doctrine of precedent fnd 2011 students copy (6)

CASE LAW LECTURE NOTES

CASE LAW & PRECEDENT

Theoretical dimensions of case law

Introduction

In Malaysia, similar to other common law countries the law is found not only in the legislation but also in the cases decided by the courts. The courts referred to in this context are the superior courts, namely, the Federal Court, the Court of Appeal and the two High Courts.

Decisions of superior courts are sources of law as these courts decide on matters of law whereas inferior courts generally decide on matters of fact.

Case law is an important and primary source of law. Whilst statues prescribe the law governing a particular matter, judges interpret them within the framework of FACTS in cases and when this exercise establishes a rule, it becomes a PRECEDENT.(thus the term ‘case law’ is actually wider in connotation as it includes decisions by the court in interpreting statues. The law derived solely from decisions of the courts is known as the ‘common law’, a term used as in contradistinction to statute law).

Judges contribute to development of law in two ways:

(a) by applying an established rule or principle to a new situation or a set of facts. This occurs most frequently in areas where statutory law has made less impact such as the law of torts (civil wrongs).

(b) by interpreting statutes enacted by the legislature. Statutes are rarely self-contained or self-explanatory and courts are frequently called upon to decide what they mean and how they are to be applied to particular situations.

Judges do not decide arbitrarily in arriving at a decision. They must follow PRECEDENT – commonly defined as “a judgment or decision of a court of law cited as an authority for the legal principle embodied in its decision”. This doctrine requires courts not only to follow precedents but in specific circumstances, courts are bound to do so, whether or not the judge in the subsequent case agrees with the precedent in question.

This practice of following precedent is commonly known as STARE DECISIS (literally it means: let the decision stands). In practice, it means – when a court makes a decision in a case then any courts which are of equal or lower status to that court MUST follow that previous decision if the case before them is ‘similar’ to that earlier case. Accordingly, when one court has decided a matter other inferior courts are bound to follow that decision.

If a judge fails to follow a binding precedent the DECISION will be legally wrong and faces likelihood of reversal upon appeal. Even if there is no appeal for that particular case, it can be OVERRULED in a latter case.

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A ‘DECISION’ of a case can mean a number of different things:

Simplest – the ‘decision’ is that X won and Y lost.Thus X and Y are bound by that decision (this is referred to as res judicata).

RES JUDICATA - Lat. "the thing has been decided" The principle that a final judgement of a competent court is conclusive upon the parties in any subsequent litigation involving the same cause of action.

The general rule is that a plaintiff who has prosecuted one action against a defendant and obtained a valid final judgment is barred by res judicata from prosecuting another action against the same defendant where (a) the claim in the second action is one which is based on the same factual transaction that was at issue in the first;(b) the plaintiff seeks a remedy additional or alternative to the one sought earlier; and (c) the claim is of such a nature as could have been joined in the first action. Underlying this standard is the need to strike a delicate balance between the interests of the defendant and of the courts in bringing litigation to a close and the interest of the plaintiff in the vindication of a just claim.

But when the word ‘decision’ is used in the context of legal analysis it refers to something much wider.It refers to the whole REASONING PROCESS that went into deciding that X won.

The doctrine of judicial precedent is not simply a mechanical process of matching similarities and differences.

It is not merely a science of comparisons for it embodies the art of interpretation; the art of propounding the principle to be derived from each case.

It involves – ARGUMENT (said by Holland & Webb to be the lifeblood of a lawyer)*** this aspect will be dealt with later)

Judges do not have to follow a precedent if they can distinguish the facts of the earlier cases from the current one (discussion on interpretation of facts and distinguishing them will be made in Week 10).

Sometimes they can OVERRULE a precedent (for example: if they are sitting in a superior court in the hierarchy of courts).

In coming to a DECISION as to which precedent is binding, the judge is influenced by two factors, namely:

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(a) the ORIGIN of the precedent – a precedent must originate from a court of appropriate rank in the same hierarchy.

(b) The CONTENTS of the precedent, that is, the ratio decidendi which is the legal reasoning. It is the legal reasoning of the precedent that is binding (practical exercises in dealing with the concept of ratio decidendi will be dealt with later).

Precedent is the basis of the common law: that body of law emerging from cases as they are decided by the judges. There are several examples of cases containing points of sufficient legal importance to constitute precedents:

Examples:

- Shaw v PP [1962] AC 220 with its statement of the law relating to conspiracy to corrupt public morals, which was followed in Knuller v DPP ten years later.

- Donoghue v Stevenson [1932] AC 562 containing Lord Atkin’s statement of the ‘neighbour principle’ which was to become the foundation stone of the later case involving negligence.

It has been argued that no two cases are even exactly alike. Query: how ‘alike’ does a later case have to be before a court must follow a given precedent? Whilst the practical answer will be discussed later, but the theory of precedent rests upon the proposition that the similarity between two cases derives not just from their specific facts, but rather from their respective ‘law-and-fact’ content. In law, every case has two aspects:

First, there is the particular dispute itself – a fact-situation, which the court must resolve with reference to relevant legal rules.

Examples: a consumer alleges injury suffered because of a faulty product; a motorist is prosecuted for driving whilst drunk; a husband brings an action against his wife for divorce.

The second aspect is the precise legal issue which these facts raise.

Examples: the circumstances provided in law whereby the consumer obtains a remedy; the legally prescribed conditions of liability under which the motorist may be convicted or the legal grounds which must be shown before a divorce may be granted.

It is to these issues that legal argument and the citation of precedents are directed. If the consumer’s injury is caused by a defective bottle of shampoo, for instance, the Law Reports need not be searched for previous cases where a bottle of shampoo caused injury. It is enough that we discover a legal authority, through precedents, for the general legal proposition that a consumer may in appropriate circumstances recover compensation for injury caused by a defective product. The actual item which features in previous cases might be a car, underwear or a bottle of ginger-beer; what really matters is the legal principle involved, and not the specific facts of the previous case. This legal principle is known as the ratio decidendi – the part of the decision which constitutes the binding precedent.

