Abstract
The debate on whether Malaysia needs to sustain strong links with English law is likely to continue. Irrespective of which side of the argument one may take, the truth is that Malaysia’s links with English law have contributed tremendously towards the development of the plural Malaysian legal system which is highly regarded in the region. This article argues that the abolition of section 3 of the Civil Law Act 1956, or the Act as a whole, which permits the reception of English law in Malaysia, is not necessary. The argument that the Act stifles the development of the Malaysian common law is untenable. The existing framework within the Act allows, if not promotes, the development of the Malaysian common law. Even though this article argues that section 3 should not be abolished, it is submitted that the time has come for the provision to be amended and improved. This article proposes various amendments to section 3 which would enable both smoother reception of English law in Malaysia and more effective development of the Malaysian common law.
Introduction
This article seeks to examine the statutory basis for the reception of English law in Malaysia and the prospects of the development of the Malaysian common law within the existing legal framework. English law, which includes the common law, rules of equity and legislation, is the predominant source of the Malaysian law. It remains the source and one of the greatest contributors to Malaysian jurisprudence even today.
The historical basis of the reception of English law in Malaysia is somewhat unclear and contentious. The received wisdom on this point is that English law was first introduced in Malaysia in the island of Penang by way of the First Charter of Justice by the British Crown in 1807. It is said that Penang was then an uninhabited island (which it might not have been—see below). The claim that Penang was a deserted island cleared the way for the introduction of English law through the application of the English doctrine of reception. However, a growing body of literature based on reliable historical documents proves that the allegedly uninhabited island was in fact inhabited by well-organized Malay communities. It follows then that the English doctrine of reception on the basis of which English law was originally introduced in Malaysia could be without a foundation.
This article begins by considering the statutory basis of the reception of English law 1 in the Straits Settlements via the doctrine of reception. Then it compares this with the reception of English law in the rest of Malaysia (Federated Malay States, Unfederated Malay States, Sarawak and North Borneo) via the doctrine of transformation. It scrutinizes these reception methods and emphasizes the significance of English law for the Malaysian legal system. There is no doubt that English law, which is entrenched in Malaysian legislation and judicial decisions, is the predominant source of Malaysian law. However, other sources of law, such as Islamic law and customary law, have also played a significant role in shaping the Malaysian legal system. During the colonial period, English and Islamic laws conflicted. 2 The conflict of laws is less evident today due to active legislative intervention and judicial observance of jurisdictional boundaries. 3
This article reinforces the fact that Malaysian legislation has explicitly recognized English law as being part of Malaysian law. The country’s apex law, the Federal Constitution (FC), includes the ‘common law’ in the definition of ‘law’. 4 A more specific endorsement of the use of English law is found in the Civil Law Act 1956 (Act 67). The article examines the relevant sections of the Civil Law Act 1956 and suggests amendments where necessary. Most of the discussion revolves around section 3 of the Act as it permits the reception of English law (common law, 5 rules of equity 6 and certain statutes) in Malaysia subject to some conditions. Besides section 3, the significance and application of sections 5 and 6 are discussed. Section 5 is the statutory authority for the reception of English law specifically in commercial matters while section 6 prevents the application of English law to land matters. Lastly, the article explores the feasibility of the development of ‘Malaysian common law’ within the existing legal framework.
Reception of English law—the period prior to the Civil Law Act 1956
When the British came to Malaysia in 1786, they brought with them their own English legal system. They argued that the first occupied land, i.e. Penang Island, was a virgin territory with no proper legal and administrative systems in place. 7 They used that as an argument to introduce English law to Penang through the introduction of the First Charter of Justice in 1807. The First Charter of Justice is considered to be the first statutory introduction of English law to Malaysia even though the Charter itself does not explicitly say so. 8 The Charter established a ‘Court of Judicature of Prince of Wales’ Island’ which had the jurisdiction in all civil, criminal and ecclesiastical matters. 9 It had the effect of introducing English law to Penang as it existed in England on 25 March 1807. 10 In 1826, Penang, Singapore and Melaka were incorporated into the Straits Settlements, a group of British territories which were initially governed by the East India Company in Calcutta. 11 In the same year, the Second Charter of Justice was introduced to the Straits Settlements and it, in essence, reiterated the content of the First Charter of Justice with minor amendments and extended its application to Singapore and Melaka (Phang, 2006). Its effect was the official and statutory introduction of English law in the Straits Settlements as it existed in England on 27 November 1826. 12 It also established a new ‘Court of Judicature of Prince of Wales’ Island, Singapore and Melaka’.
It is said that English law was introduced to Penang island by virtue of the English common law’s ‘doctrine of reception’ because the island was considered ‘terra nullius’.
13
The doctrine of reception is grounded on the notion that English common law should be applied to the newly colonized English territories if they were found to be ‘uninhabited’ or ‘infidel’ (against the law of God). In that case, no prior endorsement by local community is needed.
14
The First Charter of Justice was claimed to have the same effect by virtue of this doctrine. Hackett J in Fatimah v D Logan,
15
had this to say: Here we have the fact that an island virtually uninhabited, is occupied and settled by British subjects in the name of the King of England. The case therefore would seem to fall within the general rule laid down in our law books and which Lord Kingsdon thus expresses in a recent case: ‘When Englishmen establish themselves in an uninhabited or barbarous country, they carry with them not only the laws, but the sovereignty of their own State; and those who live amongst them and become members of their community, become also partakers of and subject to the same laws’.
