WHAT'S INSIDE THIS ISSUE: Halim Hong & Quek
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APRIL 2022 | VOL. 4
WHAT'S INSIDE
THIS ISSUE:
A MONTHLY NEWSLETTER BY
HHQ & HLP
Note from the
Editorial Team
Dear Readers,
As the moon shines brighter and as our hearts gets lighter, we
wish all of our celebrating readers a Selamat Hari Raya blessed
with happiness and peace. We would also like to take this
opportunity to wish all of you a Happy Labour Day and we hope
that all of you enjoy this much deserved break over this long
holiday weekend.
In this month’s edition of the newsletter, we have some very
interesting articles which we hope would be of interest to you.
The first article in this newsletter is a case summary of the Court
of Appeal’s recent decision in PSI Incontrol Sdn Bhd v Ircon
International Limited [2022] MLJU 239. The case is of important
significance especially for those in the construction industry, as it
thoroughly examines the contractual procedures and notice
requirements for extension of time and loss and expenses claims
under the PWD Form DB.
Our second article is also extremely relevant as it sets out some
very crucial pointers on what one is to expect when one gets
sued. As the saying goes, disagreements are unavoidable, but
how you handle them can make all the difference. Being prepared
for a legal suit as a defendant is of utmost pertinence and it is
important not to panic, so as to ensure you give your best fight in
court on the dispute at hand.
Our third article answers a very frequently asked question by
most clients that is whether they would be entitled to claim back
the legal costs incurred by them if they were to be successful in
their claim in court. The article is comprehensive and makes
reference to various case laws in Malaysia and the U.K to allow
our readers to have better context on how the law on costs
works.
Our fourth and final article titled ‘Property Transfer by Way of Love
and Affection’ explains the concept and benefits of transferring a
property to your loved ones without any monetary consideration.
Would you be required to pay full stamp duty in such a situation?
Who are considered as “loved ones”? Read this article to find out
more!
Finally, don’t forget to take a look into our Inside Out section for
the firms latest updates and activities!
So sit back, have a cup of coffee (or any beverage you like) and
enjoy reading this month’s edition of our newsletter! Happy FREE Publication
Printing Permit: PP19508/08/2019(035103)
reading!
PAGE 3
CASE SUMMARY:
PSI INCONTROL SDN BHD V IRCON INTERNATIONAL
LIMITED [2022] MLJU 239
WRITTEN BY
OOI HUI YING
INTRODUCTION Subsequent to certain claimed delay events,
PSI submitted application for an EOT and
In the recent Court of Appeal decision of PSI claimed for L&E. The Project Director (“PD”)
Incontrol Sdn Bhd v Ircon International had granted an EOT of 606 days to PSI, but did
Limited [2022] MLJU 239, the Court of Appeal not allow PSI’s claim for L&E on the basis that
of Malaysia examined the contractual Ircon had imposed a comprehensive denial of
procedures and notice requirements for any claims for compensation by PSI, and that
extension of time (“EOT”) and loss & expenses PSI had failed to comply with the notice
(“L&E”) under the Conditions of Contract for requirements as set out in Clause 50.1 and 50.2
Design and Build Contract PWD Form DB (Rev. of the PWD Form DB. PSI commenced court
2007) (“PWD Form DB”). proceedings against Ircon to pursue its claims
for L&E, amongst others.
BRIEF BACKGROUND FACTS
FINDINGS OF THE HIGH COURT
Disputes arose out of a construction contract
In the High Court, the learned Judicial
between Ircon International Limited (“Ircon”),
Commissioner (“JC”) dismissed PSI’s claim for
who was the main contractor and PSI
L&E. The learned JC found inter alia that PSI
Incontrol Sdn Bhd (“PSI”), who was Ircon’s
had failed to comply with the conditions
subcontractor for the construction and
precedent set out in the contract for the claim
completion of the works relating to “the
for EOT and L&E, and that notwithstanding the
Electrified Double Track project between
PD had granted an EOT, PSI was not entitled
Seremban (KM 461.234) to Gemas (KM 564.000)
to claim for the L&E as the relevant notice
Stations” (“Project”). The subcontract
requirements to claim for L&E were not
documents consist of, inter alia, the letter of complied with by PSI. Dissatisfied with the
award executed between the parties and the High Court’s decision, PSI appealed to the
Conditions of Contract for Design and Build Court of Appeal.