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This seems a simple proposition and it would be, if it were possible to state firmly and clearly what the ratio of a given case is. The fact is that different judges may interpret the judgments given in previous cases quite differently, and conclude that in their opinion the ‘correct’ reading of a case provides a ratio which may be wider or more restrictive (or compatible or incompatible with the case in hand) than the interpretation of their colleagues on the bench. There are some cases in which it is extremely difficult, if not impossible, to ascertain precisely the ratio of the case, and to distinguish the ratio from the obiter dicta (the judges’ statements which are not part of the points of legal principle and accordingly not binding). As Twinning and Miers point out:

“talk of finding the ratio decidendi of a case obscures the fact that the process of interpreting cases is not like a hunt for a buried treasure, but typically involves an element of choice from a range of possibilities”.

There is a strong connection between the facts of the case and the legal rules or principles, which judges derive from those facts; and differences of fact between otherwise similar cases may have important consequences for the final decision in a new case. The doctrine of precedent allows for such situations by mechanisms whereby a judge may depart from a particular line of precedent, for the doctrine does not require that judges are mere slaves of the past. One of the advantages claimed for the doctrine is that the judges have the freedom, or at least the discretion, to treat precedents with some flexibility.

The first such mechanism is inherent in the court structure itself: a court is free to overrule a decision of a court lower than itself, if it is of the opinion that the previous case was wrongly decided or has become out of date. Accordingly the Court of Appeal may overrule a decision of the High Court and the Federal Court may overrule a decision of the Court of Appeal – and sometimes a previous decision of its own.

Another device whereby precedents may be avoided (open to all courts irrespective of their place in the hierarchy) is known as distinguishing on the facts. This means that if a judge thinks that a precedent which otherwise covers the case in hand is nevertheless different in some material particular, then the precedent may be distinguished and not followed.

Having expounded the formal mechanisms of precedent, it must now be considered how precedent works in practice.

The first step is to understand the hierarchy of precedents and subsequently, to appreciate the mechanics of how precedent actually operate.

*******************

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HIERACHY OF PRECEDENTS

Decisions of some courts carry greater weight than others. The doctrine of precedent is premised on the hierarchical structure of the courts.

The doctrine of stare decisis has a two-way operation:

(a) vertical – a court is bound by the prior decisions of a higher court; and(b) horizontal – some courts are bound by their own prior decisions and prior decisions

of a court of the same level, whether past or present, if any.

To understand the doctrine of precedent it is pertinent to know the hierarchical structure of the courts and the appeal system.

OPERATION OF THE DOCTRINE IN ENGLAND AND WALES

The theories are fairly stated. First, all courts are bound to follow the previous decisions of courts which are higher in the hierarchy in cases which are similar to those previously decided cases. Accordingly, a decision of the Court of Appeal in England and Wales is binding on all courts below it but it is not binding on the Supreme Court (formerly the House of Lords). Second, the binding nature of the precedent applies to all future cases which have like facts (and this feature is the part that may give rise to difficult problem of interpretation for the courts).

The High Court is technically not bound by its own decisions though, in practice, High Court judges will usually follow previous High Court decisions unless there are good reasons not to do so.

The Court of Appeal is, generally speaking and subject to certain exceptions, bound by its own decisions. In Young v Bristol Aeroplane Co Ltd [1944] 2 All ER 293, the CoA explained the situations in which it might depart from its own previous decisions:

(1) where the court is faced with two conflicting decisions of its own, it may choose which one to follow;

(2) the court is not bound to follow one of its own previous decisions which is inconsistent with a later House of Lords decisions; and

(3) the court is not bound to follow a decision of its own which was given per incuriam, that is to say a case which was decided without taking into account some statutory provision or precedent which would have affected the decision.

Despite the attempts of Lord Denning, whilst Master of Rolls, to free the CoA from the constraints of the doctrine of precedent (see Gallie v Lee [1969] 2 Ch. 17; Barrington v Lee [1972] 1 QB 326), the House of Lords made it clear in no uncertain terms that subject to the exceptional circumstances as stated in Young, the CoA remained bound by its previous decisions.

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With regards to the House of Lords (HoL), until 1966 this (HOL) court considered itself bound by its own decisions. The could mean that unless Parliament stepped in and changed the effect of a HoL’s decision by statutes, such a decision, at least in theory, could never be modified, limited, extended or overruled, simply because there is no higher court to which such a decision might be taken on appeal.

In 1966, the Lord Chancellor announced that henceforth the HoL would consider itself empowered to depart from its own previous decisions. The Practice Directions explaining this change states that:

“Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases …. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.

Their Lordships nevertheless recognize that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous when it appears right to do so. [emphasis added]

In this connection, they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law. This announcement is not intended to affect the use of precedent elsewhere than in this House. 1”

Undoubtedly this was a sensible approach albeit overdue development although it may be added that such departures are fairly infrequent. It is arguable that the stability and continuity of the law would suffer if such departures ‘appeared right’ too often. In brief, it is to be hoped that this limited slackening of the grip of the doctrine of precedent nevertheless increases the court’s ability to ensure that the principle enshrined in previous cases are not permitted to dictate injustice, and that legal principles and rules are kept in line with the demands of changing social and economic conditions.

It is important to note that since 1 October 2009, judicial authority was transferred away from the House of Lords and the Supreme Court for the United Kingdom was created. For practical purposes, at present, it is safe to assume that whatever has been written about the operation of the doctrine of precedent in the House of Lords applies equally to the Supreme Court.

1 [1966] 1 WLR 1234.

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OPERATION OF THE DOCTRINE IN MALAYSIA

The doctrine of stare decisis applies in Malaysia and principally is based on the English practice. Its application, though influenced by English practice is not similar and much more complex in nature. Such complexities are mostly owed to the several reorganizations of the judicial hierarchy in Malaysia. Since 1985, court hierarchy has been recognized three times. The reorganizations are summarized are follows:

PERIOD COURT STRUCTURE EFFECTPre-1985 3-tier structure

[Privy Council - FederalCourt - High Court]

Privy Council at the apex and final stage of appeal

End 1984-mid 1995 2-tier structure[Supreme Court - High Court]

Abolition of appeals to Privy Council - Supreme Court became final court of appeal

1994 2-tier structure was reinstated[Federal Court - Court of Appeal - High Court]

Federal Court become the apex court and Court of Appeal was established

VERTICAL OPERATION

In theory the vertical operation of the doctrine is straightforward. A court is bound by the prior decisions of all courts higher than itself in the same hierarchy.