In other words, relying on this doctrine the conqueror does not only take the unclaimed territory from the local communities but it also ‘forcefully’ imposes its own legal and administrative system on them.
As to the claim that Penang island was terra nullius territory, this was strongly refuted by the renowned Malaysian legal scholar, Professor Ahmad Ibrahim, who argued that the facts and evidence show otherwise. According to him, Penang was inhabited at the time of British occupation. The records found in the register of surveys dated 1975 show that Penang island was inhabited by the Malay population as early as 1705. In terms of the governing legal system, there is no concrete evidence indicating what law these communities applied. However, since Penang island belonged to the state of Kedah, one is led to believe that Kedah law (adat Temengung) or local customary laws applied (Ibrahim and Joned, 1987: 21). It is clear that Penang island was not terra nullius territory (Mallow, 2014: 89–102). Henceforth, in contrast to what has been claimed by Hackett in Fatimah v D Logan, the introduction of English law to the Straits Settlements via Charters of Justice is not grounded in the doctrine of reception.
As a matter of fact, historical records suggest that Malaysian legal history does not begin with the British occupation. There was a complex and diverse legal system in Malaya, reflective of all races of the Malay Archipelago, long before the reception of English law. The major components of that legal system (i.e. digests of law), as clearly pointed out by Winstedt, include: Adat Perpateh (digests and tribal sayings cherished by Miningkabaus of Sumatra and Negeri Sembilan); Adat Temenggung (Malay indigenous patriarchal law fused with Hindu and Muslim law); digests of maritime law compiled for the last Sultan of Malacca; and Muslim law (Shafi’i school of thought) (Winstedt, 1953: 91–92).
Be that as it may, the English law introduced by the First and Second Charters of Justice did not introduce English law in its entirety. The local community was allowed to a certain degree to continue to follow and practice their religion, customs, usages and habits. 16 Besides, the third Recorder of Penang, Sir Ralph Rice, observed that the effect of the First Charter of Justice was the introduction of English law only for criminal matters, whereas in civil matters the inhabitants continued to be governed by their respective laws and customs. 17 On the other hand, Sir Benjamin Malkin in the case of In the Goods of Abdullah, 18 commenting on the Second Charter of Justice, argued that the recognition of local inhabitants’ religions and customs was not accorded by the Charter itself but rather by the general principles of English law as an exception to the general rule of reception (Hamzah, 2009: 121).
Further, the cases decided in the Straits Settlements throughout that period indicate a steady reluctance by the courts to apply the religious and customary laws of the local people. 19 The religions and customs would have been only considered if they were consistent with common law principles and the notion of justice as promulgated by the common law. This attests to the dominance of the common law over the religious and customary laws of the locals at that time.
The First and Second Charters of Justice did not manage to secure a smooth and speedy disposal of the cases in the manner in which the common law envisioned it to be done. The administration of justice put in place could not cope with the number of cases, which was on a steep increase as a result of the surge in economic and social activities in the Settlements at the time. For instance, there was only one Recorder based in Penang at the time, who rarely visited the other two states. It is true that he was provided with the assistance of the lay justices, but due to their poor knowledge of the common law they delivered many judicial decisions which were perceived by many as incorrect.
As a result, in 1855 the Third Charter of Justice was introduced, mainly with the intent to restructure the administration of justice. The court was split into two divisions, one for Penang and one for Melaka and Singapore. Sir Richard Bolton McCausland was appointed as Recorder for Penang whereas Sir Peter Benson Maxwell was appointed for Melaka and Singapore. Both Recorders were assisted by the Registrars. The period that followed witnessed further restructuring of the courts, which was necessary after handover of the Straits Settlements by the East India Company to the Colonial Office in London in 1867. The most notable development was the establishment of the new court known as the ‘Supreme Court of the Straits Settlements’, with the Recorders reappointed as judges. 20
Unlike the Straits Settlements, which arguably according to the British did not have any prior established legal and administrative system, the Malay states, both the Federated Malay States (FMS) 21 and Unfederated Malay States (UMS) 22 were inhabited territories ruled by the Malay rulers, who enforced the Malay adat (custom), which had been significantly influenced by the principles of Islamic law. Islamic law applied to Malays (Muslims) together with customary laws, whereas non-Muslims residing in those states were governed by their own personal (customary) laws.
Islamic law in particular stood up as the most predominant component of the legal and administrative system in the Malay states. This was clearly pointed out by Edmonds J in Shaikh Abdul Latif and others v Shaik Elias Bux.
23
He said: Before the first treaties the population of these States [Malays States] consisted almost solely of Mohamedan Malays with a large industrial and mining Chinese community in their midst. The only law at that time applicable to the Malays was Mohamedan modified by local customs.
