A power of attorney or mandate is a contact by means of which a person (the mandator) authorizes another (the mandatary) to act on his behalf. It is a commonly used legal instrument in today’s day and age, particularly by persons who reside abroad and require someone to manage their affairs in Malta.
In a recent judgment, the First Hall of the Civil Court examined the legal consequences of acts carried out by a mandatary against the consent of the mandator and whether such acts can be revoked if they affect third parties.
Facts of the Case – general power of attorney with right to delegate
The plaintiff mandator had granted a mandate in writing to one of the defendants, authorising her to manage his affairs. The mandate granted her, inter alia, the power to cancel inscribed hypothecs and privileges made in favour of the plaintiff. It also authorised her to appoint a substitute mandatary to carry out the mandate in her stead.
The defendant mandatary exercised her power of substitution and appointed the other defendant as her substitute, who proceeded to cancel an inscription himself. The plaintiff claimed that this cancellation was done against his consent and that he had never authorised the cancellation. He sued both mandataries and alleged that the cancellation was fraudulently cancelled by them.
Judgment – written power of attorney evidences the scope of the mandate
By means of its judgment of 2 May 2025, the First Court of the Civil Court dismissed the plaintiff’s claims after making the following considerations:
The court reaffirmed the principle that the mandator cannot do anything beyond the limits of the mandate in terms of article 1864 of the Civil Code. In the event that the mandatary abuses his power and acts beyond these limits, the mandator is not liable for what the mandatary has done beyond his powers, unless the mandator expressly or tacitly ratifies it, as provided in article 1880 of the Civil Code.
The court confirmed that a mandate granted in writing serves as the primary proof of the authorization given to the mandatory as well as of the scope of his powers. In this case, the mandate explicitly provided for both the power of substitution and the cancelling of a hypothec.
The court also emphasized the importance that a written mandate has vis-à-vis third parties. While third parties have a duty to ascertain that the mandatary is authorised to act on behalf of the mandator, they are not required to go beyond the contents of the mandate if it is reduced in writing. The written document itself constitutes sufficient proof for the third party that the mandatary is authorised to act. Once this is established, the third party is not expected to delve deeper to ascertain consent, and thus cannot be held liable for any alleged abuse of the mandate by the mandatary.
For this reason, the mandatary cannot be deemed to have acted beyond the scope of his mandate in relation to that third party. Consequently, the mandator is bound towards that third party in terms of article 1880 of the Civil Code.
The court thus held that it cannot cancel the hypothec.
Despite rightfully rejecting the claims of the plaintiff, the court declared that this decision does not preclude the plaintiff mandator from suing his mandataries, in the event that it did transpire that one or both of them acted outside the powers granted by the mandator. However, as pointed out by the court, this matter pertains to the mandator and mandataries alone, and cannot affect rights acquired by third parties. For this reason, the mandator can never sue for a declaration that the cancellation be declared null.
For more information on powers of attorney, do not hesitate to contact Dr Simon Galea Testaferrata, Dr Matthew Camilleri or any other member of Iuris Advocates.