Introduction

A power of attorney is granted by one (donor) in favour of another (donee), to act on behalf of the donor’s behalf, for instance, in respect of the donor’s properties, assets, or personal affairs. The High Court in the case of Wee Tiang Peck v Teoh Poh Tin[1] by citing Jowitt’s Dictionary of English Law (2^nd Ed), defined a power of attorney as “a formal instrument by which one person empowers another to represent him or act in his stead for certain purposes”. Once a power of attorney is created, the relationship of a principal and agent arises between the donor and the donee of the power[2]. As the donor of a power of attorney, one decides the scope of power and authority to grant in favour of the appointed donee to act on one’s behalf.

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Is it a valid Power of Attorney

The validity of a power of attorney is the primary examination that one must scrutinize.

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Authentication and Deposition  

To create a valid power of attorney, it must be executed and authenticated in accordance with Section 3 of the Power of Attorney Act 1949* (“PA 1949”)[1], duly stamped at the stamp office, and deposited in the High Court in accordance with Section 4(1) of the PA 1949. However, Section 4(1) of the PA 1949 is subject to an exception by virtue of Section 4(4) of the PA 1949 which reads:

“(4)Subsection (1) shall not apply to instruments executed and used for the sole purpose of carrying out transactions in the office of a Registrar of Titles or a Land Administrator or a Chief Inspector or Senior Inspector of Mines, provided they are attested in accordance with any law for the time being in force regarding the attestation of such instruments.”

There is no time limit for deposition of the power of attorney to be done[3].

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Laws on Power of Attorney in Malaysia

However, the validity of a power of attorney shall not be determined by authentication and registration in accordance with the PA 1949 per se. In Malaysia, the PA 1949 governs the laws of power of attorney and is subject to other legislations and by-laws in Malaysia. This article will exemplify the circumstances to have PA 1949 be read together with the Contracts Act 1950 (“CA 1950”) and the National Land Code (Revised 2020) (“NLC 2020”) to serve its fullest effect.

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Land office instrument executed under a power of attorney

Instrument executed under power of attorney fit for registration at the land office

Section 309 and Section 310 of the NLC 2020 allow registration of instrument executed under a power of attorney, where particularly, Section 309(1)(a) makes reference to Section 4(4) and Section 10 of the PA 1949 to affirm the requirement of deposition of a power of attorney at the relevant land registry/land office where such instrument shall be presented for registration at, for an instrument executed under a power of attorney be fit for registration.

With the exception provided under Section 4(4) of the PA 1949, a power of attorney shall be valid to render an instrument executed thereunder, fit for registration at the land registry/land office even if it is not registered at the High Court, so long as such power of attorney is deposited pursuant to Section 309 of the NLC 2020. This principle is affirmed in the case of Liew Mok Poh & Anor. v Balakrishnan Muthuthamby[4].

Nevertheless, Section 311 of the NLC 2020 has empowered the land registrar to make enquiries on registration of any instrument, by requiring a statutory declaration, or other evidence upon oath or affirmation that such power of attorney stands valid and existing from the parties to a power of attorney. This may in a way render a power of attorney not being a practical solution to all circumstances if one is required to attend before a registrar to answer such queries when being called upon.

 

Void instrument executed under a power of attorney

In addition, one should always bear in mind that the PA 1949 is also subject to any law for the time being in force. That is to say, not all instrument executed under a power of attorney shall be conclusively fit for registration at the land office.

For instance, the Director General of Federal Land and Mines has set out a circular[5] that any instrument executed vide a power of attorney to give effect to transfer, charge or lease of any alienated land under the governance of the respective state’s Malay reservation enactment registered in the name of a Malay proprietor in favour of any non-Malay person shall be prohibited from registration as such instrument shall be the void and invalid.[6]

Further thereto, pursuant to Section 433F of the NLC 2020, any deed or instrument executed by a non-citizen or a foreign company under a power of attorney in respect of any alienated land or any interest therein in favour of any person or body shall be void, and, in the case of an instrument of dealing, be incapable of registration.

