Koperasi Pembiayaan Syariah Angkasa Berhad v Antasha Binti Abdul Rahim (WA-24NCvC-3993-09/2023)

Two issues arose for determination in this case. The first issue was whether the said Instrument did create a power of attorney which was enforceable by the Plaintiff as an “irrevocable power of attorney for an indefinite period”. The second issue was whether a private caveat, entered by a person who was not named as a party in this case, ought to be removed by an order of this Court without giving him a chance to be heard.

The Originating Summons in this case was first filed by the Plaintiff in the High Court of Malaya at Shah Alam in March 2023, and was registered as BA-24NCvC-580-03/2023 (“the Shah Alam OS”) wherein the Plaintiff prayed for leave to enforce the power of attorney, an order requiring the Defendant to deliver to the Plaintiff the land title of a property belonging to the Defendant, an order for a private caveat entered by one Shahrul Nizam bin Abdul Aziz – a stranger not named as a party – to be removed. In response, the Defendant had filed an Originating Summons in the Kuala Lumpur branch of the High Court of Malaya, and it was registered as WA-24NCvC-1982-05/2023 (“OS No.1982”) praying for a declaration that the power of attorney failed to comply with Section 6 of the Powers of Attorney Act 1949, and to be revoked.

The Shah Alam OS was subsequently transferred to Kuala Lumpur because the subject matter was the power of attorney which was registered in this branch of the High Court of Malaya. The Shah Alam OS was re-registered as WA-24NCvC-3993-09/2023, i.e. this present case, that was heard before me together with OS No.1982.

My decision was to dismiss the Plaintiff’s application in this case and to allow the Defendant’s application in OS No.1982. Background Facts [6] The Plaintiff and a private limited company by the name of Demi Idaman Sdn Bhd (“DISB”) had entered into a Settlement Agreement dated 24th December 2020 (“the Settlement Agreement”) to settle a claim made by the Plaintiff against DISB. The amount was RM4,658,283.53 (“the Settlement Sum”). The Defendant was neither a director nor a shareholder of DISB.

As security for the Settlement Agreement, DISB undertook to cause a property owned by the Defendant held under PN 47804, Lot No. 45072, Mukim Pekan Baru Sungai Buloh, Daerah Petaling, Selangor (“the Defendant’s Property”) to be charged to the Plaintiff.

The said Instrument was signed by the Defendant and duly deposited with the High Court at Kuala Lumpur, in compliance with S.3 and S.4 of the Powers of Attorney Act 1949. The Plaintiff’s Case [9] DISB failed to pay the Settlement Sum agreed in the Settlement Agreement. This led to the Plaintiff demanding that the Issue Document of Title of the Defendant’s Property be handed over to be transferred to the Plaintiff. However, the Defendant refused to do so despite repeated requests from the Plaintiff. The Plaintiff also discovered that the Defendant wanted to sell the Defendant’s Property to a third party.

The Plaintiff then decided to apply for enforcement of the said Instrument by filing an Originating Summons seeking the following prayers:

In essence, the Plaintiff’s stand was that pursuant to the Settlement Agreement made with DISB, the Defendant had by signing the said Instrument created an irrevocable power of attorney for an indefinite period and given the Plaintiff a right to enforce the power of attorney and compel the Defendant to deliver up the original Issue Document of Title of the Defendant’s Property.

The third and fourth prayers in the Plaintiff’s application was to remove a private caveat entered by one Shahrul Nizam bin Abdul Aziz – who was not named as a party in this case. In other words, the Plaintiff was seeking an ex-parte order against the said caveator. The Defendant’s Case [13] The Defendant submitted that sometime in December 2020, her husband, who was serving as a consultant for DISB, has asked her to sign the said Instrument to create a power of attorney to appoint the Plaintiff as her donee in respect of the Defendant’s Property for the purpose of helping DISB. According to her, she was assured by her husband that following from the signing of the said Instrument, a valuation report would be prepared for the Defendant’s Property together with a supplementary agreement between DISB and the Plaintiff, which would protect the Defendant’s rights in the Defendant’s Property.

The Defendant alleged that she was never given a copy of the Settlement Agreement by DISB or the Plaintiff, and the first time she sighted the Settlement Agreement was after these proceedings were filed by the Plaintiff, presumably as an exhibit in the Plaintiff’s affidavit. Her counsel pointed out that Clause 2.3(c) of the Settlement Agreement did provide that a valuation report and an additional agreement shall be entered into. The said clause reads as follows:

On a point of law, the Defendant’s stand was that since she did not receive any valuable consideration and there was no supplementary agreement signed, the said Instrument purporting to create the power of attorney was invalid and was revocable. Decision regarding the validity of the said Instrument [16] There was no doubt that the Plaintiff had intended to ask the Defendant to give it an irrevocable power of attorney in respect of the Defendant’s Property for an indefinite period. There was also no doubt that the Defendant did sign the said Instrument. S.4 of the Powers of Attorney Act 1949, which makes it mandatory for instruments creating powers of attorney to be deposited with the High Court, was also complied with.