24
A few years later, a Court of Appeal in Ramah v Laton 25 reinstated, by the way of majority, that Islamic law is not ‘foreign law’, but on the contrary, it is the law of land which ought to be recognized as such by the court. RJ Wilkinson argued that had English law not been introduced to Malaya the Islamic law would certainly have become the law of Malaya (Wilkinson, 1922: 49). That was the level of respect Islamic law commanded from the local Malay communities, and that is probably the reason why Islamic law together with Malay custom remained largely unaffected by the British (Tun Zaki, 2012: 6). This enabled the development of a parallel court system and the non-interference by the civil courts on the matters which fall under the jurisdiction of Syariah courts as provided for by the Federal Constitution. 26 The importance of Islam for the Malays has also been evidenced through its substantive inclusion into the Federal Constitution. 27 Islamic law remains an important part of the Malaysian law today. 28
As far as the Malay states were concerned, the introduction of English law could not be carried out in the manner in which it was introduced in the Straits Settlements, i.e. by applying the common law doctrine of reception. Instead, a formal endorsement of English law application by the Act of Parliament of the respective states was needed. In other words, it had to be accepted voluntarily by the Malay states. In 1937, the FMS were the first to accept English law on a voluntary basis by passing into law the Civil Law Enactment 1937, which officially introduced English law in FMS. On 1 February 1948 the Federation of Malaya was established, and three years later the Enactment was extended to UMS by passing the Civil Law (Extension) Ordinance 1951 into law. By then, English law was officially applied in the whole of Malaya. In 1956, both Enactments in the FMS and UMS were repealed by the new Civil Law Ordinance 1956, which applied to the whole Federation of Malaya including Penang and Melaka.
However, it needs to be noted that unofficially English law had been, without any legal basis, applied in the Malay states even before its statutory introduction (Aun, 1999: 100–101). The informal application of English law was done through the ‘residential system’ in which the Residents, who were supposed to advice the Sultans of the respective states on government matters, de facto governed the states on behalf of the Sultans. 29 They possessed greater powers than they were initially envisaged to have. They used their power, among other things, to introduce and apply English law in their respective states. This is how a significant amount of legislation, modelled upon Indian legislation which itself emulated English law, was enacted, such as the Contracts Act 1950 (Act 136), Evidence Act 1950 (Act 56), Penal Code (Act 574) and Criminal Procedure Code (Act 539). In addition to this, the natural tendency for newly appointed English judges and those trained in English law would be to apply English law whenever the local circumstances would have allowed them to do so. Various reasons (excuses) were used to justify the application of English law.
The principle of ‘natural justice’, for example, was invoked in Motor Emporium v Arumugam,
30
justifying the application of English rules of equity which had no legal basis for application in the Malay states. Delivering the judgment of the court, Terrell AG CJ observed: The Courts in the Federated Malay States have on many occasions acted on equitable principles, not because English rules of equity apply, but because such rules happen to conform to the principles of natural justice.
31
Again, a few years later Terrell AG CJ (SS), when delivering his judgment in Yong Joo Lin v Fung Poi Fong,
32
said: 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 (i) of the Civil Law Enactment, therefore merely gave statutory recognition to a practice which the Courts had previously followed.
33
Likewise, English ‘principles in the law of tort’ had been heavily applied by the courts, as was rightly pointed out by Woodward JC in Government of Perak v Adams,
34
where he said: In dealings with cases of tort, the Court has always turned for guidance, as to fundamental principles, to English decisions.
35
Henceforth, the judiciary, in their own way, also contributed towards the unofficial introduction of English law into the Malay states (Ibrahim and Joned, 1987: 85–86).
When it came to Sarawak and North Borneo (now Sabah), which were British protectorates from 1888, English law, as in the Malay states, could not be automatically imposed through the English common law principle of reception. The Parliaments of each state needed to pass a formal law which would endorse the application of English law into the states. Amongst the two states, Sarawak was the first to pass such a law, in 1928, the Laws of Sarawak Ordinance 1928. Soon after, North Borneo passed a similar law, the Civil Law Ordinance 1938. These two pieces of legislation formally acknowledged the reception of English law into the respective states ‘having regard to native customs and local conditions’. 36 However, unofficially English law was already being used in the same manner in which it had been unofficially applied in the Malay states. Later, new laws were passed, namely the Application of Law Ordinance 1949 in Sarawak and the Application of Law Ordinance 1951 in North Borneo. These laws further clarified and expanded the application of English law in both states.
In 1963 Malaysia was formed and, at that time, there were altogether three different statutes which recognized the application of English law in Malaysia, i.e. the Civil Law Ordinance 1956 in West Malaysia, the Application of Law Ordinance 1949 in Sarawak and the Application of Law Ordinance 1951 in North Borneo. Soon after the formation of Malaysia, the Civil Law Ordinance 1956 was extended to Sarawak and Sabah through the Civil Law Ordinance (Extension) Order 1971. Hence, all three statutes were amalgamated into one single statute called the Civil Law Act 1956 (Act 67), which has since applied to the whole of Malaysia.
As can be seen from the above discussion, English law was not statutorily introduced to the whole of Malaysia at once. On the contrary, its introduction was made in a gradual manner, taking into account the legal and administrative status of the component states. In the Straits Settlements, the English law was imposed by the British ‘involuntarily’ through the Charters of Justice, with the sentiments and wishes of the local community being of little significance. On the other hand, in the Malay states (FMS and UFM), North Borneo and Sarawak, English law was introduced in a more smooth and people-considerate manner through the enactments of the legislation by the respective states’ Parliaments. For easy reference, the gradual statutory reception of English law in the various Malaysian states has been chronologically summarized in Table 1.
Summary of legislation introducing English law into Malaysia.
At present, the Civil Law Act 1956 is the statute which provides the legislative authority for the application of English law in Malaysia, but not without limitations. Although the Act survives to this day, it has not been immune from criticisms and constant calls for its abolition or amendment. Therefore it would be timely, at this stage, to look into the most important provisions of the Act, dealing with the reception of English law into Malaysia.