As such, even a power of attorney has been executed, authenticated and registered in accordance with the PA 1949, if the authority given in such power of attorney falls within the ambit of Section 433F of the NLC 2020, for instance, power is given in favour of a non-citizen for the purpose of execution of a transfer pursuant to Form 14A of the NLC 2020, such execution shall be void and the transfer shall be incapable of registration at the land registry.[7]

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Revocability of a Power of Attorney

Revocation under the PA 1949

A valid power of attorney shall remain in full force until it is revoked by the donor or renounced by the donee, pursuant to Section 5 of the PA 1949, which reads as follows:

“5. Every instrument purporting to create a power of attorney of which a true copy or an office copy has been deposited in the office of the Registrar or a Senior Assistant Registrar in accordance with this Act or any law repealed by this Act whether before or after the commencement of this Act, shall, so far as the said instrument is valid and so far as may be compatible with the terms of the instrument, continue in force until notice in writing of the revocation thereof by the donor, or of the renunciation thereof by the donee, has been deposited in every office in which the office copy or true copy thereof has been so deposited, or either the donor or the donee has died or the donee has become of unsound mind, or the donor has been adjudged to be of unsound mind or a receiving order has been made against him in bankruptcy”

Irrevocable power of attorney – Can you revoke?

Under Section 6(1) of the PA 1949, if a power of attorney is given for valuable consideration and is expressed to be irrevocable in favour of a donee purchaser, such power of attorney shall not be revocable at any time, whether by the death, marriage, mental disorder, unsoundness of mind or bankruptcy of the donor, without the concurrence of the donee, whilst under Section 7, the power of attorney is irrevocable for a fixed time and can either be given with or without consideration.

In short, the established principle is that an irrevocable Power of Attorney can only be revoked at the consent of the donee.

In protecting a donee from unlawful revocation of an irrevocable power of attorney, the CA 1950 has to be mentioned. Particularly, under Sections 158 and 159 of the CA 1950 that read respectively as follows, parties’ entitlement for seeking damages for wrongful revocation of an irrevocable power of attorney was recognised:

“158. Where there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the agency without sufficient cause.”  

“159. Reasonable notice must be given of such revocation or renunciation; otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other.”

The Court of Appeal in the case of Sidambaram Torosamy v. Lok Bee Yeong[8] affirmed that a power given to a donee with an interest on the subject matter shall not be revocable by citing the Illustration (a) of Section 155 of the Contracts Act 1950[2] which relates the principle of agency. It was further held that:

“In essence, if it is a revocable power of attorney, the law to some extent recognised the fact the donor is obliged to pay compensation. However, if it is irrevocable, then any conduct of the donor to the detriment of the donee will entail the donee to seek appropriate relief from the court not just limited to compensation alone. That is to say, whether revocable or irrevocable, a wrongful act of the donor will lead to the donee having relief through the court.”

Yet, in claiming that a power of attorney is irrevocable, it is vital for one to establish that such power of attorney is given for valuable consideration.[9] Again, in Sidambaram Torosamy v. Lok Bee Yeong, the Court of Appeal opined that:

“A power of attorney coupled with interest to the donee will normally be referred to as irrevocable power of attorney to at least give effect to the intention of the parties which may be expressed or implied within the four corners of the terms of the power of attorney itself.”

The High Court in Hj Fauzi Hj A Majid v Kenangan Erat Sdn Bhd[10] after scrutinising Section 6(1) of the PA 1949, in setting aside the plaintiff’s ex parte originating summons held that “valuable consideration is an essential element in order to sustain the irrevocability of a power of attorney and that this valuable consideration must be expressly stated in specific particulars either in the power of attorney itself or the affidavit in support for the purposes of the ex parte originating summons”. The Court further ruled that validity of power of attorney in the case shall be determined at full trial.

Thus, the intention of the parties creating a power of attorney and its practicality shall always be the primary consideration in deciding whether such powers to be delegated under such instrument shall be made irrevocable at any time or for a fixed time, and if the former, whether it has been given for valuable consideration.

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Can a donor still deal with the property given that a power of attorney has been granted?

It depends on the powers granted in the power of attorney.

The High Court in Liew Mok Poh & Anor. v Balakrishnan Muthuthamby[11] held that “Once an irrevocable power for valuable consideration has been given, the donor cannot thereafter exercise any of the powers already given without the concurrence of the donee.”

In the case of He-Con Sdn Bhd v. Bulyah bt Ishak & Anor and Another Appeal[12], there was an irrevocable Power of Attorney executed containing a clause that the full payment of the purchase price has been made. One of the issues tried was whether a donor of a power of attorney executed in relation to the property is subsequently prevented from dealing with the property and the Federal Court held that “Here exhibit P2, which is an irrevocable PA was issued pursuant to D25 had evinced the fact, thereby pointing irresistibly to the knowledge on part of the first defendant that full payment had been made for the said property, thereby rendering the vendor first defendant as a bare trustee. Once a donor becomes a bare trustee, he stands in the same shoe as a vendor similarly circumstanced. Both are incapable of any further dealing with the said property, including creating a charge under the NLC over the said property.”

