Equity - Exam Notes (1)

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Assignment of ‘Choses in Action’ / Legal Assignment / Equitable Assignment
A. Legal or Statutory Assignment
Introduction
• Meaning of assignment: Method of transferring benefits of contract to a third party.
• Basic arrangement: A as the assignor, transfers the benefit to a third party, C, the
assignee. C would be able to sue B.
• Meaning of ‘choses in action’: Property rights that are enforceable through legal
action and not by taking of physical possession.
• Example: Contractual rights such as debts. Non-contractual rights can also
constitute choses in action.
Statutes
Effect
➢ If the statutory conditions are satisfied, the assignor would be the holder of legal title
to the right assigned.
➢ This enables him to sue, without the need to join the assignor as a party.
➢ In MBF Factors Sdn Bhd v Tay Hing Ju, Jeffrey Tan J explained that the assignee
can sue in his own name instead of assignor.
Conditions
1. The assignment must be “absolute”. The assignment will not be absolute if it is
subject to consideration of account of the assignor and assigner, but it will be
absolute if the assignment is a total of assignor’s interest. Thus, an assignment of
debt is absolute if the assignor has assigned all that is due to him.
2. The assignment must be “by writing”. The assignment must be in writing and signed
by the assignor. This need not be by deed, and an agent may do so in the name of
the principal.
3. “Not purporting to be by way of charge.” A valid statutory assignment must not
purport to be by way of charge; and technically, “An assignment by way of charge is
one which merely gives a right to payment out of a particular fund, and does not
transfer the fund to the assignee.”
4. Notice. It is a prerequisite of a valid statutory assignment that express notice in
writing is given to the debtor, trustee or other person from whom the assignor would
have been able to claim. No particular form is necessary, so long as “it sufficiency
indicates the fact of the assignment.” Notice is effective from time of receipt by the
debtor.
The Malaysian and English positions
on assignment in law are the same.
English decisions provide guiance
on interpretation of s 4(3) of Civil
Law Act 1956.
S 4(3) Civil Law Act 1956 & S 136(1) Law of
Property Act 1925
Chose (French for "thing") is a term used
in common law tradition to refer to rights in
property, specifically a combined bundle of rights.

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5. Assignee must be have provided consideration in respect of the agreement between
him and assignor as to enable the former to sue without joining the assignor as a co-
plaintiff.
If one or more of the conditions are not fulfilled, the assignment may still be good as an
equitable assignment. Lord Macnaghten in William Brandt’s Sons & Co Ltd v Dunlop Rubber
Co Ltd explained that the statute does not forbid equitable assignments in the slightest
degree.”
B. Equitable Assignment
• When statutory assignment is not effective, equity may save the assignment of ‘choses
in action’ as an equitable assignment. Equitable assignment of choses in action covers
both legal and equitable choses. Just like statutory assignment, the assignee still obtains
title thus enabling him to bring action without joining assignor as a party.
The difference between legal assignment and equitable assignment:
Legal Assignment Equitable Assignment
The assignee, as a matter of procedural
law, cannot normally recover damages
unless the assignor is joined as a party: this
is necessary to enable the court to make a
final determination
The asignee may sue in his right without
joining the assignor save where the latter
still has some interest in the subject matter
of the proceeding.
In Malaysia International Merchant Bankers
Bhd v Malaysian Airlines Systems Bhd,
Mohamed Azmi J explained that the
assignor cannot be compelled to come as a
plaintiff. The failure of the assignee to join
the assignor as a party is not fatal to the
plaintiff’s claim.
No particular form is required. The prerequisite requirement is to make the meaning
plain, as in it is enough if a clear intention is manifested by words or conduct, to transfer
the benefit of a clearly defined right from an assignor to the assignee. In Snell’s Equity, it
is explained that equity has always looked to the intent rather than the form, and all that
is needed is a sufficient outward expression of an intention to make an immediate
disposition of the assignor’s right.
In the case of Malaysian International Merchant Bankers Bhd v Malaysian Airlines
System Bhd, it was explained that the words must clearly show an intention that the
assignee is to have the benefit of the chose in action where in the context of this case, by
addressing either to the debtor or to the assignee. Once there is a clear intention, an
equitable assignment is created.

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No notice is required, though it is desirable. The assignment is validly created, as
between the assignor and assignee, the moment it is made. This is not affected by the
fact that no notice had been given to the debtor although the debtor may only be bound
upon receipt of the notice.
The equitable assignment does not have to be communicated to the trustee, although if
the trustee has notice of the assignment, it completes the transaction as to third parties,
establishing a priority on the part of the assignee.
Mohamed Azmi J in Malaysian International Merchant Bankers Bhd v Malaysian Airlines
System Bhd that
• A debtor who has received notice of equitable assignment must withhold all further
payments to the assignor unless made with the consent of the assignee. If he pays to
the assignor without such consent, he will have to pay over again to the assignee.
• After notice, the debtor becomes trutee for the assignee.
• In the context of the case, Mohamed Azmi J held that equitable assignment is
complete and becomes absolute when the notice was acknowledged.
• In equitable assignment, it is immaterial that the deed of assignment was not signed.
The signaure is a mere formality.
• The assignment becomes enforceable when money becomes due and payable by
the debtor.
An equitable assignment as between the assignor and assignee is not invalid
solely because it was not supported by consideration.
It is noted in Snell that the debtor is not permitted to refuse paying assignee on the
ground that the question of value only arise between assignor and the assignee.
The position of the assignee is subject to any defence which can be properly
raised against the assignor.
i) Claims founded on the contract assigned
Debtor may use defence like right of rescission on account of fraud. It applies to contract
claims between assignor and assignee and they do not extend to claims that are strictly
personal in nature.
ii) Claims not founded on contract assigned
Debtor can set off his claims against assignee if his right to it arises before debtor has
notice of assignment.

