English common law and the rules of equity

The law of Malaysia is mainly based on the common law legal system that means that English law forms part of the laws of Malaysia. In Article 160 of the Federal Constitution states the definition of law which includes ‘the common law in so far as it is in operation in the Federation or any part thereof’ that concerns the extent to which the English law is applicable in Malaysia. In the Section 3 of the Civil Law Act 1956 (Act 67) (Revised 1972) gives the meaning of the English law which means ‘the common law of England and the rules of equity’ and, in prescribed circumstances, English statutes.

The common law is the body of rule developed by the old common law courts - Court of Exchequer, Court of Common Pleas and Court of King’s Bench – that distinct from the old Court of Chancery and were extinct today’s world. Before Norman Conquest in 1066, the common law was applied in England and based essentially on customs common throughout England in contrast to local customs. The common law is the unwritten or unenacted law of England and it based solely on decisions of the courts.

Equity means ‘fairness’ and is the body of rules developed first by the Lord Chancellor and by the old Court of Chancery in the end of the fifteenth century. Equity, unlike the common law, is not a complete body of rules which can exist on its own and it merely filled the gaps in the common law and softened the strict rules of common law. Furthermore, equity is a discretionary system of justice. An equitable remedy is not available as of right; it may not be granted if the plaintiff considered morally undeserving. The equitable remedies offered were injunction, specific performance, rescission and rectification that the major contributions of equity are the trust concept.

If there is a conflict between common laws and equity, the equity should always prevail (the Earl of Oxford’s case-1615)

Application of English Law in the Federation of Malaysia

In 1963, which when Malaysia was formed, there were three separate statutes authorizing the application of English Law which are the Civil Law Ordinance 1956 (CLO 1956) in Peninsular Malaysia, the Application of Laws Ordinance 1951 in Sabah as well as the Application of Laws Ordinance 1949 in Sarawak.

With effect from 1 April 1972, after the formation of Malaysia, the CLO 1956 was extended to Sabah and Sarawak by the Civil Law ordinance (Extension) Order 1971. The Civil Law Act 1956 (Act 67) (Revised 1972) (CLA 1965) being incorporate to all the three earlier statutes that are the statutory authority for the application of English law in today’s Malaysia. The extent of the application of English law is prescribed in the following three sections which are Section 3, Section 5 and Section 6.

In Section 3 (1), it provides for the general application of English law. It states that:

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:

In West Malaysia or any part thereof, apply the common law of England and the rules of equity as administered in England on the 7th day of April, 1956;

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;

In Sarawak, 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 12th 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.

In short, section 3(1) provides that the courts in Malaysia shall apply the common law as well as rules of equity existing in England in the absence of written law on 7th April 1956 in West Malaysia, 1st December 1951 in Sabah and 12th December 1949 in Sarawak.

In sub-sections (1)(b) and (1)(c) of section 3 states that English statutes of general application Sabah and Sarawak shall be applied. The difference in wording between these subsections on the one hand and subsection (1)(a) on the other hand perpetuated a controversy which earlier arose from section 3(1) CLO 1956 which was word for word the same as section 3(1)(a) CLA 1956. Are English statutes of general application applicable in West Malaysia? Two views, each as cogent as the other, exist. Professor Bartholomew, writing on section 3(1) CLO 1956, holds that such English statutes are applicable.39 Joseph Chia, in discussing the corresponding provision in the CLA 1956, expresses a contrary opinion.40 Judicial opinion supports the Joseph Chia’s view.

General Application of English Law

Common law and rules of equity as well as in Sabah and Sarawak, English statues of general application apply under section 3(1) subject to the following qualifications which are absence of local legislation, cut-off dates and ‘local circumstances’.

First of all, under the absence of local legislation, it is contained in the opening proviso. The same qualification exists in section 3(1) CLO 1956 as well as section 2 Civil Law Enactment 1937 –the antecedents of section 3(1) CLA 1956. The qualification is applied only in the absence of local status on the particular subject. The statutory recognition of judicial practice of resorting over English law to fill lacunae (gaps) in the local law system. As Terrell Ag. C.J. said in Yong Joo Lin v Fung Poi Fong:

‘Principles of English law have for many years been accepted in the Federated Malay States where no other provision has been made by statute. Section 2(1) of Civil Law Enactment therefore merely gave statutory recognition to a practice which the courts had previously followed.(Emphasis added.)45’

The qualification is illustrated in Attorney-General, Malaysia v Manjeet Singh Dhillon [1991] 1 MLJ 167. The Supreme 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 section 3 CLA 1956. The decision was followed by the Court of Appeal in Murray Hiebert v Chandra Sri Ram [1999] 4 AMR 4005,4024.