The reference to “irrevocable powers of attorney” as “powers of attorney coupled with interest” had all along been the common law position when “value” had been given in consideration of the donor granting a power of attorney to the donee. The fact that irrevocability was conferred by valuable consideration was reiterated by Lord Romilly, who was Master of the Rolls in England more than one and a half century ago, in OLDHAM v. OLDHAM (1867) L.R. 3 Eq. 404 with his following words: “In the case of Wilkinson v. Wilkinson (1), to which I was referred, there was the ordinary case of a power of attorney given for value, which, as everybody is aware, is not revocable.” (emphasis added)

In the United Kingdom, the common law position was codified ninety-nine years ago in S.126 of their Law of Property Act 1925 (“UK LPA 1925”). When the British saw the need to introduce a Powers of Attorney Act in Malaya in the late 1940’s, our Powers of Attorney Act 1949 was enacted with S.6 and S.7 incorporating most parts of S.126 and S.127 of the UK LPA 1925 respectively.

Whilst S.126 and S.127 UK LPA 1925 had both been repealed five decades ago by their Powers of Attorney Act 1971 and replaced with a clearer version (in S.4 thereof) that expressly protects the rights of a donee who has acquired proprietary rights in the subject matter of the power of attorney, S.6 and S.7 of our Powers of Attorneys Act 1949 remain in force unamended.

In Sidambaram a/l Torosamy v Lok Bee Yeong (representative to the estate of Soma Sundram a/l Doraiswamy) [2017] 4 MLJ 570, reference was made by our Court of Appeal to the concept of “powers of attorney coupled with interest”, which is essentially a reference to S.6 of the Powers of Attorneys Act 1949 that made “valuable consideration” an essential requirement. The following passage from Sidambaram (supra) is instructive: “[19] 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. Learned authors, Berna Collier and Shannon Lindsay on Power of Attorney in Australia and New Zealand on irrevocable power of attorney had this to say: The principle that an authority coupled with an interest is irrevocable except with the donee’s consent has been recognised for centuries. A good definition of an irrevocable power coupled with an interest may be found in the case of CLERK v LAURIE [1857] 2 H&N 199; 157 ER 83: What is meant by an authority coupled with an interest being irrevocable is this — that where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable.” (emphasis added)

Since S.6 of the Powers of Attorney Act 1949 (“the PA Act 1949”) is the applicable law, the issue for determination would be whether the said S.6 was complied with, for the power of attorney to be irrevocable for an indefinite period. In our present case, the said Instrument was drafted as follows:

The clause purportedly creating the power of attorney was worded as follows:

As pointed out in para [1] above, the said S.6 of the PA Act 1949 requires valuable consideration to be given for the Power of Attorney if it is expressed to be irrevocable for an indefinite period, to survive the death, marriage, mental disorder, 10 unsoundness of mind, or bankruptcy of the donor of the power. This could be seen from S.6(1) which states as follows: “(1) If a power of attorney, given for valuable consideration, is in the instrument creating the power expressed to be irrevocable, then, in favour of a purchaser—

the power shall not be revoked at any time, either by anything done by the donor of the power without the concurrence of the donee of the power, or by the death, marriage, mental disorder, unsoundness of mind, or bankruptcy of the donor of the power; and

any act done at any time by the donee of the power, in pursuance of the power, shall be as valid as if anything done by the donor of the power without the concurrence of the donee of the power, or the death, marriage, mental disorder, unsoundness of mind, or bankruptcy of the donor of the power, had not been done or happened; and

