Malaysian Legal System

LAW 434

LECTURE 2
ENGLISH LAW AND CIVIL LAW
ACT 1956
Composition of English law

Common law
Rules of equity
Statutes

The common law is the body of rules developed by the

old common law courts-Court of Exchequer, Court of
Common Pleas, and Court of King's Bench as distinct
from the old Court of Chancery, all of which are now
extinct.
The common law is the unwritten or un-enacted law of
England based solely on decisions of the courts.
 Rules of equity is the body of rules developed first by
the Lord Chancellor and later, towards the end of
fifteenth century, by the old Court of Chancery.
Equity is not a complete body of rules which can exist
on its own. It came into being to supplement the
common law, to correct its defects and mitigate its
harshness.
If there is a conflict between common law and
equity, the latter prevails . S3(2) CLA 1956
Summary of statutes which provided for the reception of English
law:

First Royal Charter of Justice of 1807

Second Royal Charter of Justice 1826
Third Royal Charter of Justice 1855
Law of Sarawak Ordinance 1928
Statutory authority for introduction of English law
into Sarawak.
Civil Law Enactment (1937 FMS No 3)
Statutory authority for introduction of English law
into Federated Malay States.
Civil Law Ordinance 1938
Statutory authority for introduction of English law
into North Borneo (now Sabah).
 Application of Laws Ordinance 1949 - Sarawak.
Application of Laws Ordinance 1951 - North Borneo
(now Sabah).
Civil Law (Extension) Ordinance 1951 - Unfederated
Malay states.
Civil Law Act 1956 - Federation of Malaya (including
Penang and Malacca).
Civil Law Act 1956 (revised 1972)- Malaysia
(including Sabah and Sarawak).
General Application of English Law

Section 3(1) of the Civil Law Act 1956 (Act 67) provides for the
general application of English law. It states:

"Save so far as other provision has been made or may

hereafter be made by any written law in force in Malaysia,
the court shall:

a) in West Malaysia or any part thereof, apply the

common law of England and the rules of equity as
administered in England on 7th day of April, 1956;

b) in Sabah, apply the common law of England and the

rules of equity, together with statutes of general
application, as administered or in force in England on
the 1st day of December, 1951;
c) in Sarawak, apply the common law of England
and the rules of equity, together with statutes of
general application, as administered in England
on the 12It, day of December, 1949, subject
however to sub-section 3(ii)

Provided always that the said common law, rules of

equity and statutes of general application shall be
applied so far only as the circumstances of the states
of Malaysia and their respective inhabitants permit
and subject to such qualifications as local
circumstances render necessary.
Conditions for the application of English Law:

Types of law common law

rules of equity
statutes of general application

Are English statutes of general application applicable in West

Malaysia? Two views exist:

1) Prof Bartholomew holds that such English statutes are

applicable. (He argues that the expression "common law
simply means the law administered by the Courts of
Common Law-whatever in nature).
2) Joseph Chia holds that English statutes are not applicable.
 Judicial opinion supports the latter view.

The Court of Appeal in Mokhtar v Arumugam (1959) 2

MLJ 232, on the question of whether damages in the
nature of interest for delay in returning specific goods
could be awarded in Malaysia, held that such a remedy,
being 'a creature of English statutes, is not available
here'.

The rule was further endorsed in Permodalan Plantation

v Rachuta (1985) 1 MLJ 157, when it held the defence of
legal set-off, based on an English statute, does not apply
in West Malaysia.
 In Jayakumari v Suriya Narayanan on the issue of
whether a Malaysian court has jurisdiction to grant an
interim relief, based on an English statute, the court held
that the English statutes were not binding in our country.

In Pushpah v Malaysian Co-operative Insurance Society

(1995) 2 ML,1 657, the plaintiff sought to invoke an
English statutory provision to revoke a nomination by her
deceased husband in his life insurance policy made
before their marriage.
 The court dismissed the application on the-ground that
section 3(1)(a) CLA 1956 allows in West Malaysia the
application of the the common law of England and the
rules of equity and not the additional item, 'statutes of
general application'. He agreed that the result was unjust
in the circumstance but observed that it was 'for
Parliament to change the law if Parliament deems the
circumstances justify such change'.
Common law and rules of equity and in Sabah and Sarawak,
English statutes of general application apply under section
3(1) subject to the following qualifications:

