LAW 501 ASSIGNMENT

PREPARED BY:
AINUR SYUHADA BINTI JEFRI 2016250708
NUR FAIZEEN BINTI KAMARUDDIN 2016239616
FARAH SUHAILA BINTI AHMAD ROSHDAN 2016239808

PREPARED FOR:
MADAM FAZLIN MOHAMED ZAIN

FACULTY OF LAW

2017
The Reception of Equity in Malaysia

History and Development of Equity

The period from the Norman Conquest to the reign of Henry III in the 13th century
witnessed the birth and rapid growth of the common law, which was administered by the
Kings justices and in the common law courts.

Although common law continued to develop, its defects prevented it from

developing fast enough to do justice in all cases. For instance, in the writ system which
incurred many problems based on the no writ, no remedy. A writ is a document that sets
out the details of a claim. This is where the problem comes as the system was too formal,
and beset with technicalities that a plaintiff with a cause of action which did not fit one of
the existing writs would have no remedy. Only claims which fit into an existing remedy
would be allowed. Besides that, The Provisions of Oxford 1258 forbade the issuance of
new writs without the consent of the King in Council, which restrained the Chancellor
from issuing new types of writ of his own initiative. Among other problems are that the
writs were expensive and not everyone could afford it.

Aside from that, the jury system were one of the defects of the common law
where the juries were easily intimidated or bribed by the defendants and the rich
defendants were the most corrupt. Inadequate remedy was also one of the defects as
damages were the only relief available, and it proved to be inadequate. To illustrate,
when a plaintiff was often unable to obtain a remedy in the common law courts even
when they should have had one for him, owing to the strength of the defendant, who
would defy the court or intimidate the jury.

The lack of common law system can be seen in formalities that were practiced.
Common law paid to much attention to formalities, and was too concerned with
procedures. Aside from formalities being one of the defects of the common law system,
the doctrine of stare decisis also proved the be one the defects as well. It is clearly seen
when there is a strict application of the doctrine and caused common law to become too
rigid. Judges were also restricted from expanding their knowledge. This leads to the
common law that lacks in many matters on the jurisdiction.

These defects in the common law cause injustice to the aggrieved party, which
then lead them to make a petition to the King. However, the petitions were often referred
to the Lord Chancellor and were heard in his office. In 1474, the Court of Chancery
headed by the Chancellor was established, where equity was administered according to
the Chancellors discretion. The Chancellor was a priest who did not possess a legal
background, thus his decisions was based on beliefs, ideas and conscience.

Therefore, it is contended that equity was developed due to the defects existed in
the common law system. Establishment of equity caused the writ system to be abolished
by the Chancellor to overcome the unnecessary formalities. Next, the jury system was
abolished. Only the Chancellor would hear the disputes between the parties on both sides.
Besides, equity provides more remedies, not only restricted to monetary compensation as
in common law system. Lastly, instead of following the rigidity in the common law
system, by following the judicial precedence, the Chancellor made decisions based on his
conscience.

Therefore it can be said that equity is a discretionary system of justice. Equitable

remedy may not be granted to the aggrieved party if he was considered as morally
underserving. Common law allowed damages to be the only remedy available, equity
introduced few more remedy such as injunction and specific performance. This is the
biggest contribution of equity to supplement the rigidity of the common law.

In Malaysia, English common law and equity forms part of the law. In Article 160
of the Federal Constitution, it defines law and includes the common law in so far as it is
in operation in the Federation or any part thereof in its definition, which concerns the
extent to which the English law is applicable in Malaysia.

There are two sources of law in Malaysia, which are written laws and unwritten
law. Written laws are the law enacted by the legislative, namely Parliament and State
Legislative Assembly. The written laws are provided in the statutes that can be known as
Acts, Ordinances and Enactments. Besides, the written law can also be in the form of by
laws and regulations passed by the minister.

Unwritten law refer to laws that are not enacted by the legislative. It consists of
judicial precedent, which is decisions of superior courts bind the lower courts, customary
law comprises of local custom which have been accepted as law by courts and lastly, the
application of the principles of English common law and equity.
Statutory Reception

Aside from judiciary reception, the reception of English law and rules of equity in
Malaysia also happened by statutory reception. The meaning of reception is the adoption
of a system of law that has been formulated in another state or in a previous historical era
by adapting it to the conditions of a particular country but the law in existence at the time
of its acquisition continues in force until changed by a Sovereign.

