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BUSINESS LAW

(LAW 416)
GROUP ASSIGNMENT

PREPARED FOR:

MDM. ALIYAH ABDULLAH

PREPARED BY:

NURHANISAH ABDULLAH NAJWA FATEEHA BAKHTIAR NURHAZWANI ABDUL RAHMAN NUR AISYAH SUZELAN AMIR NOR FAHMI ADLINA FOUZI BM 221 (2B)

(2010123341) (2010146001) (2010386473) ( ) ( )

Table of Contents
1.0 INTRODUCTION ............................................................................. 1 2.0 STARE DECISIS................................................................................ 1
2.1 DEFINITION ........................................................................................................................ 1 2.2 WHAT IS STARE DECISIS .................................................................................................. 1 2.3 WHAT IS THE CONCEPT OF STARE DECISIS ................................................................ 2 2.4 THE PROBLEM WITH STARE DECISIS............................................................................ 2 2.5 THE DOCTRINE OF STARE DECISIS................................................................................ 3 2.6 MALAYSIAN COURTS HIERARCHY ............................................................................ 3 2.7 PERSUASIVE PRECEDENT............................................................................................... 4 2.8 DISTINGUISHING PRECEDENTS .................................................................................... 4

3.0 CONCLUSION .................................................................................. 5 APPENDICES........................................................................................... i


CASE 1......................................................................................................................................... i CASE 2........................................................................................................................................iv CASE 3........................................................................................................................................vi

GA/LAW416/110211

1.0 INTRODUCTION
One important and distinctive element need to be considered in English law is that the reasoning and decisions found in preceding cases are not simply considered with respect or as a good guide, but can be binding on later courts. It is known as the principle of stare rationibus decidendis which usually referred to as stare decisis.

2.0 STARE DECISIS


2.1 DEFINITION It comes from a Latin word means Let the Decision Stand. It is the policy of courts to abide by or adhere to principles established by decisions in earlier cases. In practice, stare decisis means that when a court makes a decision in a case then any courts which are of equal or lower status to that court, they must follow previous decision if the case before them is similar to that earlier case. In the case of In the case of Khalid Panjang v. PP [1964], Court had decided in the privy Council case of Mirza Akbar is binding on the Federal Court and is also binding on every High Court in Malaysia and no judge is at liberty. Judges do not decide case arbitrarily but follow the accepted principles (precedents). When the facts and the law in a case are similar to the fact and law of the previous case, then court must follow the earlier decision.

2.2 WHAT IS STARE DECISIS


Stare decisis is a legal principle which dictates that courts cannot contravene precedent. They must uphold prior decisions, to literally stand by previous decisions. Many legal systems include the doctrine of stare decisis in their legal structure and this doctrine can be applied to many different types of cases. Some people have criticized the adherence to precedent, arguing that it has some clear flaws, including the fact that setting precedent can sometimes involve contravening previous precedent, which means that there would be no precedent to follow if judges were never willing to go against older legal decisions.

GA/LAW416/110211

2.3 WHAT IS THE CONCEPT OF STARE DECISIS


The concept of stare decisis can manifest in two different ways. In the first case, lower courts are expected to abide by rulings from higher courts. If a higher court has established a precedent in a similar case, the lower court must follow the decision entered by the higher court. If it wishes to go against the precedent set by the upper court, the lower court must be able to demonstrate that the decision contradicts the law or is unjust in some way. Courts are also expected to abide by precedents set in that court before, whether the court involved is lower or higher. The interpretation of the law should remain reasonably consistent through time and stare decisis reminds courts that they have an obligation to uphold their own prior decisions. Again, the validity of a decision may be challenged for the purpose of overruling it and setting a new precedent.

2.4 THE PROBLEM WITH STARE DECISIS


The obvious problem with stare decisis is that if a previous judicial decision is unfair, it must be overturned in order to set a new precedent. The infamous separate but equal doctrine in the United States is a good example of this situation. This doctrine was used to support the legality of segregation. Later, the court recognized that this doctrine was in fact not fair, and did not abide by the spirit of the Constitution. As a result, it was overturned to rule that segregation was not legal. If the court had stuck strictly with stare decisis, any challenge to segregation would have been struck down in accordance with the prior separate but equal ruling. In Public Prosecutor v. Mohamed Salleh bin Bitam and Public Prosecutor v. Bachita Singh & 2 Ors [1940] MLJ 149, the first point is whether this court is bound by its previous decisions or not. In the Colony, the Court of Appeal appears to have considered that under exceptional circumstances they might hold that they were not bound by their previous decisions. On the other hand, the Court of Appeal in the Federated Malay States has held that they are so bound.

