7th July 2010 by Simon O’Neill
The recent High Court judgment ofKelly J. in the case of AIB PLC v Higgins & Others [2010] IEHC 219 considered the defence of ‘Non Est Factum’ raised by one of the borrowers, Mr. James Mansfield to an application for summary judgment by AIB PLC for the sum of €6,324,959.81 in relation to loan facilities advanced to thefour borrowers (who were in partnership) for the purchase and development of lands in Duleek Co.Meath.
Three of the borrowers raised defences in relation to non compliance with the requirements of the Consumer Credit Act 1995 (see our article dated 7th July 2010). Mr Mansfield alleged that he did not understand nor was it explained to him that a joint and several liability was being incurred on foot of the borrowing by the partnership under a facility letter dated 19th January 2009 (the fifth in a succession of similar facility letters). Mr Mansfield alleged that he had only limited involvement in the transaction and was not involved in the partnership, merely the purchase of the lands and even then only to one sixth of the site purchase borrowings.
In raising the defence of ‘Non Est Factum’, Mr. Mansfield was essentially alleging his signature on the facility letter was signed by mistake, without knowledge of its meaning (but was not done so negligently) in relation to the AIB loan facilities. He alleged that due to learning difficulties he could not read or understand the import of the facility letter and a successful plea of Non Est Factum would make the contract void ab initio.
It was noted that Mr. Mansfield was the director of some 25 companies, could fly a helicopter and signed the annual accounts for many of the 25 companies of which he was a director. In rejecting the defence of ‘Non Est Factum’ Kelly J. referred to the case of Saunders v Anglia Building Society [1971] AC 1004, “The plea cannot be available to anyone who was content to sign without taking the trouble to try to find out at least the general effect of the document. Many people do frequently sign documents put before them for signature by their solicitor or other trusted advisers without making any inquiry as to their purpose or effect. But the essence of the plea of Non Est Factum is that the person signing believed that the document he signed had one character or effect whereas in fact its character or effect was quite different. He could not have such a belief unless he had taken steps or been given information which gave him some grounds for his belief…”
Kelly J held that Mr. Mansfield “ought to have taken steps to find out what the letter of 19th January 2009 [the facility letter] was or told the bank of his problems. He did neither. He cannot be said to have taken any, still less “all reasonable” precautions to find out what the document was (per Morris J.)”.
Further Information:
Please contact: Simon O'Neill - soneill@mckr.ie - Tel: +353 1 670 2990