Effect of Section 6 Civil Law Act 1956 in respect to equity
The Malaysian Torrens system as codified in the National Land Code 1965 is system of
registration of tiles which aims to provide simplicity (Oh Hiam v Tham Kong). It is different
from England’s land law. Under the Torrens system, the registration is everything (Teh Bee
v Maruthamuthu).
In safeguarding the Torrens systems, s 6 of the Civil Law Act 1956 prohibits the reception
of English law relating to tenure, conveyancing, assurance or succession to immovable
property or any estate, rights or interest.
However, the court in Wilkins v Kannamal held that the Torrens system does not abrogate
the rules of equity. S 6 CLA allows general reception of English equity in cases where there
is lacuna in local law and where application of English equity is suitable to local circumstances.
In the case Devi v Francis, appellant purchased and occupied land. Purchase was
incorporated in agreement. Respondent claimed the land back. Court applied equitable
estoppel and rejected the contention that equity is inapplicable to land matters in Malaysia.
Equity is in fact applicable by s 6 and s 3(1) and (2).
In UMBC v PHT Kota Tinggi, it was held that the English equitable principles of general
application are applicable to land matters as long as it’s consistent with Torrens system. In
Oh Hiam v Tham Kong, the Privy Council held that equitable remedy of rectification was
available to appellant when the claim was based on right in personam.
Court has also applied the doctrine of bare trust. Federal Court in Borneo Housing
Mortgage Finance v Time Engineering affirmed that the doctrine of bare trustee applicable
in a modified form in Malaysia.
The High Court in Templeton v Law Yat Holding, while held that the NLC s 206(3)
provides authority for the liberal application of equity whenever there is a basis for that. This
shows the Court never accepted the effect of section 6 as a whole but rather to halt any
direct matters to land.
S 6 prevents importation of the English law land under section 3(1) to Malaysia’s land
matters. However, in the interest of justice, the court adopted English equitable principles of
general application to land law and grants relief where there is lacuna is local law. Thus, it is
my humble opinion that the effect of section 6 does not conclusively bar the application of
the equitable principles in the Malaysian land law.

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Fusion of Law and Equity
Introduction
• The Judicature Acts 1873 and 1875 have reorganized the courts
to make Supreme Court administer both law and equity.
• S 24 of the 1873 Act has given the power and duty to judges to
recognize and give effect to both legal and equitable rights,
claims, defences and remedies.
• Further, s 25 was made for situations in which rules of law and
equity were in conflict. In case of the said conflict, the rules of
equity should prevail.
Effect of ss 24 and 25
• Before Judicature Acts, there were cases that give rise to
inconsistent remedies due to common law and equity having
different rules.
• In such cases, the equitable rule would prevail by means of the
grant of a common injunction.
• S 24(5) abolished the common injunction, and that the equitable
rule replaces it. The court in such cases now have only one rule
to enforce.
• In cases that do not result in conflict between the rules of
common law and equity, ss 24 and 25 had no application.
• Example of a case had no application is where, the common law
would award damages for breach of voluntary contract made by
deed, but there was no reedy available in equity. Equity however,

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would not restrain the plaintiff from obtaining his common law
remedy.
• To illustrate further, s 25(11) has been applied in Berry v Berry,
to prevent a wife from succeeding in an action on a separation
deed. The deed had been varied by a simple contracct, which
was no defense to an action at law. However, the equitable rule
was that such variation is effective and therefore, that rule
prevailed.
Fusion of law and Equity or Merely Fusion of Administration
• The orthodox view is that there has merely been a fusion of
administration. The view is that, “The two streams of jurisdiction,
though they run in the same channel, run side by side and do not
mingle in their waters.”
➢ This view is asserted by Mummery LJ in MCC Proceeds Inc v
Lehman Brothers International (Europe) who observed that,
“Judicature Acts were intended to achieve procedural
iprovements in the administration of law and equity in all
courts, not to transform equitable interests into legal titles, or
to sweep away altogether the rules of common law.”
➢ The language of s 49 of the Senior Courts Act 1981 which
replaces s 25(11) of the Judicature Act 1873, also appears to
assume the continued separate existence of rules and equity
and rules of the common law.
• The alternative view is that law and equity are fused. This was
put forward by Lord Diplock in United Scientific Holdings Ltd v

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Burnley Borough Council. According to Lord Diplock, the
Judicature Act 18873 has brought about the fusing of adjectival
law system and the substantive law which were formerly
administered under the courts of Chancery of law. Lord Diplock
says the two streams have mingled now.
• Lord Browne-Wilkinson, in Tinsley v Milligan also takes this
alternative view, “More than 100 years has elapsed since the
fusion of the administration of law and equity. The reality of the
matter is that, in 1993, English law has one single law of property
made up of legal estates and equitable interests.

Meaning of maxims and illustrations from cases
Maxims Meaning Cases
a) Equity acts in personam This is a maxim that governs how equity is
administered in law.
To act in personam means it acts upon a
person’s conscience.This is as opposed to
acting in rem which is a characteristic of
common law where it acts upon the property
that is subject to the suit.
This maxim comes in handy with regard to
properties held abroad.
The personam maxim has its limitations:
1. The defendant has to be within the
jurisdiction of the court.
2. The order must not violate the legal rules
of another country.
3. The order given must be capable of
being executed without intervention of a
foreign court.
In Penn v Lord Baltimore, an order of specific
performance was granted to the plaintiff who
brought a boundary dispute case to an
English court, yet the land was in Maryland,
USA. The parties to the dispute were English
and both lived in England.
Equity can make orders affecting property
outside its jurisdiction by making orders
against the person.
b) Equity is equality This maxim flows from the fundamental
notion of equality or impartiality due to the
conception of Equity and is the source of
many equitable doctrines.
The maxim is of very wide application. The
rule of ordinary law may give one party an
advantage over the other. But the court of
equity, where it can, puts the litigating parties
on a footing of equality.
In Jones v. Maynard, Vaisey J held in the
case of a joint bank account used by both
spouses over a considerable period, the
account should not, after their separation, be
picked apart.
Vaisey J had said, "I think that the principle
which applies here is Plato's definition of
equality as a 'sort of justice.’ If you cannot
find any other, equality is the proper basis.”

Equity proceeds in the principle that a right or
liability should as far as possible be
equalized among all interested.
In other words, two parties have equal right
in any property, so it is distributed equally as
per the concerned law.
c) Equity follows the law This maxim means, "equity will not allow a
remedy that is contrary to law."
It indicates the relationship between common
law and equity, which implies that equity
would intervene with the common law if
justice required it.
It however, does not attempt to overrule
common law judgments.
Equity will, where possible, ensure that its
own rules are in line with the common law
principles.
Cardozo wrote in his dissent in Graf v. Hope
Building Corporation, "Equity works as a
supplement for law and does not supersede
the prevailing law."
d) He who comes to equity must come with
clean hands
This maxim means, if you ask for help about
the actions of someone else but have acted
wrongly, then you do not have clean hands
and you may not receive the help you seek.
For example, if you desire your tenant to
vacate, you must have not violated the
tenant's rights.
In D & C Builders Ltd v Rees, Rees took
advantage of the builders’ serious financial
difficulties, and announced the work was
defective and only offered $300 instead of
the balance $482 for the work. The builders
after accepted the $300 returned to claim the
reaining debt. Lord Denning held that Rees
had not come with clean hands and that
promissory estoppel cannot be applied.

e) Equity regards that as done which ought
to be done
There are times in law where the misdeeds
of others wind up obscuring the natural order
of events, and so it is that the equitable
maxim above is crucial to redressing the
imbalance, and putting matters where equity
can reign.
A fitting case example would be Attorney-
General for Hong Kong v Reid, where a
senior crown prosecutor received bribes to
obstruct the course of justice, while
employed in a manner that bestowed
fiduciary duties.
When it was discovered that those illegal
payments had been invested in a number of
properties, it was agreed that those homes
were held on trust by the appellant for the
benefit of the Crown; and while the rules of
equity prevent a debtor to the injured party
being a trustee for the monies received, the
Court of Appeal allowed that conflict to stand
in order for the outcome to find form, and for
natural remedy to occur.

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Perpetual injunction
• When granted, effect and purpose
➢ S 51(2) Specific Relief Act 1950:
 Perpetual injunction can only be granted by a decree made at the hearing upon
the merits of the suit.
 The defendant will be perpetually enjoined from the assertion of a right, or from
the commission of an act, which would be contrary to the rights of the plaintiff.
 It may be granted to prevent the breach of an obligation existing in favour of the
applicant, whether expressly or by implication.
➢ S 52(2) Specific Relief Act 1950:
 Where the obligation arises from contract, the court shall be guided by the rules
and provisions as provided for in Chapter II of the Act which deals with the
specific performance of contracts.
➢ S 52(3)(c)
 Where the invasion is such that pecuniary compensation would not afford
adequate relief.
➢ S 52 Illustrations
 (v) A, a very eminent man, writes letters to family topics to B. After the death of A
and B, C, who is B’s residuary legatee, proposes to make money by publishing
A’s letters. D, who is A’s executor, has a property in the letters, and may sue for
an injunction to restrain C from publishing them.
• Where injunction is applied for in support of a legal right, it must be shown that
damages are inadequate remedy.
➢ Snell’s Equity: Injunction will normally be refused if future injury can be adequately
compensated by money unless an award of money would be useless (for example,
the defendant is a poor person). Whether damages would be an adequate remedy is
normally a question of fact, but many wrongs such as continuing nuisances or
infringements of trademark, by their nature demand more adequate relief than
money.
➢ At present, the judicial concern is not an adequacy of damages in a literal sense but
given the circumstances of the case, whether damages alone are sufficient to the
justice to the applicant.
 Evans Marshall & Co Ltd v Bertola SA, Sachs LJ explained that: “The question is
it just, in all the circumstances, that a plaintiff should be confined to his remedy in
damages?”
• Grant of injunction is a matter of discretion
➢ Adequacy of damages is not a limitation in respect of jurisdiction but one that relates
to discretion, a matter which is made clear by the wordings of s 50 of Specific Relief
Act 1950.
• Prove the defendant has invaded or threatened to invade the plaintiff’s rights to, or
enjoyment of, property
➢ Snell’s Equity: Perpetual injunction granted at the instance of a person who has the
right which is justiciable before the court.
 There will be sufficient right:
a) If the claimant has a cause of action against the defendant; or
b) If the claimant would have such a cause of action; or
c) If the defendant is behaving in an unconscionable manner.

