Maeaniani v Saemela [1982] SBHC 3; [1980-1984] LRC 339 (16 June 1982)

[1980-84] LRC (Comm) 339, HC

HIGH COURT OF SOLOMON ISLANDS

MAEANIANI

v

SAEMALA

High Court:
Daly, C.J.
16th June 1982

Contract - Non est factum - Illiteracy - Businessman - Onus of proof - Test to be applied - Application of doctrine in the Solomon Islands.

The plaintiff entered into an agreement to purchase the defendant's interest in a piece of land. The agreement was evidenced in writing by a "receipt" for the purchase money signed by the defendant (the terms of which are set out at p. 341 post). When the defendant refused to transfer title to him the plaintiff sued for specific performance. The defendant raised a plea of non est factum on the basis that he was illiterate.

HELD: Specific performance ordered.

The plaintiff was entitled to the order because the defendant's plea of non est factum failed. (See p. 345 post). It was established that the burden lay on the person making the plea to make out a clear and satisfactory case or to produce clear and positive evidence, and, since this was a civil matter, to do so on the balance of probabilities. Even in cases of alleged illiteracy the law required signers of documents to act responsibly and carefully according to their circumstances in putting their signatures to legal documents. Gallie v Lee [1970] 2 WLR 1078 applied. (See p. 343 post.) Even if one accepted a degree of illiteracy in the defendant in the present case, he was nevertheless a man of intelligence and acumen, and in the broader sense, a businessman, who would be most unlikely to put his name to a document, even at the behest of a relative, which he did not understand. (See p. 343 post.)

Per curiam: On the facts of an individual case a court may be more ready in the Solomon Islands to conclude that the consent of a man from, for example, a rural area was truly lacking and that nevertheless he acted responsibly and carefully according to his own circumstances in signing or affixing his mark to the document. But the test remains the same; it is the evidence and circumstances which differ. A Solomon Islands court would always approach the evidence as befits this nation rather than as befits a country at a different stage of development. (See p. 343 post.)

Case referred to in judgment:
Saunders v Anglia Building Society (Gallie v Lee) [1971] AC 1004, [1970] 2 WLR 1078, [1970] 3 All ER 961, HL

No legislation referred to in judgment

Action
The plaintiff sued for specific performance of an alleged agreement for the sale of land to him by the defendant. The defendant raised a plea of non est factum. The facts are set out in the judgement.

G. Strang for the plaintiff.
A. Radclyffe for the defendant.

16th June 1982

DALY, C.J.:

This case involves title to a parcel of registered land in Honiara, that is parcel 192-002-9 on Lot 1375 Section (VI) ("the land"). The land is situated on Panatina Ridge. The plaintiff, Joseph Maeaniani claims that the defendant Jack Saemala, agreed to sell his interest in the land to him for $1,316.00 and, as that sum has been paid, asks this court to order the defendant to execute the appropriate transfer so that the plaintiff can be registered as sole owner of the leasehold title. The defendant denies that he ever sold the land to the plaintiff, although he accepts that there was an arrangement that both he and the plaintiff would become owners in common of the interest in the land.

Let me deal first of all with the facts that are not in dispute. The defendant applied to the Government for the land and was successful. On the 15th February 1979 a grant was executed by the Commissioner of Lands and the defendant whereby the defendant was granted a 50-year lease of the land as from the 1st December 1978. For this grant the defendant paid a premium of $1,250.00 and $16.67 as first payment of the ground rent which was to be a total of $2,000.00 a year. In fact with various fees the total paid by the defendant was $1,309.55. Para. 6 of the First Schedule required the defendant within 24 months from the 15th February 1979 to erect on the land a building "equivalent in standard and value to that of a Housing Authority type 1008 house or better."

The defendant set about getting finance for the building he had to put on the land. At that stage he was running a taxi business and the Bank he approached was not prepared to advance money until the house was half finished. The Housing Authority was equally unforthcoming.

The defendant did, however, do some work on the land by having it flattened with a bulldozer. He claims that this took his total payments to $1,500 although the additional cost, when totalled as items of expenditure, would appear to have been about $100.00.

At some stage in 1980 the defendant received a letter from the Commissioner of Lands. This pointed out that the 24 months would expire on 15th February 1981 and, no doubt, invited the defendant to commence building. I say "no doubt" as I have not seen the original letter or a copy of it. This should have been produced in court and, if the matter were disputed, I have no hesitation in stating that oral evidence of it would not have been acceptable. Even though the general nature of the letter was, indeed, not disputed, insofar as the plaintiff's counsel seeks to suggest that it contained a warning that the premium as well as the land might be forfeited, I am bound, in the absence of the letter or notice to produce and admit, to rule against that suggestion.

It is what the defendant decided to do after receipt of the letter that is in dispute. The case for the plaintiff is that he decided to sell the land; the case for the defendant is that he decided to look for partners in a joint venture to build a house on the land.

The plaintiff and the defendant met outside Fassy's store in Auki in September 1980. Present at the meeting was Mr Joseph Dilianiani who gave evidence. What was said is in dispute. However, as a result the defendant later accompanies the plaintiff to Honiara on Saturday the 14th September 1980. They both stayed at the plaintiff's house and further discussions about the land took place. On the Monday the plaintiff went to see his Bank Manager and subsequently the defendant accompanied the plaintiff to the Bank where the defendant says he signed some papers. Again there is a dispute as to whether the defendant signed anything at that stage and, whether it was shortly after this visit that money changed hands, as the defendant claims, there was a further visit to the Bank when he signed yet another paper. What we do know for certain is that on 23rd September 1980 the plaintiff handed the defendant $1,316.00 and the defendant signed a document Exh. C. As this document is crucial to the case I shall set it out in full:

"Receipt Date 23-9-80

Received from Mr J. Maeaniani the sum of one thousand three hundred and sixteen dollars; as full settlement for my land (and plan, fees and other account) shown as parcel 192-002-9 on Lot 1375 (VI) Hon Panatina Ridge.

I agreed that the title of land will be in my name until such time Mr J. Maeaniani wishes to transfer it into his own name.

Signature: Jack Sae Witness: J. Maeaniani

Date: 23/9/80"

The circumstances surrounding how that document came into existence are of fundamental importance to the case and I must return to them. There is a dispute as to whether the defendant returned to the plaintiff $100.00 as part of the ground rent. After receipt of the money the defendant bought some equipment including a generator and a power plane and returned with them to Auki where he was living. Since that time he has never been on the land nor visited it nor made any enquiries of the plaintiff concerning the building on it.

On 4th February 1981 the defendant, in response to a service message from the plaintiff, returned to Honiara and executed a charge over the land in favour of the plaintiff's Bank. He also signed a guarantee, guaranteeing to the Bank the plaintiff's debts up to $15,000.00.

On the basis of his earlier credit from the Bank secured by his own house and with extended credit as a result of the documents to which reference has been made, the plaintiff started to erect a house on the site. In April when the roof was on the building the plaintiff contacted the defendant and asked him to complete the transfer referred to in Exh. C.

However the defendant did not do so. On 16th April 1981 a letter was sent by the plaintiff's solicitor requesting the defendant to execute a transfer. Again there was no result. The plaintiff gives evidence of a number of other contacts with the defendant to get him to complete the transfer; all to no avail. Finally the writ was issued in this action on 14th August 1981. The present building on the land has cost the plaintiff in the region of $35,000.00.

Those are the background facts which are not in dispute. How is the dispute about the remaining facts to be framed?

As I have indicated the substance of the dispute is whether there was an agreement between the plaintiff and the defendant for a sale of the land to the plaintiff or whether there was an agreement between them for a joint venture to build a house on the land. It is in this context that Exhibit C becomes of great importance. The terms of that document, which was signed by the defendant, a man of full legal capacity, constitute on any view a binding agreement for sale of the land to plaintiff.