GA/LAW416/110211

2.5 THE DOCTRINE OF STARE DECISIS

This doctrine is designed to keep courts consistent. Stare decisis can also help courts avoid politicization, because it allows them to focus on enforcing the law as it is currently understood, rather than responding to cases in accordance with current political fads.The occasion will never arise again when we have to remind High Court judges that they are bound by all judgments of this court and of the Federal Court and they must, despite any misgivings a judge may entertain as to the correctness of a particular judgment of either court, apply the law as stated therein. In Dalip Bhagwan Singh v. Public Prosecutor [1997] 4 CLJ 645, court had decided that the doctrine of stare decisis or the rule of judicial precedent dictates that a court other than the highest court is obliged generally to follow the decisions of the courts at a higher or the same level in the court structure subject to certain exceptions affecting especially the Court of Appeal.

2.6 MALAYSIAN COURTS HIERARCHY


Malaysian law can be found in the Judicial Decisions (JD) of the Federal Court, Court of Appeal and High Court, also Supreme Court and Judicial Committee of the Privy Council by the doctrine of binding Judicial Precedent. Judges do not decide case arbitrarily but follow the accepted principles (precedents). In example, decisions made by judges previously are in similar situations. When the facts and the law in a case are similar to the fact and law of the previous case, then court must follow the earlier decision. A court lower in hierarchy is bound by the decision of courts higher than itself Stare decisis can happened in two ways, either vertically or horizontally. In example for vertical way, Sessions Court must follow the decisions made by High Court. While, in horizontally way, some courts are bound by their own previous decisions of court from a same level, whether it is past or present, if any.

GA/LAW416/110211

2.7 PERSUASIVE PRECEDENT Not all precedents are binding. A persuasive precedent is type of precedents which will not bind others. Persuasive precedents arise out of a number of contexts: (a) Decisions of lower courts cannot bind. They may be persuasive. (b) Decisions of the High Court at first instance (i.e. the trial stage) are persuasive authority for later cases in the High Court. (c) Decisions of the Judicial Committee of the Privy Council. (d) Decisions of the Scottish and Northern Irish courts. Few cases below show that not all precedents are binding. In the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 where the House of Lords said that though the doctrine of being bound had many commendable points: too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. 2.8 DISTINGUISHING PRECEDENTS A judge may not apply the same principle in the situation such as: a. Precedent laid down by the lower court, where the case is on appeal. b. The earlier precedent is made perincuriam (made in ignorance of a statute or a binding precedent). c. When there are material differences in facts (between the case before them and case that lagging down the precedent).

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3.0 CONCLUSION
Much of this reification or being turning which sometimes outdated principles is due to the fact that there is a world of difference between only recognizing the source and value of precedent and the concept of stare decisis. Courts in nearly all major legal systems have a system of precedent which is even in Islamic law where the decisions are those of the judges acting as individuals under spiritual guidance. The great value of the doctrine of stare decisis is that it provides certainty. Unfortunately, it also has its own negative perspective. First, in order to avoid the conclusions of stare decisis, courts are sometimes forced to find close distinctions between cases. Secondly, the doctrine limits flexibility and can make unassailable (unable to deny) some principles which should have been abandoned long ago.

APPENDICES
CASE 1

BANK ISLAM MALAYSIA BHD v. AZHAR OSMAN & OTHER CASES [2010] 5 CLJ 54 [2010] 1 LNS 251

Loan facility : Bai Bithaman Ajil Determination of quantum of plaintiffs claim : Whether bank had legal right to claim for full sale price as stipulated in Property Sale Agreement Doctrine of stare decisis : Whether there was binding precedent

There were two sets of appeal that went before the Court of Appeal relating to Bai Bithaman Ajil (BBA) contracts in Islamic banking . They were heard together and decided by the Court of Appeal that a BBA contract was valid and enforceable. The cases were sent to this court for determination of the quantum of plaintiffs claim in the writs of summons, as well as the amount due under the originating summons. The proceedings before this court involved two writs of summons registered as D4-22A-263-2006 and D4-22A-195-2006 and two originating summons registered as D4-22A-395-2005 and D4-22A-399-2005 respectively. The plaintiff in each of these four cases was Bank Islam Malaysia Berhad (BIMB). Counsel for BIMB contended that in a BBA contract, the Bank had a legal right to claim for the full sale price as stipulated in the Property Sale Agreement (PSA). Accordingly, he argued that in an application pursuant to an originating summons, the court ought to grant an order for sale based likewise, on the full sale price, irrespective of a premature termination.