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 Although it is unnecessary for claimant to wait until his rights are
interfered with before he can seek an injunction, the court should be
satisfied that there is a real risk of future interference.
➢ Propositions:
a) The grant of injunction is dependent on plaintiff showing some property, right or
interest in respect of the matter in dispute (Day v Brownrigg).
b) Where the cause of action requires the proof of special damage, this must be
proved (White v Mellin),
c) In cases of breach of statutory duty, the Attorney General may, by means of
relator actions, seek injunction (AG v Sharp)
d) The grant of perpetual injunction is at the court’s discretion.

Promissory Estoppel
Promissory estoppel - Equitable principle whereby parties will not be allowed to go back
on the asssumption, promise or representation made, when it is unfair or unjust (Anson).
The application is an eception to the rule in Pinnel’s Case - A person may rely on
promissory estoppel to estop a creditor from going back on his promise after he or she has
agreed to accept less in full discharge of a debt.
1. There must be clear and unequivocal
promise on the part of the promisor,
either expressly or as a matter of
inference.
Hughes v Metropolitan Railway Co
Facts:
A landlord gave a tenant 6 months notice to
carry out repairs failure to do so would result
in forfeiture of the lease. The landlord and
tenant then entered into negotiations for the
tenant to purchase the freehold of the
property. It was thought by both parties that
a conveyance of the property would take
place. The tenant had not carried out the
repairs as they believed they would be
purchasing the freehold and the repairs
required by the landlord were not essential
to his use of the property. At the last minute
negotiations broke down and the landlord
gave the tenant notice to quit for failure to
carry out the repairs.
Held:
The time limit imposed for carrying out the
repairs was suspended during the
negotiations.
2. It must be inequitable for the promisor to
go back on his promise and insist on his
strict legal right in law.
Considerations:
a) Voluntariness of the promise on the
part of the promisor,
b) Whether the promisee had
improperly taken advantage of the
promisor’s difficult financial position,
and
c) Whether threats were utilised so as
to coerce the promisor
D & C Builders Ltd v Rees
Fact:
The builders sought payment from Rees for
building work done and materials supplied in
respect of alterations and repairs completed
on Rees’ shop. Rees did not pay, but the
work continued and a second bill was
issued. Builders started to have financial
difficulties so requested the funds again.
Rees offered Builders a reduced lump sum
in payment of the debt and stated that if it
was not accepted, they would get nothing. A
cheque was issued after Builders feared
they would receive no payment at all and
Rees provided a receipt stating the funds
were in full payment of the account. Builders
brought action for the balance and Rees
filed a defence stating that the work was
defective and that Builders had entered into
a binding agreement.
Held:

The appeal by Rees was dismissed. The
agreement was invalid as there was no
consideration in favour of Builders for
reducing the value of the amount owing by
Rees. The case of Foakes v Beer (1884) 9
App Cas 605 was applied in the fact that the
payment was by cheque made no difference
to the principle that late payment of a lesser
amount did not equal satisfaction of the total
amount owing. Builders had been under
duress to accept a reduced amount due to
their financial position which Rees was
aware of and took advantage of. An
acceptance arising from a threat does not
amount to a settlement.
3. A problem had existed in the past was
whether the proisee, in relying on the
promise, must have suffered detriment.
In Hughes v Metropolitan Railway Co,
the requirement of detriment on the part
of the promise was not specifically
required: “It is enough if the promisee
has altered his position in reliance on the
promise so that it would be inequitable to
allow the promisor to act inconsistently
with it.”
Boustead Trading Sdn Bhd v Arab-Malaysia
Merchant Bank Bhd, Gopal Sri Ram JCA
explained, “Detriment element does not form
part of the doctrine of estoppel. All that need
be show is in the particular circumstances of
a case, it would be unjust to permite the
representator to insist upon his strict legal
rights.”
4. Promissory estoppel as far as English
law is concerned, operates as a shield
and not a sword and it gives right to no
cause of action. Nevertheless, the
proisee may appropriately bring an
action if he has an independent cause of
action.
Waltons Store (Interstate) Ltd v Maher, the
assummed or represented state of affairs
may provide a cause of action.
However, in Boustead Trading Sdn Bhd v
Arab-Malaysia Merchant Bank Bhd, Gopal
Sri Ram JCA departs from the orthodoxy
and said, “Estoppel is not a cause of action
but it may assist a plaintiff by preventing a
defendant from asserting the existence of
some fact which destroys the cause of
action.”

