Court of Law Must Not Always Refuse a Claim on Plea of ‘Illegality’

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By Olaniyi Timothy Olamide

INTRODUCTION

The elementary rule of a claim found itself on illegality has been its unenforceability by court be it contract or tort. It has always been that ‘no court will lend its aid to a man who founds his cause of actions upon an immoral or illegal act.’

The above pronouncement was made by Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341, 343. Long after its pronouncement by the Law Lord, the maxim has been the fulcrum upon which Courts in England and Common Law Jurisdictions based their decisions on claims tainted with illegality whether in contract or tort.

It is normally expressed in the Latin maxim as thus: Exturpi Causa Oritur Non Actio or ex dolo malo non oritur actio and its counterpart: Im pari delicto est condition possidentis or potior est condition defendentis.

That Common Law maxims as pronounced by Lord Mansfield is a public policy and not rule of justice. For the purpose of clarity, Lord Mansfield held thus “If, from the plaintiff’s own 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 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 are equally in fault, potior est conditio defendentis.” 

To this writer what the above simply means is that if the claim upon which the plaintiff brings his cause of action is tainted with illegality whether as a result of doing something which has been expressly or by implication prohibited by a statue   [duly] enacted by the enabling law making body of the state, the court will not assist him.  OR

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Where a statue has make provisions for a particular way of carrying out an action but in which the plaintiff is in default, here again the court says the plaintiff  would not be assisted.

The consequence result of the above is that none of the parties to the illegality transaction can enforce any right from it. Both parties are precluded from approaching the court. It can be raised as a defence by the defendant or suo motu raised by the court. The property lies where it fall, the defendant gets unjustly enriched at the detriment of the plaintiff even though both parties participated in the illegality.

Just like any other legal maxim, it has so many exceptions. However, this writer is not willing to delve into the exceptions as this is considered to be out of the purview of this write up.  Readers are advised to check Sagay:  Nigerian Law of Contract at pages 411 to 423(second edition) where the exceptions to the maxim were exhaustively discussed with decided cases.

The Latin maxim of Exturpi is not without its own attendant consequence as aptly noticed in the preceding paragraphs. It was even recognised by Lord Mansfield himself as not a rule devised to do justice between the plaintiff and defendant but a rule of public policy. It was a rule purely based on public policy!

Many English cases which were later decided after Holman v Johnson were conflicting with one another. For example see the case of  Pearce v Brooks (1866) LR 1 Ex 213. The defence of  illegality failed in Holma’s case but was allowed in Pearce’s case. Even though the facts of both cases were substantially the same based on the same rule but different decisions and conclusions were reached therein.

Lord Denning endeavoured to rationalised the authorities on the illegality in the case of JM Allan (Merchandising) Ltd v Cloke [1963] 2 QB 340, 348,   when held that “active participation debars, but knowledge by itself does not”.

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However, in spite of Lord Denning’s persuasive but logically reasoning, this aspect of legal jurisprudence has thrown many English Judges into murky waters. Because of the uncertainty of Lord Denning’s view, few tests were devised to reach a just conclusion between parties to illegality. Among the tests are the doctrine of reliance applied by the House of Lords in Tinsley v Milligan [1994] 1 AC 340.

The Supreme Court of England declined to apply the doctrine of reliance in the case of Patel (Respondent) v Mirza (Appellant) [2016] UKSC 42. A case involved dealing in insider dealing by both parties which has been criminalised by section 52 of the Criminal Justice Act of England 1996. The claim of Patel was met with plea of illegallity  at the trial court and Court of Appeal set aside the decision of the trial court.

 Mr Mirza appealed to the Supreme Court where justices were divided into majority and minority. After going through the past decisions of the courts on the defence of illegality and its attendant unjust consequence on the claimant,   Majority decision of the Supreme Court dismissed the appeal and enter judgement for the Respondent.

The majority decision of the UK Supreme Court as led by Lord Toulson  held thus: ‘The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public policy on which the denial of the claim may have an impact and c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate.

The majority reasoning and the decision reached by the Supreme Court is appealing to this writer as it does not only seek to do justice between the parties but bring the parties to the status they were before the illegal transactions took place. No one is unjustly enriched at the expense of another.

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However, it must be noticed that Supreme Court held per Lord Toulson that a decisive and conclusive rule is not been laid down based on the peculiarity of individual cases.

CONCLUSION

In Conclusion, the defence of illegality has produced so many untold hardships on plaintiffs. Though, it was recognised umpteenth time that it was a rule of public policy and not of justice. Deciding cases on Public policy is not however without it own consequences as it was held in the case of the English case of Um Poh Chao V Camden and others (1979) 2 All ER. 910 at 914, that public policy is an unruly horse and judges are not such masters of equestrial ability to take on such experience.

Timothy Olamide writes from Faculty of Law, Ahmadu Bello University, Zaria. He can be contacted via olaniyitimothyolamide@gmail.com; 08144856315

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