1. Absence of local legislation.

s.3 merely is the statutory recognition of judicial
practice of resorting to English law to fill the lacunae
(gaps) in the local law.
 As Terrel Ag. C.J. said in Yong Joo Lin v Fung Poi Fong
(1941) MLJ 54:

"Principles of English law have for many years

been accepted in the Federated Malay
States where no other provision has been
made by statute. S.2 of the Civil Law
Enactment therefore merely gave statutory
recognition to a practice which the courts
had previously followed."
 In Attorney-General, Malaysia v Manjeet Singh Dhillon
(1991) 1 MLJ 167, the court held that in the absence of
any specific local legislation concerning contempt of
court, the common law of contempt as stated in R v Gray
(1900) 2 QB 36 should be applied under s.3 CLA 1956.

The case was followed by the Court of Appeal in Murray

Hiebert v Chandra Sri Ram (1999) 4 AMR 4005.
 United Malayan Banking Corp Bhd & Anor v Pemungut
Hasil Tanah, Kota Tinggi (1984) 2 MLJ 87. One of the
questions to be decided was whether the English equitable
rule with regard to relief against forfeiture could be applied
to a forfeiture of alienated land resulting from an action
duly brought under the local National Land Code. The Privy
Council held that since the National Land Code was a
complete and comprehensive code of law governing the
land tenure and other matters affecting land in Malaysia,
there was no room for the importation of any relevant rules
of English law except in so far as the Code itself may
expressly provide for this.
2. Cut-off dates

Only the common law and rules of equity (and in Sabah

and Sarawak, English statutes of general application)
existing in England on the dates specified:
7 April 1956 for West Malaysia;
1 December 1951 for Sabah; and
12 December 1949 for Sarawak
Can be applied to fill lacunae in local law
 The Privy Council in Lee Kee Choong v Empat Nombor
Ekor (1976) 2 MLJ 93 (concerning whether a valuation on
the fair price of shares could be questioned), held that
the court need not consider developments in English Law
after 1956 because under s.3(1) CLO 1956-'any
subsequent march in English authority is not embodied'.
 In Leong Bee v Ling Nam Rubber Works (1970) 2
MLJ 45, the Privy Council held that a
presumption-that a fire began on a man's
property arose from some act or default for
which he was answerable-has no application in
Malaysia because having been displaced by
English statutes, the presumption was no longer
part of the common law of England on 7 April
1956.
Followed in Lembaga Kemajuan Tanah
Persekutuan v Tenaga Nasional (1997) 2 MLJ783
 Despite the fact that that Malaysian courts shall apply English
law existing on the specified dates, in practice the court may
follow developments in English Common law after such dates.
English decisions after such dates, though not binding are
persuasive.

In Jamil bin Harun v Yang Kamsiah (1984) 1 MLJ 217 the court
held that it was for the courts of Malaysia to decide, subject
to the statute law of the federation, whether to follow English
case law. Modem English authorities may be persuasive, but
not binding. (The court in this case followed the English case
of Lim Poh Choo v Camden & Islington Area Health Authority
(1980) AC 174).
3. Suitability with local circumstances

English law is applicable only to the extent permitted by

local circumstances and inhabitants, subject to
qualifications necessitated by local circumstances.

In Syarikat Batu Sinar v UMBC Finance (1990) 3 MLJ 468,

concerning the negligent failure of a finance company to
endorse its claim to ownership of a tractor on the Vehicle
Registration Card and whether such negligence forfeits
its claim.
 The High Court noted that the English practice of
endorsement of vehicle ownership claims by finance
companies is different from that in Malaysia. Whereas
the English practice is based purely on a voluntary
arrangement, the Malaysia practice is based on statutory
provisions.

Invoking the proviso to section 3(1) CLA 1956, the court

held that the difference in in law and practice in Malaysia
constitutes 'such a distinctive local circumstances of the
local inhabitants of West Malaysia' that English cases on
failure to register a vehicle ownership claim should not
be followed.
 Specific application of English law

s.5 CLA 1956 provides for the application of English law in

commercial matters. -
S.5 states:
(1) In all questions or issues which arise or which have to
be decided in the states of West Malaysia other than
Malacca and Penang with respect to the law of
partnerships, corporations, banks and banking,
principals and agents, carriers by air, land and sea,
marine Insurance, average life and fire Insurance,
and with respect to mercantile law generally,
 the law to be administered shall be the same as
would be administered in England in the like case
at the date of coming into force of this Act, if such
question or issue had arisen or had to be decided
in England, unless in any case other provision is or
shall be made by any written law.