To put it briefly:

decision of the Federal Court bind all courts. the Court of Appeal is bound by the decisions of the Federal Court but its own

decisions bind the two High Courts and the subordinate courts. the High Courts are bound by the decisions of the Federal Court and the

Court of Appeal but their decisions bind the subordinate courts.

The doctrine of stare decisis demands that every court in the hierarchy to follow the prior decisions of courts higher than itself. It may not even decline to follow the higher court’s decision on the ground that it is wrong or rendered obsolete by changing conditions or made per incuriam (when a decision is given in ignorance or forgetting a relevant legislative provision or binding precedent and such ignorance or forgetfulness led to faulty reasoning).

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Example #1:

In Harris Solid State v Bruno Gentil s/o Pereira [1996] 3 MLJ 489, counsel for the appellants tried to argue before the Court of Appeal that the majority decision of the Federal Court in Rama Chandran v The Industrial Court of Malaysia [1997] 1 MLJ 145 was wrong and ought not to be followed. The Court of Appeal at p 518 disagreed:

“ … this court is bound to follow and apply the law as stated by the majority in Rama Chandran, even if it suffers from any infirmity. It is the decision of the apex court and constitutes binding precedent”.

Example #2:

In Co-operative Central Bank v Feyen Development [1997] 2 MLJ 829 the question was whether an intermediate Court of Appeal such as the Court of Appeal was allowed to disregard a judgment of a final Court of Appeal, such as the Federal Court on the ground that it was given per incuriam. Edgar Joseph Jr. FCJ in delivering the judgment of the Federal Court adopted in express terms the remarks of Lord Hailsham in Cassell v Broome [1972] AC 1027, 1054, which expressed the reaction of the House of Lords to the Court of Appeal’s refusal to follow the House of Lords’ prior decision in Rookes v Barnard [1964] AC 1129:

“ … I am driven to the conclusion that when the Court of Appeal described the decision in Rookes v Barnard as decided ‘per incuriam’ or ‘unkworkable’ they really only meant that they did not agree with it. But, in my view, even if this were not so, it is not open to the Court of Appeal to give gratuitous advice to judges of first instance to ignore decisions of the House of Lords in this way and, if it were open to the Court of Appeal to do so, it would be highly undesirable …. Whatever the merits, chaos would have reigned until the dispute was settled, and, in legal matters, some degree of certainty is at least as valuable a part of justice as perfection.

The facts is, and I hope it will never be necessary to say so again, that, in the hierarchical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers …

… every word of what Lord Hailsham said regarding the status of judgments and relevance of precedent in the House of Lords, the circumstances, and the duty of the Court of Appeal to accept loyally the decision of the House of Lords, and the chaotic consequences which would follow should the Court of Appeal fail in this duty, apply with full force, mutatis mutandis, to this country and we adopt what he said … and we can only express the hope that it will not be necessary for the Federal Court

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hereafter to have to remind the Court of Appeal of the principles [enunciated by Lord Hailsham]”.

A court may however, choose between two conflicting decisions:

in the case of two conflicting decisions of the Court of Appeal, courts lower in the hierarchy may choose to follow either decision irrespective of whether it is the earlier or later decision {dates do not matter to the Court of Appeal itself}.

In the case of two conflicting decisions of the Federal Court, all courts below must choose to follow the later decision {the decision represents the existing state of the law and accordingly prevails over the earlier decision}.

These principles were laid down by the Federal Court in Dalip Bhagwan Singh v Public Prosecutor [1988] 1 MLJ 1.

The Federal Court qualified an earlier High Court decision in Datuk Tan lee Teck v Sarjana [1997] 4 MLJ 329, which stated that where there are two conflicting decisions of a higher court and the later decision does not purport to overrule the earlier, a lower court may choose which to follow and in doing so, it may act on its own opinion as to which is more convincing.

In that case, the High Court was faced with two conflicting decisions of the Federal Court, namely Ah Mee v Public Prosecutor [1967] 1 MLJ 220 and Public Prosecutor v Dato’ Haji Harun Idris [1977] 1 MLJ 180 (a High Court decision approved by the Federal Court [1978] 1 MLJ 240). However, as the High Court in Datuk Tan Lee Teck chose to follow the later decision (the court regarded the earlier as not binding because it incorporated a proposition of law that was assumed to be correct without argument), its decision, in fact, was consistent with the second of the two principles subsequently laid down in Dalip Bhagwan Singh.

The first of the two principles laid down in Dalip Bhagwan Singh was illustrated by Ablemerge v Emville [2000] 6 MLJ 769. In this case, the High Court was faced with the issue of whether entry of unconditional appearance by defendant amounts to taking a step in the proceedings within the meaning of section 6, Arbitration Act 1952 (Revised 1972)(Act 93), which precludes the defendant from subsequently seeking an order for stay of proceedings. There were two conflicting authorities:

Accounting Publication v Ho Soo Furniture [1988] 4 MLJ 497, which held that an unconditional appearance filed before moving the court for a stay does not amount to taking a step in the proceedings; and

Interscope Versicherung v Sime Axa AssuranceI [1999] 2 MLJ 529, which held to the contrary.

Both were decisions of the Court of Appeal. The High Court said that the Court of Appeal is bound by its own previous decisions. On the principle laid down in Young v Bristol

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Aeroplane Co Ltd [1944] 1 KB 718 – a decision of the English Court of Appeal applicable to its Malaysian counterpart – the Court of Appeal may depart from its previous decisions in only three circumstances. Since none of the three circumstances existed, the Court of Appeal in Interscope should have followed its previous decision in Accounting. Its failure rendered its decision in Interscope per incuriam. On that ground, the High Court in the instant case opted to follow the earlier decision of the Court of Appeal in Accounting.

In conclusion, the vertical operation of stare decisis, which is relatively straightforward in most common law countries, is rather complex in Malaysia due to the following problems:

Status of decisions of the Privy Council; and Status of decisions of predecessor courts of the present Federal Court.