Contract PWD Form DB (Rev. 2007).
Some of the material terms of the subcontract FINDINGS OF THE COURT OF APPEAL
are as follows:
The Court of Appeal allowed PSI’s appeal and
a) The procedures governing a claim for EOT granted PSI’s claim for L&E in full. In coming to
are set out in Clause 49.1 of the COC; its decision, the Court of Appeal had made
some findings on the provisions in PWD Form
b) PSI is only entitled to claim for direct L&E DB.
incurred arising out of delay events under
Clauses 49.1(b), (d), (e), (h) or (i) of the PWD On the issue of EOT, the Court of Appeal’s
Form DB; findings can be summarised as follows:
a) Pursuant to Clause 49 of PWD Form DB, a
c) The procedures governing such a claim for
contractor seeking to claim for an EOT
the L&E are set out in Clause 50.1 and 50.2
shall give written notice to the PD of the
of the PWD Form DB. Non-compliance
cause of delay, and to submit any relevant
with the mandatory requirements
information with supporting documents
thereunder shall discharge Ircon from any
forthwith once the delay event becomes
liability arising therefrom.
reasonably apparent. It was held that PSI
had complied with this requirement as a
written notice was issued one month after
the occurrence of the delay event.
CASE SUMMARY: PSI INCONTROL SDN BHD V
IRCON INTERNATIONAL LIMITED [2022] MLJU 239
continued from page 3 PAGE 4
COMMENTS
The Court of Appeal’s decision in this case of
PSI Incontrol had certainly provided some
clarification on the EOT and L&E provisions in
PWD Form DB, the main takeaways in this
case are as follows:
a) The burden of assessing and deciding the
contractual limbs of delay events falls on
the contactor administrator of the project.
It is not necessary for a contractor seeking
an EOT to expressly specify which
contractual limb/category it relies on.
b) When making an EOT application, a
contractor is not required under the PWD b) In rejecting a contractor’s claim for L&E,
Form DB to specify the contractual once a contract administrator grants an
limb/category of delay event(s) on which EOT, the contract administrator must
the contractor relies. The PD must assess specify that the EOT is granted under
whether the delay event falls within the limbs which do not give rise to entitlement
limbs. In the event that the PD grants an to L&E entitlement. Clause 49 does not
EOT application without specifying the allow the party to unilaterally impose a
relevant limbs in the EOT certificate, the blanket refusal to entertain any claims
PD is deemed to accept that at least one arising from the EOT.
of the limbs is fulfilled.
c) A notice of intention to claim for L&E as
c) The fact that an EOT of 606 days was required under the PWD Form DB can be
granted to PSI, shows that the PD must as simple as a generic sentence indicating
have been satisfied that all the pre- that the contractor will be submitting its
conditions of the said Clause 49 have been claim for L&E.
fulfilled.
d) Where an L&E clause encompasses L&E
On the issue of L&E, the Court of Appeal’s incurred or “likely” to be incurred, the
findings can be summarised as follows: contractor could submit a claim based on
a mere projection of L&E without actual
a) Pursuant to Clause 49.2 of PWD Form DB, proof that such cost had already been
Ircon’s refusal to entertain claims for L&E incurred as a result of the delay event(s).
when granting an EOT can only be justified
if Ircon had expressly stated that the cause
of delay did not fall under the limbs under
Clause 49.1(b), (d), (e), (h) or (i) (which give
rise to L&E entitlement).
b) PSI had given Ircon proper notice of its’
intention to claim for L&E by virtue of the
fact that PSI had expressly indicated in its
notice of delay that “we will be submitting
our claim for EOT covering all direct and
indirect cost in line with our contract
subsequent to this letter.” Ooi Hui Ying
Senior Associate
c) The L&E clause in PWD Form DB Harold & Lam Partnership
Advocates & Solicitors
encompasses L&E which the contractor
huiying@hlplawyers.com
“has incurred or is likely to incur”. It was
held that a contractor claiming L&E which
it is “likely to incur” must necessarily involve
a projection of such costs.
CASE SUMMARY: PSI INCONTROL SDN BHD V
IRCON INTERNATIONAL LIMITED [2022] MLJU 239
PAGE 5
WHAT TO EXPECT WHEN YOU'RE EXPECTING
...TO BE SUED?
WRITTEN BY
ALYCIA CHUAH YUIN TING
Being sued as an individual can be quite stressful. Many lose sleep over it and feel helpless most
of the time. A lot of it is due to the fear of the unknown. Save for an out-of-court settlement, there
is no means of avoiding being sued. In the face of a legal dispute, rather than avoiding the
inevitable, it is more practical to learn a few important things about the process of a legal dispute
to ensure that there you would be best able to deal with it.
As the saying goes, expect the unexpected. Here are a couple of pointers for the basic
understanding of a legal dispute in court:
SERVICE OF LEGAL PAPERS
1) WHAT LEGAL PAPERS?
The first step of suing a person involves the service of legal papers onto that person. The legal
papers can generally either be a “writ of summons” supported by a “statement of claim” or an
“originating summons” supported by an “affidavit”.
2) HOW SHOULD THEY BE SERVED?
The service has to be done personally or via A.R. registered post. However, in the event either
method of service cannot be performed, the legal papers may be deemed to have been
served on a person being sued via substituted service i.e., a process which involves the
advertising of the legal suit in newspapers.
3) BEWARE OF SCAMS!
Unfortunately, the sanctity of the legal profession has been tainted by scammers who prey on
people by tricking them into believing they are being sued with falsified legal papers. These
scammers usually tell victims that they can ‘help’ to settle the legal suit if they pay a certain
amount of money. Until and after the deed is done, many belatedly realize that there is in
fact no legal suit against them, and that they have been scammed.
To circumvent such abuse, our courts assign a serial number for each legal document filed
into the courts’ online system. The serial number is found at every bottom page of the legal
document which can be used to verify the originality of the document via our courts’ online
portal. As such, every person served with a legal document should:
i) Identify the serial number (now also comes with a QR code) found at every bottom page
of the document; and
ii) Visit the courts’ online portal at
https://ecourtservices.kehakiman.gov.my/Document/Verifier/?cultureCode=ms#Verify
and key in the serial number to verify the document.
If a document appears on the screen, compare the legal document served with the
document on screen to make sure the contents are not tampered with. If there are
discrepancies, do consider it as a red flag that a scam might be in the making.
WHAT TO EXPECT WHEN YOU'RE EXPECTING...TO BE SUED?
continued from page 5 PAGE 6
LEGAL PRESENTATION
1) WHY IS A LAWYER NEEDED?
Those who are served with legal papers are encouraged to promptly seek
legal advice. Although it is not mandatory for a person to be legally
represented in a legal suit, a person who chooses to defend without legal
representation may be overwhelmed by many legal concepts and
procedures which may be incomprehensible to a layperson.
If a lawyer is appointed, the lawyer will act for the client for the entire
process of the legal suit unless otherwise discharged of such duties. The
lawyer is duty bound to perform in the client’s best interest without regard
to personal gain or benefit.
APPEARANCE IN COURT
1) DEFENDANT TO RECORD APPEARANCE
If a person is served with a “writ of summons”, his or her name will
appear on the document as a defendant. The document will notify the
defendant to enter appearance typically within 14 days after service of
the document. In actuality, the court does not require a physical
appearance. What is instead needed is a Memorandum of Appearance
to be filed to the court pursuant to the Rules of Court 2012.
2) JUDGMENT IN DEFAULT OF APPEARANCE
If no appearance is made within the stipulated time, the party who sues,
also known as the plaintiff, may enter a judgment in default of
appearance against the defendant provided that the service of legal
papers are in order. In other words, a plaintiff may obtain judgment
against the defendant in his or her absence after proving to the court
that the legal papers have been served and the defendant has failed to
enter an appearance.
DEFENCE AGAINST CLAIM
1) PUT UP A DEFENCE (AND COUNTERCLAIM, IF ANY)
After entering appearance in court, a defendant is required to
enter defence as a reply to the statement of claim prepared by the
plaintiff. A defence is a statement detailing the defendant’s version
of events to refute the plaintiff’s claim. Additionally, the defendant
may also prepare a counterclaim against the plaintiff in the same
legal suit.
