[2016] 1 LNS 1430 Legal Network Series

IN THE HIGH COURT IN MALAYA AT KUALA LUMPUR

(CIVIL DIVISION)

[ORIGINATING SUMMONS NO. WA -24NCvC-348-03/2016]

BETWEEN

MUHIBBAH ENGINEERING (M) BERHAD … PLAINTIFF

AND

PEMUNGUT HASIL SETEM … DEFENDANT

JUDGMENT

ENCLOSURE 2

[1] Enclosure 2 is the Plaintiff‟s Originating Summons (“OS”)

applying for the following Orders:

“(a) Surat Tawaran Bank daripada Maybank Islamic

Berhad (“Bank”) kepada Muhibbah Engineering (M)
Berhad (“Plaintif”) bertarikh 20.11.2013, Perjanjian
Fasiliti di antara Bank dan Plaintif bertarikh 2.6.2015
dan ‘Supplemental Amendment and Restatement
Agreement Relating to a Facility Agreement ’ di
antara Bank dan Plaintif bertarikh 28.12.2015
(“Perjanjian-perjanjian Fasiliti”) layak untuk
menuntut peremitan di bawah Perintah Duti Setem
(Peremitan) (No. 2) 2012 bagi sebahagian pinjaman
sebanyak RM495,000,000.00;

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(b) sekiranya Perjanjian-perjanjian Fasiliti layak untuk

menuntut peremitan di bawah Perintah Duti Setem
(Peremitan) (No. 2) 2012, duti setem yang telah
terlebih dibayar atas Perjanjian-perjanjian Fasiliti
bagi sebahagian fasiliti sebanyak RM495,000,000.00
dikembalikan/dibayar balik oleh Defendan kepada
Plaintif; dan

(c) relif selanjut dan/atau relif lain sebagaimana

Mahkamah yang Mulia ini fikirkan suai manfaat. ”.

BACKGROUND FACTS

Plaintiff’s Facilities with Maybank Islamic Berhad

[2] Pursuant to the letter of offer dated 20.11.2013 from Maybank

Islamic Berhad (“Bank” or “Maybank”) to the Plaintiff (“Letter
of Offer”) [exh. A1-1 of Plaintiff‟s Affidavit in Support
(“AIS”)], the Bank has approved the transfer/refinancing of the
Plaintiff‟s existing combined tradelines of RM265.0 million into
Islamic combined trade facilities of RM595.0 million.

[3] The salient terms of the Letter of Offer are as follows:

(a) the facilities offered by Maybank to the Plaintiff include

these facilities with the following limits:

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Type of Facilities Existing Limit New Limit
(RM) (RM)
Letter of Credit Wakalah-i
(“LCW-i”) (Sight)
Murabahah Letter of Credit-i 265,000,000 595,000,000
(“LCM-i”) (sight/ 80 days)
Trust Receipt-i (“TR-i”) (180
days)
Accepted Bills-i (“AB-i”)
(sales/purchase) 180 days
Bank Guarantee-i (“BG-i
(Fin)”)
Bank Guarantee-i (“BG-i
(Non Fin)”)
Total 265,000,000 595,000,000 ;

(b) at pg 2 of the Letter of Offer under the paragraph titled

“Payment”, the facility was granted by Maybank to the
Plaintiff on the following basis:

“Subject to yearly review and payable on demand.

Notwithstanding any other provisions herein stated related

to the availability of the facilities or any part thereof, the
Bank reserves the right to recall / cancel the facilities or
any part thereof at any time it deems fit without assigning
any reason thereto by giving written notice of the same,
whereupon the facility or such part thereof shall be
cancelled and the whole indebtedness or such part thereof
be repayable on demand.”;

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(c) the paragraph titled “Transaction / Security Documents”

at pg 2 of the Letter of Offer states that the instruments to
the facility are:

(i) Facility Agreement (exh. A-2 of Plaintiff‟s AIS in

enclosure 1); and

(ii) Fresh Negative Pledge.