The Civil Law Act 1956 (Act 67)
It should be remembered that Act 67 was passed in 1956, i.e. one year before independence was achieved by Malaya. 37 Looking at the Act, we do not know the real reason behind it. Hence we will not speculate. However, we think that at that time there was a case for having a general provision for the court to apply the common law of England and the rules of equity subject to necessary conditions. The legal and judicial system established by the British was the English system. Common law and rules of equity form an important part of the law applicable by the courts. Malaya then did not even have a Parliament. Written laws, as they existed, were perhaps inadequate. The written laws which had been made were common law-based. In areas where no written law had been made, the courts applied the common law of England and the rules of equity. Indeed, in our view, with or without the provisions, the lawyers would have resorted to English law and the courts would have applied the same, without any guidance. Where else would they look to? They were all trained as common law lawyers in England at that time. In the circumstances, it was natural for the applicability of the common law of England and the rules of equity to be spelled out clearly by law. And that is precisely what the Civil Law Act 1956 did. In essence, the Civil Law Act 1956 provides for general application of English law, 38 specific application of English law, 39 and non-application of English law. 40 Each one of these will be concisely explained below.
Section 3 of the Civil Law Act 1956: General application of English law
For the purpose of this article, we think it is worthwhile to reproduce the actual content of section 3 of the Civil Law Act 1956. Section 3 provides as follows:
Application of UK common law, rules of equity and certain statutes
in Peninsular Malaysia or any part thereof, apply the common law of England and the rules of equity as administered in England on the 7 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 1 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 12 December 1949, subject however to subparagraph (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. (2) Subject to the express provisions of this Act or any other written law in force in Malaysia or any part thereof, in the event of conflict or variance between the common law and the rules of equity with reference to the same matter, the rules of equity shall prevail. (3) Without prejudice to the generality of paragraphs (1)(b) and (c) and notwithstanding paragraph (1)(c)— it is hereby declared that proceedings of a nature such as in England are taken on the Crown side of the Queen’s Bench Division of the High Court by way of habeas corpus or for an order of mandamus, an order of prohibition, an order of certiorari or for an injunction restraining any person who acts in an office in which he is not entitled to act, shall be available in Sabah to the same extent and for the like objects and purposes as they are available in England; the Acts of Parliament of the United Kingdom applied to Sarawak under sections 3 and 4 of the Application of Laws Ordinance of Sarawak [Cap. 2] and specified in the Second Schedule of this Act shall, to the extent specified in the second column of the said Schedule, continue in force in Sarawak with such formal alterations and amendments as may be necessary to make the same applicable to the circumstances of Sarawak and, in particular, subject to the modifications set out in the third column of the said Schedule.
The effects of the provision with respect to Peninsular Malaysia
41
are as follows: the court shall apply the common law of England and the rules of equity; as administered in England on 7 April 1956; In so far as provisions have not been made (at that point of time) by any written law in force in Malaysia;
42
provided that the said common law and rules of equity 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.
The effects of the provision with respect to Sabah are as follows: Points (1) to (5) above apply to Sabah with two differences: The cut-off date is 1 December 1951. Besides the common law of England and the rules of equity, statutes of general application are also applicable. Proceedings by way of habeas corpus or for an order of mandamus, an order of prohibition, an order of certiorari or for an injunction shall be available in Sabah in the same way as they are available in England;
The effects of the provision with respect to Sarawak are as follows: Points (1) to (5) above apply to Sarawak with two differences: The cut-off date is 12 December 1949. Besides the common law of England and the rules of equity, statutes of general application are also applicable. There is a special provision regarding the Acts of Parliament of the United Kingdom applicable to Sarawak under ss. 3 and 4 of the Application of Laws Ordinance of Sarawak [Cap. 2].
Without going into details, do we still need such a provision? This is a question that has been debated for many years by Malaysian scholars and practitioners. A considerable number of renowned academics and judges have maintained that this provision should be repealed or even abolished along with the Civil Law Act 1956. 43 They argued that Malaysia should free itself from the colonial common law shackles and instead develop its own Malaysian common law. They questioned why the Malaysian Federal Court, presented with an issue that has not been provided for by the local legislation, would subdue its role and prestige by referring to the solutions which have been pronounced by English courts some half a century ago? In addition, they posed a question: ‘are we saying that the Malaysian judges are less qualified to find a just solution to the problem so that they have to ask their counterparts in England?’
One of the strongest voices advocating the repeal of section 3 of the Civil Law Act 1956 was the late Professor Ahmad Ibrahim. He argued that, in the case of a lacuna, Malaysian courts should not refer to English common law, but rather they ought to search for local solutions within Malaysian laws and court decisions which would inevitably prioritize the local conditions and people. 44 He further argued that from the proviso to section 3(1), which states: ‘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’, it can be concluded that even the drafters of the Act expected the Malaysian courts to develop a Malaysian common law. They have intentionally subdued the application of English law to the local circumstances of Malaysia and its people. In other words, in the case of a lacuna in the law, the Malaysian courts are free to develop the Malaysian common law that will suit local circumstances and people.
There are many contemporary Malaysian scholars who, while concurring with the views expressed by Professor Ahmad Ibrahim, voiced the opinion that what is needed is neither the complete abolition of the Civil Law Act 1956 nor the complete revamp of the existing system but rather a change in the attitude of judges, counsel and academics. One such academic was Farid Sufian Shuaib, who argued that the judges in particular should be more proactive in ‘indigenizing’ the English law. In order to do that, the Civil Law Act 1956 may have to be amended to allow the courts to, in addition to English sources, refer to other sources such as religions and customs of Malaysians (Shuaib, 2009) He wrote: After 50 years of independence and numerous achievements proclaimed, Malaysia should feel strong enough to develop its own law by looking within herself first. Physical judicial autonomy obtained by severance of appeal to the Judicial Committee of the Privy Council should be followed by substantive autonomy by severing the umbilical cord to English law.
