Saunders v Anglia Building Society (sub nom Gallie v Lee) [1970] UKHL 5 (09 November 1970)

An elderly woman was tricked into signing a document transferring her house, believing it was a gift to her nephew. The House of Lords rejected her plea of non est factum, holding the document was not radically different from her intention and she had been negligent.

Facts

Mrs Gallie, a 78-year-old widow, intended to help her nephew Parkin financially by allowing him to use her house as security for a loan. Parkin’s business associate, Mr Lee, presented Mrs Gallie with a document for signature. Mrs Gallie, who had broken her spectacles, did not read it. Lee told her it was a deed of gift to her nephew. In reality, the document was a deed assigning the house to Lee himself for £3,000, a sum that was never paid to her. Subsequently, Lee mortgaged the property to Anglia Building Society for £2,000 and then defaulted on the mortgage repayments. The Building Society sought to take possession of the house. Mrs Gallie (the Respondent, originally the Plaintiff) brought an action seeking a declaration that the deed of assignment was void, relying on the common law plea of non est factum (‘it is not my deed’). The Appellant was a successor in title to Anglia Building Society.

Issues

The central legal issue before the House of Lords was to determine the modern scope and application of the doctrine of non est factum. The key questions were:

1. Can the plea of non est factum be successful if the person signing the document was negligent in doing so?
2. What is the required degree of difference between the document as it was and the document as the signer believed it to be, for the plea to be upheld?
3. Does the plea protect a signatory at the expense of an innocent third party who has relied on the validity of the signed document?

Judgment

The House of Lords unanimously dismissed the appeal, finding in favour of the building society. It held that Mrs Gallie could not rely on the plea of non est factum. The Law Lords took the opportunity to restate and substantially restrict the doctrine.

The Plea of Non Est Factum

The court reviewed the historical basis of the plea, which originated to protect illiterate individuals who were deceived into signing a deed. Their Lordships sought to formulate a principle that balanced the protection of vulnerable signatories with the need for commercial certainty and the protection of innocent third parties who rely on signed documents.

Lord Reid criticised the previous distinction between a document’s ‘character’ and its ‘contents’, stating it was an ‘invalid’ and confusing basis for the doctrine. He articulated a more stringent test:

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 sign documents without reading them in full, but they are content to accept the solicitor’s summary of the effect… But that is a very different thing from signing a document without knowing or taking any trouble to find out even its general effect… I think that the true view is that a person who signs a document… is bound by his signature unless he can show that the transaction which the document purports to effect is essentially different in substance or in kind from the transaction he intended to execute.

Lord Wilberforce provided what has become the leading modern test for the plea, establishing two main requirements:

1. The person signing must belong to ‘a class of persons, who through no fault of their own, are unable to have any real understanding of the purport of a particular document, whether that be from defective education, illness or innate incapacity’.
2. The document signed must be ‘radically different’ or ‘fundamentally different’ from that which the signer believed it to be.

Critically, he also affirmed that negligence on the part of the signatory bars the plea, at least where innocent third-party rights are concerned:

In my opinion, a person who signs a document, and parts with it so that it may come into other hands, has a responsibility, that of a normal man of prudence, to take care what he signs… If he does not take such care, he cannot go on to say that the document in fact has a different effect from what he intended.

Applying these principles, the court found that Mrs Gallie’s plea failed. Although she was misled, her intention was to execute a document that would divest her of her interest in the property to enable her nephew to raise money on it. The document she actually signed was an assignment to Lee which enabled him (and indirectly, her nephew) to raise money on it. The court held that this was not a radical or fundamental difference in character or effect. Furthermore, she had been negligent in signing without taking steps to confirm the document’s nature, such as asking for her glasses to be found.

Implications

This landmark decision significantly narrowed the scope of the non est factum doctrine. It effectively overruled older authorities like Carlisle and Cumberland Banking Co. v Bragg [1911] which suggested negligence was irrelevant. The judgment elevates the importance of commercial certainty and the protection of innocent third parties who rely in good faith upon a signed document. The test is now extremely strict: the plea is reserved for those who are genuinely unable to understand the document signed and who were not careless in signing. It makes it very difficult for a person of full capacity to disown their signature on a contractual document.

Verdict: Appeal dismissed.

Source: Saunders v Anglia Building Soc (sub nom Gallie v Lee) [1970] UKHL 5 (09 November 1970)