Beware The Potential Pitfall When Dealing With A Sub-Delegate Of Trustees

• Published date: 05 January 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: SKRINE
• Author: Ms Oon Hooi Lin, Jesy Ooi and Theresa Chong

The recent decision by the Court of Appeal in Manuan a/l K Marappan & Anor v Sinwufu Enterprise Sdn Bhd (Mashudan bin Kamar, Bustani bin Nador & Khairil bin Sulaiman (selaku pengamanah Persekutuan Guru-Guru Melayu Johor, Cawangan Batu Pahat) & 2 Ors - Third Parties) (and Another Appeal) [2020] 8 AMR 325 is a timely reminder on legal limits that may apply to the sub-delegation of powers by trustees.

Background

In essence, the two appeals turned on the validity of the transfer of five pieces of land in Batu Pahat, Johor owned by one of the respondents, Persekutuan Guru-Guru Melayu Johor, Cawangan Batu Pahat, i.e. the Federation of Malay Teachers Johore, Batu Pahat Branch ('PGMJ') to the appellants pursuant to a power of attorney ('PA') granted by the trustees of PGMJ to one Omar bin Kassim ('Omar').

The High Court had granted a declaration that the sale and purchase agreement for the five pieces of land was null and void and ordered the appellants to deliver vacant possession of the lands to PGMJ.

Decision

The Court of Appeal upheld the decision of the High Court and dismissed the appeals.

According to the Court of Appeal, the primary issue in the appeals is the legal issue of the validity of the PA.

The Court of Appeal took the view that the decision of the Federal Court in Letchumanan Chettiar @ L Allagappan (sebagai perlaksana wasiat (executor) kepada SL Alameloo Achi Alsia Sona Lena Alamelo (si mati) menurut geran probet bertarikh 3/6/1966 menurut Petisyen No. 32-05-1996, Mahkamah Tinggi di Alor Setar, Kedah Darul Aman) & Anor v Secure Plantation Sdn Bhd [2017] 3 AMR 625 ('Letchumanan Chettiar') is authority for the proposition that the validity of a power of attorney is fundamental and if the power of attorney is invalid, then the transfer is invalid.

The Court of Appeal held that in equity the principle of delegatus non potest delegare (non-delegation) by a trustee is a strict rule that may be mitigated or modified by express provision in the trust instrument or by statute.

The Court noted that PGMJ's constitution vests immoveable properties of the association in the names of the trustees, which was in line with section 9(b) of the Societies Act 1966. The Court observed that there were no provisions in PGMJ's constitution or the Societies Act 1966 which permit delegation whether by PA or otherwise. Hence, PGMJ has no power under its constitution to appoint an agent and everything must be carried out by PGMJ and its office bearers and trustees.

The...