Nike Global Trading B.V., Singapore Branch v Pemungut Duti Setem, Malaysia

Appellant(s): Nike Global Trading B.V., Singapore Branch

Respondent(s): Pemungut Duti Setem

• YA Datuk Ravinthran a/l Paramaguru
• YA Datuk Azimah binti Omar
• YA Dato' Ahmad Kamal Bin Md. Shahid

• An original intercompany loan agreement existed between a lender (NEON) and a borrower (NIKE Malaysia) within the same corporate group.
• A Novation Agreement was subsequently entered into by NEON, NIKE Malaysia, and the appellant, transferring all rights, obligations, duties, and liabilities from NEON to the appellant.
• The respondent assessed ad valorem stamp duty on the Novation Agreement, which the appellant objected to, arguing it should only attract nominal duty.
• The High Court dismissed the appellant's appeal, ruling that the Novation Agreement constituted a transfer of debt, chargeable under Section 16(1) and Item 32(a) of the First Schedule of the Stamp Act 1949.

• Whether the Novation Agreement was a transfer or conveyance of property, making it chargeable with ad valorem stamp duty under Section 16(1) and Item 32(a) of the First Schedule of the Stamp Act 1949.
• Whether the Novation Agreement constituted a novation, which extinguishes an existing contract and creates a new one, or an assignment, which merely transfers existing rights.
• Whether the High Court erred in finding that the Novation Agreement lacked valid consideration.

• The Court of Appeal allowed the appeal, holding that the Novation Agreement was a true novation, not an assignment, conveyance, or transfer of property.
• The Court clarified that a novation, under Section 63 of the Contracts Act 1950, extinguishes the old contract and substitutes a new one, involving the consent of all parties and the assumption of both rights and obligations.
• The Court further held that consideration for a novation need not be monetary, as mutual discharge and assumption of obligations constitute valid consideration.
• Consequently, Section 16(1) and Item 32(a) of the First Schedule of the Stamp Act 1949 were inapplicable, and the Novation Agreement was directed to be stamped with nominal duty under Item 4.