155

CHAPTER CURRENT APPLICATION OF ENGLISH

LAW: SECTIONS 3, 5 AND 6 OF THE
09 CIVIL LAW ACT 19561

9.1 INTRODUCTION
Malaysia is a common law country with a distinct common
law-based legal system. The Malaysian legal system comprises various
sources such as: Federal and State Constitutions, Legislations, Judicial
decisions, English law, Islamic law, and Customary law. English law
includes English common law, rules of equity and certain legislations.
Although the English law, which is entrenched in Malaysian
legislations and judicial decisions, is a predominant source of
Malaysian law, other sources of law, such as, Islamic law and
Customary laws, have also played a significant role in shaping the
Malaysian legal system to be what it is today. There was a time when
English and Islamic laws conflicted especially during the British
occupation.2 The conflict of laws is less evident today due to active
legislative interventions and strict judicial observance of jurisdictional
boundaries.3 However, the conflict between the laws has not been
eliminated and it occasionally occurs before the Civil and Syariah
courts of the country.4

1 This chapter is contributed by Tun Abdul Hamid Mohamad and Dr. Adnan Trakic.
2 See for example, the case of In the Goods of Abdullah [1835] 2 Ky Ec 8; R v. Willans [1858]
3 Ky 16; and Fatimah v. Logan [1871] 1 Ky 255.
3 Article 121(1A) of the Federal Constitution provides: ‘The courts referred to in Clause (1)
shall have no jurisdiction in respect of any matter within the jurisdiction of the Syariah
courts.’ This constitutional amendment was made in order to stop the Civil courts from
interfering in the matters which are under the jurisdiction of Syariah courts.
4 The latest example is the case of S. Deepa in which the husband who converted to Islam
obtained custodial rights over two children in the Syariah court while the non-Muslim
wife obtained a custodial right in the civil High Court. This case immobilised the police
to act on the ‘abduction’ indictment alleged by the wife as the husband took the son into
custody by force. The police called for Parliament to act as they could not do much when
two conflicting orders given by both courts were valid and enforceable. See newspaper
comment by Balan Moses, ‘Dewan Rakyat Should address custody issue fast’, the Sundaily,
Monday, 13 April 2014. http://www.thesundaily.my/news/1015486 viewed 14 April 2013.
 Current Application of English Law:
156 Sections 3, 5 and 6 of the Civil Law Act 1956

Malaysian legislation has explicitly recognised English law as being

part of Malaysian law. The country’s highest law, the Federal
Constitution (FC), includes the ‘Common law’ in the definition of
‘law’.5 A more specific endorsement of English law has been made by
the Civil Law Act 1956 (Revised 1972) (Act 67). Section 3 of the Act
dictates that English law applicable in Malaysia means: common law,6
rules of equity7 and certain statutes. Further the application of English
commercial law is allowed pursuant to s. 5 of the Civil Law Act 1956.
It is noted that in Penang, Malacca, Sabah and Sarawak the reception
of English commercial law is continuous while in other parts of
Peninsular Malaysia the reception is at the coming into force of the
Civil Law Act 1956 namely, on 7 April 1956. However, this does not
mean that all three components of English law mentioned above can
be freely used and referred to without any limitations in Malaysia.
The extent to which English law is applicable in Malaysia will be dealt
with in detail later in the chapter. In addition, the authors will also
discuss the prospects of the development of Malaysian common law
within the existing legal framework. The authors will make suggestions
as to how to improve the existing legal framework in view of fostering
the development of the Malaysian common law.
Therefore, it would be timely, at this stage, to look into the most
important provisions dealing with the reception of English law into
Malaysia.

5 The Federal Constitution, art. 160.

6 Common law refers to the uncodified law which has been developed through the judicial
decisions of the courts. Hence, it is fairly flexible in comparison to the codified laws passed
by the Legislature.
7 Equity refers to the laws which were initially developed by the Lord Chancellor who was
appointed by the King of England. However, later by the end of the 15th century, claims in
equity were heard by the Court of Chancery. It is worth noting that the rules of equity were
never meant to operate on their own but rather they were developed in order to compliment
the common law and to bring fairness and justice to the parties when common law failed
to do so.
 Civil Law Act 1956 (Act 67) 157

9.2 CIVIL LAW ACT 1956 (ACT 67)

In essence, the Civil Law Act 1956 provides for general
application of English law as per s. 3; specific application of English
law as per s. 5; and non-application of English law as per s. 6. Each one
of these sections will be explained below.