Status of Decisions of Privy Council

The Judicial Committee of the Privy Council (PC) was the highest tribunal of appeal form Malaysia until 31 December 1984. It assumed that position from the establishment of the Straits Settlements and continued even after the independence of the Federation of Malaya. In theory the final right of appeal lay to the Yang di Pertuan Agong, who referred the appeal to the PC, whose advice would then be given effect to by the YDPA.

When the PC was at the apex of the Malaysian judicial hierarchy, its decisions were binding on Malaysian courts in two circumstances:

Where the decision was in a case on appeal from:

Malaysia Another common law country and the law in point was the same as in Malaysia

It decided as a Malaysian court, namely as the apex court in the M’sian judicial hierarchy

It decided as the apex court of that country

Its decisions therefore bound all M’sian courts

Its decision therefore was merely persuasive, not binding on M’sian courts BUT …

Wong See Leng v Saraswathy Amal (1954) 20 MLJ 141:Counsel argued that the CoA of the Federation of Malaya was bound by its own prior decision in Yaacob bin Lebai Jusoh v Hamisah Saad (1950) 16 MLJ 255.The CoA rejected that submission because

Federal Court in Khalid Panjang v PP (No. 2) [1964] 30 MLJ 108 {and affirmed in Director-General of Inland Revenue v Kulim Rubber Plantations Ltd [1981] 1 MLJ 214} held that a PC decision in an appeal from another country was binding on courts in Malaysia where the statutory provision in point was in pari material (word for word the same) with a

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that prior decision was contrary to the PC decision in Haji Abdul Rahman v Md Hassan [1917] AC 209 where the Board categorically stated that English rules of equity do not apply to a system of registration of titles to land. Buhagiar J said:

“ … that judgment is binding and affects all jurisdiction in territories within the Commonwealth which have, as in Malay States, a system of registration of title modeled on the well-known Torrens System of Australia and from the Courts of which the Judicial Committee is the highest Court of Appeal … “.

statutory provision in Malaysia.

The same principle applies in cases where the law in point, including on common law issues, was the same as in Malaysia (Tengku Mariam v Commissioner for Religious Affairs, Terengganu & Ors [1969] 1 MLJ 110; Fatuma bt Mohd bin Salim Bakhshuwen v Mohd bin Salim Bakhshuwen [1952] AC 1 and Wong See Leng as discussed )

PC decisions, which were binding on M’sian courts in the situations above continue, in theory, to be binding on all Malaysian courts below the apex court after the abolition of appeals to it. Its decisions, having become part of Malaysian jurisprudence and preserved on each change of constitutional status remain so until changed by the competent authority, namely the apex court of Parliament.

Status of Decisions of Predecessor Courts of the Present Federal Court

It has been suggested (by Wan Arfah at p 77), “it is possible to identify the immediate predecessors of the Federal Court as the Supreme Court (1985-94) and the former Federal Court (1963-85)”. It follows that decisions of these predecessor courts are binding and continue to be binding until overruled by the present Federal Court – recently acknowledged in:

Anchorage Mall v Irama Team [2001] 2 MLJ 520.

The question in issue, arising from a preliminary objection was whether a defendant who has entered unconditional appearance, is precluded from making an application under O.18 r. 19 of the Rules of the High Court (RHC) to strike out a writ and statement of claim filed by the plaintiff. A relevant authority was the Supreme Court decision in Alor Janggus Soon Seng Trading v Sey Hoe [1995] 1 MLJ 241. Counsel for the defendant urged the court not to follow Alor Janggus on the ground, among others, that what was said in that case was not the ratio. Ahmad Maarop JC rejected counsel’s submission and stated:

“To my mind, the answer to the submission advanced on behalf of the defendant in urging this court not to follow Alor Janggus, can be found in the statements made in the judgments in PP v Datuk Tan Cheng Swee, Co-operative Central Bank Ltd v Feyen, Cassell & Co Ltd v Broome and Miliangos v George Frank Textiles …. Indeed in the light of these authorities, I do not think it is open to me to disregard or refuse to follow the decision in Alor Janggus unless and until it is reversed by the

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Federal Court. In any case I am of the view that even if what was said by the SC in Alor Janggus on O 18 r 19 of the RHC was merely obiter, being a judicial pronouncement emanating from the highest court in this country then, it deserves the utmost respect and should be followed as a guide as faithfully as possible.”2

It appears however that earlier, the Court of Appeal in one occasion and the High Court in another refused to follow two decisions of the former Federal Court on the grounds below:

Presiding CourtPredecessor Court where

refusal emanates ReasoningCourt of Appeal in Tan Teck Seng [1996] 1 MLJ 261

SC in Karam Singh [1969] 2 MLJ 129

Gopal Sri Ram JCA: Karam Singh was decided “ … at a time when the learning upon the interpretation of written constitutions was still at its infancy.”

High Court in Paari a/l Perumal [2000] 4 AMR 3826

Former Federal Court in Mathews v Kump Guthrie [1981] 2 MLJ 320 & B Subramaniam v Craigiela Estate [1982] 1 MLJ 317

Faiza Tamby Chik J: principle contained in them as an ‘offending principle’ which ‘is no longer in keeping with national aspiration and development if our nation is to aspire to achieve the status of an industrialized nation by the year 2020.’

**Learned judge departed despite acknowledging that the two FC decisions are binding on the High Court. He justified that HC was entitled to makes its own decision without breaching the principle of stare decisis by referring to views expressed by judges in England and locally. It is to be noted that all except one judge quoted were all judges of the apex courts who have such freedom to depart from precedents.

A more worrying trend (expression is mine) appears in the growing tendencies of the courts lower in hierarchy departing from, and even disregarding totally clear precedents of superior

2 Note that Mohd Hishammuddin J declined to follow the SC in Alor Janggus on the ground that what was said was obiter dicta in N. Carrupaiya v Mbf Property Services [2000] 4 MLJ 389 (HC).

