Comprehensive Notes on Malaysian Legal System and Sources of Law
Chapter 1: An Introduction to the Concept of Law in Malaysia
Introduction to Law
Law as a Regulatory Device: Law is defined as a means or device utilized to regulate the economic and social behavior of society. Its fundamental purpose is to preserve the economic and social welfare of the community by implementing control over the daily activities of citizens and businesses.
Necessity of Law: Humans do not live in isolation and engage in economic activities that require recognition of a superior authority. As members of society interact, conflicts arise from differing needs and wants; law provides the mechanism to settle these disputes via legislation and case law.
Roles of Law:
Guaranteeing freedoms.
Enabling free enterprise.
Providing for the amicable settlement of disputes.
Relevance to Business: Business law shapes commercial enterprises, influencing corporate mergers, privatization, and the prevention of white-collar crimes such as insider trading, market manipulation, and corporate fraud.
Practical Example: Contract law principles apply to both individuals and businesses entering agreements regarding employment, agency, sales, insurance, and service contracts, as well as providing remedies for breaches of such contracts.
Defining 'Law'
General Description: A set of rules developed over time that regulates interactions between people, sets standards of conduct between individuals and the government, and is enforceable through sanctions.
Dictionary Definition: The Oxford English Dictionary defines law as 'the body of enacted or customary rules recognized by a community as binding'.
Sir John Salmond (Jurisprudence): Defines law as 'the body of principles recognized and applied by the State in the administration of justice… the rules recognized and acted on by courts of justice.'
John Austin (The Province of Jurisprudence Determined): Describes law as a command set by a superior being (the state) to an inferior being (the individual) and enforced by sanctions (punishments).
Sanctions in Law: These include imprisonment, fines, damages, injunctions, and decrees of specific performance.
Constitutional Definition of Law
Interpretation Acts 1948 and 1967 (Section 3): States that 'law' has the meaning assigned by Article 160(2) of the Federal Constitution.
Article 160(2) of the Federal Constitution 1957: Defines 'law' to include:
The written law.
Common law in so far as it is in operation in the Federation or any part thereof.
Any custom or usage having the force of law in the Federation or any part thereof.
Judicial Interpretation of Article 160(2)
Reception of Common Law: The case Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd clarifying that the word 'operation' means 'in force' and refers specifically to Section 3(1) of the Civil Law Act 1956, which directs the courts and provides a cut-off date for English Law reception:
West Malaysia: Common law and rules of equity as administered in England on 7 April 1956.
Sabah: Common law, equity, and statutes of general application in force in England on 1 December 1951.
Sarawak: Common law, equity, and statutes of general application in force in England on 12 December 1949.
The Proviso: Common law is applied only so far as the circumstances of the States of Malaysia and their inhabitants permit and subject to qualifications rendering them necessary for local circumstances.
The Hashim Yeop A Sani CJ Principle: In Chung Khiaw Bank Ltd v Hotel Rasa Sayang Sdn Bhd & Anor, it was held that the development of common law after 7 April 1956 is entirely in the hands of the Malaysian courts.
Nature of Common Law: In Amato v The Queen, it was stated that common law is 'always speaking'—a process of discovery or evolution rather than crystallized at a specific date.
Access to Justice: In S Kulasingam & Anor v Commissioner of Lands, Federal Territory & Ors, it was held that the legislature can exclude principles of natural justice by clear words in the absence of specific constitutional guarantees.
Customary Law and Native Rights
Customs with Force of Law: In Director of Forest, Sarawak & Anor v TR Sandah ak Tabau & Ors, the Federal Court decided whether native customs of pemakai menoa and pulau were Native Customary Rights (NCR).
Key Determining Factor: Not all customs come within the definition of 'law'. Only those 'customs which the laws of Sarawak recognize' form part of customary laws. If they are not integral to the community and remain incidental, they do not fall under Article 160(2).
Dissenting View (Zainun Ali FCJ): Argued that definition of law under Article 160(2) includes 'customs and usages having the force of law', making customary law an integral part of the Malaysian legal system.
Law and Justice
The Aim of Law: To maintain justice, which is an abstract idea of right and wrong, fairness, and equality.
Conflict of Law vs. Justice: A law may appear just in general (e.g., theft being a crime under Section 378 of the Penal Code) but unjust in specific applications (e.g., a destitute man stealing to feed starving children).