2) GATHER FACTS AND EVIDENCE
At this stage, understanding of facts and portrayal of the defence
are crucial. A chronology of events supported by evidence often
helps to put everything into perspective and clear off any
unnecessary facts for the preparation of a solid defence. As it is
detrimental to give inconsistent statements or introduce new facts
at a later stage, it is important to set the record straight and clear
from the outset through the defence.
WHAT TO EXPECT WHEN YOU'RE EXPECTING...TO BE SUED?
continued from page 6 PAGE 7
INTERLOCUTORY APPLICATION
1) POSSIBLE PRE-TRIAL ACTIONS
There are various kinds of applications that a party to a legal suit can make to the court
before trial. Parties most often opt to apply for the summary disposal of the legal suit. For
instance, a plaintiff may apply for a summary judgment (i.e., an application to obtain a quick
judgment without going to trial) or a defendant may apply to strike out the plaintiff’s claim.
The Rules of Court 2012 provide for each of these avenues.
2) CAN THE LEGAL SUIT END WITHOUT GOING TO TRIAL?
A defendant may successfully strike out the plaintiff’s claim if he or she can establish any of
the following grounds:
i) The plaintiff’s claim discloses no reasonable cause of action;
ii) The plaintiff’s claim is scandalous, frivolous or vexatious;
iii) The plaintiff’s claim may prejudice, embarrass or delay fair trial; or
iv) The plaintiff’s claim is an abuse of process of the court.
Notably, the court must be satisfied that the plaintiff’s claim involves a plain case which is
obviously unsustainable before allowing the claim to be struck out.
TRIAL
1) THE CLIMAX OF THE LEGAL DISPUTE
Perhaps it’s best to describe trial as the court scenes that we usually see in TV shows. The
scene will usually portray a judge sitting on the bench from above overlooking the
proceedings, lawyers arguing from their respective sides of the courtroom and witnesses
testifying on the witness stand.
Preparation for trial is a tedious affair. If a legal dispute is to proceed to trial, the courts will
require parties to come up with common agreed facts, common issues to be tried, common
bundle of documents and their respective witness statements.
2) SECURING WITNESSES
The trial process focuses on the examination of witnesses i.e., lawyers will take turns to
question all witnesses. As witnesses play an important role in the trial, they need to be
identified, interviewed and secured beforehand to give oral evidence in court. An individual
defendant will most likely be his or her own witness.
3) POST-TRIAL WRITTEN SUBMISSION
Once the trial is complete, the court will direct parties to prepare written submissions to
present the relevant facts and applicable laws involved in the dispute before making any
decision.
DECISION
1) ORDER OR JUDGMENT
The delivery of every court’s decision will be reflected
into an “order” or “judgment” that will be signed off by
a court authorized officer. The same document can
be enforced by the winning party should the losing
party fail to comply with the court’s decision.
2) APPEAL
If the losing party is dissatisfied with the court’s Alycia Chuah Yuin Ting
decision, he or she may decide to appeal against that Associate
Halim Hong & Quek
decision to a higher court subject to existing laws. Advocates & Solicitors
alycia.chuah@hhq.com.my
WHAT TO EXPECT WHEN YOU'RE EXPECTING...TO BE SUED?PAGE 8
CAN YOU RECOVER LEGAL FEES INCURRED?
WRITTEN BY
AMY HIEW KAR YI
INTRODUCTION
The question that is often asked by litigant(s)
is whether they can get back the legal costs
incurred if they are successful. Often times,
the answer is no.
As a general rule, the court is obliged to
order party to party costs on a standard
basis. This is provided for under Order 59 rule
16(2) of the Rules of Court 2012 (“RC 2012”).
The court, however, has the discretion to
order costs to be determined on an
indemnity basis if it appears to the court to
be appropriate to do so.
To give a brief summary of the 2 bases of assessment:
1) on an assessment of costs on the standard basis, the court will usually allow a reasonable
amount in respect of all costs incurred; whereas
2) on a determination of costs on the indemnity basis, the court will allow all costs unless they
are unreasonable or have been unreasonably incurred.
(refer to Order 59 rule 16(3) and (4) of RC 2012)
STANDARD BASIS OR INDEMNITY BASIS
In applying the assessment of costs on the standard basis, it is not unusual for courts to award
minimal costs of RM3,000.00 or RM5,000.00, even after a (full) hearing in the High Court. Hence,
if the standard basis of assessment is adopted, the winning party will not usually be able to
recover the fees it may have paid its lawyer.
When then can courts award costs on an indemnity basis? The authorities have made it clear that
the courts’ discretion to award costs on an indemnity basis is unfettered, but courts will usually
require there to be “some conduct or some circumstances which takes the case out of the
norm” (see Fiona Trust & Holding Corporate and ors v Yuri Privalov and ors [2011] EWHC
664).
In the Federal Court case of Takako Sakao (F) v Ng Pek Yuen (No 2) [2010] 2 MLJ 181, Gopal Sri
Ram FCJ referred to the English High Court case of Macmillan Inc v Bioshopsgate Investment
Trust plc and other (No 3) [1995] 3 All ER 747, whereby Millet J (later Lord Millet) held:
“The power to order taxation on an indemnity basis is not confined to cases which
have been brought with an ulterior motive or for an improper purpose. Litigants
who conduct their cases in bad faith, or as a personal vendetta, or in an improper
or oppressive manner, or who cause costs to be incurred irrationally or out of all
proportion as to what is at stake, may also expect to be ordered to pay costs on an
indemnity basis if they lose, and have part of their costs disallowed if they win. Nor
are these necessarily the only situations where the jurisdiction may be exercised;
the discretion is not to be fettered or circumscribed beyond the requirement that
taxation on an indemnity basis must be 'appropriate'.”
CAN YOU RECOVER LEGAL FEES INCURRED?continued from page 8 PAGE 9
Some instances where the courts have awarded costs to be determined on the indemnity basis
are:
1) Fradulent misrepresentation - Yap Boon Hwa v Keewah Soong [2020] 1 MLJ 37 (CA);
2) Unreasonable refusal to discontinue an action notwithstanding a concession made – Prestig
Mega Construction Sdn Bhd v Personal Representative of Estate of Vinayak Pradhan
Prabhakar (Deceased) & Ors and other cases [2021] MLJU 60; and
3) Including various unmeritorious defences – Mirzan Bin Mahathir v Star Papyrus Sdn Bhd
[2000] 6 MLJ 29.
CLAIM FOR LEGAL CHARGES
But it must be borne in mind that just because the court awards costs on the indemnity basis,
this does not guarantee the winning party its full legal costs. A litigant may, however, seek to
recover legal charges as special damages particularly in a fraud / fraudulent misrepresentation
case. This is because in fraud, the defendant is bound to make reparation for all the actual
damage directly flowing from the fraudulent inducement (see Doyle v Olby (Ironmongers) Ltd
[1969] 2 All ER 119).
This issue is recently discussed at length in the High Court case of Ling Peek Hoe & Anor v Ding
Siew Ching & Ors [2022] MLJU 157. In Ling Peek Hoe, the plaintiffs commenced a legal action
premised on fraud, and obtained a judgment for special damages, general damages as well as
punitive and exemplary damages to be assessed. One of the 2 main issues before the High Court
on assessment of damages was whether a party who has suffered a civil wrong be entitled to
claim for the legal charges incurred as special damages incurred to redress the wrong. In coming
to the decision that the plaintiffs are entitled to claim legal charges, the Learned High Court
Judge addressed, among others, the sub-issues of (i) whether the plaintiffs can claim special
damages for losses that were not specifically pleaded; and (ii) whether legal fees are claimable.
Claim for special damages for losses that were not specifically pleaded
1) The special damages claimed by the plaintiffs during the assessment included legal fees of
RM2,918,000.00. The defendants’ contention is that the plaintiffs failed to particularise their
special damages, besides a general prayer for special and general damages to be assessed.
Whilst the High Court recognise the established principle that parties are bound by their
pleadings, the High Court concluded that substantive justice will not be served to have the
claim for special damages dismissed purely on the pleading point.
2) One of the reasons given by the High Court is the fact that the defendants have never raised
this pleading issue during trial, which they ought to have done. In addition, the High Court
found that the judgment given is clear on what damages were awarded for purposes of
assessment.
3) One other reason given by the High
Court was that the exact particulars
and amounts sought by way of
special damages were set out in the
plaintiffs’ affidavits which was filed
before the assessment of damages.
Documents were also bundled and
exchanged. Thus, the defendants
had the opportunity to respond to
the claims.
CAN YOU RECOVER LEGAL FEES INCURRED?continued from page 9 PAGE 10
Whether legal charges are claimable
4) With regard to the legal charges claimed, the defendant challenged, among others, that the
quantum was excessive and unforeseeable, as well as there being no evidence that the fees
have all been paid. However, the High Court found that the challenge was without merit. The
legal proceedings for the dispute actually went on for about 15 years, due to the many
appeals and reviews filed by the defendants all the way to the Federal Court, which were
wholly without merit. The High Court was of the view that the defendant could have saved all
parties, including themselves, the costs and huge amount of time from undertaking the
transactions which were found to be fraudulent, null and void.
5) As regards the defendant’s argument that the plaintiffs must prove that the legal fees were
incurred and paid before they can be awarded the damages claimed, the High Court held
that an order for damages to be assessed is wider than an order for costs. As this was an
assessment of damages for fraud, the High Court held that all losses are claimable on the
basis of full indemnity. Hence, the plaintiffs are entitled to the legal fees and expenses on a
full indemnity basis.
6) As for the argument that the plaintiffs have not paid the legal fees in full, the High Court
found that although the legal charges have not been paid in full, they have been incurred
pursuant to the various agreements entered into between the plaintiffs and their solicitors. As
such, the defendants are liable to indemnify the plaintiffs for the same.
In the Learned High Court Judge’s grounds of judgment, His Lordship also compared legal fees
with the following types of costs which are often claimed on an indemnity basis as special
damages (see paras [99] to [101]):
1) costs incurred to seek medical care, for example, in road accident or medical negligence
cases;
2) costs incurred to undertake forensic accounting, for example, in cases involving breach of
trust or fiduciary duties;
3) costs incurred to engage architects, engineers and quantity surveyors to assess and advise on
structural damage and mode of rectification, for example, in construction cases;
4) costs incurred to engage surveyors to carry out survey of boundaries, for example, in cases of
trespass; and
5) costs incurred to pay contractors to make good repairs for damage done by the party
committing the wrong.
CAN YOU RECOVER LEGAL FEES INCURRED?continued from page 10 PAGE 11
However, take note that legal fees have been found in earlier cases to not be claimable as general
damages. For example, in the High Court case of Lau Yang Kim v Rescom Australia Sdn Bhd &
Anor [2020] MLJU 105, the plaintiff obtained a judgment from the High Court for the rescission of
an agreement on the ground of fraudulent misrepresentation. The Learned Judge ordered,
among others, general damages to be assessed. The Learned Deputy Registrar then assessed and
awarded a sum of RM127,002.80 as general damages. This amount was made up of RM177,002.80
as the legal fees the plaintiff had paid her solicitors less the costs of RM50,000.00 awarded by the
Learned Judge. The defendant then filed an appeal to the Judge in Chambers against the
decision of the Learned Deputy Registrar. In essence, the defendant contended that legal fees
cannot constitute special damages or general damages as legal fees are governed by the rules of
court governing the award of costs. The High Court allowed the appeal and held, among others,
as follows:
1) The plaintiff is entitled to plead and claim all actual damage directly flowing from or caused
by the entering into the agreement induced by the fraudulent misrepresentation.
2) However, the Learned Judge had made an order of costs on the ‘standard basis’. The Learned
Deputy Registrar’s decision to allow the plaintiff’s claim to be indemnified in full for the legal
fees as general damages thus rendered the Learned Judge’s final order of costs ineffective or
redundant.
3) In any event, legal fees fall within the meaning of special damages. To be entitled to an
award of special damages, the items constituting special damages must have been
expended before the trial begins since special damages must be pleaded. It is for this reason
that there is a mechanism for a successful litigant to claim legal fees expended in the form of
costs (as opposed to damages).
CONCLUSION
A successful litigant will, in most situations, be
awarded costs. As provided under Order 59 rule 16(2)
of the RC 2012, the courts will generally assess costs
on the standard basis, and will only assess costs on
an indemnity basis if there are “some conduct or
some circumstances which takes the case out of
the norm”. But even if cost is awarded on an
indemnity basis, one will have to bear in mind that
this does not mean that the successful litigant will
be able to recover all the legal costs expended. It is
only in exceptional circumstances, for example, in a
claim premised on fraud, where the successful
litigant may be able to recover the full legal costs
expended. However, litigants must bear in mind
that in such circumstances, legal costs are claimed
as special damages which will have to be pleaded.
Amy Hiew Kar Yi
Partner
Harold & Lam Partnership
Advocates & Solicitors
amy@hlplawyers.com
CAN YOU RECOVER LEGAL FEES INCURRED?PAGE 12
PROPERTY TRANSFER
BY WAY OF LOVE AND AFFECTION
WRITTEN BY
STELLA LIM POOI SYUEN
According to the Contracts Act 1950, in order to form a valid contract, the element of
‘consideration’ must be present. Consideration often includes the form of monetary, or both
parties must have the obligation to give the other party something which is beneficial.
However, transferring a property to your loved ones without monetary consideration, which
means there is no vendor and purchaser, only the recipient gains benefit from the donor, which is
the said property as a subject matter, does this forms a valid contract?
Section 26(a) of the Contracts Act 1950 renders a contract made without consideration to be valid
if it is expressed in writing and registered, and is made on account of natural love and affection
between parties standing in a near relation to each other. The meaning of 'natural love and
affection' is not defined in the Contracts Act 1950, so reference can be made to case laws that
provide interpretations to the provision.
Reference is made to Section 26(a) of the Contracts Act 1950 which stipulates that:
“An agreement made without consideration is void, unless –
it is in writing and registered
(a) it is expressed in writing and registered under the law (if any) for the time being
in force for the registration of such documents, and is made on account of
natural love and affection between parties standing in a near relation to
each other;”
In Chua Eng Wei & Anor v Liow Eng Keong & Anor [2015] 4 CLJ 1027 the court held that the
words ‘near relatives’ refer to those who are closely related such as one’s parents, brothers or
sisters.
In Tang Meng Hock v Tang Ming Seng [2010] 1 MLJ 33, the court held that the phrase 'natural
love and affection' cannot be read in isolation. It must be linked to the requirement that the
parties must be 'standing in a near relation to each other'. In this case, both the parties are
biological brothers and they are clearly 'standing in a near relation to each other'.
Cases seem to suggest that immediate family members in the same bloodline fall under the
category in Section 26(a).
In other words, transferring property by way of love and affection means that the property is not
to be transferred by payment of certain amount of money as consideration. It means the transfer
is held between immediate family members which is recognised by law as good consideration
for natural love and affection.
Although Sales and Purchase Agreement (SPA) is not necessary as there is no vendor and
purchaser when the transfer of property is made through love and affection. However,
Memorandum of Transfer (MOT) or Deed of Assignment (DOA) is still required as evidence that a
contract has been made and agreed by both parties. It still needs to be adjudicated and
stamped. The consideration stated in the MOT or DOA will be ‘love and affection’. It is to be noted
that in practice there are some donors and recipients, although not compulsory, sign Deed of Gift
which is an instrument that sets out the transfer of the ownership of a property to another party
with love and affection as the consideration.
PROPERTY TRANSFER BYWAY OF LOVE AND
AFFECTIONcontinued from page 12 PAGE 13
Here comes the question, does transferring a property by way of love and affection requires the
payment of stamp duty? The law does provide full or partial stamp duty exemptions for a transfer
of property by way of love and affection. However, it only applies to parents, children, and
spouses. Not everyone that transfer the property by way of love and affection can escape from
paying stamp duty to the land office. Reference can be made to the table below: -
Stamp Duty Exemption for Love and Affection Transfer
Donor Recipient Exemption Ministerial Order Effective
Rate Date
Stamp Duty (Exemption)
Husband Wife 100% (No.10) Order 2007 08.09.2007
(P.U. (A) 420)
Stamp Duty (Exemption)
Wife Husband 100% (No.10) Order 2007 08.09.2007
(P.U. (A) 420)
Mother or father / Stamp Duty (Remission)
Child 50% (No. 2) Order 2019 01.01.2003
Mother and father
(P.U. (A) 369)
Mother or father / Stamp Duty (Remission)
Child 50% (No. 2) Order 2019 01.01.2020
Mother and father
(P.U. (A) 369)
It is to be noted that the Stamp Duty (Remission) (No. 2) Order 2019 (P.U. (A) 369) provides that
the stamp duty exemption for property transfer from parent to child is only valid if the recipient is
a Malaysian citizen.