9.2.1 Section 3 of the Civil Law Act 1956 – General Application of

English Law
Section 3 provides:
Application of U.K. common law, rules of equity and certain statutes

3. (1) 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 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;

(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 1 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 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) –
 Current Application of English Law:
158 Sections 3, 5 and 6 of the Civil Law Act 1956

(i) 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;

(ii) the Acts of Parliament of the United Kingdom applied to Sarawak

under sections 3 and 4 of the Application of Laws Ordinance of
(Sarawak) 1949 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 are as

follows:
1. The court shall apply the common law of England and the rules
of equity;
2. As administered in England on 7 April 1956;
3. In so far as provisions have not been made (at that point of
time) by any written law in force in Malaysia;
4. 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;
5. And subject to such qualifications as local circumstances render
necessary.
The effects of the provision with respect to Sabah are as follows:
1. Points (1) to (5) above apply to Sabah with two differences:
(a) The cut-off date is 1 December 1951;
(b) Besides the common law of England and the rules of equity,
statutes of general application are also applicable.
 Civil Law Act 1956 (Act 67) 159

2. 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:
1. Points (1) to (5) above apply to Sarawak with two differences:
(a) The cut-off date is 12 December 1949.
(b) Besides the common law of England and the rules of equity,
statutes of general application are also applicable.
2. 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].
It should be remembered that the Act was made in 1956 ie. one year
before the independence was achieved by Malaya. Looking at the Act,
we do not know the real reasons for 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
yet. Written laws, as existed then, 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.
 Current Application of English Law:
160 Sections 3, 5 and 6 of the Civil Law Act 1956

The following table briefly explains the application of English law in

the absence of local statute.

No. Case Subject English Reasons for the

Matter law application, if
followed any.

1 Nepline Sdn Bhd v. Tort Negligent Absence of local

Jones Lang Wootton misrepre- statute
[1995] 1 CLJ 865 sentation

2 Boustead Trading Contract Estoppel Absence of local

(1985) Sdn Bhd v. statute
Arab-Malaysian
Merchant Bank Berhad
[1995] 4 CLJ 283, FC

3 Sri Inai (Pulau Pinang) Sdn Tort Negligence Absence of local

Bhd v. Yong Yit Swee & Ors statute
[1998] 3 CLJ 893

4 Curvet Transport SA & Anor Contract Estoppel Absence of local

v. Shapadu Trans-System statute
Sdn Bhd [1999] 1 LNS 126

5 Liew Choy Hung v. Fork Trust Resulting trust Absence of local

Kian Seng [2000] 1 CLJ 369 statute

6 Saad Marwi v. Chan Hwan Contract Doctrine of Absence of local

Hua & Anor [2001] 3 CLJ 98 unconscionable statute
contract

7 Majlis Perbandaran Ampang Tort Negligence Absence of local

Jaya v. Steven Phoa Cheng statute
Loon & Ors [2006] 2 CLJ 1

8 The Co-operative Central Tort Negligent Absence of local

Bank Ltd v. KGV & Associates misrepre- statute
Sdn Bhd [2008] 2 CLJ 545 sentation

9 Datuk Bandar Kuala Lumpur Contract Estoppel Absence of local

v. PPKA Sdn Bhd statute
[2012] 3 CLJ 181

10 Loh Chiak Eong & Anor v. Tort Negligence Absence of local

Lok Kok Beng & Ors statute
[2012] 9 CLJ 699
 Civil Law Act 1956 (Act 67) 161

11 Zurich Insurance Malaysia Tort Negligence Absence of local

Bhd v. Am Trustee Bhd & statute
Anor; Meridian Asset
Management Sdn Bhd
(Third Party) and Another
Case [2014] 1 CLJ 397

Do we still need such a Provision?

