Business Law Chapter02

2
Sources of
Malaysian Law
OBJECTIVES
This chapter:
provides basic knowledge on how
Malaysian law evolved
identifies the sources of Malaysian law, and
explains where they can be found
BUSINESS LAW (THIRD EDITION) All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2018
PREVIEW
Meaning of ‘Sources’
Main Sources of Malaysian Law
- Written Law
- Unwritten Law
- Islamic Law

MEANING OF ‘SOURCES’
1. Historical sources
2. Legal sources
3. Places where the law can be found
Sources of Malaysian law:
1. Islamic law
2. Written law
3. Unwritten law

SOURCES OF MALAYSIAN LAW

WRITTEN LAW
comprises of:
1. The Federal and State
2. Legislation enacted by Parliament and the State
Assemblies 议会和州议会颁布的立法
3. Subsidiary legislation made by persons or bodies under
powers conferred on them 个人或机构根据赋予他们的
权力制定的附属立法
also referred to as statute law 也称为成文法
law made by Parliament and any subordinate
bodies to whom Parliament has delegated 委托
power to legislate

WRITTEN LAW (cont.)
where statute law and common law conflict,

statute law will prevail to the extent of the conflict
在成文法和普通法冲突的情况下，在冲突范围
内以成文法为准
when hearing cases, the courts are not just
performing an act of fact-finding 实情调查的 ;
they also interpret 解释 statutes

WRITTEN LAW (cont.)
in interpreting statutes, courts are guided by:

a) Interpretation Acts
b) Extrinsic materials 外在材料
c) Common law rules of statutory interpretation 法定解释的普
通法规则
d) Precedent (a previous case or legal decision that may be or
(binding precedent) must be followed in subsequent similar
cases)
courts interpret legislation to reflect the apparent 明显的
purpose or intention 意图 of the legislators (a
‘purposive’ construction)
WRITTEN LAW (cont.)
in Birmingham v Corrective Services Commission of
New South Wales, 3 conditions:
1. It knows the mischief with which the Act was dealing
2. It is satisfied that Parliament inadvertently 不经意地
overlooked an eventuality 可能发生的事 which had to
be dealt with if the purpose of the Act was to be achieved
3. It can state with certainty the words that Parliament
would have used to overcome the omission 遗漏 if its
attention had been drawn to the defect 它可以肯定地说
明，如果提请议会注意缺陷，议会会用这些话来克服
遗漏

WRITTEN LAW (cont.)
if the words of the Act are clear, effect must be given

to them notwithstanding 尽管 that the end result
may be absurd 荒唐的
courts use extrinsic (external) material in the
interpretation of statutes:
some statutes 法规 set out their own definition or
interpretation
common law rules of statutory interpretation and
precedent 法定解释和先例的普通法规则

WRITTEN LAW (cont.)
3 main approaches 方法 to interpretation used

by the courts:
1. Literal or plain meaning approach
2. Golden rule approach
3. Mischief approach

LITERAL OR PLAIN
MEANING APPROACH
courts assume that the meaning and intention of

the legislature is clear in the statute to be
interpreted
disadvantage – words can often have more than one
meaning, so the courts have to decide which
approach should apply
the whole Act is read and understood before a
detailed
examination of a section, or of particular words in a
section, is begun 开始审查一节或一节中的特定单
词
LITERAL OR PLAIN
MEANING APPROACH (cont.)
words and sections must be read in the context of

the whole Act, rather than in isolation 单词和章节
必须在整个法案的背景下阅读，而不是孤立地
阅读
see Fischer v Bell

GOLDEN RULE APPROACH
takes the plain meaning of the words used in the

statute and adheres to that meaning
only a gloss of the literal or plain meaning rule 只是
字面或简单含义规则的词汇
where the words in an Act are at variance with the
legislators’ intention or can lead to an absurdity,
injustice or repugnancy, the court will attempt to
choose a meaning that will avoid such a result
see Lee v Knapp

MISCHIEF APPROACH
where the literal interpretation is not possible,

courts will:
1. Look at the law before the statute was passed
2. Look to the overall intention of the legislation as
discovered from reading the Act as a whole
3. Ask: What mischief is it that this statute is intended to
remedy? What was its social purpose?
where a statute provides a number of specific
examples, matters not stated are not covered

MISCHIEF APPROACH
(cont.)
by going outside the text of the statute to determine

the Act’s function, the mischief or purpose approaches
are significantly different to the literal and golden rule
approaches
see Smith v Hughes
courts may also be assisted by maxims

