reception of law of equity PDF

Preview

Summary

LAW 501 (EQUITY) ASSIGNMENT 1 TOPIC: HISTORICAL DEVELOPMENT AND RECEPTION OF PRINCIPLE OF EQUITY IN MALAYSIA The law of Malaysia is mainly based on the common law legal system which means that English law forms part of the laws of Malaysia. In Article 160 of the Federal Constitution states the defin...

Description

LAW 501 (EQUITY) ASSIGNMENT 1 TOPIC: HISTORICAL DEVELOPMENT AND RECEPTION OF PRINCIPLE OF EQUITY IN MALAYSIA

The law of Malaysia is mainly based on the common law legal system which 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 which are the Court of Exchequer, Court of Common Pleas and Court of King’s Bench which is 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. On the other hand, equity in a broad sense means natural justice or 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. Equity had 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 was considered morally undeserving. The equitable remedies offered in the law of equity were injunction, specific performance, rescission and rectification, and trust concept which is the major contributions of equity There used to be some differences between the English common law and equity. Common law was regarded as technical and rigid but equity was not. Common law court emphasizes on formalities meanwhile in equity, Chancellor decided the case based on his conscience and the inner voice within him. Equity was the moral element and the ‘moral curtain’ of the law. Equity always followed the law. The elements of equity are natural justice, good conscience and fairness. During those day, the person who had the power and discretion in the field of equity was the King of England. Any injustice that could not be redressed by the common law courts was brought to the King for justice. Initially, there were only a few of such cases, but slowly the number grew and the King’s power was then delegated to the Lord-Chancellor of England. The Lord-Chancellor was a religious person and religion represented everything honest and moral. He was well-versed in legal matters. The court of equity presided by the Lord Chancellor was called a Chancery Court. Meanwhile, the common law was administered by the courts of King’s Bench, Common Pleas and Exchequer. Initially, there was no conflict between the equity and common law. Early equity in England was performed at the discretion of the medival chancellor in relation to the rigidity of common law at that time. It was his power to issue royal writs which power came to be exercised in a discretionary manner based on notions of conscience and justice. The Chancellor had the power to act against individual, and enforces his orders against

them by imprisonment. This discretionary used of power was the foundation of equity. It was stated that during the 15th century, the Chancellor’s office took as many features of a court thus the Court of Chancery was born. The Lord-Chancellor administered equity according to his discretion and not according to stare decisis. It was said that ‘equity followed the size of the Lord-Chancellors foot’. Theoretically, the Chancellor exercised his power without altering the substance of common law and practically, his jurisdiction significantly affected the exercise of common law rights. Equity was administered on an ad hoc basis until 1873. Slowly, close to 16 century, the conflict between the common law and equity grew. Firstly, conflict in relation to the jurisdiction. For example in the case of Walsh v Lonsdale, it was decided that where there was conflict between the common law and equity, equity shall prevail. In this case, a person who has let into possession of land under an invalid instrument was relieved by treating the instrument as an agreement for a lease. The doctrine of Walsh v Lonsdale is inapplicable in Malaysia except in a case of fraud. Another example of conflict arises when the Court of Chancery is able to provide remedies which are not available in the common law court. Today, the two concepts which are common law and equity could be considered as being fused. In England, it became important to combine both law and equity. With that objective, the courts in England fused the two system pursuant to the Court of Judicature Acts of 1873 and 1875. The Act created a Supreme Court of Judicature with a High Court divided into divisions, and each division exercised both legal and equitable jurisdiction and thereafter the High Court administered the same. Lord Diplock suggested in the case of United Scientific Holdings v Burnley B.C., that since 1875, law and equity shall themselves be considered as being fused, and that it is no longer meaningful to speak ‘as through the rules of equity still a separate identity’. 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 are the statutory authority for the application of English law in Malaysia today. The extent of the application of English law is prescribed in the following three sections which are Section 3, Section 5 and Section 6 of Civil Law Act. 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 in one hand and subsection (1)(a) on the other hand perpetuated a controversy which earlier arose from section 3(1) CLO 1956 was that the wording is the same as section 3(1)(a) CLA 1956. However there are two conflicting views regarding on whether the English statutes of general application are applicable in West Malaysia. Professor Bartholomew, writing on section 3(1) CLO 1956, holds that such English statutes are applicable. On the other hand, Joseph Chia, in discussing the corresponding provision in the CLA 1956, expresses a contrary opinion. Judicial opinion supports the Joseph Chia’s view. In order to apply the English law in the Malaysia, there are some conditions that should be met. First of all, it can only be applied under the absence of local legislation. The same qualification exists in section 3(1) Civil Law Ordinance 1956 as well as section 2 of 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 is to fill the lacunae 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. 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] should be applied under section 3 of Civil Law Act 1956. The decision was followed by the Court of Appeal in Murray Hiebert v Chandra Sri Ram [1999]. 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’. In Leong Bee v ling Nam Rubber Works [1970], 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], 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.” 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. 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 fit 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), and 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. 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. 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’ and 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". The reception of English law and rules of equity in Malaysia happened by two ways which are statutory reception and judicial reception. Reception technically means the extension

of English legal principle to the ceded or conquered territories. However, the law in existence at the time of its acquisition continues in force until changed by the Sovereign. Before the formation of the Federation of Malaya which is now called Malaysia, Tanah Melayu was divided into three separate entities which are the Strait Settlements, the Federated Malay States and Unfederated Malay States. The common law and equity had been introduced in the New Strait Settlements through the three Royal Charter of Justice. Royal Charter of Justice refers to the permission granted by British crown for a statutory reception which gives power to the East India Co. to operate a competent English legal system and establish reception of English common law. The three charter of justice are Royal Charter of Justice 1806 that was established in Penang, Second Charter of Justice 1826 in Malacca and Singapore and the Third Charter of Justice that was granted in 1855. The first royal charter of justice had been introduced in Penang on 1806. It was placed under the administration of the East India Company. Under the Charter, the Court of Judicature of Prince of Wales Island was established which has the jurisdiction to hear the civil and criminal cases. It is a very important event in Malaysian legal history as it marks the starting of the reception of English law in the Malay states. The main objective of the charter was to protect the locals from oppression and to upheld justice. Thus, English principles is then applied and become lex loci of the island. For example in the case of Fatimah v Logan, the court describe Penang as a desert and uninhabited island and without any fixed legal institution. Since the Sultan of Kedah had never exercise his power on Penang, therefore the territory is considered as terra nullius and without a lex loci. It was held that by the charter of 1807, the law of England was introduced into Penang and became the law of the land. Next, the Second Charter of Justice was granted in 1826 where the English common law was extended to Malacca and Singapore while Penang receives English law for second time. The Strait Settlements were annexed as on single administration and it have same jurisdiction on Court of Judicature as former charter had done. The charter established that all civil and criminal matters to be exercised respective States. The law that shall apply is English law as administered in England on November 1826, and the jurisdiction was similar to the charter granted in 1807 and the application of law subject to local circumstances. Judicature of Prince of Wales, Malacca and Singapore were also established. In stroke of a pen, Strait Settlements receives a large dose of English law. Besides, a Recorder and lay judges were appointed. A recorder is a professional judge and assisted by lay judges, an ordinary person. A Recorder visited Singapore and Malacca twice a year. The Third Royale Charter of Justice was granted on 12 August 1855 to reorganize the structure in Straits Settlement’s. The third charter was granted because the British had problem in administering justice even though there was second charter in 1826. There was only one professional judge, the Recorder assisted by lay judges and who visited Singapore and Malacca twice a year and this cause an increase in number of cases waiting to be heard. This charter being granted in order to re-organized the court system and overcome the problems in administering justice. An additional Recorder was appointed for Penang and Singapore. Besides, there was also an appointment of Registrar. In 1867, there was a further development on the re-organization of the court system when the transfer of administration of Strait Settlements from India to Colonial

Office in London. The Recorder of Singapore became Chief Justice of Strait Settlements and the Recorder of Penang became Judge of Penang. Besides, there was an appointment of AG and SG. Next is the statutory reception of English law in the Federated Malay States which consisted of Perak, Pahang, Selangor and Negeri Sembilan. British extend their power in Federated Malay States (FMS) through various treaties made with ruler of the states. For example, Pangkor Treaty. By 1888, the British managed to control Perak, Selangor, Pahang and Negeri Sembilan. The British in Federated Malay States introduced a system called “Resident System”. The ruler of the state will receive a British Resident where the ruler acts on advice of Resident without touching religion and Malay custom. The British claimed that they were only protectorate of the Malay States. English law and equity were introduced in the Federated Malay States by enacted several laws and decision of judges in court. Civil Law Enactment 1937 were introduced. This enactment extended to Unfederated Malay States (UFMS) by application of Civil Law Extension Ordinance 1951 where Advisory System was introduced. In this Residential system, the actual government was in the hand of British Residents which were responsible to the Governor of Straits Settlements. However, this system gives some effects specifically on the adoption of English law on the Malay states. First effect is in term of the reception of the English law to the Federated Malay States. When the British residential system was applied and operative in the Malay states, the Sultan had lost his power. Residents possesses power in the state administration except in Islam and Malay adat. Under the Residential System, English law had been used to govern the matters in the administration. As a result, the Residential System had open the door for the reception English law in these four states. Besides that, th...