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Equity Tutorial Week 5
Equity and Trust I (Universiti Malaya)
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Part 1 Question 7
Explain the significance and scope of section 3 of the same Act on the reception of
English rules of equity in Malaysia. What do you think is the effect of section 6 of
the same Act on section 3?
Significance of Section 3
1. What does Section 3 says?
3(1)- Section 3(1) provides for the general application of English law. Section 3(a), (b), (c) provide clearly
that so long as other provision has not been made or may hereafter be made (in the absence of written law),
the courts in Malaysia shall apply the common law and rules of equity as administered in England on 7th
April 1956 for West Malaysia, 1st
December 1951 for Sabah and on 12th
December 1949 for Sarawak.
Therefore, not all common law and equity in England is applicable in Malaysia.
2. What is the role of English law in Malaysian law?
According to Section 3, only common law and rules of equity (for Sabah and Sarawak status of general
application as well) existing on the dates dministered in England on the dates specified can be applied to
fill in the lacuna in thespecified can be applied to fill in the lacuna in the law. This means that the common
law and rules of equity a law.
3. What does Section 3 says when there is a conflict between common law and equity?
3(2)- Since the English Judicature Acts of 1873 and 1875, it has been established that in the event of a
conflict between common law and equity, the latter will prevail. The same applies in Malaysia by virtue of
S3(2) which enacts that “it 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.”
4. Any cases that illustrate the law?
Earl of Oxfords Case
“The status of English law applicable in Malaysia reaffirmed by Lord Russell when delivering the opinion
of Privy Council in Lee Kee Chong v Empat Nombor Ekor, the Civil Law Ordinance 1956 section 3
adopted English law as administered at its effective date, so that any subsequent march in English authority
is not embodied.”
Tan Seng Gui v Palmer
Held: “we have a section which enacts that if there is a conflict between the rules of law and equity, the
rules of equity are to prevail.”
Arumugam S/O Seenivasigam v Sinammah
Facts: the applicant in this case was the father of a female infant, her mother died shortly afterwards from
complication consequent on the birth. The respondent agreed at the applicant’s request to look after the
baby and thereupon applicant handed her over to the respondent. Ever since the infant has been living with
and has been looked after by the respondent. Summons issued in which applicant asked for an order that
respondent surrender the infant to his custody. At common law the parent, as against other persons
generally, an absolute right to the custody of the child, unless he or she has forfeited it by certain sort of
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misconduct or the right of the parent has been otherwise affected by some specific statutory provision. In
equity the dominant matter for the consideration of the court is the welfare of the child, although a parent
has a right but not an absolute right to the custody of the child and the court will be very cautious in regard
to the circumstances in which they will interfere with the parental right. The court has to consider the whole
of the circumstances of the case, the position of the parent, the position of the child, the age of the child, the
religion of the child, and the happiness of the child.
Held: there is no written law in force in the federation making any provision which is applicable in the
circumstances of this case. The court must therefore apply the common law and rules of equity as
administered in England by virtue of provisions of S3(1) of Civil Law Ordinance, in the event of conflict
with reference to the same matter, rules of equity shall prevail. The law applicable is the case of Queen v
Gyngall.
Scope of Section 3
1. What are the qualification as to the application of rules of equity in Malaysia?
Common law and rules of equity apply under S3 (1) subject to the following qualifications:
Absence of local legislation
This qualification is contained in the opening proviso. The same qualification exists in the opening proviso
in S3 (1). The qualification is merely the statutory recognition of judicial practice of resorting to English
law to fill lacunae in the local law.
2. Other than that, what is the second qualification?
Cut off dates
Only common law and rules of equity (and in Sabah and Sarawak, English statutes of general application)
existing in England on the dates specified can be applied to fill the lacunae in local law. As the Privy
council put it in Lee Kee Choong v Empat Nombor Ekor (NS), case concerning whether a valuation on the
fair price of shares could be questioned), their Lordships need not consider developments in English law
after 1956 because under S3(1) CLO 1956- which is the same word for word as S3(1)(a) CLA 1956- “any
subsequent march in English authority is not embodied.”
3. Does the cut off date stop Malaysian court to refer to developments of equity in UK
completely?
However, despite the clear and categorical wording of S3(1) to the effect that Malaysian courts shall apply
English law existing on the specified dates, in practice the courts may follow developments after such
dates, English decisions made after such dates, though not binding, are persuasive. The decision has left the
door open to the continuing reception of principles of English common law and equity in Malaysia. The
choice is left to the wisdom of the Malaysian judiciary. That choice has been seized upon to develop the
common law in Malaysia in line with developments in England, particularly in novel situations.
Jamil bin Harun v Yang Kamsiah
Facts: an action for damages for negligence arising out of a road accident, the Federal Court had itemized
the damages under the various heads of loss or damage. Counsel for the appellant criticized the judgment of
the Federal Court, which he said, represented not the law of Malaysia but the law of England. His general
submission was that the Federal Court had erred in following the English authorities, in particular the
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decision of the House of Lords in Lim Poh Choo v Camden. He referred to Section 3 of Civil Law Act
1956, the effect of which is that developments after the dates specified in the section do not in themselves
form part of Malaysian law.
Held: modern English authorities may be persuasive, but are not binding. In determining whether to accept
their guidance, the courts will have regard to the circumstances of the states of Malaysia and will be careful
to apply them only to the extent that the written law permits and no further than in their view it is just to do
so. The Federal Court is well placed to decide whether and to what extend the guidance of modern English
authority should be accepted, unless it could be demonstrated that the Federal Court had overlooked or
misconstrued some statutory provision or had committed some error of legal principle recognized and
accepted in Malaysia.
4. What is the third qualification then?
Local Circumstances
English law is applicable only to the extent permitted by local circumstances and inhabitants, and subject to
qualifications necessitated by local circumstances. This qualification, contained in the concluding proviso
to S3 (1), is commonly referred to as the “local circumstances” proviso. In light of Section 3, whether an
English principle can be said to be inapplicable to the local conditions depends very much on the attitude of
the deciding judge. The proviso is both appropriate and essential given the cosmopolitan nature of
Malaysian society. English law may be most suited in its homeland but it does not necessarily translate well
into the local environment. Indeed, it may even offend local religious sentiments, customs or other
practices. The wholesale importation of English law without modification to take into account local
conditions would amount to the imposition of a totally alien system on a society that is socially and
culturally different from English society. English law is virtually excluded in personal law such as
customary law, family matters, and certain testamentary disposition, particularly with respect to Muslims.
Yeap Cheah Neo v Ong Cheng Neo
Facts: where it was ruled that it was immaterial to consider whether Penang was a ceded territory or a
settled colony since there was no trace of any established law before the British acquisition.
Held: “when observing in regard to the Island of Penang that “the law in England must be taken to be the
governing law (of Penang) so far as it is applicable to the circumstances of the place, and modified in its
application by those circumstances.”
Choa Choon Neoh V Spottiswoode
Held: the Singapore court held that English rules against tying up property for future generations- the rules
against perpetuities- applied in Singapore. “in this colony, so much of the law of England as was in
existence when it was imported here, and as is of general and not merely local policy, and adapted to the
condition and wants of the inhabitants, is the law of the land; and further, that law is subject, in its
application to the various alien races established here, to such modifications as are necessary to prevent it
from operating unjustly and oppressively on them.” Maxwell CJ proceeded to find that the English
perpetuities rule was suitable to be applied to a Chinese man, so as to prohibit him from establishing a fund
for the memories of his departed wives.
“in the colony, so much of the law of England as was in existence when it is imported here, and as is of
general and not merely local policy, and adapted to the condition and wants of the inhabitants, is the law of
lOMoARcPSD|3027433