MISCHIEF APPROACH
(cont.)
maxims are necessary to aid construction because

no drafter (of legislation) can define words in such
a manner that every possible interpretation is
covered and no definition can be exclusive or
perfectly describe a class of people, things or acts
2 maxims commonly used by the courts are:
noscitur a sociis
ejusdem generis

NOSCITUR A SOCIIS
means ‘it is known from its associates’

used where a word is ambiguous or unclear in a
group of specific words. Its meaning is limited
to the same class or types of things as the
specific words.
see Prior v Sherwood

EJUSDEM GENERIS
means of the same kind, class, or nature

known as the class rule
the broad, general word is limited to the same class as
the more specific words preceding it
used to find a viable meaning for a broad general word
written law in Malaysia:
1. The Federal Constitution
2. State Constitutions
3. Legislation
4. Subsidiary legislation

THE FEDERAL
CONSTITUTION
supreme law of the country

applies to all States in the Federation
laying down the powers of the Federal and State
Governments
enshrines the basic or fundamental rights of the
individual

STATE CONSTITUTION
each State possesses its own constitution

contain provisions which are enumerated in
the Eighth Schedule
Federal Constitution
some of these provisions include matters
concerning the Ruler

STATE CONSTITUTION
(cont.)
the Executive Council, the Legislature, the Legislative

Assembly, financial provisions, State employees, and
amendment to the Constitution
if such essential provisions are missing, or if any
provision is inconsistent with them, Parliament may
make provision to give effect to them or to remove any
inconsistencies, as the case may be – Article 71,
Federal Constitution

LEGISLATION
law enacted by a body constituted for this purpose

legislated by Parliament at federal level and by the
various State Legislative Assemblies at state level
laws that are enacted by Parliament after 1946 but
before Malaysia’s Independence in 1957 – Ordinances
those made after 1957 – Acts
laws made by the State Legislative Assemblies (except
in Sarawak) – Enactments
laws in Sarawak – Ordinances

SUBSIDIARY LEGISLATION
Interpretation Act 1967: ‘any proclamation, rule, regulation,

order, notification, by-law or other instrument made under
any Ordinance, Enactment or other lawful authority and
having legislative effect’
deals with the details about which the legislature has neither
the time nor the technical knowledge to enact
if made in contravention of either a parent Act or the
Constitution is void – an exception to this rule is the
proclamation of emergency under Art 150 of the Federal
Constitution
see Eng Keock Cheng v Public Prosecutor

UNWRITTEN LAW
portion of Malaysian law which is not written

comprises:
1. English law
2. Judicial decisions
3. Customs

ENGLISH LAW
English common law and rules of equity

subject to 2 limitations:
1. It is applied only in the absence of local statutes on
the particular subjects
2. Only that part of the English law that is suited to
local circumstances will be applied
3. For Peninsular Malaysia – English common law and
the rules of equity are applicable as they stood on 7
April 1956

ENGLISH LAW (cont.)
1. For Sabah and Sarawak – English common law and

the rules of equity together with statutes of general
application, as they stood on 1 December 1951 and
12 December 1949 respectively, apply
2. For commercial matters – in Peninsular Malaysia
(other than Penang and Malacca), principles of
English commercial law as it stood on 7 April 1956
are applicable in the absence of local legislation

ENGLISH LAW (cont.)
1. For Penang, Malacca, Sabah and Sarawak – English

commercial law at the date on which the matter has to be
decided is applicable in the absence of local legislation
2. However, since there are so many local statutes already
passed which deal with commercial subjects, there is no
total reliance on English commercial law, e.g.:
Companies Act 2016
Partnership Act 1961 (Revised 1974)

ENGLISH LAW (cont.)
Financial Services Act 2013

Contracts Act 1950 (Revised 1974)
Bills of Exchange Act 1949 (Revised 1978)
see Kon Thean Soong v Tan Eng Nam

ENGLISH LAND LAW
section 6 of the Civil Law Act 1956

see United Malayan Banking Corporation Bhd & Anor v
Pemungut Hasil Tanah, Kota Tinggi
Conflict between Common Law and Equity
section 3(2) of the Civil Law Act 1956 – 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

JUDICIAL DECISIONS
Malaysian law can also be found in the judicial

decisions of the High Court, Court of Appeal and the
Federal Court, the then Supreme Court and the Judicial
Committee of the Privy Council
decisions of these courts were made and still are being
made by the ‘doctrine of binding precedent’

