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THE PRINCIPLE OF NON EST FACTUM

By:

Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]



INTRODUCTION

In general, there is no principle of law that allows a contract to be nullified where a party does not fully appreciate and understand the terms of such contract.


It is trite that a party to a written contract is bound by the terms of the said contract. This general rule is enshrined in the English Court of Appeal case of L'Estrange v F. Graucob [1934] 2 KB 394 where it was held:


“When a document containing contractual terms is signed, then, in the absence of fraud, or, I may add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.”


The general rule that a contract binds the contracting parties is strict safe for where fraud and misrepresentation can be established, and it stretches to even where a party has failed to read the terms of the contract before signing it.


However, there is one such exception to the general rule, and such exception is known as the doctrine of non est factum.


NON EST FACTUM

Put simply, non est factum is a Latin phrase and it means literally “it is not my deed”. A successful plea of non est factum makes the contract void ab initio. It is a defence allowing a party to avoid terms in a contract that the said party has signed because the said signature was by mistake.


The Court of Appeal in Lin Wen-chih & Anor v Mycom Bhd [2014] 3 MLJ 691 held that the “mistake, however, is not so much because one does not know the contents of the documents that one is signing, but that it was or turned out to be of a character entirely different from what is thought to be signed.


An illustration could be found in the Federal Court case of Chin Leong Soon & Ors v Len Chee Omnibus Co Ltd & Anor [1970] 2 MLJ 228 where it was held:

“Her claim is clearly based on the doctrine of non est factum, which means that if a person, owing to an error, executes a legal document which is of an entirely different character from that which he intended to sign, he is entitled to found his claim on it or to plead it as a defence if he is sued on the document …”


Further in the High Court case of Wan Salimah Bte Wan Jaffar v Mahmood Bin Omar (Anim Bte Abdul Aziz, Intervener) [1998] 5 MLJ 162, it was held as follows:

“Byles J in Foster v Mackinnon held the view that where a signatory to a document signs it under a genuine mistake as to its nature, he is not bound by the terms of it because his mind has not gone with his action, and a fortiori the same reasoning applies when he is deceived into signing it by a false representation as to its nature.”


David Wong J in Malayan Banking Bhd v Marilyn Ho Siok Lin [2006] 7 MLJ 249 held that the law governing the doctrine of non est factum was reviewed and restated in Gallie v Lee; Saunders v Anglia Building Society [1971] AC 1004 (HL) as follows:

“(a) The plea of non est factum can only rarely be established by a person of full capacity and although it is not confined to the blind and illiterate, any extension of the scope of the plea would be kept within narrow limits. In particular, it is unlikely that the plea would be available to a person who signed a document without informing himself of its meaning.

(b) The burden of establishing a plea of non est factum falls on that party seeking to disown the document and that party must show that in signing the document he acted with reasonable care. Carelessness (or negligence devoid of any special, technical meaning) on the part of the person signing the document would preclude him from later pleading non est factum on the principle that no man may take advantage of his own wrong; It is not, however, an instance of negligence by way of estoppel.

(c) In relation to the extent and nature of the difference between the document as it is and the document as it was believed to be, the distinction formerly drawn between the character and the contents of the document is unsatisfactory and it is essential, if the plea is to be successful, to show that there is a radical or fundamental distinction.”


In essence, Lord Reid in Gallie v Lee; Saunders v Anglia Building Society [1971] AC 1004 (HL) held that “the essence of the plea non est factum is that the person signing believed that the document he signed had one character or one effect whereas in fact its character or effect was quite different.


Accordingly, the plea of non est factum has not been remarkably successful. In UMW Industries (1985) Sdn Bhd v Kamaruddin bin Abdullah & Anor [1989] 2 CLJ 1278, the High Court held as follows:

“As for the 2nd defendant's intention that he only signed blank guarantee forms, he has only himself to blame as the plea of non est factum does not work in favour of a person who has shown himself to be negligent.”


In Richard Aik Chea Han & Anor v Stuart Bevan Dawson [2014] 1 LNS 1903, the plea of non est factum failed as the High Court was of the opinion “if the defendant could not read the memorandum of transfer, he could have sought advice from somebody who could read Malay instead of raising it as an issue after the property had already been transferred to the plaintiffs. The plea of non est factum cannot be availed by someone who neglected to take the precaution to obtain the assistance of another if he could not understand the language of a document.”


In Bong Ah Loi v Zain Azman Sideni [2015] 1 LNS 815, the Defendant raised the plea of non est factum as the Defendant signed the Letter of Confirmation and Undertaking without being informed of its content. The High Court was of the opinion that if the Defendant was unaware of the contents, the Defendant should have enquired on the contents of the document and read through it before executing the same otherwise the Defendant must accept full responsibility for his omission.


CONCLUSION

The doctrine of non est factum is purely a common law defence that has enjoyed extremely limited success in Malaysian jurisprudence. Put simply, the Contracts Act 1950 does not make any provision for the doctrine of non est factum.


To succeed in the plea of non est factum, there must be clear and positive evidence and the burden lies on the party seeking to disown the contract which includes the burden of showing that in signing the contract, the party acted with reasonable care.


The said party must show that the contract signed was radically different from what the party thought it was.



Image by Edar from Pixabay


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