Evolution: As society evolves, the legal system should evolve to replace injustices with fairness.
Law and Ethics
Ethics defined: About what is right and what 'ought' to be, guiding individuals in ascertaining the soundness of rules.
Codes of Ethics: Businesses often adopt ethical codes, such as the BNM/GP7 Code of Ethics issued by Bank Negara Malaysia for bankers.
Legal Rules with Ethical Considerations:
Assumption of good faith in contracts.
Privacy and cyber-squatting issues.
Intellectual property (copyright, trademarks, patents).
Restrictive trade practices and consumer protection.
The principle of uberrimae fidei (utmost good faith) in insurance.
Anti-discrimination and occupational health and safety in employment law.
The Rule of Law
Origin: Formulated in the late nineteenth century by Professor Dicey.
Propositions:
No person must be punished except for a breach of the law.
All persons are equal before the law irrespective of status.
Rights and freedoms are enforceable in the courts.
Law, the State, and the Constitution
Malaysia's Structure: One political unit consisting of Peninsular Malaysia, Sabah, and Sarawak, united by the Parliament and the Federal Court.
The 'State': Malaysia has 13 states and Federal Territories (Kuala Lumpur, Labuan, Putrajaya).
The Federal Constitution: The supreme law of the Federation. Under Article 4(1), any law passed after Merdeka Day inconsistent with the Constitution is void to the extent of the inconsistency.
Constitutional Cases:
R Rethana v The Government of Malaysia & Anor: Dismissed claim against SOCSO (Sections 31 and 42) as the classification was fair and did not violate Article 8(1) equality.
Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd: Held that Section 72 of the Pengurusan Danaharta Nasional Act 1998 was constitutional as it satisfied the reasonable classification test.
Repco Holdings Bhd v PP: Sections of the Securities Industry Act and Securities Commission Act were declared unconstitutional and void as they contravened Article 145(3).
Gopal Sri Ram JCA on Constitution: 'Our Federal Constitution is a living document… the task of the judicial interpreter… is to breathe life into it.'
Distribution of Legislative Power
Article 73: Parliament makes laws for the whole federation; State legislatures make laws for the state.
Article 74 and the Ninth Schedule:
Federal List (List I): External affairs, defense, internal security, civil/criminal law, finance, trade, education, etc. (Total 26 items).
Concurrent List (List III): Social welfare, scholarships, town planning, public health, fire safety.
State List (List II): Islamic law, land, agriculture, local government, state holidays.
Conflict between Federal and State Law: Under Article 75, federal law prevails over inconsistent state law.
Classification of Legal Systems
Civil Law: Derived from Roman law; primary source is written codes; inquisitorial (e.g., France, Japan).
Common Law: Derived from case law/precedent and statute; accusatorial; emphasizes remedies (e.g., UK, Malaysia, USA).
Islamic Law: Derived from the Quran; coexists with other laws (e.g., Malaysia's dual financial system).
Sino-Soviet: Based on Karl Marx's philosophy; emphasis on public law and eradication of private ownership.
Hindu Law: Based on doctrine of proper behavior.
Talmudic Law: Derived from the Old Testament; the law of the Jews.
Classification of Law in Malaysia
Public Law: Governs relationship between individuals and the state.
Constitutional Law: Rights of citizens and supremacy of Parliament.
Criminal Law: Offenses against the state (e.g., murder, theft). Elements: actus reus (wrongful act) and mens rea (guilty mind).
Private (Civil) Law: Governs relationships between individuals.
Contract: Legally enforceable promises (Essential elements: Offer, acceptance, capacity, no mistake, lawful object, intent, consideration).
Tort: Civil wrong/breach of duty imposed by law (unliquidated damages).
Trust: Equitable obligation of a trustee to manage property for beneficiaries.
International Law: Rules state observe in relations with each other.
Public International Law: Between states.
Private International Law (Conflict of Laws): Determines which country's law applies to a case involving more than one nation.
Chapter 2: Sources of Malaysian Law
Meaning of 'Sources'
Historical Sources: Non-legal influences like religious beliefs and local customs.
Legal Sources: The actual rules that make up the law.
Places of Law: Statutes, law reports, and textbooks.
The Main Sources of Malaysian Law
Written Law (Most Important):
Federal and State Constitutions.
Legislation enacted by Parliament (Acts) and State Assemblies (Enactments/Ordinances).
Subsidiary legislation (Rules, Regulations, By-laws).
Unwritten Law:
English law (Common law and Equity).
Judicial decisions of superior courts (Precedents).
Local customs.
Islamic Law: Applied to Muslims specifically in family and personal matters.
Written Law Details
Interaction with Common Law: Statutes often reaffirm common law. If conflict occurs, statute law prevails.
Statutory Interpretation: Courts use aids to interpret ambiguous words:
Interpretation Acts: Guide courts to use a 'purposive' construction.
Extrinsic Materials: Parliamentary debates, reports, treaties, explanatory notes.
Common Law Rules:
Literal Approach: Plain meaning (Fischer v Bell - flick knife display not a 'sale').
Golden Rule: Avoids absurdity (Lee v Knapp - 'stop' means remaining as long as necessary).
Mischief Rule: Considers the social purpose of the Act (Smith v Hughes - soliciting from windows included 'in a street').
Maxims:
Noscitur a sociis: Word meaning derived from its associates (Prior v Sherwood - 'place' limited to enclosed areas).
Ejusdem generis: A general word following specific words is limited to that class (e.g., 'building' following 'flat, villa, unit').
The Federal Constitution as Source
The supreme law (Loh Kooi Choon v Government of Malaysia).
Loh Kooi Choon Case (1977): Held that Parliament can alter fundamental rights (Article 5(4)) so long as the process of constitutional amendment in Article 159(3) is met. 'The ultimate touchstone of constitutionality is the Constitution itself'.
Subsidiary Legislation
Defined by Interpretation Act 1967 as rules, by-laws, etc., made under authority of an Act.
Necessary due to lack of time and technical knowledge in the main legislature.
Eng Keock Cheng v PP (1966): Federal Court held that during an emergency (Article 150), Parliament can delegate power to make regulations that are valid even if inconsistent with the Constitution.
Unwritten Law Details
English Law (Section 3 CLA 1956):
Only applies when there is a lacuna (gap) in local statutes.
Commonwealth of Australia v Midford: Common law in Malaysia is not static; it can develop after 1956.
Jamil bin Harun v Yang Kamsiah: Modern English authorities are persuasive but not binding.
English Commercial Law (Section 5 CLA):
In West Malaysia (except Penang/Malacca): English principles as of 7 April 1956.
In Penang, Malacca, Sabah, Sarwak: English law as of the date the matter is decided (continuing reception).
English Land Law (Section 6 CLA): Specifically prohibits introduction of English law regarding land tenure. The National Land Code is a 'complete and comprehensive code' (UMBC v Pemungut Hasil Tanah).
Conflicts: If Common Law and Equity conflict, Equity prevails (Section 3(2) CLA 1956).
Judicial Decisions and Precedent
Stare Decisis: 'To stand by a decision.'
Res Judicata: Final order binding the parties of the specific case.
Ratio Decidendi: The legal reasoning behind a decision; it is the binding part of a judgment.
Obiter Dictum: 'Sayings by the way'; persuasive but not binding.
Types of Precedents:
Declaratory: Applies existing law without extension.
Original: Sets a new rule for a novel situation.
Privy Council Decisions: Binding if on appeal from Malaysia or if on appeal from a Commonwealth country with law in pari materia (materially similar) to Malaysia (Khalid Panjang v PP).
Hierarchy for Self: The Federal Court is bound by its own decisions except in cases of conflict, inconsistency with Privy Council, or if given per incuriam (through want of care/ignorance of relevant law).
Chapter 3: The Judicial System in Malaysia
Overview
Separation of Powers: Legislative, Executive, and Judiciary. The judiciary checks against arbitrary power.
Independence: Protected by Article 125 (tenure until age 66, remuneration charged to Consolidated Fund).
Head of Judiciary: The Chief Justice of Malaysia.
Kok Wah Kuan Case (2008): Discussion on judicial power. Majority held that after the 1988 amendment to Article 121(1), judicial powers are such as conferred by Federal Law. Dissenting view (Richard Malanjum CJ) argued the judiciary remains an independent pillar and Article 121(1) shouldn't be interpreted to make courts 'servile agents' of Parliament.