It also provides that ‘child’ means a legitimate child, a stepchild or child adopted in accordance
with any law. Therefore, the 50% exemption for transfer of property between parent and child
only applies to those that fall within the definition of ‘child’ stated above. If a child’s birth
certificate does not include his or her parents’ name or if the child is born out of wedlock, he
would not fall under this definition. Hence, not entitle for the stamp duty exemption.
Can stamp duty be exempted for parties other than parents, children or spouses? Apart from the
above, any forms of transfer between siblings, grandparents, uncle, aunties, nephew, nieces,
friends, boyfriends, girlfriends and so on are not entitled for the stamp duty exemption. Therefore,
the stamp duty will be charged in full amount.
Relationship Exemption
(YES/NO)
Sibling - Sibling NO
Uncle / Aunt - Niece / Nephew NO
Unmarried couple NO
Friends NO
Stella Lim Pooi Syuen
Also, is legal fee required to be paid? Of Pupil-in-Chambers
Halim Hong & Quek
course, legal fees for professional legal Advocates & Solicitors
services undertaken to transfer the property is stella.lim@hhq.com.my
still required.
PROPERTY TRANSFER BYWAY OF LOVE AND
AFFECTIONHHQ & HLP
ACTIVITIES
PAGE 14
inside OUT
Halim Hong & Quek and Harold & Lam
Partnership had participated as one of the
Silver Sponsors in KPUM’s Law Career
Convention 2022 which was held virtually on
2nd & 3rd of April 2022.
With the theme, ‘Beyond Covid-19: A New Legal
Landscape’, this conference aims to connect
law students with the firms and acts as one of
the platforms to recruit talents.
We wish to congratulate KPUM for organizing a
successful virtual event.
INSIDE OUT:
HHQ & HLP ACTIVITIEScontinued from page 14 PAGE 15
inside OUT
HHQ X KPUM
NETWORKING LUNCHEON
Good food, good company, good time!
A networking luncheon between HHQ and
KPUM. 10 law students in UK joined the
luncheon held on 19 April 2022 at Mei Mei
Restaurant, Liverpool, United Kingdom.
INSIDE OUT:
HHQ & HLP ACTIVITIESPAGE 16
is a monthly newsletter jointly published by
Halim Hong & Quek and Harold & Lam Partnership.
It is distributed for free and can be read on HHQ's or HLP's website at
https://hhq.com.my/ or https://hlplawyers.com/
All articles in this publication are intended to provide a summary or review of the
subject matter and are not intended to be nor should it be relied upon as a
substitution for legal or any professional advice.
EDITORIAL TEAM
Contact Us
KUALA LUMPUR OFFICE KUALA LUMPUR OFFICE
OFFICE SUITE 19-21-1, LEVEL 21, SUITE 32-5, 32ND FLOOR,
WISMA UOA CENTRE, OVAL TOWER DAMANSARA,
19, JALAN PINANG, NO. 685, JALAN DAMANSARA,
50450 KUALA LUMPUR 60000 KUALA LUMPUR
T: +603 2710 3818 T: +603 7732 8862
F: +603 2710 3820 (Corporate & Real Estate) F: +603 7732 8812
+603 2710 3821 (Dispute Resolution) E: hlp@hlplawyers.com
E: hhqkl@hhq.com.my
PENANG OFFICE JOHOR OFFICE
C-11-2, LORONG BAYAN INDAH 3, A-2-23 & A-3-23, BLOCK A,
BAY AVENUE, PUSAT KOMERSIAL BAYU TASIK,
11900 BAYAN LEPAS, PERSIARAN SOUTHKEY 1,
PULAU PINANG 80150 JOHOR BAHRU,
T: +604 640 6818 JOHOR
T: +604 640 6817 T: +607 338 4648
F: +604 640 6819 T: +607 338 4725
E: hhqpenang@hhq.com.my T: +607 338 4728
F: +607 338 4685
FREE Publication
E: hhq@hhqjb.com.my
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