The first English statutory that was introduced by the British was the First Royal
Charter 1806 in Penang. The charter established the Court of Judicature of Penang. The
Court of Judicature has a wide range of jurisdiction to cover civil and criminal cases as
well as religious matters. The introduction of the Charter had brought in the existing law
of England also, except in some cases where it was modified by expressed provision and
had voided any law that previously existed. The Charter of Justice was applied
retrospectively to civil injuries so as to be redressed according to English Law and the
main objective of the charter was to protect the locals from oppression and injustice.
Therefore, to fit the circumstances, it must be modified in its application as regards to be
taken to be the law of Penang. The Second Royal Charter 1826 was then introduced to
extend the provisions of the First Royal Justice to cover Malacca and Singapore. The
Charter introduced the General law of England into the Straits Settlements i.e Penang,
Malacca and Singapore. A new Court of Judicature was established. Lastly, the Third
Royale Charter 1855 was introduced to restructure the administration of justice and the
most notable development was the establishment of the new court known as the
Supreme Court of the Straits Settlements.

As for Federated Malay States (FMS), these states were not under British
territory. Britishs influence came through treaties with ruler of the states. The first treaty
made was Pangkor Treaty and as a result a system called Resident System was
introduced by the British. The residential system is where the ruler merely acted on
advice of the British administration except on matters relating to religion and Malay
custom. In Federated Malay States, English law and equity introduced by enacted several
laws which includes Penal Code, Evidence Ordinance and Contract Ordinance and
decision of judges in court which are principles of tort and equity. Aside from that, Civil
Law Enactment 1937 were introduced. Advisory System was introduced when this
enactment extended to Unfederated Malay States(UFMS) by application of Civil Law
Extension Ordinance 1951.

When it came to North Borneo and Sarawak, 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

In 1928, the formal reception of English law took place in Sarawak when the Law
of Sarawak Ordinance provided the statutory authority on the source of law to be
applied by courts. It stated that the Law of England, as long as it was not modified by
Brooke and so far as it was applicable having regard to native customs, was to be the law
of Sarawak.
 As for North Borneo(Sabah), the reception of English law came through the Civil
Law Ordinance 1938. The provisions were somewhat substantially similar to those of
the Sarawak Ordinance but the modifications to English law by local customary laws
were what makes the major difference between these two ordinances. These can be seen
only to the extent that such customary laws were not 'inhumane, unconscionable or
contrary to public policy'.

Therefore, both North Borneo Civil Law Ordinance 1938 and Law of Sarawak
Ordinance 1928 introduced to allow reception of English law and rules of equity in
North Borneo and Sarawak on matters of administration or judiciary.

Civil Law Ordinance was introduced to whole Federated Malaya which included
Penang and Malacca in 1956. Civil Law Ordinance 1956 was then changed to Civil Law
Act 1956 after the formation of Malaysia. And lastly, Civil Law Act (Amendment)
1972 then extended the application of Civil Law Act 1956 to Sabah and Sarawak. Section
3 of the Civil Law 1956 is the statutory authority that allowed the application of English
Law of equity in Malaysia.

Section 3(1) provides 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:

. a) 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;

. 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 or in force in England on the
12th day of December 1949, subject to however to subsection 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.

Based on the above section, it is clear that rules of equity of English Law can be
applied in West Malaysia, Sabah and Sarawak, however, it is subjected to few provisions.

Firstly, there must be a lacunae in the local legislation. Secondly, the application
of rules of equity in Malaysia is also subjected to the cut-off dates; 7 April 1956 for West
Malaysia, 1 December 1951 for Sabah and 12 December 1949 for Sarawak. However, the

Malaysian court may also apply rules of equity of English Law developed after such
dates, just that it is not binding, but only persuasive. Lastly, it is applicable to the extent
permitted by local circumstances and inhabitants and subject to qualifications
necessitated by local circumstances.
Judicial Reception

