Oh My…This Agreement Has Never Been Stamped All This While! So…Is It Considered Valid?

QUESTION:

My rental contract has already ended. I  have never defaulted on paying the  monthly rent and I left the house in good  condition. However, after several months  since the end of the contract, I have yet to  receive the deposit payment that should  be paid by the landlord. I have tried to  reach him but to no avail. I intend to take  legal action against him, but I just realised that the Rental Agreement has never been  stamped. I’m lost and worried that the  agreement is not valid in the eyes of the  law. I need help!

ANSWER:

The purpose of stamping an agreement is  to protect the contractual rights of the  signatory parties to the agreement.  Whether or not your document/agreement  is stamped, it will result in different  consequences.

This is because section 52 of the Stamp  Act 1949 provides that:

“No instrument chargeable with duty shall  be admitted in evidence…unless such  instrument is duly stamped”. 

This means that the Court shall not accept  such unstamped document as evidence in  Court. However, this does not necessarily  mean that the law imposes an absolute  prohibition against the admissibility of  unstamped documents in evidence.

This is due to the legal position on the  validity of unstamped instruments was  clarified in a Federal Court case  of Malayan Banking Bhd v Agencies  Service Bureau Sdn Bhd & Ors (1982) 1  MLJ 198. In this case, the Court held that  the unstamped agreement does not  invalidate the agreement as it only affects  the admissibility of the agreement as  evidence in Court.

The Court further emphasized what  should be ensured is for the agreement to  be duly stamped together with the  requisite payment of the penalty as in  accordance with the Stamp Act.

Therefore, by referring to the case above,  your next step is to proceed with stamping  the agreement and pay the penalty fee as  determined by the IRB in order for your  agreement to be admissible as evidence  in Court.

WHAT IS STAMP DUTY?

Stamp duty is a tax levied on  document/instrument which has legal,  commercial, and financial effect as  enshrined in the First Schedule of Stamp  Act 1949.

The stamp duty payable is determined by  the Inland Revenue Board (IRB) as  prescribed under Section 4 of the Stamp  Act 1949.

TYPES OF STAMP DUTY

There are 2 types of stamp duty namely,  ‘ad valorem’ or fixed.

1. Ad Valorem is where the stamp duty  imposed is variable and not fixed,  depending on the transacted value stated  in the instrument or the market value of  the property, whichever is higher.

2. Fixed Duty is where the stamp duty imposed is fixed, without any  consideration of the value transacted or  the amount stated in the instrument.

WHEN SHOULD AN AGREEMENT BE  STAMPED?

Section 47 of Stamp Act 1949 states that:

“Save where other express provision is  made by this or any other Act, any  unstamped or insufficiently stamped  instrument not being a cheque or  promissory note drawn or made within  Malaysia may be stamped after execution  on payment of the unpaid duty if the  instrument is presented for stamping  within thirty days of its execution if  executed within Malaysia, or within thirty  days after it has been first received in  Malaysia if it has been executed out of  Malaysia.”

To make it simple, the penalty fee will be  imposed if you failed to submit your  agreement/document for stamping within  30 days from the day the agreement was  signed.

HOW MUCH IS THE PENALTY FOR  LATE STAMPING?

Under the Act, if you fail to stamp the  instrument within the period stipulated,  you will be liable to pay for the unpaid  payable duty together with the penalty  imposed under Section 47A which  provides as follows:

(a) RM25.00 or 5% of the amount of the  deficient duty, whichever sum be the  greater, if the instrument is stamped  within 3 months after the time for  stamping;

(b) RM50.00 or 10% of the amount of the  deficient duty, whichever sum be the  greater, if the instrument is stamped later  than 3 months but not later than 6  months after the time for stamping; or

(c) RM100.00 or 20% of the amount of  the deficient duty, whichever sum be the  greater, if the instrument is stamped  beyond six months after the required time  for stamping.

Let’s follow the High court case of  Omega Securities Sdn Bhd v Dato’ Hamzah Bin Abdul Majid (2011) 8 MLJ  12

In this case, the issue raised before the  Court was whether the Margin Facility  Agreement is invalid due to the non stamping of the said agreement. The  Court, in this case, has referred to the  principle used in the Federal Court case  of Malayan Banking Berhad and further  held that “in this case, the non- stamping  of the Margin Facility Agreement did not  go to the root or validity of the document.  It was only an issue of the government  revenue”. Therefore, the Margin Facility  Agreement remained to be valid.

Do you need answers and solutions in a  legal action? Get legal advice from our  lawyers at Liyana & Co.

Our lawyers have 10 years of experience  in solving complex legal problems.

“Your Legal Savior” 

���� Let’s set an appointment and contact  us at:

https://wa.me/60123640086

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *