Mandate appointment is a common tool that is used between persons in order to facilitate a transaction on behalf of others. By example, such powers are at times conferred through the medium of a power of attorney (in Maltese referred to as ‘prokura’).

The obligations that are imposed by law when a mandate is resorted to is sometimes underestimated. For a mandate is not to be deemed as a mere act performed on behalf of others.

A mandate is a contract between a mandator (the person who grants the mandate powers) and a mandatary (the person who accepts such powers). The word of the law – article 1856 of the Civil Code − states that a mandate is a contract whereby a person gives to another the power to do something for him.

Granting power to others to act on your behalf – especially when such power is of general nature – has significant effects. By effect, the mandator is granted the power to represent the mandator and perform acts on his behalf, without the physical presence of the mandator.

A mandate is, therefore, a fiduciary obligation where a person places his trust in another to act on his behalf and in his interest. The law acknowledges the fiduciary feature and to this effect, it imposes various obligations and limitations upon the person being appointed to represent another – the mandatary. As a general legal commandment, the mandatary must not act in excess of the powers conferred unto him.

The law acknowledges two types of mandates – the general mandate and the special mandate. General mandate refers to the instance where the mandator appoints his attorney to perform general acts of administration which can vary from a mere alienation of property to the hypothecation of property that is owned by the mandator.

Special mandate, on the other hand, is only granted to administer one or a number of matters on behalf of the mandator. The power granted on such mandate is only limited to the performance of a specific act.

The mandate commences as soon as the mandatary accepts his role to become a representative of the mandator. 

As to the obligations of the mandatary – the person who has been vested with the powers to act on behalf of others – he is bound to commit the acts he has been appointed to do. He shall be answerable to damages and interest in case of non-performance. The mandatary is also answerable for fraud or negligence that may result from his acts or omissions.

More importantly, and unless the mandatary has been exempted, the mandatary is duty-bound to render accounts – statements representing a description of his administration and of everything that he received by virtue of the mandate.

The mandatary is answerable to damages and interest in case of non-performance. He is also answerable for fraud or negligence that may result from his acts or omissions

Rendering of accounts is an important measure which the law imposes in order to keep a mandatary in check. Mandate or power-of-attorney abuse is not something unheard of – hence this obligation that is placed upon the mandatary is a safety valve, attempting to ensure that the executing of these powers is being done in a correct manner, according to law, and in the interest of the mandator.

This obligation to render accounts featured in a recent judgment, delivered by the Court of Appeal, on May 26, bearing the names of ‘Manduca noe vs Vella Zarb’.

The plaintiffs (the mandators) had appointed the defendant to administer their estate which administration involved the collection of ground rent and leases, together with the alienation of some of their properties. They claimed that their appointed mandatary – the defendant – had failed to render accounts of the estate that he was entrusted to manage and administer.

The First Hall, Civil Court had found the defendant in default and ordered the mandatary to render the requested estate’s accounts. The defendant appealed, and in a nutshell, he claimed that he had correctly executed his powers, in terms of the law.

It emerged that the respondent had provided two types of accounts – one that listed the properties that he had sold on the claimant’s behalf, and a list containing amounts that were due to mandators following such sale of property. The respondent claimed that these forms of accounts demonstrated that he had sufficiently executed his duty to render administration statements. 

The first court disagreed. It cited an old judgment, bearing the names of ‘Demarco vs Demarco’, delivered in 1963, which judgment determined that such accounts must be rendered in a manner that show the true financial position of the immovable estates. Therefore, figures or descriptions of events on their own, without any proper backing, do not entail proper or sufficient rendering of accounts.

Therefore, the court’s task was to examine whether the statements that were rendered by the defendant demonstrated a true and fair view of the financial situation of the mandator’s estate. 

These statements were found to be fragmentary. The court deemed that these lacked those elements that were necessary in order to understand the financial position of the plaintiff’s estate. By example, no explanation of by who and how were the ground rents being paid to the effect that the mandators could not certify that these payments were up-to-date and that no emphyteuta was defaulting. Moreover, these accounts gave no exact explanation of the source of payments, and who was paying it − one of the statements was a simple note containing numerical figures and resulted to be undated.

The Court of Appeal held the general rule that – as a second instance court − it should not disturb the findings of the first court, unless such findings contained unreasonable conclusions in light of the evidence produced. The court reassessed the evidence that was brought before the first court and concluded that the appellant had indeed failed to render proper accounts and was found to be in breach of his fiduciary obligations.

In conclusion, the Court of Appeal confirmed the first judgment and ordered the appellant – the mandatary – to render proper accounts in terms of law within six weeks from the date of judgment.

Mary Rose Micallef is an associate at Azzopardi, Borg and Associates Advocates.