(2) In all questions or issues which arise or which have

to be decided in the state of Malacca, Penang,
Sabah and Sarawak with respect to the law
concerning any of the matters referred to in
subsection (1),
 the law to be administered shall be the same as
would be administered in England in the like case
at the corresponding period, if such question or
issue had arisen or had to be decided in England,
unless in any case other provision is or shall be
made by any written law.

The different terminology used in s.5 ('the law to be

administered), compared to that in s.3(1)(which specifies
the relevant sources of English law) shows that s.5
introduces, the whole of English law including statutes.
 The difference in wording between subsections (1) and
(2) of section 5 means there is a difference in the extent
to which English law is applicable in commercial matters
in the former Malay States on the one hand, and Melaka,
Penang, Sabah and Sarawak on the other hand. S.5(1)
introduces into the former Malay States the law
administered in England on 7 April 1956 whereas s.5(2)
introduces the law existing in England on the same date
that the issue has to be decided in Melaka, Penang,
Sabah and Sarawak.
 Thus, theoretically, in commercial matters, there is a
continuing reception of English law in these four states while
in the other states the reception stops at the cut-off date.

However, in practice, the difference does not exist. In Zainal

Abidin v Century Hotel (1982) 1 MLJ 260, the Malaysian
courts, following developments in England, exercised
jurisdiction to grant Mareva injunctions (enabling the court to
freeze the asset of the defendant) and in Lian Keow v
Paramjothy (1982) 1 MLJ 217 to issue 'Anton Piller' orders
(requiring a defendant to permit a plaintiff or his
representative to enter the defendant's premises to inspect or
take away material evidence that the defendant might wish to
remove or destroy in order to frustrate the plaintiff's claim; or
to force a defendant to answer certain questions).
 There are two conflicting approaches to the
interpretation of s.5, arising from two Privy Council
decisions.
In Seng Djit Hin v Nagurdas Purshotumdas (1923) AC
444, the action was for damages for failure to deliver
goods, delivery having been prevented by a shortage of
ships owing to wartime requisitioning.
In issue was the application of the Defence of the Realm
(Amendment) Act No. 2 of 1915 and the Courts
(Emergency Powers) Act 1917, both English statutes. The
Privy Council held that the law to be administered was
not the 'mercantile law' but 'the law' as would be
administered in England in the like case.
 Such law meant the entirety of English law. The correct
approach is to determine if the issue concerned one of
the enumerated categories and 'mercantile law generally'
in the first part of the section.

If it does, then in accordance with the second part of the

section, the law to be administered shall be the same as
would be administered in England in the like case. In that
case, the issue concerned the law of sale, clearly part of
mercantile law. As the two statutes could be pleaded had
the issue arisen in England, they could be relied upon in
the Straits Settlements.
 Second approach to the interpretation of s.5

In Shaik Sahied bin Abdullah Bajerai v Sockalingam

Chettiar (1933) 2 MLJ 81, the plaintiff sued for money
allegedly due on a promissory note and a cheque. In
defence, the defendant relied upon the absence of a
written memorandum as required under the English
Moneylenders Acts 1900-1927. In dispute was whether
those statutes could be pleaded upon in the Straits
Settlements.
 The Privy Council held that the statutes were not part of
the mercantile law because they contain saving clauses
excluding from their scope the borrowing of money in
the course of ordinary commercial transactions. As the
statutes were not part of the mercantile law, an issue
raised under any of their provisions was not an issue
concerning mercantile law. Consequently, the statutes
did not apply in the Straits Settlements.
 The 'local circumstances' proviso present in s.3(1) is
absent from s.5. In practice, however, s.5 seems to have
been interpreted as if that proviso exists.

In Sockalingam Chettiars case, the trial judge held that

the facts did not allow the application of Moneylenders
Acts 1900-1927 in Singapore because they were peculiar
to England (the Acts were meant to regulate activities of
moneylenders in England), and not in general character,
and was unsuitable and impossible of the performance in
the East.