the land; and further, that law is subject, in its application to the various alien races established here, to
much modifications as are necessary to prevent it from operating unjustly and oppressively on them.”
“in questions of marriage and divorce, it would be impossible to apply our law to Mohammedans, Hindoos,
and Buddhists, without the most absurd and intolerable consequences, and it is therefore held inapplicable
to them”.
Motor Emporium v Arumugam
“Supreme court has the widest possible jurisdiction in all suits, matters and questions of a civil nature, and
although the legislature has given no indication on what principles such jurisdiction should be exercised,
every court must have inherent jurisdiction to do justice between the parties and apply such principles as
are necessary or desirable for attaining such object and for giving decision which are in conformity, with
the requirement of the social condition of the community where the law is administered.”
Significance of Section 6
1. What does Section 6 say?
Section 6 of the Civil Law Act, 1956 provides that nothing in Part II of the Act shall be taken to introduce
into Malaysia or any of the states compromised therein any part of the law of England relating to the tenure
or conveyance or assurance of or succession to any immoveable property or any estate, right, or interest
therein. S6 was enacted to prevent the wholesale application of English law under S3 (1) to land matters in
Malaysia.
2. Why is this section introduced in Civil Law Act?
This was because there already existed local legislation concerning land matters, when the CLO was
enacted in 1956. Such local legislation incorporated the Torrens system in 1956. Such local legislation
incorporated the Torrens system in the FMS and each of the UMS, and the deeds system (of English land
law) in Melaka and Penang. The Torrens System based on the Australian system of land administration. It
is system based on registration of land titles, designed to provide simplicity and certainty. Considered
superior to, and more effective than the English deeds system previously administered in the Straits
Settlements, the Torrens System is now the system in force in Malaysia.
Effect of Section 6 to Section 3
1. Therefore, what is the effect of Section 6 to Section 3?
The section therefore is the authority to express exclusion of English law relating to land tenure.
2. However, there is existing conflict as to whether the express exclusion of English law
relating to land tenure in S6 must be taken to exclude general equitable principles
which are peculiar to English land law. What are the two views?
There are 2 views. One, that equitable principles are totally excluded. The other, that general equitable
principles are applicable to the extent that they are not precluded by local legislation and are suitable to
local circumstances. The second view is based on the contrary proposition that the National Land Code
does not cover all the relations between the parties to land transactions but merely professes to be
comprehensive. For instance, it regulates the rights and obligations of the parties only after registration, but
not before registration.
lOMoARcPSD|3027433

3. What is the significance of the second argument then?
Consequently, in the absence of any provision- express or implied- prohibiting the application of general
equitable principles, such principles may be applied under S3 (1). This view is consistent with S206 (3) of
National Land Code which states that the provisions of the NLC requiring dealings to be effected in the
statutorily prescribed manner shall “not affect the contractual operation of any transaction relating to
alienated land or any interest therein”. In other words, the general principles of law- particularly,
contractual principles- that govern land transactions as a whole are not affected by the NLC, which covers
merely the system of registration of land titles.
4. We should discuss a few cases as to this matter.
United Malayan Banking v Pemungut Hasil Tanah, Kota Tinggi
Facts: whether the English equitable rule with regard to relief against forfeiture could be applied to a
forfeiture of alienated land resulting from an action duly brought under the NLC.
Held: since the National Land Code is a complete and comprehensive code of law governing land tenure
and the incidents of it as well as to other important matters affecting land, there is no room for the
importation of any rules of English law in that field except in so far as the Code itself may expressly
provide. Section 6 in referring to the laws relating to tenure, must be taken to embrace all rules of law
which govern the incidents of the tenure of land and the English rules relating to the grant of relied against
forfeiture are therefore inapplicable in Malaysia.
Therefore, the case suggests that rules of equity are excluded, along with the rest of English law in the areas
affected. Though it had been argued that English equity rules were not part of the English law relating to
land tenure. The Privy Council rejected this. All rules governing the incidents of tenure of land, including
the equitable rule against forfeiture, were included in the term law relating to tenure.
However, Professor Visu Sinnadurai in his book “The Sale and Purchase of Real Property in Malaysia”
argues that Section 6 does not exclude equitable principles. It does not expressly mention equitable rules,
and it does not exclude equitable principles if local existing law does not exclude equitable principles, and
furthermore if local existing law does not cover a particular point, or if the justice of the case demands the
application of these applications. His view finds supports in Woo Yok Wan v Loo Pek Chee.
Woo Yok Wan v Loo Pek Chee
Held: the provisions of S6 do not exclude the English equitable principle that a lease which is void at law
for not having complied with legal formalities can be treated as an agreement for a lease which may be
enforced in equity. What is precluded by Section 6 is the English law relating to tenure or conveyance or
assurance of or succession to any immovable property or any immovable property or any estate, right or
interest therein but the section does not in any way preclude the application of the English principles
relating to equitable interests in land.
Chin Choy v Collector of Stamp duties
Facts: the Privy Council doubted whether the principle that the purchaser of land can become the equitable
owner of the land applies in Malaysia.
Held: the principle that once a valid contract for sale is concluded the vendor becomes in equity a trustee
for the purchaser of the estate sold is a peculiarity of the English Land Law. But Section 6 provides that
lOMoARcPSD|3027433

nothing in that part of that statute should be taken to introduce into the Federation any part of the law of
England relating to tenure.
#although the observation of Lord Roskill is only obiter, however, the case made it clear that applicability
of bare trust is part of English land law and accordingly its application in Malaysia is prohibited by section
6 Civil Law Act 1956.
Lian Keow V Overseas Credit Finance
Held: Supreme Court held that rules of equity are not totally excluded in matters affecting land, but their
field of operation is reduced. The National Land Code “does not abrogate the principles of equity but alters
the application of particular rules of equity but alters the application of particular rules of equity in so far as
necessary to achieve its special objects”.
Therefore, equitable principles can apply before title to land is registered. However, after registration,
equitable principles give away to the operation of the Code. The equitable doctrine of constructive fraud
has no application under the provisions of the Code. It would seem therefore that the express exclusion of
English law relating to land tenure in S6 does not exclude English rules of equity relating to land tenure,
except in so far as the National Land Code supersede them. This raises a question of interpretation as to the
scope of the Code in relation to all those matters covered by equitable principles.
Haji Abdul Rahman v Mohamed Hassan
Facts: Lord Dunedin delivering the judgment of the Privy Council in holding that there is no such thing as a
mortgage under the Land Code.
Held: “it seems to their lordships that the learned judges, in these observations, have been much swayed by
the doctrine of English equity, and not paid sufficient attention to the fact that they were here dealing with a
totally different land law, namely, a system of registration of title contained in a codifying enactment.”
Bhagwan Singh
Facts: the court dealt with a purchase of land whereby of one of the purchasers died after the execution of
the transfer by the vendor which made the original transfer incapable of registration, the sub-purchaser was
entitled to an order directing the Registrar of Titles to register what he had bought.
Held: the contract is a valid contract and therefore, the English equitable principles in determining a
question of priorities of caveats applicable and “the Torrens system does not prevent the court from doing
equity where the rights of third parties have not intervened”. Thus, the principle is that the rules of equity
may be applicable to land matters by virtue of S3 (1), but they cannot be applied if there is a conflict with
the objective of Torrens system as embodied in the NLC.”
Devi v Francis
Facts: whether the equitable doctrine of irrevocable license can be applied? Francis’s mother (the owner of
a piece of land) sold to Devi a house standing on part of her land for $1400 subject to a payment of ground
rent of $4 per month. One of the conditions of this agreement was that if the owner shall decide to sell the
said land, the portion of the said land is to be sold to Devi if Devi shall so desire. This agreement was
witnessed by Francis. On 25/3/1960, the mother transferred the land to her son, Francis. Francis gave one
month’s notice to Devi to terminate the tenancy agreement. Devi relied on the equitable doctrine of
lOMoARcPSD|3027433

irrevocable license as established in the case of Ramsden v Dyson. The respondent objected to this based on
S6 Civil Law Ordinance 1956.
Held: land law of England is one thing and equity is another and it is expressly provided in S 3(1) that the
court shall apply the CL and rules of EQ. Therefore following this decision, it appears that the equitable
doctrine of propriety estoppel can be applied in Malaysia.
Templeton v Low Yat Holdings
Held: while confirming that the plaintiff was entitled for easement, NLC Section 206(3) provides authority
for the liberal application of equity whenever there is a basis for that.
The Motor Emporium v Arumugam
Held: the principle of equitable assignment was applied.
Khoo Hock Leong v Lim Ang Kee
Facts: an action for the recovery of the land. The court found that plaintiff was entitled to recover
possession of the land but also found that defendant was in honest belief that he spent money on the
improvement of the land.
Held: the court applied the maxim “he who seeks equity must do equity” and ordered defendant to be
compensated for his improvement.
5. What is the conclusion that we should draw from these list of cases?
A survey of cases on the application of equitable principles in land transactions- which can hardly be said
to be consistent- shows support for the second view. Observed in Wilkins v Kannammal, “Torrens law is a
system of conveyancing; it does not abrogate the principles of equity, it alters the application of particular
rules of equity but only so far as is necessary to achieve its own special objects”. The case has established
beyond doubt that general principles of equity are not excluded by S6. In a recent article, Teo Keang Soon,
after reviewing the conflicting assertions, suggests that the better view is that English equitable principles
are applicable to land matters in Malaysia, except to the extent that they come into conflict with the
Malaysian Torrens system, as embodied in the National Land Code.
-
Reception of equity – refer to S.3 and 6 of CLA
S.3 – cut-off date – reception of English law and equitable principles
S.6 – English land law is not applicable
So, can we import equitable principle in land matters?
2 views:
1) No – strict interpretation of s.6
-UMBC v Pemungut Hasil Tanah Kota Tinggi (forfeiture)
-Datin Siti Hajar v Murugesu (easement)
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2) Yes – s.206(3)
s.206(1)
Subject to these requirements (application of equitable principles under S.206(3)) -There must be
a dealing and a valid contractual relation, and it doesn’t affect 3rd
party interest.
Alfred Templeton v Lowyat Holding
- Land subject to easement
- But the easement was not registered
- Equity is still applicable to land matters in Malaysia – S.206(3) is the basis for the liberal
application of equitable principles
Motor Emporium v Arumugam
- prior to CLA
- court has inherent jurisdiction to invoke equity
Devi v Francis
- Distinction between English land law and equity
- They are different, S.6 only prohibits the application of English land law
Kampiah Chettiar v Subramaniam
- Same principle – can apply equity
Khoo Hock Leong v Lim Ang Kee
Approach by the court later on, by relying on S.206(3), equitable principles can be applied in land matters.
Conclusion
lOMoARcPSD|3027433

Maxims of equity (Question 3)
‘Owing to its haphazard origin, equity is not a complete system. Nevertheless, there
are certain general principles upon which the court of Chancery exercised its
jurisdiction. Many of these have been embodied in the so-called maxims of equity.
These are not to be taken as positive laws of equity which will be applied literally
and relentlessly in their full width, but rather as trends or principles which can
discerned in many of the detailed rules which equity has established’ – John
MacGhee, Snell’s Equity (London: Sweet & Maxwell) (30th
ed., 2000), 27.
lOMoARcPSD|3027433

Aliah (2019)
1
Equity Notes - Anton Piller Order
1. The purpose of Anton Piller order is to prevent removal of evidence before an
inter partes application. As explained by Lord Denning in Anton Piller KG v
Manufacturing Processes Ltd, “There is danger that evidence will be destroyed,
papers will be burnt, lost, hidden or taken beyond jurisdiction which can defeat the
ends of justice.”
Lord Denning further explained that when Anton Piller is granted, it orders the
defendants to give permission to authorise entry and inspection by plaintiffs. If they
refuse to, they are guilty of contempt of court. In fact, Halsbury’s Law of Malaysia
also states that the High Court has the jurisdiction to grant the said order to:
a) Look for illicit materials and documents; and
b) Allow such materials and documents to be removed and detained and
preserved in safe custody pending the trial of the action.
It also restates that the purpose of the order therefore, is to prevent the destruction
of evidence.
2. In order to plead for Anton Piller order, the following needs to be shown by the
plaintiff:
1. Strong prima facie case
2. Serious potential or actual damage to plaintiff
3. Clear evidence that defendant is in possession of incriminating materials;
and
4. There is a real possibility that they may, unless restrained, destroy such
material before the making of inter partes application.
To prevent abuse Anton Piller order, the following is judicially required:
1. Order should contain a term where defendant may obtain legal advice before
complying
2. Unless inappropriate, execution of orders must be restricted to working days
and normal working hours
a. What is considered unacceptable is asking the permission to enter
into a house in the middle of the morning where the woman is alone
in the house and that she could not get any legal advice. This is seen
in the case of Universal Thermosensors Ltd v Hibben.
3. The order may contain injunction to restrain defendant from informing others
of the existence of the order for an appropriate period according to the
circumstances.
4. The orders should provide, unless impracticable, a detailed list of items that
should be prepared for removal and defendant should be able to check the
list
5. If the place is a private house and there is only a woman alone, the solicitors
serving the order must be accompanied by a woman.
a. As explained in Universal Thermosensors Ltd v Hibben, a woman
should not be confronted without warning by a strange man, waving
unfamiliar papers and claiming entitlement to enter the house.
6. The following are ideally desirable:

Aliah (2019)
2
a. Execution of order is supervised by solicitor who is not from the firm
representing the plaintiff;
b. The said solicitor is experienced in execution of Anton Piller orders;
c. The said solicitor prepares a written report as to what transpired in
the execution of the order;
d. A copy of the report is given to defendant; and
e. The plaintiff presents report at inter partes hearing.
3. In regards to privilege of self-incrimination, if it does apply, it is likely that the
defendant would need to show that there is a real risk that the answers would
incriminate in order to claim the privilege, and the plaintiff may argue against the
privilege if it can be shown that there is no real or appreciable risk of the defendant
being prosecuted (Halsbury’s Laws of Malaysia).

Equity - Exam Notes (1)

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