Semenyih Jaya Case (2017): Held that judicial power resides exclusively in the judiciary. Provisions that bindingly forced judges to follow lay assessors' opinions on land compensation were unconstitutional.
Subordinate Courts
Magistrates' Courts:
First Class: Civil claims up to . Criminal: max 10 years jail. Sentencing limit: 5 years jail, fine, 12 strokes.
Second Class: Civil claims up to . Criminal: max 12 months jail. Sentencing limit: 6 months jail, fine.
Small Claims: Claims up to filed via Form 164. No lawyers allowed.
Courts for Children (Juvenile Court):
Governed by Child Act 2001. For individuals under 18.
Composition: One Magistrate and two Advisors (one must be a woman).
Jurisdiction: All offenses except those punishable by death (heard in High Court).
Sanctions: Admonition, probation, approved school, Henry Gurney School, or whipping (max 10 strokes of light cane for males).
Sessions Courts:
Highest subordinate court. Presided over by a Sessions Court Judge.
Criminal: All offenses except death penalty.
Civil: Claims up to . Unlimited jurisdiction for motor vehicle accidents, landlord-tenant, and distress.
Native Courts (Sabah and Sarawak)
Exercise jurisdiction over 'native customs' and native personnel.
Sarawak Hierarchy: Native Officer's Court -> District Native Court -> Resident's Native Court -> Native Court of Appeal.
Ongkong anak Salleh v David Panggau Sandin: Held that the High Court has no supervisory power over the District Native Court because it is a state statutory court, not a federal subordinate court.
Superior Courts
High Court:
Original civil jurisdiction over actions occurring in Malaysia or involving land in Malaysia.
Exclusive jurisdiction over divorce, company winding-up, bankruptcy, and probate.
Supervisory jurisdiction over all subordinate courts.
Divisions: Commercial, Civil, Criminal, Appellate/Special Powers, and Mu'amalat.
Shariah Courts:
Parallel system for Muslims only. Governed by State Law.
Jurisdiction: Harta sepencarian (marital property), aqidah (belief), etc.
Indira Gandhi a/p Mutho Case: Civil High Courts retain residual power to hear grievances regarding constitutional rights even if a matter is before Shariah Courts.
Industrial Court:
Governed by Industrial Relations Act 1967. Deals with trade disputes and worker dismissals.
Awards may take non-legal matters (social conscience/public interest) into account.
Court of Appeal:
Hears civil appeals involving claims over .
Hears criminal appeals from the High Court.
Federal Court:
The highest court of the land.
Advisory jurisdiction (Article 130) and referral jurisdiction (Article 128).
Hear cases of general principles of law or constitutional importance.
Rule 137 powers: Inherent power to prevent injustice or abuse of process (though doesn't allow a full merits review of its own decision, as per Anwar Ibrahim v PP).
Special Court
Established by Article 182 in 1993.
Exclusive jurisdiction to try civil/criminal cases involving the Yang di-Pertuan Agong or a Ruler in their personal capacity.
Requires consent of the Attorney-General to institute action (Article 183).
Alternative Dispute Resolution (ADR)
Mediation: Facilitative process to resolve disputes cheaply.
Conciliation: Advisory role in helping parties reach agreement.
Arbitration: Governed by Arbitration Act 2005. Determinative process by an independent third party.
Key Principle: A court must stay proceedings if an arbitration agreement exists and a dispute is pending (Section 10 Arbitration Act 2005).
Consumer Claims Tribunal: Under Consumer Protection Act 1999, for claims up to (often reduced in practice/context of small claims to in some procedures).
Questions & Discussion
Question: Distinguish Public Law and Private Law. Answer: Public law governs the relationship between the individual and the state (e.g., Constitutional and Criminal Law). Private law concerns rights and duties of individuals among themselves (e.g., Contract, Tort, Trust).
Question: Is English Commercial Law applicable in Malaysia? Answer: Yes, but limited. West Malaysian states (excluding Penang/Malacca) apply it as of April 7, 1956, in the absence of local legislation. Penang, Malacca, Sabah, and Sarawak have continuing reception. Local statutes (like the Companies Act 2016) often override English law.
Question: Does English Land Law apply in Malaysia? Answer: No. Section 6 of the Civil Law Act 1956 excludes it. The National Land Code is a comprehensive and complete code governing land tenure in Malaysia.