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courts by either citing the previous ratio to be obiter or even worse, by not even acknowledging a clear precedent from a higher court. The examples cited below deal only with the civil law but there are also examples of such tendencies in the criminal law, particularly in dealing with procedural aspects where questions on technicalities are disputed. Evaluate the following:

Court that departed/Case

Case IssueDevelopment/

CommentCourt departed/

disregardedJustification

Court of Appeal/ Harta Empat v Koperasi Rakyat

Federal Court/Co-operative Central Bank v Feyen Dev, [1995] 3 MLJ 313 {Feyen No. 1}

Validity of charge created in contravention of s 133 of Companies Act 1965Relegated decision to status of obiter dicta

Invoked sharp rebuke from Federal Court on appeal – see Co-operative Central Bank v Feyen Dev [1997] 2 MLJ 829, 836-7 {Feyen No. 2}

Court of Appeal/ Sugumar Balakrishnan [1998] 3 MLJ 289

Federal Court/Ng Hock Cheng v Pengarah Am Penjara [1998] 1 MLJ 153 which had overruled CoA in Tan Teck Seng v Suruhanjaya Perkhidmatan Pendidikan [1996] 1 MLJ 261

Attempted to reintroduce doctrine of proportionality which was introduced by Tan Teck Seng and overruled by Ng Hock Cheng (FC)

CoA in Sugumar applied Tan Teck Seng (CoA) and totally disregarded the binding effect of FC in Ng Hock Cheng

HORIZONTAL OPERATION

The horizontal operation of the doctrine stare decisis in Malaysia is much more complicated compared to its vertical operation. To appreciate this the three phases need to be examined.

Pre-1985

PRIVY COUNCIL- stood at the apex of the Malaysian judicial hierarchy until 31 December 1984.- never considered itself bound by its own decisions (for e.g., Read v Bishop of

Lincoln [1892] AC 644; AG of St Christopher, Nevis and Anquilla v Reynolds [1979] 2 All ER 129.

- rarely departs from its own decisions.

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FEDERAL COURT

Established on 16 September 1963 under the Malaysian Act 1963 (No. 26 of 1963).- end product of a series of reorganizations of the judicial systems of three territories;

Federation of Malaya, Singapore and Borneo.- Historically, there were 11 predecessor courts of the Federal Court.

Issues:

Was the Federal Court bound by the precedents of all these courts?There is limited judicial guidance on this issue. Generally, those that exist show that the FC regarded itself bound by the decisions of at least some of them.

Was the Federal Court bound by its own precedents?The practice of the Federal Court followed that of the CoA in England.

In CIVIL CASES its practice was based on that of the English Court of Appeal (Civil Division) – Central Securities v Haron bin Mohd Zaid [1980] 1 MLJ 304. In summary, the practice of following the rule in Young v Bristol Aeroplane Co Ltd can be traced to the judgment of the Court of Appeal of the Malayan Union in Hendry v De Cruz (1949) 15 MLJ Supp. 25.

In CRIMINAL CASES, the FC, like the English CoA (Criminal Division) did not regard itself strictly bound by its own precedents. In Oie Hee Koi v PP [1966] 2 MLJ 183 the FC held that proof of the nationality of the appellant, who claimed the status of a prisoner of war when charged with consorting with Indonesia troops during Indonesia’s ‘confrontation’ with Malaysia, rested with the prosecution. In doing so, the FC dissented from its decision given only seventy-seven days earlier in Lee Hoo Boon v PP [1966] 2 MLJ 167. Ong Hock Thye FJ said:

“In arriving at this decision we are not unaware that it runs counter to the previous decision of this court. Nevertheless, we do so without qualms. As Sir Carleton Allen says at p 245 of Law in the Making (6th Edition) ‘the case of Gideon Nkambule v R makes it clear that in criminal matters at least, where life and liberty are at stake, the Privy Council will not hesitate to reject even a recent decision of its own, if it is satisfied that all relevant considerations and historical circumstances were not before the court in the earlier case’. We will not hesitate to follow the same principle.”

In PP v Ooi Khai Chin [1979] 1 MLJ 112, the FC in holding that it had jurisdiction to hear an appeal from an acquittal by a jury, disagreed with its earlier decision in PP v Tai Chai Geok [1978] 1 MLJ 166. Suffian LP said:

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“Having carefully considered this matter, we have come to the conclusion that we were in error in PP v Tan Chai Geok when we held that this court had no jurisdiction to quash an acquittal following the verdict of not guilty by a jury.”

HIGH COURTS

Under Article 121(1) of the Federal Constitution there were and still are two High Courts of equal jurisdiction and status namely the High Court of Malaya and High of Borneo then renamed Sabah and Sarawak.

The Federal Court in Sundralingam v Ramanathan Chettiar [1967] 2 MLJ 211 held that one High Court judge does not bind another High Court judge. Azmi CJ (Malaya) in the FC said:

“On this question, my view is that, we may properly follow the practice in England where a High Court judge, though he cannot overrule one of his brethren, could disprove his decision and decline to follow his. This to my own knowledge has been the practice in Malaya for several years now.”

This view was supported by Ong Hock Tye FJ:

… “individual judges are not bound by each other’s decisions, although judicial courtesy naturally requires that they do not lightly dissent from the considered opinions of their brethren ….”

[In England there is a difference between the HC sitting at first instance and the Divisional Courts of the HC. The former is not bound by the decision made by another. But such a judge is bound by a decision of the Divisional Court of the same division and probably by decisions of the Divisional Courts of the other divisions. In criminal cases, the Divisional Court of the Queen’s Bench Division may refuse to follow its own decision if convinced that that decision is wrong and following it would unjustly affect the appellant. But in civil cases the Divisional Courts of the Chancery and Family Divisions are bound by their own decision].

In Malaysia, High Court judges have acted on the assumption that one High Court judge whether exercising appellate or original jurisdiction is not bound by a decision made by another in exercising original or appellate jurisdiction.

Examples:

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(a) Ng Hoi Cheu v PP [1968] 1 MLJ 53 – Chang Min Tat J in exercising appellate jurisdiction did not follow the decision of Smith J, also exercising appellate jurisdiction in Wong Heng Fatt v PP (1959) 25 MLJ 20.

(b) Joginder Singh v PP [1984] 2 MLJ 133 – the High Court held it was not bound to follow a decision of the High Court in an appeal (presided by three judges) in Hassan bin Isahak v PP (1948-9) MLJ Supp. 179.