45
Nevertheless, there are also some prominent contemporary Malaysian scholars who have been even more critical of Malaysia’s reliance on English law and have called on the complete abolition of the Civil Law Act 1956. For instance, Syed Ahmad Alsagoff stated: It is about time the Civil Law Act 1956 be abolished, releasing Malaysia from the last remaining vestige of colonial rule. The Civil Law Act 1956 may have served its purpose in providing Malaysia with a supplementary English common law or equity in its fledging years after independence. But times have changed. It is diabolical and indignified that whenever there is a novel case before the Malaysian courts, unprovided for by written law, they have first to determine what was the law in England 50 years ago! (Alsagoff, 2010: 22)
The call for a departure from the common law either through the repeal or abolition of section 3 or the Act as a whole was strongly opposed by the Malaysian Bar Council (See, for example, Sreenevasan, 2007a; 2007b; Cumarsmawy, 2007). The Bar Council pointed out that Malaysia should be proud of its common law system, which is, without doubt, one of the most respected legal systems in the world. It even forms the basis of public international law. The Bar Council argued that the application of English common law in Malaysia should not be viewed as a weakness but rather a strength. It projects security and certainty to investors and businesses operating in Malaysia. Malaysia’s steady economic development for the past few decades has been by and large enabled and fostered by, among other things, its common law-based legal system. In addition, the Bar Council argued that Malaysia’s link to the common law via section 3 does not prevent Malaysian courts from developing the Malaysian common law. English cases that have been accepted by the Malaysian courts automatically become part of the Malaysian common law. As a matter of fact, this is what has been done for the past few decades where Malaysian court decisions are reported in Malaysian law reports that then become precedents for future cases. At the same time, the court is allowed to reject, either in toto or partially, any English law that in the opinion of the court would not be in accordance with the local circumstances and inhabitants.
This article submits that section 3 of the Civil Law Act 1956 should not be abolished. Since section 3 in its current form allows for the development of the Malaysian common law, why should it be abolished? There are numerous reasons why section 3 should not be abolished, but the most compelling are as follows: We may still need to refer to the common law of England, particularly in the law of tort. In the same way we may still need to refer to the rules of equity, particularly in the law of trust. Such provisions remove any doubt regarding the Court’s jurisdiction to apply such laws. Bear in mind the provision of Article 121(1) of the Federal Constitution which, inter alia, states that the Courts ‘shall have such jurisdiction and powers as may be conferred by or under federal law’.
46
It provides guidance to the Court in applying such rules leading to greater consistency.
Will the abolition of section 3 divorce Malaysia completely from the English common law system? We should not forget that the common law has been accorded official recognition as part of Malaysian law by the Federal Constitution. 47 To exclude common law from the definition of law in the Malaysian context would require, in addition to the abolition of section 3, the amendment of the Federal Constitution. But why would Malaysia want to alienate itself from the English common law in the first place? We often hear calls for it to be replaced, but replaced with what? What would happen with all those common law-based judicial decisions which have been painstakingly developed and delivered by the Malaysian judiciary for the past 50 years or so? We should not want change just for the sake of change, but rather we should work on what we have and develop it further, possibly by ‘indigenizing’ English law whenever the circumstances require.
We are not advocating that English law should be used liberally as if it was the main or only law of the country. On the contrary, its use should be restricted to the manner prescribed by section 3. In fact, section 3 limits the application of English law and promotes the development of the Malaysian common law. But the problem is that section 3 is often being treated as if it does not exist at all. It tends to be omitted by lawyers in their submissions and judges in their judgments, or misinterpreted. Often lawyers would cite the English law devoid of section 3 as if English law applies in Malaysia automatically without any hurdles. They find it burdensome to strictly follow the methodology propounded by section 3 and instead opt for an easy way of presenting to the court the latest English law on the matter without considering any of the hurdles laid down in section 3. Likewise, the judges who rely on those decisions for their judgments transform them into Malaysian law without considering the hurdles in section 3. A large number of recent English judgments have in this manner found their way into becoming part of Malaysian law.
This happens primarily because the judges who decide the cases allow this to happen. They do not pay enough attention to section 3. This particular problem was articulated by Dato’ Abdul Hamid Mohamad J (as he then was) in Nepline Sdn Bhd v Jones Lang Wootton,
48
when he said: …the provision [i.e. s. 3(1)] remains in our statute book though rarely referred to by lawyers or judges in their submissions of judgments, respectively. More often than not, and this case is a good example, Counsel refer to English authorities as if the common law of England applies in toto in Malaysia.
49
He further concluded by saying: My humble view is that the provision of s. 3 of the Civil Law Act 1956 as it stands today, is the law of Malaysia. Courts in Malaysia have no choice but to apply it.
50
Three years later, in the case of Sri Inai (Pulau Pinang) Sdn Bhd v Yong Yit Swee,
51
the learned judge Abdul Hamid Mohamad J voiced his concerns again on the passive attitude of the courts when it comes to section 3. He said: This provision [s.3 of the Civil Law Act 1956] always gives me problems. On the one hand it is the law of this country. It has to be complied with. On the other hand, courts in this country, except on very rare occasions, do not seem to pay any attention to this provision. Instead the courts appear to apply the Common Law of England, irrespective of the date of the decision as if that provision does not exist at all.
