the plaintiff rented to the defendant a roulette table, together with copies of a book of rules, for use in a club. The rules stated that a charge of sixpence was payable on any bet before the croupier spun the wheel. Using a roulette table in a club in that way was an offence under the Betting and Gaming Act 1960, although neither of the parties appreciated that fact. The trial judge found that it was the intention of both parties when they made the contract that the table would be used in the way described in the rules. Accordingly the agreement was unlawful and the plaintiff was not entitled to recover hire under it.
Held: The appeal failed.
Lord Denning MR set out the principle: ‘[Counsel for the plaintiff] argues before us that the parties to this letting were ignorant of its unlawfulness: and that, in these circumstances (as it is a contract which could lawfully be performed) it is not to be regarded as unlawful unless they had a ‘wicked intention to break the law.’ He relies on the well-known judgment of Blackburn J in Waugh v Morris (1873) LR 8 QB 202. Now I desire to say that where two people together have the common design to use a subject-matter for an unlawful purpose, so that each participates in the unlawful purpose, then that contract is illegal in its formation: and it is no answer for them to say that they did not know the law on the matter. I would take a comparable case where there is a common design to use a subject matter for an immoral purpose. If a landlord lets a flat to a prostitute at a rent beyond any normal commercial rent, or if he lets her a brougham of a specially intriguing nature [a reference to Pearce v Brooks (1866) LR 1 Exch 213] it may fairly be inferred that it was their common design that it should be used for an immoral purpose. The letting is unlawful and he cannot recover the rent or hire. It is different with the washerwoman who washes the clothes of the prostitute or the butcher who supplies her with meat. They may know of her trade but they charge her normal commercial prices. There is there no common design. There is no participation in the immoral purpose, but merely knowledge of it. And that is no bar to recovering the price. Likewise with an unlawful purpose, active participation debars, but knowledge by itself does not. As I read Waugh v Morris there was there no participation in any unlawful purpose and the plaintiff could recover. In this case, however, there was participation. The common design was that a game should be played which was in fact unlawful.’
Lord Denning MR
 2 QB 340
England and Wales
Cited – Pearce v Brooks 1866
The contract was for the hire of an ornamental brougham to a prostitute which was supplied with knowledge that it would be used ‘as part of her display’. She returned it in a damaged condition, and refused to make any payments under the contract as . .
Cited – Patel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Lists of cited by and citing cases may be incomplete.
Updated: 29 April 2022; Ref: scu.588240