Lease – Transfer – Respondent sub-selling property – Mortgage company obtaining possession order – Respondent claiming transfer of lease obtained by fraud – Respondent relying on defence of non est factum and seeking rectification – Judge upholding claim – Whether judge could properly conclude that the respondent, acting reasonably, signed documents without knowledge of their nature – Appeal dismissed
The respondent H was Iranian and came to the UK in 1989. He met S, who advised him to purchase a flat. In July 1989 H purchased the lease of 82 Eamont Court from S for £125,000. On the same day, he signed the transfer of the lease to S for £170,000. The property was mortgaged by S to TSB Bank for £140,000. S failed to meet the mortgage repayments and TSB obtained a possession order.
H, who was in occupation, became aware that he was not the registered proprietor and sought rectification. He brought two actions, which were heard together. The first action was a claim that there had been a breach of duty of care by Chatwani & Co (the fourth defendant). In the second action, H sought rectification of the register of title: (i) cancelling S as the proprietor and registering himself as proprietor; and (ii) cancelling the charge in favour of TSB Bank, of which the Solicitors’ Indemnity Fund was the assignee. He submitted that he had been unable to speak, read or understand any English at the time and had therefore failed to understand the nature of the document he had signed.
The judge held that: H, at all stages, believed himself to be the owner of the property; the defence of non est factum applied; and the transfer to S should be declared void. Accordingly, the judge ordered rectification. The appellant Solicitors’ Indemnity Fund submitted, inter alia, that H did have an awareness of commercial matters, that he was able to read English numerals and his suspicions should have been raised. The principal issue was whether the judge was correct in holding that H reasonably, and without negligence, signed documents believing them to be of a different nature, so as to rely on a defence of non est factum.
Held: The appeal was dismissed.
The judge had seen H giving evidence and accepted him as a truthful witness. H was illiterate in the sense that he could not understand English and had relied on those present when the transfer was signed. He therefore had acted responsibly and carefully in view of his particular circumstances. The judge had not fallen into error in applying the law. Having considered the test in Saunders v Anglia Building Society (formerly Northampton Town & Country Building Society (No 1) [1971] AC 1004 and also Foster v Mackinnon (1869) LR 4 CP 704, the judge concluded that H had never intended to sign the transfer of the lease to S. With the correct legal test in mind, the judge made findings of fact, with which it was not for the court to interfere.
Justin Fenwick QC and Sue Carr (instructed by Ince & Co) appeared for the appellant; Anthony Mann QC and Ann McAllister (instructed by Stanley de Leon, of Potters Bar) appeared for the respondent.
Sarah Addenbrooke, barrister