During the time of British administration, the courts in Malaysia have independently
applying equitable principles in their jurisdiction. The formation of the Federated Malay
States (FMS) showed that the Malay Rulers seems already started to accept the British
intervention into the Malay states. The courts in their own opinion had the widest
possible jurisdiction to do justice based on the principle of natural justice and also equity.
The higher rank of the judiciary were mostly filled by English-trained judges who
naturally will apply all the English law in their judgment if there is a lack to find a local
law to apply into a new situations. This can be seen in the case of Motor Emporium v
Arumugam (1933) MLJ 276. It is a case on execution of judgment through prohibition
order. Terrel CJ said,

The courts of the Federated Malay State have on many occasions acted on
equitable principles not because English rule to Equity applies, but because such rules
happen to conform to the principles of natural justice

The same goes to in the case of Government of Perak v Adam (1914) where it is
a tort case that involved unlawful interference of land belonging to the plaintiff.
Woodward JC said, In dealing with cases of torts, this court has always turn for
guidance, as a fundamental principle to English decisions. The judge should have
applied Perak law instead of English law as because this case was happened in the state
of Perak and the judgment must follow the state law.

This judicial reception can be supported by earlier case of Fatimah v Logan

(1871) Ky. 255, which the facts of the case is about a Muslim who died in Penang and
leaving behind him is a will. The issue before the court was, what law must be applied to
determine the validity of the will. This case was recognized the used of English law and
rules of equity in Malaysia as the application of English law as lex loci in Penang Island.
It was held that, By the Charter of Justice 1807, the law of England was introduced into
Penang and became the law of the lalnd.

Furthermore, in other case regarding judicial reception of English law and equity
is in the case of Choa Choon Neoh v Spottiswoode (1869) 1 Ky. 216. In this case the
court actually ignored the Chinese customary law on the making of a devise giving
property for charity. Maxwell CJ 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 was imported here
and as in 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 the law is subject in its applications
to various alien races established here, to such modifications as are necessary to prevent
it from operating unjustly and oppressively on them. Thus, in questions of marriage and
divorce, it would be impossible to apply to our Mohammedans, Hindoos and Buddhists,
without the most absurd and intolerable consequences and it is therefore held inapplicable
to them.

Hence, in this case the English law was imported here. It was adapted and modify
as necessary to suit the local custom in order to prevent it operate unjustly and
oppressively.

In short, it can be said that many of common law cases will apply English law or
referring to the state law itself if there is lacuna in any prohibition. After the cut off dates,
most probably the cases will follow the preferred law in Malaysia and no longer common
law and rules of equity will be applied.

Because of British intervention in the Malaysian legal system, the Malaysian

court not only has provided remedy provided under English common law, which is
damages, but also several remedies under the rules of equity such as specific
performance, injunction and quantum meruit. Equitable remedies are defined in the
Oxford Law Dictionary as: remedies granted by equity to redress wrong

Remedy of specific performance in Malaysia was governed by Specific Relief Act

1950. Specific performance provide relief for an aggrieve party to force a defaulting party
to perform his obligation under the promise. The court has the discretionary power to
compel a contracting party to perform his or her obligation under the contract. In MMI
Industries Sdn Bhd v Let Sin Industries Sdn Bhd [2010] 1 CLJ 36, Abdul Malik Ishak,
JCA said, An order for specific performance has the effect of ordering a contracting
party to do what he has undertaken to do. It is an equitable remedy. It cannot be asked for
as of right. It is certainly a discretionary remedy but the discretion cannot be exercised
arbitrarily or capriciously.

Section 4(b) and (c) of Specific Relief Act 1950 provided that a specific relief is
given by ordering a party to do the very act which he is under the obligation to do, and by
preventing a party form an act which he is under an obligation not to do. However,
section 11 of SRA stipulates that the claim of specific performance may not guaranteed to
be performed. Being an equitable remedy, the specific performance will depend on a
decree of court. As provided in Mesuntung Property Sdn Bhd v Kimlin Housing
Development Sdn Bhd [2014] 7 CLJ, David Wong Dak Wah JCA in the case held that,
the appellants claim of specific performance is not frivolous and baseless claim. Neither
is it a futile claim in that it is bound to fail. Whether it fails or not should be determine by
courts.