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. There are a considerable number of renowned
academics and judges who argue that this provision should be repealed
or even abolished all together with the Civil Law Act 1956.8 They argue
that Malaysia should free itself from the colonial common law shackles
and instead develop its own Malaysian common law. They would
normally question why would the Malaysian Federal Court, which is
presented with an issue that has not been provided for by the local
legislation, 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 ask “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 s. 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 prioritise
the local conditions and people.9 He further argued that from the

8 Amongst the academics, see for example, Ahmad Ibrahim, ‘The Civil Law Ordinance in
Malaysia’, [1971] 2 MLJ lviii; Syed Ahmad Alsagoff, Principles of the Law of Contract in
Malaysia (3rd Edn) (LexisNexis, Kuala Lumpur, 2010), pp. 22–27. This view has been
shared by some judges such as, Tun Abdul Hamid Omar, ‘Common Law: Mitos atau
Realiti?’ [1990] 2:2 KANUN 1; and Tun Ahmad Fairuz Sheikh Abdul Halim’s opening
speech at IKIM’s s eminar titled ‘Ahmad Ibrahim: His Intellectual Thought and
Contributions’ (see an article written by Dr Wan Azhar Wan Ahmad at http://
ww w.ikim.gov.my/index.php/ms/the-star/7587-malaysian-common-law (viewed
20 May 2014).
9 Ahmad Ibrahim, ‘The Civil Law Ordinance in Malaysia’, [1971] 2 MLJ lviii.
 Current Application of English Law:
162 Sections 3, 5 and 6 of the Civil Law Act 1956

proviso to s. 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 case of a lacuna in 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, concurring
with the views expressed by Professor Ahmad Ibrahim, argue that
what is needed is neither the complete abolishment of the Civil Law
Act 1956 nor the complete revamp of the existing system but rather a
change in the attitude of judges, counsel as well as academics. For
example, Farid Sufian Shuaib, argues that the judges in particular,
should be more proactive in ‘indigenising’ 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.10 He said the following: “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.”11
However, there are 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

10 See Farid Sufian Shuaib, ‘Towards Malaysian Common Law: Convergence between
Indigenous Norms and Common Law Methods’, Jurnal Undang-Undang dan Masyarakat,
13, p. 167.
11 Ibid, p. 162.
 Civil Law Act 1956 (Act 67) 163

Act 1956. For instance, Syed Ahmad Alsagoff contends the following:
“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!”12
The call for a departure from the Common law either through the
repeal or abolition of s. 3 or the Act as a whole was strongly opposed
by the Malaysian Bar Council.13 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 s. 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

12 See Syed Ahmad Alsagoff, Principles of the Law of Contract in Malaysia (3rd Edn)
(LexisNexis, Kuala Lumpur, 2010), p. 22.
13 See, for example, Ambiga Sreenevasan, ‘Common Law’, The Malaysian Bar, 23 August
2007. http://www.malaysianbar.org.my/press_statements/press_release_common_
law.html (viewed 20 May 2014); Ambiga Sreenevasan, ‘Leave the Common Law Alone’,
The Malaysian Bar, 24 August 2007 http://www.malaysianbar.org.my/press_statements/
press_release_leave_the_common_law_alone.html (viewed 20 May 2014); Param
Cumaraswamy, ‘Dropping English Law may Leave Nation Isolated’, The Malaysian Bar,
27 August 2007. http://www.malaysianbar.org.my/members_opinions_and
_comments/dropping_english_common_law_may_leave_nation_isolated.html
(viewed 20 May 2014).
 Current Application of English Law:
164 Sections 3, 5 and 6 of the Civil Law Act 1956

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.
Before we give our views on s. 3 of the Civil Law Act, the burning
question that needs to be answered is whether the existing legal
framework (ie. s. 3 of the Civil Law Act 1956) allows for the development
of the Malaysian common law?
Can Judges develop Malaysian Common Law within the existing legal
framework?
Many judges have emphasised the need for Malaysian courts to start
developing the Malaysian common law like 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 & Ors
v. UMBC Finance Bhd & Ors,14 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’.”15
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 & Ors v. Mohd
Latiff bin Shah Mohd & Ors & Other Appeals.16 Since the purported
issue in the case was in relation to undue influence, the learned judge
observed that the courts must apply statutory law (ie. s. 16(1) of the
Contracts Act 1950) and since the statutory definition of undue

14 [1990] 1 LNS 80.

