Ramsay-Hale J
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IN THE GRAND COURT OF THE CAYMAN ISLANDS
CIVIL DIVISION
G 119 of 2016
BETWEEN
FINANCIAL INTEGRATED SERVICES LTD
Plaintiff
AND
LOVINE WILSON-BARRETT
Defendant
IN OPEN COURT
Appearances:
Mr. H. Delroy Murray of Murray & Westerborg, Attorneys for the
Plaintiff
Mrs Lovine Wilson-Barrett, in person
Before:
Hon. Mrs. Justice Margaret Ramsay-Hale
Heard:
6 May 2021 and 23 June 2021
Judgment Delivered:
26 April 2022
HEADNOTE
Action for debt due - Plea of non est factum - Mistake - Burden of proof - Proof that reasonable care
exercised - Failure to exercise reasonable care not giving rise to estoppel - whether fundamental
difference in nature of document
JUDGMENT
Introduction
1.
The Plaintiff, Financial Integrated Services Ltd. (“FIS”), is a company engaged in the business of
making personal loans to members of the community who are unable to qualify for loans from
other financial lending agencies in the Cayman Islands. At the relevant time, it operated out of
premises commonly known as 196 Shedden Road in George Town, Grand Cayman of which it
was the lessor.
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2.
The Defendant, Mrs. Lovine Wilson-Barrett (“Mrs. Barrett”), also known as Charmaine, is a small
business owner who operated a hairdressing salon known as Charmaine’s Beauty and Barber
Hair Studio from commercial space at 196 Shedden Road which she sub-let from FIS.
3.
Pursuant to a tenancy agreement made with FIS in 2010, Mrs. Barrett, agreed to pay the sum of
$1,500 per month as and for rent. It is agreed that Mrs. Barrett was in persistent arrears of rent
and utility payments over the relevant period.
4.
A decision was taken by FIS in 2012 to evict Mrs. Barrett because of the arrears. In response to
Mrs. Barrett-Wilson’s entreaties, however, FIS wrote off a portion of the sums owed and
converted the remainder of the arrears of rent and unpaid utilities, into a loan.
5.
The agreement made between FIS and Mrs. Barrett was reduced to writing on or about 1 March
2012 and documented using FIS’s standard Promissory Note and Loan Agreement. The
agreement provided that the sum of $7,503.18, which was the sum outstanding for arrears of
rent and unpaid utilities, would be repaid over a period of 60 months at the rate of $500 per
month, with interest of 10 per cent per annum (the “First Agreement”). The agreement was
signed by Mrs. Barrett.
6.
Unsurprisingly, Mrs. Barrett failed to make the payments as required under the First Agreement.
As she said in her evidence she could not pay her rent, much less make loan payments on top of
that. Surprisingly, notwithstanding Ms. Barrett’s failure to repay the loan, her continued failure
to pay her rent and utility charges and the delivery of a second eviction notice, FIS agreed to
enter into a Second Agreement with her in October 2014 (the “Second Agreement”). The loan
made by FIS to Mrs. Barrett in the Second Agreement was in the sum of $22,500 with interest at
the rate of 12.5% per annum, to be repaid at the rate of $500 per month for a period which was
not to exceed 60 months. This agreement was also signed by Mrs. Barrett.
The Claim
7.
No monies were paid under the agreement and, on 4 May 2016, FIS made a formal demand that
Mrs. Barrett repay the outstanding principal plus interest within 14 days. The monies were not
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paid and on 1 July 2016, FIS filed a Writ of Summons claiming the sum of $28,081.06 being the
outstanding principal at 4 May 2016 with interest on that sum at the rate of 12.5 % per annum.
The Defence
8.