PRECEDENT
is basically a judgment or decision of a court of law

cited as an authority for the legal principle embodied in
its decision
may comprise:
res judicata – final order of the court binding the
immediate parties to the decision
ratio decidendi – the reason for the decision
obiter dictum (sayings by the way) – no binding power,
although it can exercise an extremely strong influence in a
lower court, and even in a court of equivalent standing,
depending on the court and the judge

PRECEDENT (cont.)
‘following a precedent’ means that a question should be

resolved in a certain way today because a similar
question has been so decided before
this process of following an established procedure is
called stare decisis which literally means ‘to stand by a
decision’
advantages of precedents:
promote consistency, coherence and certainty
promote efficiency and justice, ensuring equality and fairness

PRECEDENT (cont.)
disadvantages of precedents:
certain precedent may not be relevant in today’s
circumstances but the judge may have to nevertheless follow
it
may also be slow in responding to community changes and it
is cumbersome to change them as they may require an Act of
Parliament
in applying binding precedents, Malaysian law can be
found in the judicial decisions of the High Court, Court of
Appeal and the Federal Court and the then Supreme
Court, Federal Court and the Judicial Committee of the
Privy Council

PRECEDENT (cont.)
decisions of these courts were made, and are still being made,
systematically by the use of what is called the ‘doctrine of
binding judicial precedent’
in the case of a binding precedent (the ratio decidendi of an
earlier case decision), each court is bound by the decisions of
courts of the same level or higher than it, in the same hierarchy
of courts
if a judge applies an existing rule of law without extending it,
his decision may be called a declaratory precedent
if the case before a judge is without precedent, then the
decision made by him may be called an original precedent

HIERARCHY OF
PRECEDENTS
the functioning of the system of precedents is based on the
hierarchy of decisions
although the Federal Court and the Judicial Committee of the
Privy Council do not form part of the present judicial system,
they were part of the judicial system until 31 December 1986 and
decisions made by them are still binding on the present courts
the Supreme Court was part of the judicial system from 1 January
1987 to 23 June 1994
the general rule regulating the hierarchy of precedents is based on
the principle that decisions of higher courts bind lower courts, and
some courts are bound by their own decisions

THE JUDICIAL SYSTEM
The present court system is as follows:

PREVIOUS JUDICIAL
SYSTEMS
Between the period of 1 January 1987 and 23 June

1994, the Court system was as follows:

PREVIOUS JUDICIAL
SYSTEMS (cont.)
Prior to 1 January 1987, however, the court system
was as follows:

JUDICIAL COMMITTEE OF
THE PRIVY COUNCIL
was the final court of appeal of Malaysia prior to 1

January 1987
its decision was in the form of an advice to the Yang di-
Pertuan Agong who was obliged to give effect to it
appeals to the Privy Council on criminal and
constitutional matters were abolished on 1 January 1987
effective 1 January 1987, no more appeals could be made
to the Privy Council, and the highest court of appeal was
then the Supreme Court

FEDERAL COURT
abolished on 1 Jan 1987

in its stead, the Supreme Court was set up and was the
highest court until 23 June 1994
now it is the highest court
appeals from the High Court can be made to the Court of
Appeal
the Supreme Court has, therefore, been abolished since
24 June 1994

HIGH COURT
decision is binding on all subordinate courts but the High

Court judge is not bound to follow the decision of another
however, he may do so as a matter of ‘judicial comity’
Sessions Courts and the Magistrates’ Courts
are bound by precedents laid down by the superior courts
but their own decisions are not binding on any court

HIGH COURT (cont.)
decisions of the Judicial Committee are binding on

all courts in Malaysia in the following
circumstances:
1.
1. If the law decided is given on appeal from Malaysia

2. If the decision is given on appeal from another
Commonwealth country and the law is in pari
materia or similar to that of the law in Malaysia
see Khalid Panjang & Ors v Public Prosecutor

DISTINGUISHING
PRECEDENTS
it is not in every case that judges apply earlier precedents

a judge may not wish to apply precedents in the following
circumstances:
1. The precedent is laid down by a lower court, where the
case is on appeal
2. The earlier precedent is arrived at per incuriam (i.e. made
in ignorance of a statute or a binding precedent)
3. There are material differences in facts between the case
before them and the case laying down the precedent

DISTINGUISHING
PRECEDENTS (cont.)
advantages in applying the system of binding

judicial precedents:
1. The law evolved is a result of an actual dispute rather
than a hypothetical situation
2. It is more flexible when compared to statute law enacted
by Parliament
3. Case-law is richer in legal detail than statute law

DISTINGUISHING
PRECEDENTS (cont.)
disadvantages in applying the system of binding

judicial precedents:
1. There is a tendency to overlook some authorities
inadvertently – too many cases
2. It is sometimes difficult to tell whether a particular
statement in a judgment is ratio or dicta. It is the ratio
decidendi of a case which makes the decision a
precedent for the future while an obiter dictum is not
binding as a precedent