52
Even though we argue that section 3 should not be abolished, we opine that the time has come for the provision to be amended and improved. This article proposes the following amendments: The reference to the common law and the rules of equity should not be confined to that of England only but also to that of other Commonwealth countries.
53
English law is, without any doubt, the most significant contributor to Malaysian law, but other Commonwealth countries could be too. We should not presume that in every area of law English law provides the most advanced solutions and mechanisms. Other Commonwealth jurisdictions such as Australia, New Zealand, Canada and, more close to home, Singapore, Hong Kong and India, very often may have even more advanced and culturally sounder solutions to the lacunas found in the Malaysian law.
54
It should not be forgotten that the strength of the common law lies in its ability to adapt itself to the needs of different common law jurisdictions.
55
Hence the diversity of common law solutions found in various common law jurisdictions is a precious resource that Malaysian courts should tap into. Encouraging news is that more and more judges have started to look at laws from other Commonwealth jurisdictions. Even with conditions stipulated, the provision should not be mandatory on the Court. The word ‘shall’ should be substituted with the word ‘may’.
56
That would give to the Court discretion on whether to apply the said principles or not. There should be no cut-off dates. Common law and the rules of equity grow through judgments of courts to cope with time. There is no basis whatsoever to impose the cut-off date around the 1950s (or any other date for that matter) unless we want to live by an archaic law which may no longer be suitable even in England. Besides, it is difficult to determine the common law or rules of equity on a matter at a particular cut-off date. A case decided after the cut-off date may draw the principle from earlier judgments. There is not a judgment that does not refer to earlier precedents. Abdul Hamid Mohamed J (as he then was) when delivering the judgment in Nepline was faced with the similar problem when he tried to apply negligent misstatement principles established in Hedley Byrne & Co. Ltd. v Heller & Partners.
57
Hedley Byrne was decided in 1963; however, the principles referred to by the court were from a much earlier date.
58
The provision that such common law and the rules of equity should only be applicable in so far as provisions have not been made (at that point of time) by any written law in force in Malaysia should remain, subject to improved drafting, if any. This is obvious. Once the Malaysian Parliament enacts a law on the subject, it is that law that should be applied. No lawyer should be heard to argue and no judge should be heard to say that common law rights or equitable remedies continue to run parallel with the written law enacted by Parliament. The introduction of the principle of equitable estoppel to contracts made under the Control of Rent Act 1966 (which has now been repealed) had caused great injustice to affected house owners and had caused the houses to deteriorate. The proviso that ‘the said common law and rules of equity 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’ should remain, subject to improved drafting, if any. With regard to Sabah and Sarawak, the provisions regarding the application of statutes of general application should be removed. Even if there were some justifications six decades ago, they do not exist anymore. If it is not necessary to apply English statutes in Peninsular Malaysia, why should it be necessary for Sabah and Sarawak? Besides, it may lead to an unnecessary disparity in the laws of Peninsular Malaysia and the two States. Everything should be done to standardize the law applicable to the whole country. There should be a new addition. The principles of Islamic law should be included too. We realize that due to ignorance and prejudice the mention of ‘Islamic law’ would straight away raise a controversy. However, we must remember that we are not dealing with the introduction of the Islamic criminal law or laws relating to ibadah (worship). We are dealing with civil law, and the scope is very limited. Consider this example. There is no equivalent of caveat emptore in Islamic law. Islamic law insists on fairness and honesty from both parties in their dealings. The common law on disclosure of material information (e.g. as in Hedley Byrne) does not go so far as the Islamic law principle that ‘a seller must disclose the defects of the good he is selling’.
59
With regard to Sabah, section 3(3)(i) as it relates to habeas corpus, mandamus, prohibition, certiorari or injunction should be repealed. Habeas corpus involves criminal procedure. The laws on the subject applicable to Peninsular Malaysia should be extended to Sabah (and Sarawak) where necessary to provide for standardization. Our comment in point 8 should apply equally to Sarawak in respect of section 3(3)(ii).
Sections 5 and 6 of the Civil Law Act 1956
Section 5 of the Civil Law Act provides:
Application of English law in commercial matters
(2) In all questions or issues which arise or which have to be decided in the States 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.
Section 5 is the statutory authority for the reception of English law specifically in commercial matters. In essence, section 5(1) provides that in the absence of any local written law, English commercial law shall be applicable in Peninsular Malaysia with the exception of Penang and Malacca, as administered in England on 7 April 1956. On the other hand, as seen in section 5(2), in the states of Penang, Malacca, Sabah and Sarawak the English commercial law applicable will be the same as that administered in England in the like case at the corresponding period, in the absence of any local written law. In the latter subsection, the cut-off date has been removed in order to streamline the decisions of the Courts in the Straits Settlements with that of the English courts. It can also be observed that section 5 uses the expression ‘the law to be administered’, which allows the application of the whole of English commercial law, and in that way it is much broader than section 3, which points to the specific sources of English law that may be used.
Nevertheless, section 5, like section 3, allows for the application of English commercial law only in the absence of any written law passed by the Malaysian Parliament. Therefore the reliance on this section has been significantly reduced since the Malaysian Parliament has passed laws on most of the commercial matters listed in the section. 60 This has been that case in other area of law too. In fact, it could be said that a current trend which seems to gain more and more prominence in Malaysia is codification of law in legislation (Tun Zaki, 2012: 10). A large portion of the common law has been imported into Malaysian legal system, not by case law, but by codification in legislation, so much so that at present the volumes of statute law have become dominant compared to what we call judge-made law (Tun Zaki, 2012: 10). Therefore one may say that, because of this, section 5 will continue to be less and less relevant till one day it becomes extinct. However, one should not be led to believe that courts only refer to English law when there is absence of a written law on the matter. The statutory provisions in legislation often require a very skilful and innovative interpretation to suit different situations. Judges are trained to interpret the statutory provisions and in doing so they are guided by, inter alia, judicial principles governing statutory interpretation which have been developed through common law cases (Nabi Baksh, 2014: 502–543). Therefore, even if all commercial laws in Malaysia become codified in legislation, the reference to English court decisions may still be necessary in the course of interpretation of the statutory provisions.
It can also be noted that the ‘local circumstances’ and ‘local inhabitants’ proviso stated in section 3 is not to be found in section 5. Even so, in practice, section 5 is interpreted and read by the courts as if the proviso exists (Hamzah, 2009: 136). Henceforth, it needs to be observed that the methodology by which English commercial law is to be applied by the Malaysian courts as per section 5 is the same as that applicable to section 3.
Section 6 of the Civil Law Act 1956 states:
Immovable property
This section has been passed to prevent the application of English law to land matters. The English land laws ‘relating to the tenure or conveyance or assurance of or succession to any immovable property or any estate, right or interest therein’ do not apply to Malaysia. Malaysia follows the Torrens system (i.e. the Australian system of land administration). The central theme of the Torrens system is the registration of land titles which is perceived as more superior to the English deeds system. 61 The Torrens system has been applied in all states of Malaysia, except Sabah, via the National Land Code. 62 There has been an ongoing debate as to whether English rules of equity are applicable under the Torrens system provided by the National Land Code 1965. The debate is fed by the fact that the Land Code and section 6 of the Civil Law Act 1956 are silent on the application of the rules of equity in land matters. 63
The development of Malaysian common law
Many judges have emphasized the need for Malaysian courts to start developing the Malaysian common law just as some other common law countries have done since they obtained their independence. For example, in the High Court case of Syarikat Batu Sinar Sdn Bhd v UMBC Finance Bhd,
64
the learned Peh Swee Chin J reminded the Malaysian judges of the need to develop the Malaysian common law by saying: 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’.
65
The danger of blindly following English or other Commonwealth judicial decisions without having any regard to the local circumstances and inhabitants was also highlighted by Gopal Sri Ram JCA (as he then was) in Tengku Abdullah ibni Sultan Abu Bakar v Mohd Latiff bin Shah Mohd.
66
Since the issue in the case was in relation to undue influence, the learned judge observed that the courts must apply statutory law (i.e. section 16(1) of the Malaysian Contracts Act 1950) and since the statutory definition of undue influence is not different from the English doctrine of undue influence then the English and Commonwealth judicial decisions could be a very useful guide on how the Malaysian court ought to interpret section 16. However, as the learned judge pointed out, decisions in Malaysian cases should never be made solely by reference to English or Commonwealth judicial decisions without taking into consideration the local circumstances and inhabitants. This is what he said: …We are of the view that our courts, when faced with a case of undue influence in the sphere of the law of contract, must primarily hearken to the words which Parliament has used to introduce the doctrine into our jurisprudence. While we may refer to the decisions of courts of those jurisdictions where the law is akin to our own, we must therefore ultimately have regard to the words of our own statute. In our judgment, it would be quite wrong, and indeed wholly out of place, to decide a Malaysian case solely by reference to English or other Commonwealth decisions. Indeed, the more recent decisions of the English courts demonstrate that their concept of the doctrine and the relationships to which it may be extended do not accord to the standards of our society…Our society, on the other hand, has an entirely different set of moral standards. It would therefore be quite wrong to blindly follow all foreign decisions if the result would facilitate moral decadence within our social structure.
67
It seems that most of the Malaysian legal fraternity agrees that there is a dire need for Malaysian common law, but the disagreement is over the question of how to develop it.
We argue, and many would share our views, that the existing legal framework already allows for the development of the Malaysian common law. In fact, the Malaysian courts have been developing Malaysian common law in the past and are continuing to do so. Any English law that has been accepted by the Malaysian court in toto or in part crystallizes into Malaysian common law. There is nothing wrong with accepting the English law in toto, but that has to be done in compliance with section 3(1) of the Civil Law Act 1956. If there is lacuna in the Malaysian law, then the court may apply English law in toto provided all the hurdles in section 3(1) are satisfied. In this way, the English law crystallizes into a Malaysian common law through the statutory doors of section 3(1). This was done by judges in many cases in the past. For instance, in 2001, Gopal Sri Ram JCA, in the Court of Appeal case of Saad bin Marwi v Chan Hwan Hua & Anor,
68
applied the English law doctrine of ‘inequality of bargaining power’ in toto in the absence of any other written law on unfair contract terms in Malaysia at that time.
69
The judge observed the following: This section applies because no other provision of written law has been enacted upon the subject of inequality of bargaining power in contracts. S. 16 of the Contracts Act to which I have already referred deals with quite a different and much narrower doctrine. I do not therefore see any difficulty in receiving the well-established English doctrine of unconscionable bargains into our jurisprudence through the statutory doors of s. 3(1)(a).