[4] In accordance with the terms of the Letter of Offer:

(a) the Facility Agreement and the Negative Pledge, both

dated 2.6.2015, were signed by the Plaintiff and Maybank;

(b) insofar as the adjudication for stamp duty payable on the

Facility Agreement and the Negative Pledge was
concerned:

(i) stamp duty of RM1,980,000 was imposed by the

Defendant and paid by the Plaintiff for the facility
amounting to RM495,000,000 (stamp duty of
RM400,000 imposed on the facility amounting to
RM100,000,000 had already been paid by the
Plaintiff to the Defendant pursuant to an earlier bank
letter of offer dated 19.5.2011);

(ii) stamp duty of RM10 was imposed on the Fresh

Negative Pledge executed for the full amount of the
facilities of RM595.0 million and was duly paid by
the Plaintiff.

Plaintiff’s Appeals to the Defendant

[5] The Plaintiff, via its Solicitors, Messrs Skrine, wrote a letter of
appeal dated 17.8.2015 to the Defendant to seek for remission

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and refund of stamp duty on the basis that the Facility

Agreement fulfils the criteria prescribed in the Stamp Duty
(Remission) (No. 2) Order 2012 [P.U.(A) 258/2012]
(“Remission Order 2012”), i.e. stamp duty imposed on any loan
agreement or loan instrument without security for any sum or
sums of money repayable on demand or in a single bullet
repayment which is in excess of 0.1% is remitted.

[6] The Defendant via its letter dated 15.9.2015 rejected the
applicability of the Remission Order 2012 and maintained the
amount of stamp duty payable on the Facility Agreement.

[7] On 8.10.2015, the Plaintiff was made to understand by the

Defendant that the rejection on the applicability of the
Remission Order 2012 was due to the relevant references of the
word “security” in the existing Facility Agreement, although the
Plaintiff contends that in substance the facility was a “clean”
facility with no collateral or “security”, as intended by the
parties.

[8] On 9.10.2015 the Plaintiff, via its Solicitors, again wrote to the
Defendant to request for the reassessment of the Facility
Agreement dated 2.6.2015, and informed the Defendant that a
supplemental amendment and restatement agreement will be
provided to the Defendant for its review and assessment for the
purposes of the appeal.

[9] By way of a letter dated 28.12.2015, the Supplemental

Amendment and Restatement Agreement dated 28.12.2015
(“SARA”) (exh. A-10 of Plaintiff‟s AIS) was made available by
the Plaintiff to the Defendant for the purpose of the review and
assessment. The SARA was made to be effective from the date
of the original Facility Agreement. The Plaintiff contends that
the objective of the agreement was to clarify and clearly reflect

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that no security is, has been, or will be created for the Plaintiff ‟s
facilities.

[10] The Defendant via its letter dated 12.2.2016 again rejected the
applicability of the Remission Order 2012 after reviewing the
SARA.

ISSUES

[11] The issues for determination by this Court are:

(1) whether the term “Negative Pledge” in the Facility

Agreement carries the meaning of “security” (“jaminan” or
“cagaran”);

(2) whether the Facility Agreement and the SARA (“Facility

Agreements”) are entitled to the remission of stamp duty
as accorded by the Remission Order 2012.

DECISION OF THE HIGH COURT ON ENCLOSURE 2

[12] On 8.11.2016, after hearing both parties, I dismissed the

Plaintiff‟s OS. I held that the Plaintiff is required to pay the
stamp duty charged by the Defendant. I ordered the Plaintiff to
pay the Defendant costs of RM4,000.00, subject to payment of
the allocatur fee of 4% of the costs.

GROUNDS FOR DECISION

Remittance under the Remission Order 2012

[13] Paragraph 2 of the Remission Order 2012 provides as follows:

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“Remission

2. The amount of stamp duty that is chargeable under

subsubitem 22(1)(b) of the First Schedule to the Act upon
a loan agreement or loan instrument without security for
any sums or sums of money repayable on demand or in
single bullet repayment under that subsubitem which is in
excess of zero point one per cent (0.1%) is remi tted.”
(emphasis added).

[14] The crux of the matter before this Court is whether the “loan
agreement” or “loan instrument”, i.e. the Facility Agreements in
this case, are “without security” for the sums of money which
are “repayable on demand”. In determining this, the Court would
consider, inter alia, whether the term “negative pledge” can be
construed as being akin to “security”. If it is found that the
Facility Agreements are without security, then the Plaintiff is
entitled to the remittance of stamp duty as provided in paragraph
2 of the Remission Order 2012.

