Court of Appeal affirms that Instruments of Transfer for renunciation of entitlement in respect of intestate estate are subject to nominal stamp duty

The High Court in Lee Koy Eng v Pemungut Duti Setem (and Another Appeal) [2020] 7 AMR 296 held that Instruments of Transfer (‘Forms 14A’) executed under the National Land Code to give effect to a renunciation of entitlement to the estate of a person who died intestate attract nominal stamp duty. Our commentary on this decision can be read here.
The Court of Appeal in Pemungut Duty Setem v Lee Koy Eng [2022] 3 CLJ 252 dismissed the appeal by the Collector of Stamp Duty against the decision of the High Court, holding, inter alia, that: 
  1. the High Court Judge had adopted the correct approach by placing due emphasis on whether the instrument releasing the property to the respondent was by way of gift by construing the true nature of the instrument; 

  2. there was no error in the High Court Judge’s finding that the true nature of the Forms 14A was solely to give effect to the renunciation by the children of their entitlements to the estate of the deceased who had died intestate; 

  3. the High Court Judge’s conclusion that the Forms 14A could not be construed as a gift by the children of their interest in the deceased’s estate by reason that the children’s entitlement to the estate does not constitute a right or interest in the estate until the administration of the estate is completed (i.e. distributed in accordance with law) is correct in law as laid down by the Federal Court in Chor Phaik Har v Farlim Properties Sdn Bhd [1997] 3 MLJ 188; and 

  4. a court has wide discretionary powers in awarding interest where appropriate and that the High Court Judge’s decision to award interest at the rate of 5% per annum on the amount of the excess duty paid to the Collector of Stamp Duty was in compliance with Order 42 rule 12 of the Rules of Court 2012. 
The Court of Appeal has affirmed that a memorandum of transfer of landed property to give effect to a renunciation of an entitlement to the estate of a person who died intestate is not subject to ad valorem stamp duty as a “release or renunciation by way of gift” under item 66(c) of the First Schedule of the Stamp Act 1949, but rather to nominal duty of RM10.00 as a conveyance “of any kind not otherwise specifically charged with duty” under item 32(i) of the First Schedule of the said Act.
As a cautionary note, we emphasise that the principles in this case will not apply to the renunciation by a beneficiary of his interest under a will as the entitlement will be vested in the beneficiary upon the will being proved.
Case update by Joey Tiw (Associate) of the Corporate Practice of Skrine.

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