Nayyar & Ors v Sapte & Anor

The ex turpi causa principle may bar a claim where the claimant’s wrongful conduct is sufficiently closely connected with the loss claimed. An intended civil-law bribe may engage the principle even though the bribe was unsuccessful and the identity of the intended fiduciary is uncertain. The relevant question is whether payment was intended to induce a fiduciary to betray the principal’s trust. The court must assess the connection between the unlawful conduct and the cause of action, avoiding both technical overreach and undue assistance to unlawful claims. A solicitor’s business-development role does not ordinarily extend to personally broking and guaranteeing a commercial transaction. Where a solicitor acts as a deal broker and gives specific assurances about payment security, a personal duty of care may nevertheless arise.

Four travel-agency claimants claimed damages from a solicitor and her firm after paying £383,259 in connection with a proposed Air India global sales agency. They alleged negligent advice, breach of contract, breach of fiduciary duty and vicarious liability. The solicitor denied acting as their solicitor and said that she had merely introduced the opportunity. The defendants contended that the payment was intended to secure the agency irrespective of merit and therefore constituted an attempted bribe, barring the claim under ex turpi causa. The central issues were whether the payment engaged the illegality defence, whether the solicitor or firm owed relevant duties, and whether the losses were recoverable.

1. Illegality. The claim was barred by ex turpi causa. The payment was intended to obtain the agency regardless of the merits of the application, by inducing whoever had authority to award it to breach a fiduciary duty. It was not necessary to prove that an actual bribe had been paid, that the intended fiduciary had received or known of the payment, or that the fiduciary could be identified with certainty.
2. The payment’s returnability if the appointment was not issued did not alter its corrupt purpose. Nor did the solicitor’s involvement excuse the claimants’ own responsibility. The payment and the damages claimed were closely connected: the payment was an effective cause of the loss and was itself the loss claimed.
3. The solicitor’s role was principally that of a personal deal broker, rather than a solicitor or legal adviser. Her activities went beyond her actual or ostensible authority from the firm and were mainly undertaken for personal gain. The firm was therefore not vicariously liable.
4. Alternatively, if illegality had not barred the claim, the solicitor would have owed the claimants a duty to exercise reasonable skill and care in the specific advice and assistance she provided as deal broker. Her assurances that she was their guarantee and that the payment arrangements were normal gave no legal protection and negligently diverted them from seeking security. The claimants’ contributory negligence would have been assessed at 20%, with the solicitor responsible for 80% of the recoverable loss.
5. The duty would have extended to the corporate vehicles involved in the transaction. The claim nevertheless failed because both defendants established the illegality defence.