Mrs. Barrett accepts that she was in arrears of rent and utilities for the commercial premises she
had leased from FIS. It is her case, however, that she had not applied for a loan from FIS but had
made an arrangement with FIS under which she would pay $125 per week towards the
outstanding arrears. She contends that the First and Second Agreements were essentially
payment plans for the monies owed under the lease and asserts that she did not know and had
not understood that interest was reserved on the sums due and owing under either the First or
the Second Agreement.
9.
Although the pleaded averment in her Defence, that “the reason for the said loan to fall into
arrears was due to payments been (sic) made and [she] saw no reflection of the said principal
being reduced”, amounts, on one view, to an admission that FIS had converted the sums due to
them under the lease as a loan, it was clear in the her pre-trial exchanges with the Court that
Mrs. Barrett’s position was that she had not applied to FIS for a loan and was unaware that the
payment plan she had made with FIS was in fact an agreement under which FIS loaned her the
sum due to them to be repaid with interest. The Court, therefore, treated her defence to the
claim as a plea of non est factum and the matter proceeded on that basis.
The Law
10.
The general rule of law is that a party of full age and understanding is bound by his signature to
a document whether he reads it or understands it or not.
11.
A plea of non est factum - it is not my deed - is a defence which may be available to someone
who has been misled into signing a document which is fundamentally different from what he or
she intended to execute or sign. Where the defence is established, the person who has signed
the document may be able to escape the effect of the signature by arguing that the agreement
is void for mistake.
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12.
The modern boundaries of the doctrine of non est factum are found in the case of Saunders v
Anglia Building Society [1970] UKHL 5, where the House of Lords restated the principles
governing the availability of the defence. As summarised by the learned editors of Halsbury’s
Vol. 22 (2019) at 4-85, the case establishes the following propositions :
(i)
the plea can only rarely be established by a person of full age and capacity; and,
although it is not confined to blind or illiterate persons, any extension in the
scope of the plea will be kept within narrow limits;
(ii) the burden of establishing the plea falls on the signatory seeking to disown the
document; and he must show that, in signing the document, he acted with
reasonable care;
(iii) Carelessness which would preclude him from pleading non est factum is based
on the principle that no person can take advantage of his own wrong, and is not
an instance of negligence operating by way of estoppel;
(iv) For the plea to succeed, it is essential to show that there is as regards the
transaction a radical or fundamental distinction between what the person
seeking to set up the plea actually signed and what he thought he was signing.
The Evidence
13.
Ms. Karen Diaz, the Operations Manager for FIS exhibited the First and Second Promissory Note
and Loan Agreements as well as the record of payments made by Mrs. Barrett over the relevant
period.
14.
In her viva voce testimony, she explained that a decision had been taken to evict Mrs. Barrett
because of the arrears but, in response to Mrs. Barrett’s entreaties, FIS entered into the First
Agreement with Mrs. Barrett who signed the document in her presence and in the presence of
Melissa Ebanks. She couldn’t recall if Mrs. Barrett had asked any questions about the document
or if she explained it to her, but she believed she had done so because, as she said, in her viva
voce testimony,
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“I know because that is my moral obligation to discuss the terms of the agreement when
they sign it. I would have pointed out whatever is in bold. I would have shown her those
terms agreed upon.”
15.
She later said under cross-examination that she had told Mrs. Barrett that she would be charged
interest of 10%.
16.
Though not present when the Second Agreement was made, Ms Diaz’s evidence was that FIS’s
records reflect that, in October 2014, the loans were consolidated. At that time, Mrs. Barrett
was behind on both the loan and rent payment and then General Manager, Mr. Andre Iton
wrote off a portion of the debt due and rounded it down to $22,500.
17.
Ms. Diaz said she spoke to Mrs. Barrett several times between 2015 and 2016 about the
outstanding debt before the matter was referred to the lawyers and Mrs. Barrett’s response had
been, much like today’s, that she did not have the money to pay the monies outstanding, that
she had not known FIS had made her a loan but rather made an agreement with her to pay “the
back rent”.
18.
Ms. Diaz explained to the Court that FIS had had to borrow the money to pay the rent Mrs.
