The true nature of asset transfer under intestate succession is determined by legal entitlements, impacting applicable stamp duty.

Introduction

[1] This is the appellant's appeal against the decision of the Learned High Court Judge ["LHCJ"] where the LHCJ allowed the respondent's appeal with costs and ordered the appellant to refund the excess of stamp duty that was paid by the respondent.

Background Facts

[2] On 8 August 2018, the respondent and respondent's son (Mr Tan Chun Keat) were appointed by the Shah Alam High Court as co-administrators of the deceased's (the respondent's husband's) estate.

[3] In view of the deceased's intestacy, s 6(1)(a) of the Distribution Act 1958 ["DA 1958"] provides that the respondent and the deceased's two children shall each have one-third of the Estate. The Estate consists of, among others, the Deceased's interest in five pieces of land.

[4] The respondent and the Deceased's two children executed a "Deed of Family Arrangement" on 2 October 2018 ["DFA"] which the respondent and the Deceased's two children agreed to distribute, among others, the Deceased's interest in the five properties to the respondent only.

[5] On 20 December 2018, the Shah Alam High Court issued an order to vest the Deceased's interest in the five properties to the respondent only (Vesting Order).

[6] Pursuant to the Vesting Order, the respondent and Mr Tan Chun Keat executed five (5) "Forms 14 A", instruments of transfer of the Deceased's interest in the five properties under the National Land Code, in favour of the respondent only.

[7] Pursuant to s 36(1) of the Stamp Act 1949 [" SA "], the Collector imposed ad valorem stamp duty on the Forms 14A. The Collector's Assessment was made on the ground that the Forms 14A concerned "or renunciation by way of gift" under item 66(c) of the First Schedule to the .

[8] The respondent objected to the Collector's Assessment and applied to the Collector to review the Collector's Assessment under s 38A(1) of the SA . The review application was made on the basis that stamp duty of RM10.00 should be assessed for the Forms 14A in accordance with item 32(i) in the First Schedule.

[9] The Collector dismissed the review application. Hence, the respondent paid the stamp duty in full as stated in the Collector's Assessment. The respondent then filed appeals to the High Court against the Collector's dismissal of the review application pursuant to s 39(1) of the SA .

[10] The only question posed by these appeals is whether the Forms 14A in this case attract ad valorem stamp duty under Item 66(c) (release or renunciation of property by way of a gift) or a fixed amount of stamp duty of RM10.00 pursuant to Item 32(i) (conveyance or transfer which is not specifically charged with stamp duty).

Finding Of The High Court

[11] The High Court allowed the respondent's appeal with costs and ordered the appellant to refund the excess stamp duty that was paid by the respondent.

[12] The LHCJ was of the view that the true nature of the Forms 14A was solely to give effect to the renunciation (entitlements under the DA) by the Deceased's two children. This decision was premised on the following reasons:

(a) the intestate death of the Deceased has attracted the application of the DA 1958. The entitlement of the Deceased's two children to the Estate only arises by virtue of operation of law, namely, s 6(1)(e) of the DA 1958;

(b) the Deceased's two children and the respondent had entered into the Deed which provided for, among others, the renunciation (entitlements under the DA 1958);

(c) the Vesting Order was obtained by the co-administrators of the estate so as to give effect to the renunciation (entitlements under the DA 1958); and

(d) the execution