The second qualifications for application of English law is cut-off dates as only common law and rules of equity and in Sabah and Sarawak, English statutes of general application existing in England on the dates specified which were 7th April 1956 for West Malaysia, 1st December 1951 for Sabah and 12th December 1949 for Sarawak.

It can be applied to fill lacunae in local law. As the Privy Council put in Lee Kee Choong v Empat Nombor Ekor (concerning whether a valuation on the fair price of shares could be questioned), their Lordships need not consider developments in English law after 1956 because under section 3(1) CLO 1956- which is word for word the same as section 3(1)(a) CLA 1956 –‘any subsequent march in English authority is not embodied’.46

Several cases illustrate this qualification. In Leong Bee v ling Nam Rubber Works [1970] 2 MLJ 45, the Privy Council held that a presumption – that a fire which 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 Arpil 1956. That decision was followed by the High Court (Malaya) in Lembaga Kemajuan Tanah Persekutuan v Tenaga Nasional [1997] 2 MLJ 783.

However, despite the clear and categorical wording of section 3(1) to the effect that Malaysian courts shall apply English law existing on the specified dates, in practice the courts may follow developments in English common law after such dates. English decision made after such dates, though not binding, are persuasive. This was made clear by the Privy Council in Jamil bin Harun v Yang Kamsiah in 1984. In an appeal from Malaysia, the appellant argues that the Federal Court was wrong to follow the English case of Lim Poh Choo v Camdem & Islington Area Health Authority [1980] AC 174, a decision of the House of Lord, in itemizing damages in a personal injury case. The Privy Council rejected the argument. Delivering the opinion of the Privy Council, Lord Scarman said:

‘Their Lordships do not doubt that it is for the courts of Malaysia to decide, subject always to the statute law of the Federation, whether to follow English case law Modern English authorities may be persuasive, but are not binding.47’

The choice is left to the wisdom of the Malaysian judiciary as that decision not only endorsed the judicial practice before Lee Kee Choong v Empat Nombor Ekor, but leaves the door open to the continuing reception of principles of English common law and equity in Malaysia.

To develop the common law in Malaysia in line with developments in England, which choice has been seized particularly in novel situations48 as well as heightened concern in academic and judicial circles about the development of a Malaysian common law.

The third qualification of general application in English law is ‘local circumstances’ that English law is applicable only to the extent permitted by local circumstances and inhabitants, and subject to qualifications necessitated by local circumstances. English law may be most suited in its home land but doesn’t necessarily translate well into the local environment which the imposition is totally an alien system on a socially and culturally different from English society. This qualification is contained in the concluding provision to section 3(1), is commonly referred to as the ‘local circumstances’ proviso.

That proviso recalls minding the words used by the judiciary in the early days of British rule in the Straits Settlements. For example, Maxwell C.J. in Choa Choon Neoh v Spottiswoode held that the English Superstitious Uses Act, 1547 and the Mortmain Acts of 1531 and 1735 were not applicable in the Straits Settlements. He said:

‘ In the colony, so much of law of England as was in existence when it is imported here, and as is of general and not merely local policy, and adapted to the condition and wants of the inhabitants, is the law of the land; and further, that law Is subject, in its application to the various alien races established here, to such modifications as are necessary to prevent it from operating unjustly and oppressively on them.49’

In the case of Syarikat Batu Sinar v UMBC Finance [1990] 2 CLJ 691, it shown that the effect of the ‘local circumstances’ proviso in the application of English law that 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 of Malaya noted that the English practice of endorsement of vehicle ownership claims by finance companies is different from that in Malaysia (and Brunei). Whereas the English practice is based purely on a voluntary arrangement, the Malaysian practice is based on statutory provisions. Invoking the proviso to section 3(1) CLA 1956, Peh Swee Chin J. Held the difference in law and practice in Malaysia constitutes ‘such a distinctive local circumstance of the local inhabitants of West Malaysia’ that English cases on failure to register a vehicle ownership claim should not be followed. Instead, he followed a decision of the Brunei high Court. The learned judge added: ‘ We have to develop our own common law just like what Australia has been doing by directing our minds to the “local circumstances" or “local inhabitants".50