The bases of the counsels arguments were:(i) that this court should honour and enforce the clear written terms of the contract and should not interfere with the intention of parties by imputing any other term. Since the parties had agreed as to the amount of sale price as stipulated in the PSA, the defendant was under a legal obligation to pay the full sale price, irrespective of when a breach occurred; (ii) by virtue of the doctrine of stare decisis, this court was bound by the decision of the Court of Appeal in Lim Kok Hoe which upheld and acknowledged the obligation to pay the full sale price under the PSA.

Held:

(1)

In cases of BBA contracts despite stipulating the full sale price as being payable, the Bank grants ibrar or rebate on a termination due to breach or for prepayment. The granting of ibrar by BIMB is in line with the practice of other Islamic banks. That being the case in an order for sale application the sum stipulated under s. 257(1)(c) National Land Code shall be the amount payable in the event that a customer intends to tender payment under s. 266(1) National Land Code. Under this section, if a chargor tenders payment to court of the amount due and payable before the conclusion of the auction, the Order for Sale ceased to have effect. The approach of the Islamic banks that deduct unearned profit as ibrar is consistent with the requirement of s. 266(1) NLC while at the same time facilitated cases of prepayment. (paras 9 & 10)

(2)

Whilst the Court of Appeal in Lim Kok Hoe held that a BBA contract in a way differed from conventional banking because it was a sale transaction, it could not however be regarded as a sale transaction simpliciter. The BBA contract is secured by a charge and concession as ibrar is given as a matter of practice to all

termination. Despite the written term of the agreement, the bank in reality does not enforce payment of the full sale price upon a premature termination. It always grants rebate or ibrar based on unearned profit. In the decisions of Affin Bank Bhd v.
ii

Zulkifli

Abdullah, Malayan Banking Berhad v Marilyn Ho Siok Lin and Malayan

Banking Bhd v. Yakup Oje & Anor, when a BBA contract was prematurely terminated upon default by the borrower, the court did not allow the bank to enforce the payment of the full sale price in a premature termination. The court does not enforce payment of the full sale purchase price but intervene on equitable grounds, albeit based on different approaches. (paras 13, 14 & 18) (3) The purpose of this proceeding was to deal with what would be considered fair and equitable in the circumstances and to lay emphasis on what would be the better and appropriate approach in dealing with the plaintiffs quantum with particular reference to the manner of its determination while being mindful of the parties position. In doing so, the bank should not be allowed to enrich itself with an amount which was not due while at the same time taking cognizance of the customers right to redeem his property. Therefore where the BBA contract was silent on issue of rebate or the quantum of rebate, by implied term, the bank must grant a rebate and such rebate

shall be the amount of unearned profit as practiced by Islamic banks. (para 22) (4) Applying the doctrine of stare decisis to Lim Kok Hoe, this court was bound to hold that a BBA contract was a valid and enforceable agreement. However, there was no binding precedent by the Superior Court for this court to follow to enforce the sale price under the PSA at all costs. There was not a slightest suggestion in Lim Kok Hoe that the issue of quantum has been canvassed before the court. The very fact that the Court of Appeal sent the cases back to this court for determination of quantum, said it all. (paras 27 & 32

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CASE 2

Doctrine of Stare Decisis: Dato' Tan Heng Chew v Tan Kim Hor & Anor 2006 [FC] Saturday, 04 March 2006 12:22PM DATO' TAN HENG CHEW v. TAN KIM HOR & ANOTHER APPEAL FEDERAL COURT, PUTRAJAYA [CIVIL APPEAL NOS: 02-6-2005(W) & 02-8-2005(W)] 4 JANUARY 2006 Abdul Hamid Mohamad FCJ:

Public Prosecutor v Datuk Tan Cheng Swee (1980) It is however necessary to reaffirm the doctrine of stare decisis which the Federal Court accepts unreservedly and which it expects the High Court and other inferior courts in a common law systemto follow similarlyClearly the principle of stare decisis requires more than lip-service. Chang Min Tat F.J. I agree that for the reasons stated by my noble and learned brother Abdul Hamid Mohamad FCJ, the appeal should be dismissed with half costs to the respondents. I may add that I agree entirely with his Lordship's observation that the Court of Appeal is bound by the doctrine of stare decisis to follow the "real danger of bias" test for recusal adopted by the Federal Court in Majlis Perbandaran Pulau Pinang v. Sykt. Berkerjasama-sama Serbaguna Sungai Gelugor [1999] 3 MLJ 1; [1999] 3 CLJ 65 and Mohamed Ezam bin Mohd Nor & 4 Ors v. Ketua Polis Negara [2002] 1 MLJ 321; [2001] 4 CLJ 701. It is axiomatic to state that the doctrine of stare decisis has become the cornerstone of the common law system practised in this country. It is fundamental to its existence and to the rule of law. It has attained the status of immutability.

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In Public Prosecutor v. Datuk Tan Cheng Swee & Anor [1980] 2 MLJ 277; [1980] 1 LNS 58, Mr. Justice Chang Min Tat had occasion to restate the doctrine in words which are poignantly clear when he said:It is ... necessary to reaffirm the doctrine of stare decisis which the Federal Court accepts unreservedly and which it expects the High Court and other inferior courts in a common law system such as ours to follow similarly.

CASE 3 Wong Siew Choong Sdn Bhd V Anvest Corporation Sdn Bhd The Appellants (Wong Siew Choong Sdn Bhd) at all material times were the registered and beneficial owners of a piece of land held under Lot No. 129, Section 44, Town and District of Kuala Lumpur measuring approximately 100,934 square feet hereinafter referred to as (the said land). The Appellants agreed to sell the said land to the Respondents (Anvest Corporation Sdn Bhd), principals of M/S Appraisal (M) Sdn Bhd, who were the registered real estate agents at the material time. On 11th October 1988, the Respondents agent Appraisal(M) Sdn Bhd wrote to the Appellants to confirm the terms and conditions of the sale of the said land. Dispute arose over the transfer of the said land to the Respondents culminating in the Respondents issuing a writ against the Appellants claiming inter alia, for specific performance and damages for breach of contract in lieu of or in addition to specific performance. The Court of Appeal on 9 December 1997 unanimously held that the said letter was a concluded and binding contract and allowed the Respondents appeal. The Court further ordered the matter be remitted to the High Court for specific performance and completion of the contract as embodied in the said letter of 11th October 1988. The Appellants obtained leave to appeal to the Federal Court against the order of the Court of Appeal. On 1st July 1999 the Federal Court unanimously dismissed the Appellants appeal and affirmed the order of the Court of Appeal. The Learned High Court Judge Y.A. Datuk Mohd. Shaari Yusoff (as he then was) held that the acquisition award received by the Appellants for the area acquired be deducted from the total purchase price of the said land. The Learned Judge also held the Respondents were the beneficial owners of the said land at the time of the land acquisition. Therefore, the said acquisition award of RM5,252,783.20 belonged to the Respondents and must be deducted from the purchase price. Before we deliberate on which is the more preferable judicial approach on the aforesaid issue, we feel it is imperative to address our minds to the doctrine of judicial precedent. In this
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respect, it would be apposite we find, to quote in extensor the decision of Peh Swee Chin FCJ, in the case of Dalip Bhagwan Singh v Public Prosecutor (1998) 1 MLJ 1 where the doctrine of binding precedent was discussed in his Lordships customary style. The rule of judicial precedent in relation to the House of Lords was stated in London Tramways v London Country Council (1898) AC 375 that it was bound by its own previous decision in the interests of finality and certainty of the law, but a previous decision could be questioned by the House when it conflicted with another decision of the House or when it was made per incuriam, and that the correction of error was normally dependent on the legislative process. 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 in the Federal Court should have this power to do so but it is suggested that it should be used very 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 decided 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 do so depart is indicated (subject to a concurrent consideration of the question of the consequences), when a former decision which is sought to be overruled is wrong, uncertain, unjust or outmoded or obsolete in the modern conditions.

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