15 Ibid, p. 474. This statement was later upheld by the Federal Court in Majlis Perbandaran
Ampang Jaya v. Steven Phoa Cheng Loon & Ors [2006] 2 CLJ 1, FC.
16 [1997] 2 CLJ 607, CA.
 Civil Law Act 1956 (Act 67) 165

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 s. 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.17

Everyone agrees that there is a dire need for Malaysian common law
but the disagreement is on the question as to 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 crystalises into Malaysian common law. There is nothing wrong
in accepting the English law in toto but that has to be done in
compliance with s. 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 the hurdles in s. 3(1) are all satisfied. In this way, the English

17 Ibid, p. 309.
 Current Application of English Law:
166 Sections 3, 5 and 6 of the Civil Law Act 1956

law crystalises into a Malaysian common law through the statutory

doors of s. 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 Marwi v. Chan Hwan Hua & Anor,18 applied the English law
doctrine of ‘unequal bargaining power’ in toto in the absence of any
other written law on unfair contract terms in Malaysia at that time.19
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.
Section 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).20

It is worth mentioning that the liberal interpretation of s. 3(1) and use

of the English doctrine of unequal bargaining power in Saad’s case
caught the attention of the Court of Appeal one year later in the case
of American International Assurance Co Ltd v. Koh Yen Bee.21 The Court
of Appeal expressed doubts as to whether the doctrine had passed all
the hurdles in s. 3(1) in order to become part of Malaysian law. In
addition, to allow judges to arbitrary apply the doctrine 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

18 [2001] 3 CLJ 98.

19 This is not the case anymore as in 2010, the Consumer Protection Act 1999 (Act 599) was
amended with the Consumer Protection (Amendment) Act 2010 (Act A1381) adding to
it a new Part IIIA entitled ‘Unfair Contract Terms’.
20 [2001] 3 CLJ 98, p. 115.
21 [2002] 4 CLJ 49, CA.
 Civil Law Act 1956 (Act 67) 167

provision of s. 14 of the Contracts Act 1950 which only recognises

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.22

Be that as it may, it can be surely said that the Malaysian courts are
empowered by s. 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.23
Hence, the development of the Malaysian common law must be done
in the manner prescribed by s. 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 in the High
Court case of Nepline Sdn Bhd v. Jones Lang Wootton,24 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

22 Ibid, p. 319.
23 See Syed Ahmad Alsagoff, Principles of the Law of Contract in Malaysia (3rd Edn)
(LexisNexis, Kuala Lumpur, 2010), p. 26.
24 [1995] 1 CLJ 865.
 Current Application of English Law:
168 Sections 3, 5 and 6 of the Civil Law Act 1956

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. 25

Therefore, in case of a lacuna in the law, it becomes mandatory for the

court to refer to English law which needs to pass through three
statutory hurdles as per s. 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 (ie. 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’s case 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.’26
All in all, the answer to the question as to, ‘whether Malaysian courts
can develop a Malaysian common law within the legal framework
propounded by s. 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 s. 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

25 Ibid, p. 871.
26 Ibid.
 Civil Law Act 1956 (Act 67) 169

of s. 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. 27
Should s. 3 of the Civil Law Act 1956 be abolished?
Since s. 3 in its current form allows for the development of the Malaysian
common law why should it be abolished? There are numerous reasons
why s. 3 should not be abolished but the most compelling are as
follows:
1. 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.
2. Such provisions remove any doubt regarding the Court’s
jurisdiction to apply such laws. Bear in mind the provision of
art. 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.’28
3. It provides guidance to the Court in applying such rules leading
to greater consistency.
Will the abolition of s. 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.29 To exclude Common law from the definition
of law in the Malaysian context would require, in addition to the
abolition of s. 3, the amendment of the Federal Constitution. But why