Plaintiff’s case

[15] The Plaintiff contends that the Facility Agreements fulfil the
criteria prescribed in the Remission Order 2012, and the
Plaintiff is therefore entitled to the remission of stamp duty
under the Remission Order 2012.

[16] The Plaintiff supports its case based on the following reasons:

(a) the facility under the Letter of Offer is without any

security. The term “security” generally refers to any
mortgage, charge, lien or right of interest in rem which
secures the liability of a party or any agreement or
arrangement that has the effect of conferring priority on

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the assets/properties (usually tangible) of the security

provider in the event of winding up of the debtor/ borrower.
A negative pledge is not an asset/property which can be
reflected in the books of the borrower, nor can it be
realised into cash in the event of winding up;

(b) the terms “Facility Agreement” and “New Negative

Pledge” in the Letter of Offer are b oth transaction
documents in nature rather than as a form of security or
collateral;

(c) there is no Form 34 (Statement Of Particulars lodged To

Be With Charge) pursuant to s. 108(1) of the Companies
Act 1965 that has been executed by the Plaintiff and
lodged with the Companies Commission of Malaysia
(“CCM”) for the purpose of securing the facility under the
Letter of Offer;

(d) the facility under the Letter of Offer is repayable by the

Plaintiff to Maybank on demand.

[17] The Plaintiff also contends that its case is further strengthened
by the confirmation of the facility provider, Maybank, that the
facility provided by Maybank to the Plaintiff is without security
and is repayable by the Plaintiff to Maybank on demand
(paragraph 5 of Maybank‟s AIS). Maybank, like all banks must
in their reporting obligations to Bank Negara Malaysia on their
banking reserves, classify the facilities into secured and non -
secured, and as do external auditors when preparing audited
financial statements in compliance with paragra ph 2(1)(n)(iii) of
the Ninth Schedule of the Companies Act 1965.

[18] The said Ninth Schedule provides as follows:

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“NINTH SCHEDULE

[Sections 169, 326]

ACCOUNTS

Balance Sheet

2. (1) There shall be shown as at the end of the period of

accounting –

(n) under separate headings and showing separately

amounts that are redeemable or payable not later than
twelve months after the date to which the accounts
are made up and amounts that are redeemable or
payable later than twelve months after that date -

(i) …….;

(ii) …….;

(iii) bank loans and overdrafts, distinguishing

between those which are secured and those which
are unsecured; and

(iv) other amounts borrowed without security,giving

details of the contractual terms and, where
secured, of the nature of that security;”
(emphasis added).

Defendant’s case

[19] The Defendant contends that –

(i) both the Bank‟s Letter of Offer and the Facility Agreement
which were signed by both parties contain the word
“security” or “jaminan” to guarantee the said loan.

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Therefore, the Facility Agreement does not fulfil the

condition as provided in the Remission Order 2012;

(ii) the assessment of the stamp duty as notified to the Plaintiff

by the Defendant through the Notice of Assessment
(“Notice Taksiran”) for the sum of RM1,980,000 is
accurate and correct according to item 22(1)(b) read with
item 27(a) of the First Schedule to the Stamp Act 1949.

Evaluation and Findings of the Court

[20] The Defendant‟s power to collect stamp duty is provided in s.

4(1) of the Stamp Act 1949:

“4 Instruments chargeable with duty.

(1) Subject to this Act and subject to the exemptions
contained in this Act and in any written law for the
time being in force, the several instruments specified
in the First Schedule shall, from and after the
commencement of this Act, be chargeable with the
several duties specified in such Schedule. ”.

[21] Based on the wording in s. 4(1) of the Stamp Act 1949, I agree
with the Defendant‟s submission that stamp duty is chargeable
on the “instrument”, and not on the “transaction”.

[22] In addition to s. 4(1), s. 14A of the Stamp Act 1949 provides for
stamp duty to be charged for principal or primary securities as
follows:

“Principal Securities in Syariah financing.

14A. Where it is shown that a principal or primary security

secures the repayment of moneys provided under a scheme

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of financing made according to the syariah, duty

chargeable thereon shall be calculated on the principal
amount provided by the financier or financing body. ”.

