Defendant failed to show that there was no negligence in signing loan facility

In AIB v Higgins & ors [2015] IECA 23, the Court of Appeal considered the necessary elements of the defence of 'non est factum'. 

Generally speaking if a person signs a document they are affirming the contents and will be bound by their signature. The defence of 'non est factum' (meaning literally “it is not my deed”) alleges that the signed agreement is void due to an absence of consent by the signatory.

This appeal was against an order of the High Court which granted summary judgment against the third named defendant, and rejected the defence of non-est factum' raised by the defendant.  

The evidence before the High Court that the defendant was unable to read properly due to dyslexia, and that his verbal reasoning skills were below average for the same reason.  While the defendant accepted that the signature on the facility letter was his, he stated that he signed a plain back sheet and that nobody had explained to him the details of the facility. 

The Court of Appeal endorsed the approach of the High Court who found that in order to raise the defence of non-est factum an individual must prove:

(a) that there was a radical or fundamental difference between what he signed and what he thought he was signing;

(b) that the mistake was as to the general character of the document as opposed to the legal effect; and

(c) that there was a lack of negligence i.e. that the individual took all reasonable precautions in the circumstances to find out what the document was. 

Applying this test to the facts before it the court held that if the defence is to be made out, the defendant must put before the court evidence which would at least arguably establish that he took reasonable precautions to find out what was the document he signed.  Here the defendant knew he was signing a facility letter and was a businessman with commercial experience yet there was no evidence before the court that he had even asked about the amount of the liability he was undertaking.  In the circumstances the appeal was dismissed.

The decision underlines the strict nature of the test that will be applied by the court before such a defence will succeed.  The reason for this stringency is the need for certainty in commercial relations.  That certainty was commented on by Charleton J in the case of Friends First Ltd v Lavelle & anor [2013] IEHC 201 where he stated:- "There are strong policy reasons underpinning the requirement for care in signing legal documents.  The stringency of the test whereby liability may be resiled from reflects the proposition that those who enter into contractual relations on the basis of documents must take care as to what they are signing." 

For further information please contact Paula Mullooly at or your usual contact at A&L Goodbody

Date Published: 5 May 2015