The practice of the High Court as discussed remains unchanged till today.

1985-1994

SUPREME COURT

With effect from 1 January 1985 the Federal Court was renamed the Supreme Court. It became the Court of Appeal of last resort in Malaysia with the final abolition of appeals to the Privy Council. The structure of the superior courts was then reduced from three-tier to two-tier.

On the issue of whether the SC was bound by the practice and precedents of the Federal Court, the court is superceded, the sole case in point is Govt of M’sia & UEM v Lim Kit Siang [1988] 2 MLJ 12. Appellants appealed to the SC, among others, to set aside an interlocutory injunction that was earlier granted by the SC in an oral judgment on 25 August 1987. These appeals revolved on issue of locus standi to sue in public interest litigation. Two cases were applicable: Lim Choo Hock v Govt of the State of Perak & Ors [1980] 2 MLJ 148, a High Court decision approved by Federal Court in Tan Sri Haji Othman Saat v Mohd bin Ismail [1982] 2 MLJ 177. The Supreme Court, convened in a Full Bench of five judges, by a majority of 3:2 allowed the appeal. On the issue of locus standi the majority decision departed from the FC decision in Tan Sri Haji Othman Saat. That decision indicates that the SC did not consider itself bound by decisions of FC. Abdul Hamid CJ (Malaya) stated such:

“Cleary the main hinge upon which the judgment of the learned (trial) judge rested as regards the locus standi point was the judgment of the FC in Tan Sri Haji Othman Saat v Mohd bin Ismail.

Having regards especially to the very full arguments which have been addressed to the court and the obvious public importance of the case before the court, I consider that the time is now ripe for us to restate our position on the law of standing in this country. (Emphasis added).”

Abdoolcader SCJ refuted that view and expressed the opinion that the SC inherited the practice of the Federal Court:

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“I must touch on one other matter in this regard. Tan Sri Abdul Hamid CJ in delivering his judgment says that perhaps the time has come to review the decision of the FC in Tan Sri Haji Othman Saat v Mohd bin Ismail, and that the SC is not bound by the decisions of the FC. The SC is but the FC reconstituted under a different name with enhanced jurisdiction, and until a policy in relation to judicial precedent has been agreed, formulated and declared by the judges of the SC as a collegiate body, as indeed the HC Australia has done in Viro v Regina [1978] 18 ALR 257 and Jones v The Commonwealth [1987] 61 ALJR 348 after appeals to the Privy Council ceased, I would have thought that the principles enunciated in Young v Bristol Aeroplane Co Ltd [1944] KB 718 (at p 169) would apply. As for Tan Sri Haji Othman Saat, speaking for myself I can see no reason for any review of that decision of the FC, and the call so made would appear to be all more surprising as there has been no such suggestion by the appellants ….”

On the issue whether SC was bound by its own precedents, writers have expressed that the position is rather unclear but as Prof Ahmad put it: “experience of other SCs seem to suggest that while SC would normally follow its earlier decision (Lye Thai Sang v Faber Merlin [1986] 1 MLJ 166), it would reserve the right to depart from its former decision when it would appear to be right to do so.

POST 1994 TILL NOW

FEDERAL COURT

Section 2 of the Constitution (Amendment) Act 1994 (Act A885) and section 5(c) of the Courts of Judicature (Amendment) Act 1994 (Act A886) renamed the Supreme Court as the Federal Court.

Section 17 of the Courts of Judicature (Amendment) Act 1995 (Act A909) enacted to rectify an omission in Act A886, provided that any proceedings before the Supreme Court on 23 June 1994 shall continue in the Federal Court and for that purpose the Federal Court shall have and exercise all the powers of the Supreme Court before 24 June 1994.

On the basis of that provision, decisions in appeals pending before the Supreme Court on 23 June 1994 delivered after that date are treated as decisions of the present Federal Court.

Issues:

Is the Federal Court the successor to the Supreme Court upon superceding it? Is it bound by the practice and precedents of the Supreme Court?

Based on section 17 Act A909 and on the assumption that the rationale of the former Federal Court in Re Lee Gee Chong in interpreting section 88(3) of the Malaysia Act 1963 is correct, then the present Federal Court is the successor of the Supreme Court and as such, bound by

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the decisions of the latter. In Dalip Bhagwan Singh v Public Prosecutor [1998] 1 MLJ 1, Peh Swee Chin in delivering the judgment of the Federal Court, referred to ‘the Federal Court and its forerunner, i.e., the Supreme Court.’

The effect of Supreme Court decisions upon the FC may be seen below:

CIVIL MATTERS CRIMINAL MATTERSFC regard itself not bound by decisions of the Supreme Court

FC holds itself bound by decisions of the Supreme Court

In M’sia National Insurance v Lim Tiok [1997] 2 MLJ 165, the case concerned the extent of liability of insurers against third party risks under a compulsory insurance policy in a direct action brought by a third party.The SC in Tan Chik bin Ibrahim v Safety Life & General Insurance [1987] 1 MLJ 217 had decided that in a situation involving independent tortfeasors, insurers are liable only to the extent to which their insurer is adjudged responsible for the accident.The issue was whether the Supreme Court decision should be reviewed to determine whether it was wrongly decided and if so, whether it should be overruled.The FC adopted the criteria laid down by the House of Lords in Food Corporation of India v Antclizo Shipping Corporation [1988] 2 All ER 513. Two prerequisites to be satisfied before HoL can embark on such review: they feel free, if necessary, to depart from the reasoning and the decision; and they are satisfied that it would be of relevance to the resolution of the dispute in the case before them.Having satisfied those, the Federal Court reviewed Tan Chik, decided it was wrongly decided and should not be followed. In effect, the FC overruled the decision of the SC.