[23] Further to s. 4(1) and s. 14A of the Stamp Act 1949, items
22(1)(b) and 27(a) of the First Schedule to the same Act provide
for stamp duty to be charged as follows:

Item 22(1)(b)

“BOND, COVENANT, LOAN, RM1.00

SERVICES, EQUIPMENT LEASE
AGREEMENT OR INSTRUMENT
of any kind whatsoever:

(1) (a) ………

(b) for any sum or sums of The same ad valorem

money, not being interest duty as a charge or
for any principal sum mortgage for such total
secured by a duly stamped amount.”;
instrument, nor rent
reserved by a lease or tack;

Item 27(a)

“27 CHARGE OR
MORTGAGE,
AGREEMENT FOR A
CHARGE OR MORTGAGE
(including that under the
Syariah), BOND,
COVENANT,
DEBENTURE (not being a
marketable security) BILL

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OF SALE by way of
security and WARRANT
OF ATTORNEY to confess
and enter up judgment:

(a) Being the only or

principal or
primary security
(other than an
equitable
mortgage or an
assignment of
receivables or the
kind mentioned in
paragraph (d)) for
the payment or
repayment of
money-

(i) ……..

(ii) ……..

(iii) in any other RM5.00 “.”

case - For
each
RM1,000 or
part thereof

[24] In the light of the above statutory provisions for stamp duty to
be charged, the question now is whether the Plaintiff should be
given the remittance of stamp duty.

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[25] In the Bank‟s Letter of Offer (exh. A-1 of Plaintiff‟s AIS in

enclosure 1), “security documents” have been given the meaning
as follows:

“TRANSACTION/ : i) Facility Agreement.

SECURITY
ii) Fresh Negative Pledge.”.
DOCUMENTS

[26] As rightly pointed out by the Defendant, the Facility Agreement

does refer to “security documents”. This can be seen in the
Definitions in Clause 1.1 of the Agreement as follows:

„Security collectively this Agreement, the

Documents Negative Pledge, the Trade Finance
Contract Note and all other security
documents for the time being or from
time to time constituting security for
the payment obligations and liabilities
(including but not limited to the
payment of the Indebtedness) of the
Customer under and in connection with
the Facility and references to the
“Security Documents” shall include
references to any one or more of
them;‟.

[27] In the same Clause 1.1, “negative pledge” has been defined as
follows:

“Negative Pledge means the negative pledge granted by

the Customer in favour of the Bank
undertaking inter alia that it will not

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create or permit to arise or subsist any

encumbrance, mortgage, charge,
pledge, lien, right of retention, right of
set off or any other security interest on
the whole or any part of our present or
future assets other than:-

(a) liens arising in the ordinary course

of business or by operation of law;
and

(b) security interests existing at the

date hereof provided the same has
been disclosed to you prior to the
date hereof and subject to the
amount outstanding and secured
thereby at all times and at any time
hereafter not exceeding the amount
so disclosed at the date hereof;”.

[28] It is further noted that Clause 15 of the Facility Agreement

provides extensively for “SECURITY” as follows:

“15. SECURITY

15.1 Covenant Relating to Security

In consideration of the Bank granting the Facility,

the Customer shall in addition to this Agreement, on
or before the execution of this Agreement, execute:-

(a)the Negative Pledge.

15.2 Continuing Security

(a) The security created pursuant to the Security

Documents are expressly intended to be and shall be

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a continuing security for all moneys whatsoever now

or hereafter from time to time owing to the Bank by
the Customer whether alone or jointly and severally
with another or others and whether as principal or
surety notwithstanding that the Customer may at any
time or times cease to be indebted to the Bank for
any period or periods of time and notwithstanding
that the Designated Current Account or any other
account or accounts of the Customer with the Bank
may from any cause whatsoever cease to be a current
account or accounts and notwithstanding any
settlement of any account or accounts or otherwise.

(b) This Agreement shall be without prejudice to any

security already given by the Customer to the Bank
or any security which may hereafter be given to the
Bank whether the same be for securing payment of
the Indebtedness or any part or parts thereof or any
other moneys covenanted to be paid herein and under
the other Security Documents and whether such
security is taken as additional or collateral security
or otherwise howsoever.

15.3 Covenant to Provide Further Security

(a) The Customer shall at any time if and when required

by the Bank so to do execute in favour of the Bank or
as the Bank shall direct such legal or other
mortgages, charges, assignments, transfers or
agreements as the Bank shall require of and on all the
Customer‟s estate, right, title and interest in any
property or assets or goods or business now
belonging to or which may hereafter be acquired by

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or belong to the Customer (including any vendor ‟s

lien for unpaid moneys) and the benefit of all
licences held in connection therewith, to secure the
Indebtedness hereby agreed to be paid or intended to
be hereby secured, such mortgages, charges,
assignments, transfers or agreements to be prepared
by or on behalf of the Bank at the cost of the
Customer and to contain all such terms and
conditions for the benefit of the Bank as the Bank
may reasonably require.

(b) The Customer hereby further covenants with the

Bank that it will at all future times at the request of
the Bank and at the Customer‟s own costs charge to
or deposit with the Bank the documents of title to
any or all movable and immovable properties vested
in the Customer for any tenure and all or any
debenture shares stocks or other investments o r
securities registered in the name of the Customer or
otherwise belonging to the Customer. Such charge or
deposit may be by way of security for the payment of
the Indebtedness and may also or otherwise be for
the purpose of securing any other moneys owing to
the Bank and not secured hereby.

(c) In the event of the Bank requiring security pursuant

to paragraphs (a) and (b) hereof, the Customer shall
do all such acts and things, and execute all such
further or other documents, as may be necessary or as
the Bank may require in order to constitute, render
enforceable or perfect such security or securities and
to protect the rights of the Bank in relation thereto
and in particular will, within fourteen (14) days of

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notice of such requirement, identify and offer to the

Bank the security or securities and thereafter execute
and or cause to be executed all and any instruments
of charge and other documents relating thereto as
required and upon being so requested by the Bank.

(d) In the event any security or securitie s offered to the

Bank as abovestated is or are not acceptable to the
Bank, then the Bank shall give to the Customer a
further period of fourteen (14) days from the date of
notification thereof, for the Customer to provide to
the Bank a substitute security or securities. If the
Bank determines that such substitute security or
securities is or are also not acceptable to the Bank,
then the Customer shall pay to the Bank the
Indebtedness payable by the Customer to the Bank
under the Security Documents within fourteen (14)
days from the date of notification thereof by the
Bank.

(e) Any determination by the Bank as to whether such

security or securities (proposed to be provided
pursuant to this Clause 15.3) are acceptable as
security or securities shall be in the sole and absolute
discretion of the Bank and the Bank shall not be
obliged to give any reasons for its determination. ”
(emphasis added).

[29] Clause 16.1(e) of the Facility Agreement goes on to provide:

“16. REPRESENTATIONS AND WARRANTIES

16.1 The Customer acknowledges that the Bank has

entered into this Agreement and the other Security

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Documents in full reliance on the representations and

warranties by the Customer in the following terms
and the Customer hereby represents and warrants to
and undertakes for the benefit of the Bank that:-

(a)………………………

………………………

(e) all the necessary consents (including without

limitation, shareholders or creditors of the
Customer) and payment of duty (including
stamp duty) or tax and all necessary consents
approvals, licences, authorisation of, filing
with, or other act by or in respect of any
governmental authority required in connection
with the execution, delivery performance,
validity or enforceability of this Agreement and
the other Security Documents have been
obtained and paid, as the case may be, and are
in full force and effect and any conditions
contained therein or otherwise applying thereto
have been complied with;” (emphasis added).

[30] The Plaintiff submits that the facility under the Facility
Agreements is payable on demand by the Bank. The Plaintiff
relies on the meaning of the term “negative pledge” as defined
in the Lexis Nexis publication of Words, Phrases and Maxims
– Legally and Judicially Defined (Volume 11 – M, N and O) at
[N0059] as:

“A provision requiring a borrower, who borrows funds

without giving security, to refrain from giving future

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lenders any security without the consent of the first

lender.”.

