POAs: Mandators cannot escape liability if they cannot read Maltese or English

A person who accepts another as their mandatory through a power of attorney agreement cannot escape liability by stating that they were not aware of the contents of the agreement because they were in Maltese or English, rather they should seek advice before signing the agreement. This was explained by the First Hall Civil Court presided by Hon. Mark Chetcuti in the case of Olivia Mallia vs. Inna Sergeevna Furtseva et.

The Court heard the claims by the plaintiff who stated that in September 2010 she appeared as the guarantor for the defendants who happened to be her brother and his wife. This occurred after her brother explained that he needed the loan to open his own business.

Through this contract the defendants entered into a loan agreement with HSBC bank for the amount of €175,000. However in 2012, the defendant Terrance Gialanza, represented in court by appointed curators, disappeared from Malta and in fact a magisterial inquiry had taken place to determine his whereabouts. Gialanza has made no contact with his sister nor his wife since that time. Once the defendants no longer made the bank payments, the plaintiff was called upon to fulfil this obligation. She did so and paid the amount of €78,340 to date to the bank but was, however, refunded €48,000 by the defendants’ father. She was therefore suing the defendants to refund her the remaining sum of €30,000.

The defendant Furtseva held that she did not owe the amount to the plaintiff since she was not the one who signed the agreement with the bank for the loan. She explained that she had appointed the plaintiff as her mandatory through a power of attorney agreement but was under the impression that the plaintiff would be using the power given to her to sign a paper which related to the property shared between the defendants.

Instead she found that the plaintiff has used her power to appear and sign the loan agreement. She explained that at the time she was travelling to Russia a lot and therefore her husband asked her to give his sister the power to sign official documents for her. She stated that the loan agreement was signed without her knowledge and that she should therefore not be held responsible to refund the plaintiff for the loan payments.

The Court first explained that the main article speaking about the responsibilities of the mandatory is Article 1874 of the Civil Code. The Court explained that what had to be proven by the defendant is that the plaintiff acted negligently in performing her duties and that she did not fulfil the fiduciary obligations that the Civil Code requires of mandatories under Article 1124A. The Court explained that the first thing that had to be established was whether the power of attorney agreement was general or specific.

The Court heard the testimony of Notary Patricia Hall who stated that on the day of the signing of this agreement she explained to the defendant that this was a general power of attorney agreement which included the ability of the plaintiff to sign a loan agreement and what the consequences of this was. She explained in English and confirmed that the defendant understood the contents.

The Court did not accept the defendant’s plea that she did not understand the contents of the agreement because she spoke neither Maltese or English. The Court held that if she did not understand the contents of the agreement it was her responsibility to ask for legal advice or to ask questions before signing the document. Furthermore, the Court noted that in the sanction letter for the loan that was going to be taken by the defendants, Furtseva’s signature was present. This means that she did indeed have knowledge of the loan and should have understood the contents before signing or should have asked for help.

The Court concluded that the defendant did not adequately prove that the plaintiff was in mala fede. It held that it was clear that the plaintiff had nothing to hide and had been making the loan payments and was entitled to reimbursement.

The plaintiff also did not derive any personal benefit or gain from her position as mandatory. It held that in accordance with Article 1942 and 1946 of the Civil Code guarantors have every right to be reimbursed for the expenses they incurred and that the loan agreement was valid, and was for all intents and purposes of the law was signed by the defendant. It upheld the plaintiff’s claim and ordered the defendants in solidum to pay the sum of €30,340 with all the legal expenses and tax.