The general rule in law is that where a person, who is of full legal capacity, signs a document then it is binding upon him whether or not he has read it. The reasons for this rule are obvious; there must be some degree of certainty in business dealings and a written document duly signed must be regarded as embodying certainty to the extent that the law will regard it as the formal acknowledgement by the person who signs it that he accepts the contents of the document. However, there are exceptions to this rule and one of these is when the person who signs the document can establish that he signed the document under a mistaken belief as to the very nature of the document. This plea is sometimes known as "non est factum" and is raised by the defendant in this case in relation to Exhibit C.

The leading modern case on the subject is Gallie v Lee [1970] 2 WLR 1078. In that case the older authorities were reviewed by the House of Lords. A number of judgments were given in which a variety of words were used to embody the test to be applied. Lord Wilberforce states it as follows (at p. 1090 H):

"How, then, ought the principle, on which a plea of non est factum is admissible, to be stated? In my opinion, a document should be held to be void (as opposed to voidable) only when the element of consent to it is totally lacking, that is, more concretely, when the transaction which the document purports to effect is essentially different in substance or in kind from the transaction intended."

The learned Lord of Appeal said as to the negligence of the person signing the document at p. 1091 H:

"In my opinion, the correct rule, and that which in fact prevailed until Bragg's case, is that, leaving aside negotiable instruments to which special rules may apply, a person who signs a document, and parts with it so that it may come into other hands, has a responsibility, that of the normal man of prudence, to take care what he signs, which, if neglected, prevent him from denying his liability under the document according to its tenor. I would add that the onus of proof in this matter rests upon him, ie to prove that he acted carefully, and not upon the third party to prove the contrary."

As in this case there is a suggestion that the defendant is illiterate I should also refer to the following passages in the judgment at p. 1092 C:

"The preceding paragraphs contemplate persons who are adult and literate: the conclusion as to such persons is that, while there are cases in which they may successfully plead non est factum these cases will, in modern times, be rare.

As to persons who are illiterate, or blind, or lacking in understanding, the law is in a dilemma. On the one hand, the law is traditionally, and rightly, ready to relieve them against hardship and imposition. On the other hand, regard has to be paid to the position of innocent third parties who cannot be expected, and often would have no means, to know the condition or status of the signer. I do not think that a defined solution can be provided for all cases. The law ought, in my opinion, to give relief if satisfied that consent was truly lacking but will require of signers even in this class that they act responsibly and carefully according to their circumstances in putting their signature to legal documents."

What becomes abundantly apparent as one reads the speeches in that case is that the burden is on the person relying upon the plea of non est factum to make out a "clear and satisfactory case" (per Lord Wilberforce at p. 1092 E) or produce "clear and positive evidence" (per Lord Hodson at p. 1084 E) before the plea can succeed. As this is a civil case the test to be applied is whether the plea is made out on the balance of probabilities.

In deference to the submissions of counsel I should say something about the application of the plea of non est factum in Solomon Islands. At the early stage of development to which we have attained we still have many people who are not familiar with the written word or with the implications of signing documents. Nevertheless the words with which Lord Wilberforce ends the passages cited above remain entirely apt to our circumstances. On the facts of an individual case a court may be more ready in Solomon Islands to conclude that the consent of a man from, for example, a rural area was truly lacking and that nevertheless he acted responsibly and carefully according to his own circumstances in signing or affixing his mark to the document. But the test remains the same; it is the evidence and circumstances which differ. I venture to suggest that a Solomon Islands Court would always approach the evidence as befits this nation rather than as befits a country at a different stage of development.

