Instruments Of Transfer For Renunciation Of Entitlement In Respect Of Intestate Estate Attract Nominal Stamp Duty

• Published date: 12 January 2021
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Real Estate, Civil Law
• Law Firm: SKRINE
• Author: Ms Preetha Pillai, Desmond Liew Zhi Hong and Dickson Chia Chung Ming

Recently, the High Court in Lee Koy Eng v Pemungut Duti Setem (and Another Appeal) [2020] 7 AMR 296 held that Instruments of Transfer (i.e. Form 14A) executed under section 215 of the National Land Code 1965 to give effect to a renunciation of entitlement to the estate of a person who died intestate attract nominal stamp duty.

Brief facts

The deceased died intestate leaving, amongst others, five pieces of lands ("Lands") to his wife and two children. The two children executed a deed of family arrangement ("Family Deed") to renounce their respective entitlements to the Lands under section 6(1)(e) of the Distribution Act 1958 ("DA").

Premised on the Family Deed, the High Court issued an order to vest the Lands solely to the wife of the deceased ("Vesting Order"). Subsequently, the co-administrators of the deceased's estate executed five Forms 14A to transfer the Lands in her favour.

The Collector imposed ad valorem stamp duty on the Forms 14A on the basis that these Forms were in relation to a "release or renunciation by way of a gift" under item 66(c) in the First Schedule of the Stamp Act 1949 ("SA").

Decision

The High Court cited the Federal Court's decision in BASF Services (M) Sdn Bhd v Pemungut Duti Setem [2011] 3 AMR 11 and held that in determining the applicable stamp duty, the true nature of the instrument (i.e the Forms 14A) must first be ascertained. In doing so, the High Court considered the following factors:

1. the Forms 14A;

2. the effect of section 6(1)(e) of the DA;

3. the Family Deed; and

4. the Vesting Order.

Having considered the above, the High Court held that the Forms 14A attract nominal stamp duty of RM10 as these Forms cannot be regarded as a gift under item 66(c) in the First Schedule of the SA for the following reasons:

1. the true nature of the Forms 14A is to give effect to the renunciation pursuant to the Family Deed and the Vesting Order;

2. an entitlement to an estate is not equivalent to a beneficial and legal right or interest in the estate which can be given absolutely as a gift;

3. the renunciation by the two children cannot be construed as a gift of entitlement to the wife because the two children had no right or interest in the Lands at all material times as they had renounced their entitlement at the outset (see Chor Phaik Har v Farlim Properties Sdn Bhd [1997] 3 MLJ 188 - a beneficiary of a deceased's estate has no right or interest in the estate until the administration of the estate is complete); and

4. item 66(c)...