70
It is worth mentioning that the liberal interpretation of section 3(1) and use of the English doctrine of inequality of bargaining power in Saad caught the attention of the Court of Appeal one year later in the case of American International Assurance Co Ltd v Koh Yen Bee.
71
The Court of Appeal expressed doubts as to whether the doctrine had passed all the hurdles in section 3(1) in order to become part of Malaysian law. In addition, to allow judges to apply the doctrine arbitrarily whenever they felt appropriate may lead to uncertainty in the law. The Court of Appeal judge Abdul Hamid Mohamad JCA (as he then was) said the following: We do not wish to enter into an argument whether the doctrine of inequality of bargaining power or unconscionable contract may be imported to be part of our law. However, we must say that we have some doubts about it for the following reasons. First is the specific provision of s 14 of the Contracts Act 1950 which only recognizes coercion, undue influence, fraud, misrepresentation and mistake as factors that affect free consent. Secondly, the restrictive wording of s 3(1) of the Civil Law Act 1956, in particular, the opening words of that subsection, the cut-off date and the proviso thereto. Thirdly, the fact that the court by introducing such principles is in effect ‘legislating’ on substantive law with retrospective effect. Fourthly, the uncertainty of the law that it may cause.
72
Be that as it may, it can surely be said that the Malaysian courts are empowered by section 3(1) to develop the Malaysian common law. In fact, it has been argued that the Federal Court, as the highest court in the country, has the responsibility to develop the Malaysian common law by taking into consideration local circumstances and inhabitants (Alsagoff, 2010: 26). Thus the development of the Malaysian common law must be done in the manner prescribed by section 3. Section 3 is a complex section, which provides the concrete methodology that ought to be followed by the courts when faced with a lacuna in the law. The correct methodology has been explained by Dato’ Abdul Hamid Mohamed J (as he then was) in the Court of Appeal case of Nepline Sdn. Bhd v Jones Lang Wootton,
73
where his Honour said: In my view the approach that the Court should take is first to determine whether there is any written law in force in Malaysia. If there is, the Court need not look anywhere else. If there is none, then the Court should determine what is the common law of, and the rules of equity as administered in, England on 7 April 1956. Having done that the Court should consider whether ‘local circumstances’ and ‘local inhabitants’ permit its application, as such. If it is ‘permissible’ the Court should apply it. If not, I am of the view that, the Court is free to reject it totally or adopt any part which is ‘permissible’, with or without qualification. Where the Court rejects it totally or in part, then there being no written law in force in Malaysia, the Court is free to formulate Malaysia’s own common law. In so doing, the Court is at liberty to look at any source of law, local or otherwise, be it common law of, or the rules of equity as administered in England after 7 April 1956, principles of common law in other countries, Islamic law of common application or common customs of the people of Malaysia. Under the provision of s. 3 of the Civil Law Act, 1956, I think, that it is the way the Malaysian common law should develop.
74
Therefore, in case of a lacuna in the law, it becomes mandatory for the court to refer to English law which needs to be able to pass through three statutory hurdles as described in section 3 before it can be applied in Malaysia, namely: ‘cut-off dates’, ‘local circumstances’ and ‘local inhabitants’. If the English law passes these three hurdles, then it shall be applied by the court. However, if it fails to comply with any of these hurdles, then the court may either adopt part of it with or without qualification or completely reject it. In either situation (i.e. whether the court rejects English law completely or in part and there being no written law in Malaysia), the court is allowed to develop the Malaysian common law. Dato’ Abdul Hamid J in Nepline went further, and said that in developing the Malaysian common law the court then is free to refer to ‘any source of law, local or otherwise, be it England after 7 April 1956, principles of common law in other countries, Islamic law of common application or common customs of the people of Malaysia’. 75
All in all, the answer to the question ‘Can Malaysian courts develop a Malaysian common law within the legal framework propounded by section 3 of the Civil Law Act 1956?’ is definitely ‘Yes’. Section 3 in its current form is not an obstacle for the development of the Malaysian common law. On the contrary, it can be argued that section 3 encourages the development of the Malaysian common law through the proviso that states: ‘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.’ This proviso shows that the drafters of section 3 never expected Malaysian courts to accept all English laws in toto irrespective of local circumstances and inhabitants. The proviso enables the creation of a Malaysian common law by requiring the court to adjust the English law to local circumstances and inhabitants. 76
Conclusion
In conclusion, the debate on whether Malaysia needs to sustain strong links with English law is likely to continue. Irrespective of which side of the argument one may take, the truth is that Malaysia’s links with English law have contributed tremendously towards the development of the plural Malaysian legal system, which is highly regarded in the region. We submit that the abolition of section 3 of the Civil Law Act 1956, or the Act as a whole, as some propose, is not necessary. The argument that the Act stifles the development of the Malaysian common law is untenable. The existing framework within the Act allows, if not promotes, the development of the Malaysian common law. In doing so, the judges are allowed to refer to other sources of law, including Islamic law, provided that the prescribed methodology and procedure under section 3 is followed. In fact, we do suggest certain amendments to section 3 which would enable smoother reference to Islamic law principles in civil matters. The judges are not only allowed but in fact they are encouraged to draw an inspiration from the wide spectrum of Islamic civil laws to fill in the lacunas in the law whenever the need arises. The precedent for that can be found in Nepline, as discussed earlier.