbitrator whom you choose makes a mistake in law that is your look-out for choosing the wrong arbitrator; if you choose to go to Caesar you must take Caesars’s judgment’ (see African & Eastern (Malaya) Ltd v White, Palmer & Co Ltd (1930) 36 LI L REP 113; cited with approval by the Court of Appeal in Dato’ Teong Teck Kim & Ors v Dato’ Teong Teck Leng [1996] 1 MLJ 178 … (at p 452).” [63] Granted the Court is always guarded to prevent an application filed with ‘reference on question of law’ under s. 42 of AA 2005 from turning into a wholesale ‘appeal’ against the Arbitral tribunal’s decision. More recently, the Court of Appeal Chain Cycle Sdn Bhd v Kerajaan Malaysia [2016] 1 MLJ 681 held at p. 699D-G: “[32] In our considered view such a restriction or limitation as afforded by the Absalom exception, was still necessary and relevant even in a s 42 of the AA scenario as well. This was so in order that the ‘reference on question of law’ under that provision was not turned into a wholesale ‘appeal’ against the 48 arbitral tribunal’s decision or ruling. The court had to guard that the proceedings brought to court related to arbitrations, especially post-award, were not in substance and effect an appeal or a re-hearing, or like here, providing an opportunity for regurgitation of the competing arguments on that specific issue of law that had by agreement of the parties been chosen and referred to the arbitral tribunal for determination conclusively. The fact that the arbitrator took one approach in interpretation over the other could not be a cause for further complaint in a reference proceedings under s 42 of the AA too. To allow the appellant to re-litigate this issue would have the effect of opening the floodgates to allow what was in substance an appeal couched as a question of law.” [64] However, as has been highlighted earlier, the Court of Appeal in Far East Holdings' case (supra) had decided that an Arbitrator lacks the power and so the jurisdiction to grant pre-award interests. It is a pronouncement of the law that goes to the very root and core of the Arbitrator's powers. In as much as the Court of Appeal affirmed the decision of the High Court to intervene and set aside the pre-award interest there, this High Court would so allow it here. 49 [65] It was also ably argued for the Defendant that the issue was raised for the first time by the Plaintiff in this Application. It was submitted that the Plaintiff is not entitled to do so. [66] As noted above, in the statement of defence, the Plaintiff merely made a bare denial on the claim for interests. It is well established that the danger of this kind of general denial defence is that once the Plaintiff takes that course, it must stand or fall on its pleaded defence. It is not permissible for the Plaintiff to proceed to put forward some affirmative case which they have not pleaded or alleged: Regina Fur Co Ltd v Bossom [1958] 2 Lloyd’s Rep 425, 428 per Lord Evershed M.R.; adopted in Cheong Heng Loong Goldsmith (KL) Sdn Bhd v Capital Insurance Bhd [2004] 1 MLJ 353, 365[19], CA. [67] Lord Brightman in delivering the decision of the Privy Council case in AR. PL. Palaniappa Chettiar v Lakshamanan Chettiar [1983] 2 MLJ 177 held at p.180: “The submissions were exchanged before being delivered to the trial judge. If a submission referred to a matter of record which the other party asserted he was entitled to exclude from the judge’s consideration, the time to take that objection and to seek a ruling upon it was when the submissions been 50 delivered. If a party considered that a matter of record, such as the findings in the Indian Action, was inadequately or inaccurately set out, the objection should have been taken before the judge was asked to consider the case and adjudicate upon it, and not after he had reached his decision.” (emphasis added) [68] In the English Court of Appeal in Fidelitas Shipping Co., Ltd v V/O Exportchleb [1965] 2 All ER 4, Lord Denning M.R. held at p. 9: “… And within one issue, there may be several points available which go to aid one party or the other in his efforts to secure a determination of the issue in his favour. The rule then is that each party must use reasonable diligence to bring forward every point which he thinks would help him. If he omits to raise any particular point, from negligence, inadvertence, or even accident (which would or might have decided the issue in his favour), he may find himself shut out from raising that point again, at any rate in any case where the self-same issue arises in the same or subsequent proceedings.” (emphasis added) [69] Diplock LJ, in the same case, held at p. 10: 51 “Issue estoppel applies to arbitration as it does to litigation. The parties having chosen the tribunal to determine the disputes between them as to their legal rights and duties are bound by the determination by that tribunal of any issue which is relevant to the decision of any dispute referred to that tribunal.” [70] All the above submissions of the Defendant would have been spot on had it not been for the fact that the reference of a question of law here deals with something more fundamental. It is this: the lack of power and jurisdiction of the Arbitrator to grant pre-award interest. Pronouncement [71] My hands are tied though I can appreciate the cogency of the legal arguments in favour of an Arbitrator granting pre-award interests. Another panel of the Court of Appeal will have the opportunity to hear the arguments again or perhaps the Federal Court might be hearing the appeal sooner from the decision of Far East Holdings (supra), as a question of law that was allowed during the leave application granted by the Federal Court on 28 March 2016 was as follows: "Whether under or in proceedings under the Arbitration Act 2005, the Arbitrator has jurisdiction to award pre-award interest?" 52 [72] In the circumstance I was constrained to set aside only the award of pre-award interest of RM305,307.85. Each party shall bear its own costs. Dated: 30 May 2016. Y.A. TUAN LEE SWEE SENG Judge Construction Court Kuala Lumpur For the Plaintiff : Shamsurryaty Shamsuddin (Senior Federal Counsel – AG’s Chambers) For the Defendant : Ben Chan together with Chin Yu Yen (Messrs Mah-Kamariyah & Philip Koh) Date of Decision : 15 April 2016