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Can a donee appointed under a valid power of attorney be substituted?

The PA 1949 is silent about substitution of a donee appointed under a power of attorney. However, depending on the needs and the intention of the parties, a power of attorney may contain an express provision to allow the donee to be substituted. This principle is recognized by the Director General of Federal Land and Mines in its circular.[13]

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Conclusion: Should I?

Most of the time, the common impression is that the power of attorney is the most powerful legal document for solving problems particularly situations in relation to properties. It may be and may not be. Creation of a power of attorney does provide convenience to a certain extent but sometimes, the risks may outweigh the convenience if the intention of the parties is not rigorously spelt out in a power of attorney.

In essence, one should always seek for proper legal advice when in creating or accepting a power of attorney, to firstly ensure that such power of attorney created shall be enforceable under the laws of Malaysia, and that the powers given thereunder shall be legally tailored to meet the purpose of the parties creating such power of attorney.

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*The Power of Attorney Act 1949 is not applicable in Sabah and Sarawak.

[1]     “Authentication of powers of attorney

1. 3(1) No instrument purporting to create a power of attorney executed after the commencement of this Act shall have any validity to create such power within **Peninsular Malaysia unless—
2. (a) if executed within *Peninsular Malaysia, the instrument is executed before, and is authenticated in the appropriate form set out in the First Schedule hereto by—
   1. (i)      a Magistrate;
   2. (ii)     a Justice of the Peace;
   3. (iii)     a Land Administrator;
   4. (iv)     a Notary Public;
   5. (v)     a Commissioner for Oaths;
   6. (vi)     an advocate and solicitor; or
   7. (vii)    an officer, acting in the course of his employment, of a company carrying on the business of banking in *Peninsular Malaysia and incorporated by or under any written law in force in *Peninsular Malaysia; or
   8.  
3. (b) if executed outside *Peninsular Malaysia, the execution of such instrument is authenticated, in such form as may be accepted by the Registrar, by—
   1. (i)      a Notary Public;
   2. (ii)     a Commissioner for Oaths;
   3. (iii)     any Judge;
   4. (iv)     a Magistrate;
   5. (v)     a British Consul or Vice-Consul;
   6. (vi)     a representative of Her Britanic Majesty;
   7. (vii)    on and after Merdeka Day, any Consular Officer of Malaysia;
   8. (viii)   in the case of an instrument executed in the Kingdom of Saudi Arabia, the Malaysian Pilgrimage Commissioner; or
   9. (ix)     in the case of an instrument executed in the Republic of Singapore, an advocate and solicitor of the Supreme Court of the Republic; or an officer, acting in the course of his employment, of a company carrying on the business of banking in the Republic and incorporated by or under any written law of the Republic.
4.  
5. (2) Notwithstanding anything to the contrary contained in any written law in force at the commencement of this Act, an instrument purporting to create a power of attorney duly executed and authenticated in accordance with this section shall be deemed to be properly and validly executed and attested for all or any of the purposes for which a power of attorney may be used under any such written law.”
6. .

[2]     “Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

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ILLUSTRATIONS

1. (a) A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his unsoundness of mind or death.
2.  
3. (b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority nor is it terminated by his unsoundness of mind or death.”
4. .

[1] [1995] 1 MLJ 446

[2] Wee Tiang Peck v. Teoh Poh Tin [1995] 1 MLJ 446, p. 454

[3] United Malayan Banking Corporation Berhad v. The Official Receiver and Liquidator of Soon Hup Seng Sdn. Bhd. (In Liquidation) & Anor. [1986] 1 MLJ 75, p. 81

[4]  [1990] 2 CLJ (Rep) 365, p. 366

[5] Pekeliling Ketua Pengarah Tanah Dan Galian Persekutuan Bilangan 11/2021

[6] Pekeliling Ketua Pengarah Tanah Dan Galian Persekutuan Bilangan 11/2021, Paragraph 4

[7] Section 433F of the National Land Code (Revised 2020)

[8] [2018] 3 CLJ 599

[9] Section 6(1) of the Power of Attorney Act 1949

[10] [2005] 8 CLJ 230, p 231

[11] [1990] 2 CLJ (Rep) 365

[12] [2020] 7 CLJ 271

[13] Pekeliling Ketua Pengarah Tanah Dan Galian Persekutuan Bilangan 11/2021, Paragraph 6

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This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

About the Author

Noelle Low Pui Voon
Senior Associate, Banking & Finance, Real Estate and Corportae/M&A
Halim Hong & Quek
noelle.low@hhq.com.my