Injunction, which is also an equitable remedy is provided under section 50 of

Specific Relief Act 1950. It classifies injunction as either temporary or perpetual
injunction. Injunction can be in the form of mandatory and prohibitory as provided under
section 53 and section 55 respectively. As in the case of Tenaga Nasional Bhd v
Dolomite Industrial Park Sdn Bhd, the appellant had trespassed the respondents land by
erecting a pylon on the land. A mandatory injunction however, would have resulted in the
disruption of electricity supply in Peninsular Malaysia. It was held that in an application
for an injunction, whether prohibitory or mandatory against the acts of a public authority,
public interest is a relevant consideration. The court considered public interest to have
outweighed the plaintiffs interest.

In the case of Chettiar v Chettiar[1962], a father registered shares in the name of

his children and transferred the beneficial interest in those shares to them. Years later, the
father had treated the shares as his own. It was found that the father made the transfer for
fraudulent purpose, which is to deceive the public administration. It was held that the
court, as referring to Lord Mansfield in Holman v Johnson, no court will lend its aid to a
man who founds his cause of action upon an immoral or illegal act. The court applied
the maxim of rules of equity the one who seeks for equity must come with clean hands
in making the decision.

In the case of Mohamed Syed Fathima d/o Shahul Hammed & Ors v Syed Aliyar,
the plaintiff and defendant are partners and co-owners of restaurant and staying together
on the same floor, they obtained order against trespassers. The plaintiff was asked to pay
damages to defendant for discontinued injunctive orders against the defendant. The
plaintiff appealed against the damages and relied on section 343 of the National Land
Code that as co-owners, the defendant has no right for damages. The Court held that
since the plaintiff relied on section 343 therefore should realized that he also has no right
to obtain injunction against the defendant. The Court then applied the rule of equity on
the maxims of equity which is that he who seeks equity must do equity. This means that a
plaintiff who seeks equitable relief must be prepared to act fairly towards his opponent.

Weakness On The Application Of Rule Of Equity In Malaysia

Since Malaysia already obtained their independence, many judges have point out the
need for Malaysian courts to start developing the Malaysian common law just as some
other common law countries have done. For instance in the case of Syarikat Batu Sinar
Sdn Bhd v UMBC Finance Bhd, 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 have been
doing, by direction our minds to the local circumstances or local inhabitants.

While in the case of Tengku Abdullah ibni Sultan Abu Bakar v Mohd Latiff
bin Shah Mohd, Gopal Sri Ram JCA highlighted about the weakness of blindly
following English or Commonwealth judicial decisions without having any regard to the
local circumstances and inhabitants. Since the issue in the case was related with undue
influence, the learned judge recognized that the courts must apply the statutory law, for
example in section 16(1) of Malaysian Contracts Act 1950. Since the statutory definition
of undue influence did not make any difference from the English doctrine of undue
influence, then the English and Commonwealth judicial decisions could be a very proper
guide for the Malaysian courts ought to interpret section 16. However, as the learned
judge already had mentioned that the decisions of Malaysian case should never be
completely rely upon by the reference of English and Commonwealth judicial decisions
without taking into consideration the local circumstances and inhabitants.

The British have left a big impact on the Malaysian legal system. It is time for our
legal system to develop our own Malaysian common law, because in the cases where the
local circumstances are different than in English community, English law is not suitable
to be applied in Malaysia. As for the process of developing it, the court may refer to
principles of common law in other countries, Islamic law of common application or
customs of the people of Malaysia. We are in the opinion that with this development,
there will be a convergence of the legal systems rather than domination by one over
another.

REFERENCE
1.Position of english law in the Malay states and its effect to the local law. (2016, March
27). Retrieved from https://studymoose.com/position-of-english-law-in-the-
malay- states-and-its-effect-to-the-local-law-essay

2.Reception of equity in Malaysia. (2015, Feb. 25). Retrieved from

https://www.slideshare.net/fyqasanchez/reception-of-equity-in-malaysia week-2

3. Reception of Equity in Malaysia

Lecture slides by Dr.Zuraidah Haji Ali

4. Shan, P. (n.d.). RECEPTION OF ENGLISH LAW IN MALAY STATES. Retrieved

October 23, 2017, from
http://www.academia.edu/5217219/RECEPTION_OF_ENGLISH_LAW_IN_MALAY_S
TATES

5.Abdul Hamid Mohamad, Tun & Trakic, Adnan. (2015). The reception of English law in
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6.Hamzah, A. (2009). A first look at the Malaysian legal system. Shah Alam, Selangor
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7.http://www.worldresearchlibrary.org/up_proc/pdf/128-145199843341-46.pdf