Chang Min Tat J:

This is a case stated under the provisions of s. 39 of the Stamp OrdinanceNo. 59 of 1949 for the decision of the High Court whether the proper stamp duty chargeable on a Loan Agreement dated 15 July 1974 (the agreement) between Pernas Securities Berhad (the appellant) and American International Assurance Co. Ltd. (the lender) is as a security or as a mere agreement. As a security for a loan of $10 million it would attract stamp duty to the tune of $49,997 under Item 22(1)(a) read in conjunction with Item 27(a) of the First Schedule of the Stamp Duty (Special Provisions) Malaysia Act, 1967, and as a mere agreement which is not a security, the stamp duty would be $1 under Item four of the First Schedule.

The loan agreement which was executed on 15 July 1974 is a rather intriguing instrument. The recital is to the effect that the lender has agreed to lend, at the request of the appellant, the sum of $10 million upon the terms and conditions contained therein. Clause 1 refers to this agreement and specifies the interest to be 9% on the principal of the loan. The whole sum is not however to be made immediately available or in one lump sum. By cl 2, it is to be given by nine instalments spread over a year and according to the timetable specified as a schedule to the agreement and termed the "break-down" schedule, the instalments which with the exception of the first, are all of $1 million each, the first being of $2 million, are to be made by certain specified dates. Provisions and penalties are made for early and late advances. An early advance of an instalment before the time due will attract interest at the time of the advance. An advance made late or for a smaller sum will cause the lender to pay a penalty. Other provisions are for the payment of interest for the capitalisation of interest and for the mode of payment.

An unusual feature is that upon each advance, the lender is to execute a promissory note, which is more or less in the ordinary form. A specimen is annexed to the agreement. In this form, the lender "unconditionally" promises to pay the amount of the instalment, described as the principal sum together with the agreed rate of interest.

In addition the agreement requires the appellant to comply with certain conditions precedent in the form of a valid and enforceable guarantee by the Government of Malaysia and a written confirmation by the Ministry of Finance that this guarantee is chargeable on the Consolidated Fund of Malaysia. There are also other provisions which are of some significance and relevance in the determination. It is also provided that the law governing the agreement is the law of Malaysia.

By reason of the provision for a separate promissory note for each instalment as per the break-down schedule in the agreement, the appellant contends that the agreement is not a "security", that the security for the loan consists of the several promissory notes and therefore that the agreement is a mere agreement for the loan. It merely gives the details of how the whole loan is to be made.

Before proceeding further, it may be useful to remind myself of the principles to adopt in construing provisions for imposing duty, and I think I ran do no better than to cite the following passage from Halsbury's Laws of England Vol. 33 at pp. 266-267:

In construing provisions imposing the duty, strict attention must be paid to the actual words used by the legislature, but the words themselves must be understood in a 'popular' sense, that is, the sense which persons conversant with the subject matter with which the statute is dealing would attribute to them and, although no consideration as to what might be reasonable on the one hand, or oppressive on the other, can affect the conclusion, ambiguous words are construed in favour of the subject. Formerly a liberal construction was given to exceptions, but the tendency in recent years seems to be towards a stricter

construction. The duty being impos