The claimants owned a vessel on which the defendants shipped a cargo of orange juice, packed in barrels which were old, frail and leaky. The claimants said they would issue a claused bill of lading stating the defects in the barrels. The defendants could only sell the juice with a clean bill of lading stating that the cargo was shipped in apparent good order and condition. The defendants offered an indemnity to the claimants for any losses that might result from the issue of a clean bill. It was found at trial that the claimants believed that the issue of clean bills in such circumstances was an acceptable practice permitting the question of the condition of the cargo to be litigated later. Upon receiving the indemnity, the claimants issued a clean bill. The claimants had to pay damages to the buyers of the orange juice for the loss occasioned by the poor barrels, and they claimed on their indemnity from the defendants.
Held: The contract was unenforceable because it had as its object the commission of the tort of deceit.
Morris LJ said: ‘On the facts as found, and indeed on the facts which are not in dispute, the position was therefore that, at the request of the defendants, the plaintiffs made a representation which they knew to be false and which they intended should be relied upon by persons who received the bill of lading, including any banker who might be concerned. In these circumstances, all the elements of the tort of deceit were present. Someone who could prove that he suffered damage by relying on the representation could sue for damages. I feel impelled to the conclusion that a promise to indemnify the plaintiffs against any loss resulting to them from making the representation is unenforceable. The claim cannot be put forward without basing it upon an unlawful transaction. The promise upon which the plaintiffs rely is in effect this: if you will make a false representation, which will deceive indorsees or bankers, we will indemnify you against any loss that may result to you. I cannot think that a court should lend its aid to enforce such a bargain.’
Pearce LJ said: ‘The general principle is not in doubt. In Alexander v. Rayson [1914] 1 KB 169, 182 this court said: ‘It is settled law that an agreement to do an act that is illegal or immoral or contrary to public policy, or to do any act for a consideration that is illegal or immoral or contrary to public policy, is unlawful and therefore void. But it often happens that an agreement which in itself is not unlawful is made with the intention of one or both parties to make use of the subject-matter for an unlawful purpose, that is to say, a purpose that is illegal, immoral or contrary to public policy. . In such a case any party to the agreement who had the unlawful intention is precluded from suing upon it. Ex turpi causa non oritur actio. The action does not lie because the court will not lend its help to such a plaintiff.’
I do not propose to consider the cases to which Morris LJ has already referred. In none of the cases cited before us has a plaintiff failed where he was not fraudulently minded, but was merely reckless and unthinking in committing a tort of deceit instigated by the defendant. Nor, per contra, has any case been cited where a plaintiff has succeeded in such circumstances. But recklessness is sufficient to make a man liable in damages for fraud. Here the plaintiffs intended their misrepresentation to deceive, although they did not intend that the party deceived should ultimately go without any just compensation. In an action based on deceit that state of mind would render them liable, no less than if they had been fraudulent, and I cannot avoid the conclusion that the purpose for which the clean bill of lading was given in this case was unlawful within the general principle set out above. The plaintiffs’ rather haphazard belief that no one would be ultimately defrauded, though it affects their merits, does not in my view improve their legal position in this case.’
Lord Evershed MR dissented, saying: ‘even if we should conclude that the representation was made with such recklessness as to amount, in law, to the same thing as a representation made with the deliberate intention of deceiving, still I am not satisfied that it would be right to hold, or that any authority compels us to hold, that the proved circumstances were such that it would be contrary to public policy, contra bonos mores, to allow the plaintiffs to recover upon the contract of indemnity from the defendants. I have, I hope, sufficiently perused all the authorities, including those cited by my brother Morris. I have failed to find any case (apart from those involving immorality or public illegality) in which, upon the principle ex turpi causa non oritur actio, a plaintiff has been cast from the seat of judgment who has not been found personally dishonest. If there was a false statement deliberately made, it was made in accordance with a practice that was common and well known in the trade and with an intention that any consequences should be covered by their or their principals’ liability to make compensation – in other words, in circumstances in which the plaintiffs, by reason of the current laxity in that respect, honestly believed would not damage anybody.’
Judges:
Morris LJ, Pearce LJ, Lord Evershed MR
Citations:
[1957] 2 QB 621
Jurisdiction:
England and Wales
Cited by:
Cited – Parkingeye Ltd v Somerfield Stores Ltd CA 17-Oct-2012
The claimant company operated parking management for the defendant, charging customers for overparking. The defendant came to believe that the claimant’s behaviour was over-aggressive, and the use of falsehoods, and terminated the contract. The . .
Cited – Les Laboratoires Servier and Another v Apotex Inc and Others SC 29-Oct-2014
Ex turpi causa explained
The parties had disputed the validity a patent and the production of infringing preparations. The english patent had failed and damages were to be awarded, but a Canadian patent remained the defendant now challenged the calculation of damages for . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 27 November 2022; Ref: scu.536188
