The parties had agreed for the sale and purchase of land and chattels, but had deliberately misdescribed the apportionment so as to reduce tax liability. The purchasers then brought an action for misrepresentation. The vendor replied that the action shoud fail since the contract was tainted with the fraud.
Held: The defence failed. The misrepresentation was not part of the contract itself, and was therefore not affected by the plea of ex turpi causa non oritur actio. The purchasers’ dishonest apportionment of the price was wholly unconnected with their cause of action and that their moral culpability in that regard was greatly outweighed by that of the vendor in making the fraudulent representation.
Bingham LJ said: ‘Where issues of illegality are raised, the courts have . . to steer a middle course between two unacceptable positions. On the one hand it is unacceptable that any court should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct.’ and ‘the courts have tended to adopt a pragmatic approach to these problems, seeking where possible to see that genuine wrongs are righted so long as the court does not thereby promote or countenance a nefarious object or bargain which it is bound to condemn. Where the plaintiff’s action in truth arises directly ex turpi causa he is likely to fail . . . Where the plaintiff has suffered a genuine wrong, to which the allegedly unlawful conduct is incidental, he is likely to succeed.’
Kerr LJ:- ‘However, the present action, unlike Alexander -v- Rayson, is not brought on the contract, but on the tort of deceit based on the defendant’s fraudulent misrepresentation. I therefore do not propose to consider what would have been the position if, for instance, the defendant had declined to complete in this case and the plaintiffs had sought to sue on the contract, either for specific performance or for damages.’ but ‘But the full picture is more complex, as shown by two more recent cases to which we were also referred. I will not analyse them in detail, but they show that there are no rigid rules for or against the application of the ex turpi causa defence. This is not surprising, since it involves issues of public policy. To some extent these must depend on the circumstances of each case.’ and
‘. . . the conduct and relative moral culpability of the parties may be relevant in determining whether or not the ex turpi causa defence falls to be applied as a matter of public policy.’
Judges:
Bingham LJ, Kerr LJ, Nicholls LJ
Citations:
[1987] 1 WLR 1116, [1987] 2 All ER 651, [1986] Ch 638, [1986] EWCA Civ 4
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Sweetman v Nathan and others CA 25-Jul-2003
The claimant had been engaged with his solicitor in a fraudulent land transaction. He now sought to sue the solicitor for negligence. The solicitor replied that the claimant was unable to rely upon his own unlawful act to make a claim.
Held: . .
Cited – Pitts v The Personal Representatives of Mark James Hunt (Deceased) and Another CA 1990
The plaintiff and a friend had spent the evening drinking at a disco before setting off on the friend’s motorcycle. The plaintiff was aware that the motorcyclist was neither licensed to ride a motorcycle nor insured. During the journey, the . .
Cited – St Paul Travelers Insurance Co Ltd v Okporuah and others ChD 10-Aug-2006
The first defendant had acquired several properties, and was due to make repayments greatly in excess of his income. A further defendant, his brother, was a solicitor who was known to have been involved in mortgage fraud and was suspected of having . .
Cited – Stack v Dowden HL 25-Apr-2007
The parties had cohabited for a long time, in a home bought by Ms Dowden. After the breakdown of the relationship, Mr Stack claimed an equal interest in the second family home, which they had bought in joint names. The House was asked whether, when . .
Cited – Vellino v Chief Constable of Greater Manchester Police CA 31-Jul-2001
The police were not under any duty to protect someone who had been arrested from injuring himself in an attempt to escape. The claimant had a history of seeking to avoid capture by jumping from his flat window. On this occasion he injured himself in . .
Cited – Hounga v Allen and Another SC 30-Jul-2014
The appellant, of Nigerian origin had been brought here at the age of 14 with false identity papers, and was put to work caring for the respondent’s children. In 2008 she was dismissed and ejected from the house. She brought proceedings alleging . .
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.
Litigation Practice, Contract
Updated: 02 May 2022; Ref: scu.186011