In Tan Boon Kean v PP [1995] 3 MLJ 514 the FC was faced with the issue of standard of proof to be satisfied by the prosecution t the end of the prosecution’s case in a non-jury trial under section 180 CPC. Earlier the SC in Khoo Hi Chiang v PP [1994] 1 MLJ 265 had decided that the duty of the court at the end of the prosecution’s case was to undertake the maximum evaluation of evidence to determine whether or not the prosecution had established the charge against the accused beyond reasonable doubt. The FC unanimously held itself bound by the SC decision.However, although the FC held itself bound by the SC decision, it had in fact departed from that decision by not following the second limb in the mistaken belief that it was dicta, and not part of the ratio.This was clearly pointed out by the subsequent decision of the FC on the same issue in Arulpragasan a/l Sandarajoo v PP [1997] 1 MLJ 1.

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Is the Federal Court bound by its own precedents?

CRIMINAL MATTERS

The present Federal Court is not bound by its own previous decisions. Its practice is as summarized by Peh Swee Chin FCJ in Dalip Bhagwan Singh v PP [1998] 1 MLJ 1 at p 14:

“In Malaysia, the FC and its forerunner, i.e., the Supreme Court, after all appeals to the Privy Council were abolished has never refused to depart from its own decision when it appeared right to do so …

Though the Practice Statement (Judicial Precedent) 1966, of the House of Lords is not binding at all on us, it has indeed and in practice been followed, though such power to depart from its own previous decision has been exercised sparingly also. It is right that we in the Federal Court should have this power to do so but it is suggested that it should be used sparingly on the important reason of the consequences of such overruling involved for it cannot be lost on the mind of anybody that a lot of people have regulated their affairs in reliance on a ratio decidendi before it is overruled. In certain circumstances, it would be far more prudent to call for legislative intervention. On the other hand, the power to so depart is indicated (subject to a concurrent consideration of the question of consequences), when a former decision which is sought to be overruled is wrong, uncertain, unjust or outmoded or obsolete in the modern conditions.”

Case examples:

Arulpragasan illustrates the departure of the Federal Court from its own previous decision on the issue of standard of proof at the close of the prosecution’s case. It declined to follow its own decision in Tan Boon Kean because the FC in that case misunderstood the ratio in the SC decision in Khoo Hi Chiang.

In Tunde Apatira v PP [2001] 1 MLJ 259, the FC took up the advice by Peh Swee Chin FCJ (noted above) to use its power to depart from its previous decision sparingly. The FC in this case rejected the prosecution’s submission that a very recent decision of the Federal Court in Muhammad bin Hassan v PP [1998] 2 MLJ 273 was wrongly decided and ought not be followed. Gopal Sri Ram said (inter alia):

“It is bad policy for us at the apex court to leave the law in a state of uncertainty by departing from our recent decisions. Members of the public must be allowed to arrange their affairs so that they keep well within the framework of the law. They can hardly do this if the judiciary keeps changing its stance upon the same issue between brief intervals. The point assumes greater importance in the field of criminal law where a breach may result in the deprivation of life or liberty or in the imposition of other serious

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penalties. Of course, if a decision were plainly wrong, it would cause as much injustice if we were to leave it unreversed merely on the ground that it was recently decided ….

The second reason is closely connected to the first. It also has to do with certainty in the law. The decision in Muhammad bin Hassan has been affirmed by our courts (see PP v Ong Cheng Heong [1998] 4 CLJ 209] and convictions have been quashed by this court acting on its strength. See, e.g., Harvadi Dadeh v PP [2000] 3 CLJ 553. If we accept the learned deputy’s invitation to depart from Muhammad bun Hassan. It will throw the law into a state of uncertainty and cast doubt on the accuracy of the pronouncements made in those case that have so recently applied the interpretation formulated in that case. It is bad policy for us to keep the law in such state of flux especially upon a question of interpretation of a statutory provision that comes up so often for consideration before the courts ….”

CIVIL MATTERS

Similar to criminal matters, namely, while treating previous decisions to be normally binding, the Federal Court will depart from a previous decision when it appears right to do so (a similar stand to that of most apex courts).

In Koperasi Rakyat v Harta Empat [2000] 2 AMR 2311 the defendant co-operative society appealed to the FC against a decision of the Court of Appeal to the effect that a charge created in contravention of section 133 Companies Act 1965 was void and unenforceable. The Court of Appeal reached that decision in disregard of the FC decision in Co-operative Central Bank v Feyen Development [1995] 3 MLJ 313 (‘Feyen No. 1’). In the instant appeal, the plaintiff (a private housing development company) attempted to invite the FC to review its previous decision in ‘Feyen No. 1’ and overrule it. The attempt was rejected. Gopal Sri Ram JCA explained as follows:

“first, I do not think, as a matter of policy, it is open to us t reverse a decision of another division of this court given so recently. Great care must be taken especially in a case as the present which concerns the interpretation of a statutory provision. It should not be done save in the most exceptional of cases. Otherwise it would lead to uncertainty. Men of business must be in a position to organize their affairs in such a fashion that they keep well within the framework of the law. And members of the legal profession must be able to advise their clients with some degree of certainty as to what the law is upon a particular subject matter. Certainty in the law is therefore one of the pillars upon which our justice system rests.

But I am not to be taken as saying that we should never depart from an earlier decision of this court. Departure may be warranted in a case where it appears patently clear that the earlier decision was given in defiance of an

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express statutory provision that was overlooked by this Court. Equally, where a serious error is embodied in a decision of this court that has distorted the law, in which case the sooner it is corrected the better. … I hasten to add that it is not the position here ….”

In summary, the practice of the present FC in civil matters is the same as in criminal matters, that is, while treating previous decisions as normally binding, the FC will depart from a previous decision when it appears right to do so.

COURT OF APPEAL

The Court of Appeal (CoA) was established by the Constitution (Amendment) Act 1994 (Act A885). Whether the CoA is regarded as new court starting with a clean slate or does it take the place of the former FC in the three-tier structure pre-1985 of the Federation of Malaya CoA are generally unanswered.

On the assumption that it is a new CoA, it is bound by the decision of the FC and its decision is binding on all lower courts including the High Courts.

Is the CoA bound by its own precedents?