To return now to the facts of the present case. The defendant is a man of 42 years of age. He is a carpenter and builder at present living in Malaita although from 1954 to 1979 he lived in Honiara and was employed here on building work. He also, as I have said, is the operator of a number of taxis in Honiara. The defendant says he is uneducated and able only to read a small amount written in language and to write his own name. Otherwise he says he is totally illiterate and must rely upon others to read letters to him and to write his letters for him. I must say that I treat this claim, as did the plaintiff, with a degree of scepticism. The defendant is an articulate and intelligent man who is, in the broader sense, a business man. He carries around with him an attaché case containing documents, a diary and a calculator. When he showed these items to me in court and gave various explanations for them I was not at all convinced by those explanations or the manner of the defendant that he was telling the truth. I am not prepared to accept that the defendant is as illiterate as he claims. Even accepting a degree of illiteracy I am satisfied that the defendant is a man of intelligence and acumen who would be most unlikely to put his name to a document, even at the behest of a relative, which he did not understand.

The plaintiff is, indeed, related to the defendant. He is an educated man holding a post as a cartographer in the Lands Department. It is suggested that this work would give him access to information concerning the defendant's difficulties over the land but this has not been established. The plaintiff struck me as a straightforward man. He made a good impression in the witness box.

The defendant's case as to Exhibit C is that it was signed at the plaintiff's house after the two of them had been to the bank and withdrawn $2,000.00. At the Trading Company Snack Bar the sum of $1,316.00 was handed by the plaintiff to the defendant but this, says the defendant, was for him to buy tools and equipment to work on the house. The document was explained to the defendant by the plaintiff as a document to show to the Bank how the $2,000.00 had been spent if the Bank asked about it. The defendant did not read the document but signed it on this basis. It was, he said, not in his mind at all that it was a receipt for purchase price of the land.

The plaintiff, on the other hand, says the document (which was written by him and signed at the Snack Bar) was explained word for word to the defendant who appeared to read it and then signed it. There was absolutely no question of the purchase of tools and the sum handed over was the agreed purchase price for the land and the document accurately reflected the terms of the purchase.

How do these cases fit respectively against other facts? Clearly what was said at the initial meeting in Auki would be of importance. As to this we have the independent evidence of Mr Dilianiani. Despite some differences as to who came with whom he was adamant that it was the defendant who said he wanted to sell the land and was prepared to do so to the plaintiff. This accords with the plaintiff's account. The amount of money handed over at the Trading Company, too, accords with the plaintiff's account of a price reached to clear the defendant's outgoings on the land.

The defendant's account of the purchase of tools and equipment and his immediate return with them to Auki is inconsistent even with his own evidence that the tools were to be used to build a house on the land. Indeed the defendant's conduct after signature of Exh. C has been of a man who has lost all interest in the land; he failed even to visit it, let alone to enquire of the progress of the building and the cost of it.

The plaintiff, on the other hand, has expended a considerable amount of money on the building, he now lives in part and receives rent for the other part. He has acted entirely as a man who purchased the land.

There are two possible matters which may be said to go against the plaintiff. One is the failure to take an immediate transfer of the interest in the land on signature of Exhibit C. However, this is explicable by the refusal of the Commissioner of Lands to consent to such transfer until there was a building with a roof on it on the land; a refusal confirmed by the Lands Officer who gave evidence. On this basis, as the defendant remained title holder of the land, the defendant had to sign the charge to the Bank. The other matter is that the defendant also signed a substantial guarantee of the plaintiff's debts to the Bank and this could suggest that he must have retained an interest in the land and building.

I have considered all these matters and the evidence in the case. I have also observed and heard the two parties. I have no hesitation whatsoever in coming to the conclusion that the transaction between the plaintiff and the defendant has always, to the knowledge of both of them, been one by which the title in the land would be sold by the defendant to the plaintiff. I therefore find that Exhibit C expressed the agreement which the parties had reached. The defendant was, in my judgment, well aware of what he was signing when he signed Exhibit C. He has therefore failed to establish his plea of non est factum and is bound by the terms of that document.

It follows that the plaintiff is entitled to an order for specific performance requiring the defendant to execute a transfer of his interest in the land to the plaintiff.

The plaintiff is entitled to costs.