Discuss the application of Sections 3, 5 and 6 of the Civil Law Act 1956 towards the

Malaysian legal system.

Answer

Beforehand, there are three sections of the Civil Law Act 1956, which are Section 3, 5 and 6 that are
crucial towards the Malaysia legal system. First and foremost is Section 3 of the Civil Law Act
1956. Section 3 of the Civil Law Act 1956 enables the application of common law of England and
the rules of equity as well as the statutes of general application. Section 3(1) a allows the application
of common law of England and the rules of equity that came into force in England on 7 th April 1956,
in West Malaysia. Section 3(1) b and section 3(1) c provides for the application of common law of
England and the rules of equity including the statutes of general application that came into force on 1 st
December 1951 and 12th December 1949 respectively in Sabah and Sarawak. It is also provided 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.

Section 3 provides for the application of English Common Law and the rules of equity in the
absence of any local legislation. Section 3(1) b and section 3(1) c imports English statutes of
general application into Sabah and Sarawak respectively. On the other hand, section 3(1) a
imports only common law and rules of equity into Peninsular Malaysia. In Pushpah A/P
MSS Rajoo v Malaysian Co-Operative Insurance Society Ltd & Anor, the plaintiff
sought after an English statutory provision in order to revoke a nomination by her deceased
husband in his life insurance policy made before their marriage. The judge dismissed the
application on the primary grounds that section 3(1)a of Civil Law Act 1956 only allows the
application of common law and rules of equity and not the statutes of general application.
Hence, English statutes are not applicable in West Malaysia. In West Malaysia, the common
law and rules of equity administered on 7th April 1956 can be used to fill in the lacunae in the
law. In East Malaysia, the common law and rules of equity is adopted together with the
statutes of general application.

However, the cut-off dates in both Sabah and Sarawak is different. The cut-off date for Sabah
is 1st December 1951 while the cut-off date for Sarawak is 12th December 1949. The effect of
the cut-off dates are of that, the English Law administered before and on the date is binding,
but it is only persuasive if the English Law came into force after the cut-off date. In Lee Kee
Choong v Empat Nombor Ekor, the court held that when refererring to English Common
Law, the courts are restricted to adopt English Common Law that came into force at the cut-
off date, and any further development in England after the cut-off date is not binding.

There is also the absence of local legislation. This qualification is provided in section
3(1) of Civil Law Act 1956. It is only a statutory recognition of judicial practice of resorting
to English Law to fill the lacunae in the local law. In Attorney General, Malaysia v
Manjeet Singh Dhillon, the court held that in absence of any local legislation concerning
contempt of court, the common law contempt as stated in R v Gary [1900].

English law is to be applied only if it is permitted by local circumstances and inhabitants.

This qualification is contained in the concluding proviso of section 3(1). In Choa Choon
Neoh v Spottiswoode, Maxwell CJ delivered that law is subject , in its application to the
various alien races established here, to such modifications as are Batu Sinar v UMBC
Finance, the negligent failure of a finance company to indorse its claim to ownership of a
tractor on the Vehicle Registration Card and whether such negligence forfeits its claim. The
practice in West Malaysia combined with local statutory provisions in regard to the
registration of ownership claims would constitute such a distinctive local circumstance of the
inhabitants of West Malaysia that the decisions in English cases on the point of failure to
have an ownership claim registered.

The next section is Section 5 of the Civil Law Act 1956. Commerce and trade had been the
economic focal point of the British ever since their first settlement in the Prince of Wales
Island. To regulate matters concerning commerce and trade, a provision was incorporated
into the enactment of Civil Law Ordinance 1878. Under section 6, special application of
English legislation is provided for in mercantile matter, which marked the formal reception of
English law, including statues, on the commercial and mercantile matters of the Strait
Settlement. Not only such provision remained, the essence of which also became the basis for
the enactment of Section 5 of the Civil Law Act 1956, which essentially sets out that the law
to be applied in issues concerning partnership, corporations, banks and banking, principals
and agents, carriers by air, and sea, marine insurance, average life and fire insurance, and
with respect to mercantile law generally, shall be the same as how it would be administered
in England, on the same date of enforcement of the Act; unless, there is already written law in
force.

As compared to the similar provision available in the ordinance of 1878, s.5 subsection 2 of
the CLA distinctively sets out a cut-off date, i.e. 7th April 1956 to restrict the application of
English Law in commercial disputes arise specifically in the states of West Malaysia that
corresponds to the former Federated and Unfederated Malay States. However, such
restriction does not apply in issues arise or to be decided in Penang, Malacca, Sabah and
Sarawak, whereby the court is still allowed to continue applying law as administrated in
England at the corresponding period. In order words, ongoing reception of English Law only
happens in these four states, though the application of which is subjected to existing local
laws.

Section 5 essentially divides the country into 2 commercial regimes for the
purpose of application of commercial laws. But why Penang, Malacca, Sabah and Sarawak
are not imposed on them a cut-off date? As the fact that they were British colonies, the
English law was the binding law governing the states prior to the formation of Federation of
Malaya and later Malaysia. Particularly in Penang and Malacca which were part of the Strait
Settlement, the Civil Ordinance 1878 effectively imported English Law to govern the states.
According to Thomas Braddell’s report9 on the CLO 1878, it was revealed that the dearth
of English Mercantile law in Strait Settlement caused the courts to heavily rely on
authoritative cases decided in the Superior Court of England. Therefore, provision in section
6(1) of the 1878 Ordinance was necessary to ensure there was sufficient statutory authority
applicable in Penang and Malacca, besides taking it as a legitimate basis for the application of
English Law in courts. As time passed, the legal system in these colonies became so
entrenched and advanced that it was unreasonable for the British to abruptly put an end to it
by means of a cut-off date.

The wording used in S.5 poses ambiguity in statutory interpretation in so much that two
conflicting approaches were taken by the Privy Council judges to interpret the section. In
Seng Djit Hin, The respondent counterclaimed for damages for short delivery of sugar,
which the appellant in turn blamed on the requisitioning of ships by the British Government.
As defence, the appellant pleaded two related English
statues . Their Lordships approached the issue by first determining whether the issue has
arisen with respect to the enumerated subjects in S.5 and mercantile law generally. Since the
issue with regard to the law of sale is an issue of mercantile law, the pleaded statues are
applicable as the law to be administrated was not ‘mercantile law’, but ‘the law’ which is to
be the same as the law would be administrated in English court in the like case. In
Sockalingam Chettier, however it was held that since the saving clauses in the pleaded statue
explicitly excludes the borrowing of money in the course of commercial transaction, it forms
no part of mercantile law and therefore issue raised under the statue is not an issue within the
ambit of mercantile law. Hence, the statute is not applicable. In former cases, the nature of
the issue concerns the mercantile law and therefore related laws can be applied. The latter
case however, the pleaded law is not part of the mercantile law, therefore, it cannot be
applied.

Lastly is Section 6 of the Civil Law Act 1956. In pursuant to S.6 of the CLA, the application
of English Law is restricted in matters regarding tenure and conveyance of immovable
property. The main reason behind the inclusion of s.6 for the first time in CLA was to prevent
any further importation of English Land law. As early as 1840, a modified system of
registration of land title based on the Australian Torrens system had been already in place in
Malay states. The land system administered in Penang and Malacca, however, was the
English Deed System which was drastically different from that of the Malay States.
Therefore, when Penang and Malacca joined the Federation of Malaya, such a provision to
preclude application of English Law was necessary to prevent uncertainty and confusion in
the law.

As compared to English land law system, Torren system is said to do away from the dual
ownership – legal and equitable – of the same land, which is ‘one of the causes of the evils in
the [English] system of conveyancing.’ In relation to this, acquisition of an estate or interest
in land thus can only be done by virtue of due conformity with the statutory provision.This is
in accordance to the wording in section which ousts the application of any part of the law in
England including common law and rules of equity. The ground of such restriction can be
seen in United Malayan Banking Corp. Bhd. v Pemungut Hasil Tanah Kota Tinggi case
was whether English equitable rules as to the relief against the forfeiture is applicable. The
Privy Council dismissed on the ground that the words in section 6 should be interpreted in
their ordinary and natural meaning. As such, it embraces all rules of law governing the tenure
of land. The NLC is already a complete and comprehensive code to regulate the tenure of
land in Malaysia. Thus, there is no room for the importation of English law, except in so far
as the Code itself may expressly allow it.

However, inapplicability of equitable interest does not mean that the personal rights which
affect the land are not protected. Under Section 206(3) of the NLC, nothing in the statutory
requirements of registration of dealing ‘shall affect the contractual operation of any
transaction relating to alienated land or any interest therein’. As section 6 of the CLA has no
scope beyond section 3 of the same Act, section 206(3)
is therefore free from the restriction in section 6 of the CLA . So, the rule of equity can still
be applied in contractual issue of land. This is affirmed in Templeton v Low whereby the
court allows the application of equity whenever

Thus, extra care must be given to make sure that application of equitable principle is able to
reconcile with the schemes of NLC, for instance, the ‘conclusiveness’ of a register document
of title of evidence of ownership under section 89 etc.