27 Danaharta Urus Sdn Bhd v. Kekatong Sdn Bhd (Bar Council Malaysia, intervener) [2004]
1 CLJ 701, FC. See also Farid Sufian Shuaib, ‘Towards Malaysian Common Law:
Convergence between Indigenous Norms and Common Law Methods’, Jurnal Undang-
Undang dan Masyarakat, 13, p. 164.
28 See art. 121(1) of the Federal Constitution of Malaysia.
29 See art. 160 of the Federal Constitution.
 Current Application of English Law:
170 Sections 3, 5 and 6 of the Civil Law Act 1956

would we want to alienate ourselves 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
‘indigenising’ 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 s. 3. In fact, s. 3 limits
the application of English law and promotes the development of the
Malaysian common law. But the problem is that this section is often
being treated as if it does not exist at all. It tends to be often omitted by
lawyers in their submissions and judges in their judgments, or
misinterpreted. Often lawyers would cite the English law devoid of s.
3 as if English law applies in Malaysia automatically without any
hurdles. They find it burdensome to strictly follow the methodology
propounded by s. 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 in s. 3. Likewise, the judges who rely on those
decisions for their judgments transform them into Malaysian law
without considering the hurdles in s. 3. A large number of recent
English judgments have in this manner found their way into becoming
part of Malaysian law.
This happens because the judges who decide the cases allow this to
happen. They do not pay enough attention to s. 3. This particular
problem was articulated by Dato’ Abdul Hamid Mohamad J (as he
then was) in Nepline Sdn Bhd v. Jones Lang Wootton,30 when he said:
“However, the provision [ie. 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

30 [1995] 1 CLJ 865.

 Civil Law Act 1956 (Act 67) 171

England applies in toto in Malaysia.”31 He 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.”32
Three years later, in the case of Sri Inai (Pulau Pinang) Sdn Bhd v. Yong
Yit Swee,33 the learned judge Abdul Hamid Mohamad J voiced his
concerns again on the passive attitude of the courts when it comes to
s. 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. 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.”34
Amendments to s. 3 of the Civil Law Act 1956
Even though we have argued that s. 3 should not be abolished, we
opine that the time has come for the provision to be amended and
improved. This paper proposes the following amendments:
1. The reference to the common law and the rules of equity should not be
confined to that of England but also to that of other Commonwealth
countries.

2. Even with conditions stipulated, the provision should not be mandatory

on the court. The word ‘shall’ should be substituted with the word
‘may’. That would give to the court discretion on whether to apply the
said principles or not.

3. 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 1950’s (or any other date
for that matter) unless we want to live by an archaic law which may no

31 Ibid, p. 869. Emphasis added.

32 Ibid, p. 871.
33 [1998] 3 CLJ 893.
34 Ibid, p. 903. Emphasis added.
 Current Application of English Law:
172 Sections 3, 5 and 6 of the Civil Law Act 1956

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. Hedley Byrne & Co Ltd v. Heller & Partners Ltd35 is a good
example.

4. 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 remedy 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.

5. 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.

6. 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 standardise the law
applicable to the whole country.

7. There should be a new addition. The principles of Islamic law should be

included too. We realise 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. We are dealing with civil

35 [1964] AC 465, HL.

 Civil Law Act 1956 (Act 67) 173

law and the scope is very limited. Consider this example. There is no
equivalent of caveat emptore in Islamic law. Islamic law insists fairness
and honesty on both parties in their dealings. The common law on
disclosure of material information (eg. 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’.36

8. With regard to Sabah, s. 3(3)(i) regarding 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 standardisation.

9. Our comment in point 8 should apply equally to Sarawak in respect of

s. 3(3)(ii).

Section 5 and 6 of the Civil Law Act 1956

Section 5 of the Civil Law Act provides:
Application of English law in commercial matters

5. (1) In all questions or issues which arise or which have to be decided

in the States of Peninsular Malaysia other than Malacca and Penang
with respect to the law of partnerships, corporations, banks and banking,
principals and agents, carriers by air, land and sea, marine insurance,
average, life and fire insurance, and with respect to mercantile law
generally, the law to be administered shall be the same as would be
administered in England in the like case at the date of the coming into
force of this Act, if such question or issue had arisen or had to be
decided in England, unless in any case other provision is or shall be
made by any written law.