[31] According to the Plaintiff, the term “negative pledge” can also
be interpreted as a contractual promise, often included in a
debenture or charge, that the chargor will not create any further
encumbrances over the charged property without the consent of
the chargee. A negative pledge does not itself create a security
or proprietary interest in favour of the pledgee (see Howie v.
New South Wales Lawn Tennis Ground Ltd [1956] 95 CLR 132
and Government Insurance Office (NSW) v. KA Reed Services
Pty Ltd [1988] VR 829).

[32] As for the term “security”, the Plaintiff further submits that it is
extensively defined in the Lexis Nexis publication of Words,
Phrases and Maxims – Legally and Judicially Defined
(Volume 13 – R and S) at [S0128] as:

“A security is an encumbrance, vested in a creditor, over

the property of his debtor, for the purpose of securing the
repayment of the debt. It is a right in the property of
another, which enables a person, who is entitled to receive
a definite value from that another in default of so receiving
it, to realise it from that property. The purpose of a
security is to ensure, of [sic] facilitate, the fulfilment, or
enjoyment, of some other right vested in its owner.
Securities may be classified into:

(i) mortgages

(ii) pawns;

(iii) floating charges;

(iv) lien.

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This word has a variety of meaning:

(i) the general name for all mortgages, charges,

debentures, etc, whereby repayment of money
is assured or secured;

(ii) any document by which any claim may be

enforced.”.

[33] The Court notes that the word “security” in the Remission Order
2012 has not been defined. The Concise Oxford Dictionary 9 t h
Edn., Thumb Index Edn. has, inter alia, given the ordinary
dictionary meaning of the word “security” as follows:

“1 a secure condition or feeling. 2 a thing that guards

or guarantees…… 4 a thing deposited or pledged as a
guarantee of the fulfilment of an undertaking or the
payment of a loan, to be forfeited in case of default….. ”.

[34] The Defendant relies on the following cases which I think are
applicable to the present case:

[35] In JONES v. COMMISSIONERS OF INLAND REVENUE [1895]

1 QB 484, Wright J stated:

„…the word “security” as used in these schedules does not

mean as in popular language some obligation which is
auxiliary to some other obligation, but means any
obligation which is created by an instrument .‟ (emphasis
added).

[36] The decision in Jones (supra) was agreed to by the Court of

Appeal in National Telephone Company, Limited v.
Commissioners of Inland Revenue [1899] 1 QB 250, where AL
Smith LJ went on further to state:

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„The question, however, is not what in ordinary parlance

could be called a security, but what is the meaning of the
word “security” in this taxing Act;‟ (emphasis added); and
“a bond given for the payment of a sum of money at stated
periods, or a covenant given for such payment, is clearly a
security within the meaning of the Act”. (emphasis added).

[37] Subsequently, the House of Lords in The National Telephone

Company, Limited v. The Commissioners Of Inland Revenue
[1900] A.C 1 upheld the decision of the Court of Appeal in
National Telephone Company, Limited v. Commissioners Of
Inland Revenue (supra).

[38] Following the decisions in the above 3 cases, it is clear that the
covenant and duty of the Plaintiff to carry out the “Negative
Pledge” (exh. A-4 of Plaintiff‟s AIS) tantamounts to a
“security”. This therefore renders the Facility Agreement to be
an agreement “with security”.

[39] In the present case, it is true that the Plaintiff did not pledge any
tangible asset or property as security that can be disposed, sold
and converted to cash to pay the facility. However, it must be
noted that according to Clause 1.1. of the Facility Agreement,
the negative pledge by the Plaintiff to the Bank is an
“undertaking” that the Plaintiff “will not create or permit to
arise or subsist any encumbrance, mortgage, c harge, pledge,
lien, right of retention, right of set off or any other security
interest on the whole or any part of the Plaintiff‟s present or
future assets” other than those provided in (a) and (b) therein.
Therefore, it can be construed that whilst the Plaintiff did not
pledge any tangible asset as a security, the Plaintiff has given an
undertaking not to create any security interest in the Plaintiff‟s
assets. This means that, if construed within the meaning of the

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word “security” as stated in the Concise Oxford Dictionary

(supra), the Plaintiff has given to the Bank a “security” in the
form of “a guarantee of the fulfilment of an undertaking or the
payment of a loan”. By the “obligation created by an
instrument”, namely the Facility Agreement [following the
meaning of the word “security” as explained by Wright J in
Jones (supra)], the Bank is assured by the Plaintiff‟s negative
pledge that when the Bank demands the sum loaned under the
Facility Agreement, the Pla intiff is able to pay back the loan or
facility since the Plaintiff is not encumbered by other claims on
the Plaintiff. In that way, the Bank is guaranteed that recall of
the loan on demand can be secured.

