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4. Illegality Notes

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Illegality Introduction & General Principles

1. The Two General Principles of the Defence of Illegality o Introduction o The key question that the illegality defence raises is whether the


claimant should be given a remedy where they have committed a crime, or another form of illegality such as a civil wrong (see definition of illegality below). There are two basic principles that operate within the defence of illegality.
? (1) Ex turpi causa non oritur action
? (2) In pari delicto potior est conditio defendentis

a. Ex Turpi Causa Non Oritur Actio o Definition o "No action can arise from a base cause". o However this is never an absolute principle. o Driven by public policy mainly. o Key Authority - Holman v Johnson 1775 -
? Facts - the claimant sold and delivered some tea to the?

defendant under a contract that was made at Dunkirk. The defendant intended to smuggle the tea into England illegality and the claimant was aware of this intention. The defendant, in breach of contract never paid for the tea and the claimant brought an action for the price of the tea. Held - that the claimant was entitled to recover, he had not himself committed an offence, he was indifferent towards the defendant's intentions, and received no benefit from the illegality. Lord Mansfield - "No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If from the plaintiff's owns stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon this ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff".

b. In Pari Delicto Potior Est Conditio Defendentis o Definition o "In the case of mutual fault, the position of the defendant is the stronger one".

o Qualifying principle to the operation of ex turpi causa principle - exception to application of ex turpi causa.

1 o Where in pari delicto applies, the defence does not negate the liability o


of the defendant thus the claimant has no claim.
? Key Authority - Holman v Johnson 1775 Virgo argues that this means that this is a principle of comparative fault. Thus if the defendant is more to blame, then the claimant succeeds despite the claim of illegality. This, he argues can be seen in Holman v Johnson, the claimant was tainted but still recovered the price against the defendant, this was because the defendant was more to blame in the smuggling than the claimant who was just the middle man.
? However this must be questioned - see below where Virgo's thesis is challenged. Arguably the first principle is too often the focus at the expense of the second.

o Tension between the two principles -
? There is often tension felt between the general policy ofpreventing a wrongdoer recovering and the fairness or justice of a specific case.
? Authority - Zarkasi v Anindita 2012 - o The claimant was trafficked into the UK as an illegal immigrant, there was evidence of her extreme exploitation by the defendant, as well as sexual and racial discrimination rendering the claimant effectively enslaved. The claimant sued on the basis of statutory duty of nondiscrimination. o Held she could not recover as she herself was an illegal immigrant. o Appears a hard line for the court to take, would appear that the defendant was far more at fault on the facts, but still there was no recovery. Question how this fits with Virgo's thesis.
? Authority - Allen v Hounga 2012 (Currently on appeal to the Supreme Court) - o Another case of an illegal immigrant employed, suffered racial and sexual discrimination who sued on the basis of the statutory duty of nondiscrimination. o Held she could not recover by virtue of her status as an illegal immigrant. Virgo sees these cases as an illustration of the assumption that illegality is an absolute rule (rather than qualified by pari in delicto), however this is not what Holman v Johnson decided.

Definition of Illegality o No accepted definition of illegality, but mere unlawfulness does not equate.

1. Conduct Included Within the Scope of Illegality o (1) Any criminal offence - criminality is illegality

2 o (2) Civil unlawfulness o Authority - Safeway Stores v Twigger 2010 (Flaux J) -
? Price-fixing contrary to the Competition Act 1998, because a



penalty could be imposed under the statute there was sufficient illegality when it was infringed.
? Flaux J - "there must be an element of moral turpitude or moral reprehensibility involved". Authority - Les Laboratoires Servier v Apotex Inc 2012 -
? Commission of a strict liability tort under Canadian law through the manufacture of certain goods (note that despite the illegality was sufficient to trigger the defence, it failed on the facts). Authority - ParkingEye v Somerfield Stores 2012 - deceit.

o (3) In Equity, includes coming with unclean hands o Authority - Tinsley v Milligan 1994 o (4) Lawful but immoral conduct o Authority - Nayaar v Denton Wilde Sapte 2009 -
? Claimants were travel agents who paid bribes to a

o o

o o o

former minister of the Indian Government in an attempt to secure appointment as exclusive sales agents for Air India in the UK. The appointment failed and the claimants attempted to have the money repaid. They sued the solicitor involved in the arrangements and who had introduced them to the possibility.
? Hamblen J: "The principle of ex turpi causa can extend to immoral as well as illegal acts and may apply to improper conduct evincing serious moral turpitude". Authority - Giles v Thompson 1994 -
? Champertous agreements, not unlawful but merely immoral, triggered defence. Authority - Parkinson v College of Ambulance 1923 -
? Claimant wanted to be awarded a knighthood, the college was a charity which said that if the claimant donated money to them, they would pull strings with the government to get knighthood for him. After payment of the money as agreed, the college did not procure knighthood as promised.
? Held - the claim in unjust enrichment failed on the basis of total failure of consideration, because there was a taint from the immoral conduct. Authority - Pearce v Brooks 1866 -
? Payment for prostitution is not a crime but the claimant was barred from his claim because it concerned prostitution. Authority - Hegarty v Shine 1878 -
? 19th Century case in which extra-marital cohabitation agreements were deemed too immoral to be enforceable. Authority - Sutton v Michon de Reya 2003 -
? A very senior lawyer met someone at a party who worked as an air host, both were interested in sado-masochistic activities therefore entered into a contract between the two for the provision of such services, the lawyer sued the sadomasochist for being too gentle and sought damages.

3 ?

Held - he was unable to recover (surprise surprise), the court thought the activities involved were immoral, said there was no chance of recovery.

o (5) Suicide?
o There have been cases in which there has been liability in negligence o o o o o

for failure to look after those who have attempted or committed suicide
- does suicide constitute immorality?
Suicide used to be a crime, but no longer, plus there is an increasingly sympathetic attitude towards suicide. The issue has bee discussed but not dealt with head on Authority - Reeves v Commissioner of Metropolitan Police 1999; Kirkham v CC of Greater Manchester 1990. Legal conduct tainted by illegal purpose Authority - Tribe v Tribe 1996 -
? Father wanted to hide his assets from creditors, transferred them to his son to hide them, he then requested it back and the son refused to re-transfer it. On the face of it there was a resulting trust, but the presumption of advancement operated, which the father operated to rebut.
? Initially held the father had acted illegality, tainted by the illegal purpose.

2. Defeating Illegality o Depending on the changing way in which the test of illegality has been characterised in the case law, there are various ways in which the defence of illegality can be circumvented.

a. Claim is not founded on the commission of an illegal act o If the claimant can frame the case without reference to the commission of an o

illegal act Sometimes this means that the claimant is relying on independent property rights instead. o Authority - Tinsley v Milligan -
? Cohabiting couple purchased property in a single name to allow the other to defraud social security by being off the title, then sought to recover her share in the property when the relationship broke down - there was a presumption of resulting trust, the other sought to rebut it by relying on the structure of the relationship for the purpose of defrauding the social security services.
? Held - the claim succeeded as the claimant did not refer to or rely on the illegal purpose.
? On the facts the claimant had also paid back all the money defrauded, therefore probably her hands were clean again anyway.
? Illustration of defeating illegality. o Authority - Bowmakers Ltd v Barnet Instruments Ltd 1945 -
? Concerned an illegal hire-purchase agreement, the claimant succeeded because they were able to avoid pleading illegality.

4 b. Withdrawal o Locus Poenitentiae - o Withdrawal from an illegal act - in principle there must be a voluntary

o o o o

withdrawal from the illegal transaction, however some case law suggests that it depends on whether the illegal purpose has been fulfilled.
? Authority - Tribe v Tribe 1996, Millett LJ shifted the focus onto whether the illegal aim had been achieved or not. Also established however that "repentence" as an additional element was not required as previously thought. The law actively seeks to encourage people to withdraw from unlawful transactions. Since Tribe however it appears that the focus has been returned to the issue of a voluntary act of withdrawal.
? Authority - Patel v Mirza 2013 Withdrawal may be too late if it is done after mere preparation towards the illegal purpose. Note that this leaves a slight clash with the criminal law, which has extensive requirements for withdrawal.

c. The Parties are Not in Pari Delicto o Even if the claim arises from participation in an illegal transaction, the claim will succeed if the parties are not in pari delicto, usually if the defendant is more responsible for participating in the transaction.

Justifying the Recognition of the Illegality Defence

1. Public Policy o Which public policy?
o Furthering the purpose of the rule in question that has been infringed
? Authority - Etherton LJ in Les Labortoires o Consistency across the civil and criminal law; preventing stultification of the law
? Authority - McLachlan J in Hall v Hebert 1993 -?

"To allow recovery in these cases would be to allow recover for what is illegal....would, in short, introduce an inconsistency into the law... For the courts to punish conduct with the one hand while rewarding it with the other, would be to 'create an intolerable fissure in the law's conceptually seamless web'... We thus see that the concern, put at its most fundamental, is with the integrity of the legal system". Authority - Etherton LJ in Les Labortoires

o Principle that the claimant should not profit from their own wrong
? Authority - Etherton LJ in Les Labortoires

5 ?

Authority - Woolf J in Meah v McCreamer (No.2) 1986

o Deterrence
? Authority - Etherton LJ in Les Labortoires o Dignity of the court
? Authority - Collins v Blantern 1767 o Public conscience
? Authority - Kerr LJ in Euro-Diam Ltd v Bathurst 1990 o Punishment
? Authority - Ralph Gibson LJ in Tinsley v Milligan 1992 o Evaluating the underlying rationales o Consistency across the civil and criminal law
? Weinrib asserts that without the defence there would bestultification of the law. This is probably the strongest rationale.

o Profit principle
? This overlooks that preventing the claimant recovering allows the defendant to retain profit.

o Deterrence
? Virgo - surely won't add to the criminal law's deterrence function, plus knowledge of the defence would actually render it easier to avoid.

o Dignity of the court
? Not terribly convincing in this day and age.
? Lord Sumption also questions whether it is still a relevant consideration and draws on the court's willingness to apportion liability under the Civil liability (Contribution) Act 1978 in Dubai Aluminium v Salaam.

o Public conscience
? Explicit link with public policy but horribly vague and uncertain


and was rejected on this basis in Equity in Tinsley v Milligan and tort in Moore Stephens v Stone & Rolls.
? Warning about relying too heavily on the notion of "public policy" in general -
? Burroughs J - "a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law".
? Compare Lord Denning - "with a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles". Punishment
? Very controversial - even exemplary damages go to the claimant and not to the state - there are different burdens of proof in crim and private law, also possible that there would be double punishment.


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