36 Please see discussion in Nepline’s case. Indeed in that case the court went further than the
common law of England and indeed drew an inspiration from the Islamic law position,
without saying so. (We know because Tun Abdul Hamid Mohamad, co-author of this
paper, decided the case.) The Court of Appeal confirmed the judgment, perhaps without
even knowing where the idea came from. Unfortunately, there is no written judgment of
the Court of Appeal. We have not come across any criticism of the judgment. We hope
there will not be any even after this ‘disclosure’! The point we are making is that there might
be some principles of Islamic law which could be applicable. Due to ignorance and
prejudice, many people do not realise the similarities between Islamic law and common
law.
 Current Application of English Law:
174 Sections 3, 5 and 6 of the Civil Law Act 1956

(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, s. 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 per s. 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 Strait Settlements with that of the English courts. It
can also be observed that s. 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 then s. 3 which
points to the specific sources of English law that may be used.
Nevertheless, s. 5, like s. 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 enlisted in the section.37 In that
way, it can be said that s. 5 will continue to be less and less relevant till
one day it becomes extinct. Although the ‘local circumstances’ and
‘local inhabitants’ proviso stated in s. 3 is not to be found in s. 5, in
practice, s. 5 is interpreted and read by the courts as if the proviso

37 See Partnership Act 1961 (Act 135); Companies Act 1965 (Act 125); Financial Services Act
2013 (Act 758); Islamic Financial Services Act 2013 (Act 759); Contracts Act 1950 (Act
136); Hire Purchase Act 1967 (Act 212); Bankruptcy Act 1967 (Act 360) etc.
 Civil Law Act 1956 (Act 67) 175

exists.38 Therefore, it needs to be observed that the methodology by

which English commercial law is to be applied by the Malaysian courts
as per s. 5 is the same as that applicable to s. 3. Hence, Dato’ Abdul
Hamid Mohamed J’s earlier explanation of the methodology in the
context of s. 3 in the Court of Appeal case of Nepline Sdn Bhd v. Jones
Lang Wootton39 is relevant to s. 5 as well.
Section 6 of the Civil Law Act 1956 states:
Immovable property

6. Nothing in this Part shall be taken to introduce into Malaysia or any

of the States comprised therein any part of the law of England relating
to the tenure or conveyance or assurance of or succession to any
immovable property or any estate, right or interest therein.

This section has been passed to prevent the application of English law
to land matters. Hence, 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 which is modeled upon 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. The Torrens system has been applied in all
states of Malaysia, except Sabah, via the National Land Code.40

38 See Wan Arfah Hamzah, op. cit., p. 136.

39 [1995] 1 CLJ 865, p. 871.
 Current Application of English Law:
176 Sections 3, 5 and 6 of the Civil Law Act 1956

9.3 CONCLUSION
In conclusion, the debate on whether we need to sustain our
strong links with English law is likely to continue. Irrespective of which
side of the argument one may take, the truth is that, our links with
English law have contributed tremendously towards the development
of the plural Malaysian legal system which is highly regarded in the
region. We argue that the abolition of s. 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
flawed. 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 procedure under s. 3 is followed. In fact,
we do suggest certain amendments to s. 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. This was done by Tun
Abdul Hamid Mohamad in Nepline’s case as discussed earlier. In fact,
we are of the opinion that any law that is not unIslamic is Islamic.
Having said this, there are many common law rules which are very
similar to Islamic laws. One would be astonished to find how similar
these two systems are, in many ways. The prominent scholar, Professor
John, A. Makdisi, in his well-known article ‘The Islamic Origins of
Common Law’ suggests that the origins of Common law may be found
in Islamic law.41 This is an article that we would suggest be read by all
skeptics as to the link between the two systems of law which seem to
have much more in common than one may initially think.

40 Penang and Malacca – National Land Code (Penang and Malaka Titles) Act 1963 (Act
518), the rest of Peninsular Malaysia – National Land Code 1965 (Act 56), and Sarawak –
Sarawak Land Code (Cap 81). Sabah does not use the Torrens system and is instead governed
by the Land Ordinance (Cap 68).
41 See John, A. Makdidi, ‘The Islamic Origins of Common Law’, North Carolina Law Review,
June 1999, 77(5), pp. 1635–1739.