neither the donee of the power, nor the purchaser, shall at any time be prejudicially affected by notice of anything done by the donor of the power, without the concurrence of the donee of the power, or of the death, marriage, mental disorder, unsoundness of mind, or bankruptcy of the donor of the power.” [24] In our present case, the Defendant was not a party to the Settlement Agreement. DISB is a private limited company – a separate legal entity from the Defendant and/or her husband who merely served as a consultant for DISB. I found that the Plaintiff was barred by the doctrine of privity of contract from using the terms and conditions of the Settlement Agreement to sue the Defendant. [25] The draftsman who drafted the PA Act 1949 had wisely envisaged such situations where instruments drafted to create a power of attorney are invalid. This could be seen from the phrase “purporting to create a power of attorney” in S.4 of the PA Act 1949 that states: “Except as hereinafter provided no instrument purporting to create a power of attorney shall, after the commencement of this Act, have any validity to create such power within West Malaysia until…” [26] Borrowing the aforesaid phrase from the PA Act 1949, it is my judgment that the said Instrument purporting to create a power of attorney that was irrevocable for an indefinite period failed to do so because there was not a word in the said Instrument about any valuable consideration being given by the donee (the Plaintiff) to the donor (the Defendant) for the power of attorney that was expressed to be irrevocable for an indefinite period. Neither did the Plaintiff’s affidavit mention any valuable consideration being given by the donee (the Plaintiff) to the donor (the Defendant). [27] In the absence of “valuable consideration” being stated and/or proven to have been given, this Court must assume that there was no valuable consideration given for the power of attorney. Consequentially, it was my finding that the said Instrument failed to comply with a mandatory provision of S.6 of the PA Act 1949 and was therefore not irrevocable for an indefinite period. [28] En passant, it is interesting to note the contrast between S.6 and S.7 of the PA Act 1949. S.7 does not make it mandatory for there to be “valuable consideration”. This could be seen from the phrase “whether given for valuable consideration or not” in S.7 – in contrast with S.6 that makes it mandatory for there to be valuable consideration given to the donor. In our present case, the “power of attorney” was clearly expressed to be created pursuant to S.6 of the PA Act 1949 – intended to be irrevocable for an indefinite period. Hence, the absence of “valuable consideration” was fatal to the Plaintiff’s claim. The Defendant was therefore entitled to demand the revocation of the said Instrument as it was not irrevocable for an indefinite period. [29] In any event, the irrevocability of a power of attorney validly created for an indefinite period under S.6 is effective only to protect a donee who was himself a purchaser and/or a purchaser who purchased the donor’s property from the done (in his capacity as the donee). Here, the Plaintiff was not a purchaser eligible for protection under S.6 – as is evident from the phrase “in favour of a purchaser” in S.6(1) of the PA Act 1949. [30] By reason of the above, I was therefore constrained to dismiss prayer (1) and (2) of the Plaintiff’s application with costs, and to allow the Defendant’s application in OS No.1982. Decision regarding the Plaintiff’s application [prayer (3) & (4)] to remove the stranger’s caveat [31] My decision regarding the revocability of the said Instrument was sufficient to justify dismissing the Plaintiff’s prayer to remove a private caveat entered by one Shahrul Nizam bin Abdul Aziz – who was not even named as a party in this case. For the sake of completeness, I shall state my other reasons for deciding to dismiss that prayer. [32] Even though S.327(1) of the National Land Code 1965 (“NLC 1965”) empowers this Court to make an ex-parte order for the removal of private caveats, i.e. without naming the caveator as a party in the application, I am of the view that this power ought to be exercised only in cases where it was crystal clear that the caveator was abusing the process under NLC 1965 that allows private caveats to be entered without verification by the Registrar of Land Titles. This is because S.324(1) thereof requires the Registrar of Land Titles to endorse the caveat “without being concerned to enquire into the validity of the claim on which it is based”. A private caveat may be entered by any person by simply filling in Form 19B of the NLC, affirming a statutory declaration to verify his claim and paying a small fee to lodge a private caveat. Drawing from my past experience at the Bar, an example of such an abuse was when a caveator entered a new private caveat within days of his earlier caveat being removed by a court order that was issued after an inter-parte hearing. In that case, the learned judge found it fit to issue an ex-parte order for the immediate removal of the new caveat. [33] The words in S.327 of the NLC 1965: “acting, if the circumstances so require, ex parte”, are intended to empower the court to hear applications under S.327 ex-parte if the circumstances so require. The whole S.327(1) NLC 1965 states as follows: “Any person or body aggrieved by the existence of a private caveat may at any time apply to the Court for an order for its removal, and the Court (acting, if the circumstances so require, ex parte) may make such order on the application as it may think just.” [34] In our present case, I found that the circumstances did not require an ex-parte hearing of the Plaintiff’s application to remove the said caveat. The caveator ought to have been named as a co-defendant in this case. Counsel for the Plaintiff: Mior Muhammad Nadjmie Bin Abdul Talib SOLICITORS FOR THE PLAINTIFF: MESSRS TAWFEEK BADJENID & PARTNERS Advocates & Solicitors Suite E-09-20, Amcorp Business Suite, 9th Floor, Menara Melawangi, Jalan Persiaran Barat, 46050 Petaling Jaya, SELANGOR DARUL EHSAN. Counsel for the Defendant: Mohd Hanif Bin Idris SOLICITORS FOR THE DEFENDANT: MESSRS HANIF IDRIS & ASSOCIATES Advocates & Solicitors No. 40-1A, Jalan Telawi, Bangsar Baru, 59100 KUALA LUMPUR. CASES REFERRED:

Oldham v. Oldham (1867) L.R. 3 Eq.

Sidambaram a/l Torosamy v Lok Bee Yeong (representative to the estate of Soma Sundram a/l Doraiswamy) [2017] 4 MLJ 570 LEGISLATION REFERRED:

Section 3 Powers of Attorney Act 1949

Section 4 Powers of Attorney Act 1949

Section 6 Powers of Attorney Act 1949

Section 7 Powers of Attorney Act 1949

S.126 UK Law of Property Act 1925

S.127 UK Law of Property Act 1925

S.4 UK Powers of Attorney Act 1971

S. 324(1) National Land Code 1965

S.327(1) National Land Code 1965