Barrett owed to FIS in order for FIS to pay the landlord to whom FIS was liable under their lease
and had incurred interest on those borrowings which they sought to recover from Mrs. Barrett.
No monies were paid out to Mrs. Barrett as would have been under a conventional loan; rather,
the monies were paid to her indirectly by settling of her outstanding arrears.
19.
Ms Diaz said that the proposal would have been explained to Mrs. Barrett and the
documentation would not have been prepared unless Mrs. Barrett had agreed to the terms.
20.
Mr. Iton, who made the 2014 agreement with Mrs. Barrett on behalf of FIS, stated that at all
times in his discussions with Mrs. Barrett she was told that she was being given a loan by FIS in
respect of her indebtedness to them.
21.
In his viva voce testimony, he rehearsed the facts which are not in issue, that Mrs. Barrett
operated a hairdressing salon on the premises and was consistently late on her rent. It was a
pattern and the unpaid rent had accumulated over a protracted period.
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22.
In an effort to help her keep her small business going, FIS offered to put the arrears on a loan so
she could pay them in a “more timely manner” and continue to pay her current rent. She did
neither and it became necessary to make a second loan to her. In making the second loan, FIS
waived a portion of the unpaid interest which had accrued on the 2012 loan. According to Mr.
Iton:
“What we had was accumulated unpaid rent over a protracted period that we
attempted to work with her by converting it to a lump sum loan which she could pay
piecemeal while she continued to pay her rent for the ongoing business.”
23.
Given the lapse of time, Mr. Iton was unable to remember exactly what was said, but it was his
evidence that it was standard operating procedure to explain the terms of a loan to a borrower.
24.
Cross-examined by Mrs. Barrett, he scoffed at the idea that the agreement they had made was
for her to pay the arrears of rent without interest, noting that the document she signed stated
at the top “Promissory Note and Loan Agreement” and recalled that he had a discussion with
her, before the 2014 loan was made, in which he said that FIS would waive the interest on the
2012 loan.
25.
Mrs. Barrett, in putting her case to Mr. Iton, suggested that she was “panicking” at the time she
signed the document, that she had signed without going through the details of the agreement,
that she thought she was agreeing to pay the arrears of rent and not taking a loan and that she
would not have signed the agreement had she understood that interest was payable.
26.
Mr. Iton remarked that the whole issue of whether Mrs. Barrett had agreed to pay interest was
just a “diversion” given that she had not paid any of the principal. In response to her suggestion
that he had assured her that she was only paying the outstanding rent, he said that that if you
owe money that you haven’t paid, it is a debt and how you restructure the repayment of that
debt is a matter to be agreed and that FIS had agreed with her to allow her to pay her debt at an
agreed rate of interest instead of going to Court to seek judgment against her for the sum
outstanding.
27.
Asked by Mrs. Barrett if he had explained all of that to her, Mr Iton replied,
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“You signed that you would pay $500 per month over 16 months.”
28.
He rejected the suggestion that because of his “more professional standard” - by which I take
Mrs. Barrett to mean to mean his greater understanding of financial matters - “he put [her] in a
position where [she] had to sign the document.”
29.
Ms Melisa Rankine was the last witness for FIS. It was her evidence that she had signed the
Promissory Note and Loan Agreement made on 15 October 2014 on behalf of the Company in
the presence of the Mrs. Barrett and that it was the usual practice to go through the terms of
the agreement with the customer when the document is signed.
30.
In her evidence, Mrs. Barrett said that during the period when she was renting the premises
from FIS, she was under a lot of financial stress. Her then husband had a stroke and her mother
fell ill with cancer and ultimately passed away. She was going through a lot of stress financially
and “paying the rent to Mr. Iton had become a real strain.” She said she would speak to him
sometimes and explain her situation to him because he was someone she could talk to and that
she told him that she was not making enough to pay the rent.
31.
She said she had heard nothing from FIS about the arrears for about 6 years until she was served
with the Writ, during which period she had been under extreme stress. Her daughter was
diagnosed with leukemia and she too was unwell being both diabetic and hypertensive and
taking medications for both which caused her to suffer certain side effects. I understood this to
be her explanation for not addressing the monies owed to FIS before the matter was taken to
Court.
32.
She accepted that she owed arrears of rent but insisted that she did not owe any interest
because she “didn’t take out any loan.” Consistent with her opening remarks and her cross-
examination, Mrs. Barrett said at the time the agreements were made she was really stressed
because FIS was going to evict her and that she had not realized that the debt she owed to FIS
was being repackaged as a loan.
33.
Under cross-examination, she maintained her position that Mr. Iton did not tell her that the
arrears were being converted to a loan and that Ms Diaz did not explain the 2012 document to
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her. She said that at the time she signed the agreement, she was in a situation where she was
vulnerable and that she did not read the document because she had no reason to doubt Mr.
Iton who had not told her that interest would be payable on the arrears.
34.
She accepted that in 2014, when she received a further notice of eviction, she went to Mr. Iton
who again offered to work with her on the outstanding rent. She denied the suggestion that Mr.
Iton offered to waive any interest accrued on the first agreement, asserting that no interest had
been payable. She said she signed that document too without reading it and that she did not
know she was borrowing money and agreeing to pay interest on that sum.
35.
Mr. Murray’s final question in cross-examination, whether Mrs. Barrett could think of any other
document of a legal nature which she had signed without reading it, prompted the following
exchange:
Mrs. Barrett: “I cannot answer that question”
Mr. Murray: “You cannot answer that question?”
Mrs. Barrett: “I cannot understand what you are saying.”
Mr. Murray: “Have you signed other legal documents, a mortgage, a car loan,
any legal document. Have you signed other legal documents?”
Mrs. Barrett: “I am talking about this one, sir.”
Mr. Murray: “I am asking you if you have signed other legal documents…”
Mrs. Barrett: “I am talking about this one. I did not know…”
Mr. Murray: “Ma’am. Answer my question.”
Mrs. Barrett: “I did not know. I don’t know what you are talking about. I can’t
remember anything.”
Mr. Murray: “Ms. Charmaine, please….
Mrs. Barrett: “I don’t remember what you are talking about. I did not sign this…
I did not sign this knowing I was signing a loan and interest.”
Mr. Murray: “You are not in the habit of signing a legal document without
reading it?”
Mrs. Barrett: “Not in a habit...?”
Mr. Murray: “…of signing a document without reading it.”
Mrs. Barrett: “I don’t really have issues like that so I don’t understand.”
Mr. Murray: “Do you have a mortgage?”
Mrs. Barrett: “Sir, I just explained…”
Mr. Murray: “Do you have a mortgage?”
Mrs. Barrett: “I am talking about this. I did not …”
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36.
The question was repeated by the Court and Mrs. Barrett acknowledged that that she did
indeed have a mortgage, ”made some 20 odd years ago” which she had not signed without first
reading it. She was then asked by Mr. Murray if she had ever entered into a written lease
agreement, to which her response was,
“I don’t know where you are going?”
37.
After another intervention by the Court, Mrs. Barrett answered that she had read her current
lease with Paramount out of whose premises she now operates her salon.
38.
She insisted, however, that
“I didn’t read this document because Mr. Iton never tell me it was a loan and I was quite
happy with the fact that he was allowing me to pay the rent over time.”
Findings of Fact and Application of the Facts to the Law
39.
The primary issue of fact for resolution is whether Mrs. Barrett was aware of the provision in the
agreement made with FIS for interest to be paid on the accumulated arrears to be paid over a
period of 60 months.
40.
It is impossible to accept that Mrs. Barrett did not know that FIS was agreeing to convert her
arrears to a loan or that interest would be payable on the amount to which she was indebted to
them. As Mr. Iton said the document is headed as follows:
“THIS PROMISSORY NOTE AND LOAN AGREEMENT made the 1st day of March 2012
BETWEEN
Lovine Wilson-Barrett
PO Box 2897
Grand Cayman KY1-1112
(hereinafter referred to as “the undersigned”)
AND
FINANCIAL INTEGRATED SERVICES LTD.
PO Box 321818 SMB
Grand Cayman
(hereinafter referred to as “the Finance Company”)”
and a little further down, again in bold:
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“THE UNDERSIGNED PROMISES TO PAY TO THE FINANCE COMPANY ON DEMAND THE
RENEGOTIATED LOAN AMOUNT plus interest accrued on the Loan as set forth below”
and at clause 2
“2. Interest shall be charged on the outstanding daily balance of the loan at a rate of
12.5% …”
with the rate in bold as set out above.
41.
The only way Mrs. Barrett would have failed to be aware that the document she was signing
obliged her to pay interest on the sums she owed to FIS is if she had signed it without even so
much as glancing at it, as the essential terms are highlighted in bold and clear in their meaning.
42.
Her evasive responses to Mr. Murray’s question, whether she had ever signed other legal
documents without reading them, undermined her credibility and give the lie to her evidence
that she had not read the document and was unaware of the provision that interest of 12.5%
was payable on the sums she owed. I am satisfied and find that she was aware that the
arrangement made with FIS for the payment of the debt due to them was subject to interest.
Mrs. Barrett signed the agreement thus signifying her consent to its terms and she is bound by
it.
43.
Even if it were to be believed that Mrs. Barrett had not read the document, the plea of non est
factum would not be available to her. It is only available where the person seeking to rely on it
has acted with reasonable care. As Lord Reid said in Saunders’ case,
“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.”
44.
On her own case, she would have been exceedingly careless in a signing the document without
knowing what it was and the law does not permit her to rely on her own wrong to avoid her
obligations to pay the interest reserved in the agreement she signed.
45.
Mrs. Barrett’s defence was somewhat of a moving target as she sought to make the case that
she was the victim of undue influence on the part of Mr. Iton saying, as she did, that she was “in
a situation” where she “vulnerable” - by which I understand her to mean under threat of
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eviction while under severe financial stress because her family members were all ill and needed
her support - and had been put, by Mr. Iton, “in a position where she had to sign the document.”
46.
The evidence does not support a finding of undue influence. Mrs. Barrett was not vulnerable in
any relevant sense. She was not ignorant of business or illiterate or otherwise unable to
understand the language of the bargain made. She is an established business woman, a
property owner pursuant to a mortgage agreement. This was a simple commercial agreement,
the language of which would be readily understood by anyone who took the time to read it.
47.
Mr. Iton did not exert any pressure on Mrs. Barrett to sign the agreement, as she alleged. She
fell into arrears of rent and, on both occasions when the threat of eviction reared its head, it
was she who approached Mr. Iton who she found, as she said in her evidence, “quite
sympathetic” to her position. Instead of evicting her or making demand for full payment of the
arrears, he agreed to work with her and converted her indebtedness to a loan which she could
pay over time thus allowing her to continue to operate her business, on the promise that she
would continue to pay her rent. He did so only to find that his sympathy had been misplaced.
48.
Mrs. Barrett signed the agreement thus signifying her consent to its terms and she is bound by
it.
ORDER
49.
Judgment is entered for the Plaintiff in the sum of $28,081.06 with the contractual rate of
interest of 12.5 % on that sum from May 2016 to the date of judgment and post-judgment
interest at the same rate until the debt is paid. The Plaintiff shall pay the Defendant’s costs, to
be taxed if not agreed.
DATED 26TH DAY OF APRIL, 2022
Hon Mrs. Justice Ramsay-Hale
Judge of the Grand Court