[40] In view of the express provisions in the Faci lity Agreement that
the “Security Documents” i.e. the Facility Agreement and the
Negative Pledge constitute “security for the payment obligations
and liabilities of the Customer” i.e. the Plaintiff, I agree with
the submissions of the Defendant that the Plaintiff‟s Facility
Agreement is a loan agreement or loan instrument with security.
It is not one “without security” as envisaged in paragraph 2 of
the Remission Order 2012 to entitle the Plaintiff to remittance of
stamp duty as provided therein.

[41] It is observed that the Plaintiff and the Bank had agreed to
amend the Facility Agreement dated 2.6.2015 through the SARA
and its further provisions on 28.12.2015 by removing all
references to “security documents”. It appears to me that the
Plaintiff intended to ensure that the Facility Agreement qualifies
as a loan agreement or loan instrument “without security” under
paragraph 2 of the Remission Order 2012. The SARA was made
effective retrospectively on 2.6.2015 i.e. on the same date as the
Facility Agree ment. It is obvious that the Plaintiff is now

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relying on the SARA, to be read together with the Facility

Agreement, in order to claim the remittance of stamp duty.

[42] The said amendments have been tabulated clearly by the

Defendant in “Apendiks A” of its submissions (see “Apendiks
A” annex hereto).

[43] Despite the said amendments which have been made to the
Facility Agreement, I am of the opinion that at that point in time
when the Defendant first stamped the Plaintiff ‟s Facility
Agreement dated 2.6.2015, stamp duty was already chargeable
and therefore had to be paid by the Plaintiff by reason of the
fact that the loan agreement or loan instrument, with all its
provisions on security given through the “security documents”,
is one with security, and not one “without security” as provided
in paragraph 2 of the Remission Order 2012.

[44] The Plaintiff further submits that the Facility Agreement is

without security since it does not involve the registration of
Form 34 (Statement of Particulars to be Lodged with Charge)
according to s. 108(1) of the Companies Act 1955 with the CCM
in order to guarantee the facility under the Bank ‟s Letter of
Offer.

[45] However, I am of the opinion that Form 34 is for the purpose of s.

108(1) of the Companies Act 1965. The “Negative Pledge” to be
performed by the Plaintiff does not fall within the scope of s.
108(1) of the Companies Act 1965. As such, Form 34 is not
applicable to it. In any case, nowhere in the Facility Agreement
does it refer to the Plaintiff‟s obligation to file Form 34. To my
mind, Form 34 is not relevant, and should not be used as a
determinant for the interpretation of “security” in the present case.

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DECISION

[46] Based on the foregoing considerations, it is clear that the

Facility Agreement, together with the amendments and further
provisions in SARA, are agreements which are with security.
The Plaintiff is therefore not entitled to the remittance of stamp
duty as provided in paragraph 2 of the Remittance Order 2012.

Order accordingly.

Dated: 8 DECEMBER 2016

(YEOH WEE SIAM)

Judge
Civil Division
High Court Malaya, Kuala Lumpur

COUNSEL:

For the plaintiff - Preetha Pillai, Khong Siong Sie; M/s Skrine

For the defendant - Shafini Saman, SRC & Irfan Munashik Jantan;
Lembaga Hasil Dalam Negeri

Case(s) referred to:

Howie v. New South Wales Lawn Tennis Ground Ltd [1956] 95 CLR 132

Government Insurance Office (NSW) v. KA Reed Services Pty Ltd

[1988] VR 829

Jones v. Commissioners of Inland Revenue [1895] 1 QB 484

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National Telephone Company, Limited v. Commissioners of Inland

Revenue [1899] 1 QB 250

The National Telephone Company, Limited v. The Commissioners Of

Inland Revenue [1900] A.C 1

Legislation referred to:

Companies Act 1965, s. 108(1), Ninth Schedule

Stamp Act 1949, ss. 4(1), 14A, First Schedule

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