CUSTOMS
generally, customs relating to family law, i.e. marriage,

divorce and inheritance, are given legal force by the
courts in Malaysia
‘adat’ applies to Malays
prior to the enforcement of the Law Reform (Marriage
and Divorce) Act 1976, Hindu and Chinese customary
law applied to the Hindus and Chinese respectively
in Sabah and Sarawak, native customary laws apply in
land dealings over native customary lands and family
matters

CUSTOMS (cont.)
in Peninsular Malaysia there are two main varieties of

Malay customary law: the adat perpatih and the adat
temenggong
Adat Perpatih
prevalent among Malays in Negeri Sembilan and Naning in

Malacca
effective in matters such as land tenure, lineage and the
election of lembaga, undang and the Yang di-Pertuan Besar
noted for its matrilineal system

CUSTOMS (cont.)
Adat Temenggong
practised by the other states

originated from Palembang, Sumatra
patrilineal system of law

ISLAMIC LAW
each State has the power to administer Islamic Law

the head of the Muslim religion in a state (except for
Penang,Malacca, Sabah, Sarawak and the Federal Territories) is
the Sultan
in Penang, Malacca, Sabah, Sarawak and the Federal
Territories, the Yang di-Pertua Negeri is the head
the courts enforcing Islamic law – the Syariah Courts
Islamic law applies to Muslims only
in businesses, esp. areas of banking and finance, Islamic
principles are increasingly relevant in lending and investments

REVIEW
Meaning of ‘Sources’
Main Sources of Malaysian Law
- Written Law (components)
- Unwritten Law (components)
- Islamic Law


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BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

where statute law and common law conflict,

BUSINESS LAW (THIRD EDITION) All Rights Reserved

in interpreting statutes, courts are guided by:

BUSINESS LAW (THIRD EDITION) All Rights Reserved

if the words of the Act are clear, effect must be given

BUSINESS LAW (THIRD EDITION) All Rights Reserved

3 main approaches 方法 to interpretation used

BUSINESS LAW (THIRD EDITION) All Rights Reserved

courts assume that the meaning and intention of

words and sections must be read in the context of

BUSINESS LAW (THIRD EDITION) All Rights Reserved

takes the plain meaning of the words used in the

BUSINESS LAW (THIRD EDITION) All Rights Reserved

where the literal interpretation is not possible,

BUSINESS LAW (THIRD EDITION) All Rights Reserved

by going outside the text of the statute to determine

BUSINESS LAW (THIRD EDITION) All Rights Reserved

maxims are necessary to aid construction because

BUSINESS LAW (THIRD EDITION) All Rights Reserved

means ‘it is known from its associates’

BUSINESS LAW (THIRD EDITION) All Rights Reserved

means of the same kind, class, or nature

BUSINESS LAW (THIRD EDITION) All Rights Reserved

supreme law of the country

BUSINESS LAW (THIRD EDITION) All Rights Reserved

each State possesses its own constitution

BUSINESS LAW (THIRD EDITION) All Rights Reserved

the Executive Council, the Legislature, the Legislative

BUSINESS LAW (THIRD EDITION) All Rights Reserved

law enacted by a body constituted for this purpose

BUSINESS LAW (THIRD EDITION) All Rights Reserved

Interpretation Act 1967: ‘any proclamation, rule, regulation,

BUSINESS LAW (THIRD EDITION) All Rights Reserved

portion of Malaysian law which is not written

BUSINESS LAW (THIRD EDITION) All Rights Reserved

English common law and rules of equity

BUSINESS LAW (THIRD EDITION) All Rights Reserved

1. For Sabah and Sarawak – English common law and

BUSINESS LAW (THIRD EDITION) All Rights Reserved

1. For Penang, Malacca, Sabah and Sarawak – English

BUSINESS LAW (THIRD EDITION) All Rights Reserved

Financial Services Act 2013

see Kon Thean Soong v Tan Eng Nam

BUSINESS LAW (THIRD EDITION) All Rights Reserved

section 6 of the Civil Law Act 1956

BUSINESS LAW (THIRD EDITION) All Rights Reserved

Malaysian law can also be found in the judicial

BUSINESS LAW (THIRD EDITION) All Rights Reserved

is basically a judgment or decision of a court of law

BUSINESS LAW (THIRD EDITION) All Rights Reserved

‘following a precedent’ means that a question should be

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

The present court system is as follows: