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Illegality in English law

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Illegality in English law is a potential ground in English contract law, tort, trusts or UK company law for a court to refuse to enforce an obligation. The illegality of a transaction, either because of public policy under the common law, or because of legislation, potentially means no action directly concerning the deal will be heard by the courts. The doctrine is reminiscent of the Latin phrase "Ex turpi causa non oritur actio", meaning "no cause of action arises from a wrong". The primary problem arising when courts refuse to enforce an agreement is the extent to which an innocent party may recover any property already conveyed through the transaction. Hence, illegality raises important questions for English unjust enrichment law.

Overview

In the early case of Holman v Johnson[1] Lord Mansfield CJ set out the rationale for the illegality doctrine.

The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may say so. The principle of public policy is this; ex dolo malo non oritur actio ["no action arises from deceit"]. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff's own standing or otherwise, the cause of action appears to arise ex turpi causa ["from an immoral cause"], or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both were equally in fault, potior est conditio defendentis ["more important is the condition of the defendant"].

Contract

See also: English contract law

Public policy

Statute

Restraint of trade

Main articles: Restraint of trade, UK competition law, and UK labour law

Employment rights

Tort

See also: English tort law

In the law of tort, the principle would prevent a criminal from bringing a claim against (for example) a fellow criminal. In National Coal Board v England[2] Lord Asquith said,

If two burglars, Alice and Bob, agree to open a safe by means of explosives, and Alice so negligently handles the explosive charge as to injure Bob, Bob might find some difficulty in maintaining an action against Alice.

In Hewison v Meridian Shipping Services Pte Ltd,[3] an employee who had obtained his position by concealing his epilepsy was held not to be entitled to claim compensation for future loss of earnings as a result of his employer's negligence, since his deception (resulting in a pecuniary advantage contrary to the Theft Act 1968) would prevent him from obtaining similar employment in future.

It is not absolute in effect. For example, in Revill v Newberry[4] an elderly allotment holder was sleeping in his shed with a shotgun, to deter burglars. On hearing the plaintiff trying to break in, he shot his gun through a hole in the shed, injuring the plaintiff. At first instance, the defendant attempted to raise the defence of ex turpi to avoid the claim; this failed and he appealed against the decision. The Court of Appeal dismissed the defendant's appeal, holding that he was negligent to have shot blindly at body height, without shouting a warning or shooting a warning shot into the air, and that the response was out of all proportion to the threat.

The precise scope of the doctrine is not certain. In some cases, it seems that the illegality prevents a duty of care arising in the first place. For example, in Ashton v Turner[5] the defendant crashed a car in the course of getting away from the scene of a burglary, injuring the plaintiff. Ewbank J held that the court may not recognise a duty of care in such cases as a matter of public policy. Similarly, in Pitts v Hunt,[6] Balcombe LJ of the Court of Appeal rationalised this approach, saying that it was impossible to decide the appropriate standard of care in cases where the parties were involved in illegality. However, the other two judges, although reached the same conclusion, took different approaches. Beldam LJ favoured a public conscience approach which considers whether the general public would be outraged or view the court as indirectly encouraging a criminal act if they were to award damages. Dillon LJ meanwhile provided little practical guidance in his approach where the defence of illegality is successful when a claimant's cause of action arises "directly ex turpi causa".

Trusts

See also: English trusts law

The courts view ex turpi as a defence where otherwise a claim would lie, again on grounds of public policy. In Tinsley v Milligan[7] Nicholls LJ in the Court of Appeal spoke of the court having to "weigh or balance the adverse consequences of granting relief against the adverse consequences of refusing relief". The plaintiff was ultimately successful in Tinsley v Milligan in the House of Lords, which allowed the claim on the grounds that the plaintiff did not need to rely on the illegality.

Gray v Thames Trains[8] upheld the basic rule of public policy that disallowed recovery of anything stemming from Plaintiff's own wrongdoing.

Companies

The effect of illegality under English law was most recently considered by the United Kingdom Supreme Court in Jetivia SA v Bilta (UK) Limited (in liquidation) [2015] UKSC 23 (22 April 2015).

Unjust enrichment

Main article: English unjust enrichment law

See also

Notes

  1. ^ (1775) 1 Cowp 341, 343
  2. ^ [1954] AC 403
  3. ^ Hewison v Meridian Shipping Services Pte Ltd [2002] EWCA Civ 1821
  4. ^ [1996] 1 All ER 291
  5. ^ [1981] QB 137
  6. ^ [1990] 3 All ER 344
  7. ^ [1992] Ch 310
  8. ^ [2009] UKHL 33, [2009] 3 WLR 167

References

  • Law Commission, Illegal Transactions: The Effect of Illegality on Contracts and Trusts (1999) Law Com 154
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