As in the case of the old Court of Appeal, it is probably bound by its own decisions on the principle enunciated in Young v Bristol Aeroplane Co Ltd [1994] KB 718. In Kesultanan Pahang v Sathask Realty [1997] 2 MLJ 701 the CoA was urged by counsel for the appellant to reject its earlier decision in Sykt Kenderaan Melayu Kelantan v Transport Workers Union [1995] 2 MLJ 317 which in the counsel’s opinion, had wrongfully refused to follow the Privy Council decision in South East Asia Firebricks Sdn Bhd [1981] AC 363. Abdul Malek Ahmad JCA rejected that invitation on the ground, among others that ‘we are bound by our own decision’, quoting as authority Gopal Sri Ram JCA in the Federal Court in Kumpulan Perangsang Selangor v Zaid Mohd Noh where the learned judge having stated that the FC is bound by its own decisions added that ‘for like reasons, the CoA is bound [1949] MLJ (Suppl.) 25.’ The stand was reaffirmed in Kwong Yik Bank v Ansonia Management Associates [1999] 1 AMR 377.

DECISIONS FROM OTHER COMMONWEALTH COUNTRIES

Decisions from courts outside the Malaysian judicial hierarchy are not binding but persuasive in nature.

England and Wales

This general principle is even applicable to English decisions despite the obvious legal inheritance. However, this would be subject t the express reception of English law under the specific provisions of sections 3(1), 5(1) and 5(2) of the Civil Law Act 1956. Subject to the

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cut-off dates and ‘local circumstances’ proviso, decisions of the House of Lords were and may, where applicable under continuing reception, continue to be binding.

Apart from express reception under the Civil Law Act 1956 and (at least until the final abolition of the Privy Council) the re-enactment of English statutes in Malaysia in identical terms, decisions of the English courts, including those of the House of Lords, are only persuasive. This is evident from the decision in Jamil bin Harun v Yang Kamsiah [1984] 1 MLJ 217, an appeal against the FC decision to incorporate the principle of itemizing heads of damage in personal injury cases. The FC decision followed the HoL decision in the English case of Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174, Lord Scarman in delivering the judgment of the Board observed at p 219:

“Their Lordships do not doubt that it is for the courts of Malaysia to decide, subject always to the statute law of the Federation, whether to follow English case law. Modern English authorities may be persuasive, but are not binding.”

The areas in which decisions of English courts are influential are:

the basic common law principles of tort, contract and the commercial laws; and the basic common law principles of evidence, criminal law and procedure – areas in

which Malaysia has enacted legislation based on Indian legislation which in turn originated form English principles.

The decisions of English courts are helpful not only in understanding and applying the legislation but also in filling in lacunae or gaps in the legislation. In fact, section 5 CPC expressly provides that in event of lacuna the law in relating to criminal procedure for the time being in force in England shall be applied so far as it shall not conflict or be inconsistent with the CPC.

India

Decisions of courts in India are generally not binding but in respect of legislation derived from India, notably the Penal Code, the Criminal Procedure Code and the Evidence Act 1950, Indian cases are highly persuasive.

Examples:

“The Penal Code has been taken textually from the Indian Penal Code and Indian cases are continually being referred to in the Courts of this country; they are considered of persuasive authority and are frequently relied on and followed.”

Per Buhagiar J in Seet Soon Guan v Public Prosecutor (1955) 21 MLJ 223 at p 225

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However, since Indian decisions are strictly not binding, the Malaysian courts will not hesitate to decline to apply them where they do not agree with them.

“It is not without precedent that when our courts strongly fee that a decision of a court of different jurisdiction cannot be supported we have not hesitated to say so.”

Per Raja Azlan Shah J in Chandrasekaran & Ors v Public Prosecutor [1971] 1 MLJ 153 at p 160

In other spheres of the law, there is a general willingness by the Malaysian courts to be guided by Indian decisions.

Examples:

“Decisions of the Indian courts are of course not binding here, but they are very valuable guides and have always been treated with the greatest respect by the courts in this country. Putting the matter at its lowest level it can at least be said that due weight should be given to them when it is found that they are based on reasoning that commends itself to the Court.”

Per Reay JC in Leonard v Nachaippa Chetty (1923) 4 FMSLR 267

“My view seems to have support from some Indian authorities which, though not binding upon this Court, are of persuasive authority and should be respected.”

Per Chong Siew Fai in Jumatsah bin Daud v Voon Kin KuetAustralia & New Zealand

Where legislation is modeled upon those of other common law countries, for example, the National Land Code 1965 being based on that of South Australia, then the status of decision of those courts on points of law in pari material with Malaysian law is summarized by Chang Min Tat FJ in Director-General of Inland Revenue v Kulim Rubber Plantations [1981] 1 MLJ 214:

“In so far as the decision of other courts … are concerned, we have always treated these judgments as of only persuasive authority, but we have never lightly treated them or refused to follow them, unless we can successfully distinguish them or hold them as per incuriam. Other than for these reasons, we should as a matter of judicial comity and for the orderly development of the law, pay due and proper attention to them.”

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References:

Ahmad Ibrahim & Ahilemah Joned, The Malaysian Legal System, 2nd Ed., DBP,1995.Beckman, R.C., Coleman, B.S. & Lee,J., Case Analysis and Statutory Interpretation, 2nd Ed., Faculty of Law, National University of Singapore, 2001.Finch & Fafinski, Legal Skills, 3rd Ed., Oxford University Press, 2011.Fox & Bell, Learning Legal Skills, 3rd Ed., Blackstone Press Ltd., 1999.Hanson, S., Legal Method, Skills and Reasoning, 3rd Ed., Routledge:Cavendish, 2010.Holland & Webb, Learning Legal Rules, 7th Ed., Oxford University Press, 2010.McLeod, I., Legal Method, 5th Ed., Palgrave Macmillan Law Masters, 2005.Rutter, M.F., The Applicable Law in Singapore and Malaysia, MLJ, 1989.Smiths, A.T.H., Glanville Williams; Learning the Law, 12th Ed., Sweet & Maxwell, 2002.Sharifah Suhanah Syed Ahmad, Malaysian Legal System,Lexis Nexis, 2007Wan Arfah & Ramy Bulan, An Introduction to the Malaysian Legal System, Fajar Bakti, 2001.Wan Arfah Hamzah, A First Look at the Malaysian Legal System, Oxford Fajar, 2009.Wu Min Aun, The Malaysian Legal System, 3rd Ed., Pearson Longman, 2005.

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