Griffin v UHY Hacker Young & Partners (A Firm)

For the narrow form of the ex turpi causa principle, recovery is barred only for loss flowing from a sentence or punishment lawfully imposed for the claimant’s unlawful act. Loss flowing from the conviction itself is not necessarily within that rule, particularly where the offence is one of strict liability.

Where the wider principle is relied upon, the court must consider personal culpability and causation. The necessary level of culpability may depend on the offence. Alleged dishonesty, concealment or other morally culpable conduct must be sufficiently connected with the offence to make it an intervening cause. These issues ordinarily require findings of fact and are unsuitable for summary determination where the claimant has a real prospect of defeating the defence.

Robert Matthew Griffin claimed damages from UHY Hacker Young & Partners (a firm) for allegedly negligent advice concerning the liquidation of Saxon Drinks Limited and the establishment of a successor business using the Saxon 1050 name.

He had been convicted of contravening section 216 of the Insolvency Act 1986, an offence accepted to be one of strict liability. The defendant applied to strike out the claim or obtain summary judgment, relying solely on ex turpi causa.

The central issues were whether losses flowing from conviction, rather than sentence, fell within the narrow rule; what culpability was required where the underlying offence was one of strict liability; and whether the pleaded facts established that the defence had no real prospect of success.

1. Application dismissed. The defendant failed to establish either that the claim had no real prospect of success or that it disclosed no reasonable cause of action or constituted an abuse of process. The matter was directed to proceed to trial, with costs and further directions to be addressed.

2. Applying Gray v Thames Trains Ltd [2009] 1 AC 1339, the narrow form of ex turpi causa applies to loss flowing from the sentence imposed, such as imprisonment or a fine. It does not automatically include loss flowing from the conviction itself. The rationale of the narrow rule is that the civil law should not compensate a claimant for a punishment imposed because of his personal fault. That rationale may not apply to a strict-liability conviction.

3. The wider rule required consideration of causation and culpability. The court did not finally decide the level of culpability required for a strict-liability offence. The authorities did not speak with one voice, and the appropriate level might depend on the offence. Expressions such as gross, culpable or crass negligence were unhelpful where the court was in fact considering a higher and less clearly defined level of blameworthiness.

4. The alleged lie to creditors and the backdating of corporate documents might be morally culpable, but their connection with the statutory offence remained fact-sensitive. The claimant’s knowledge of section 216, his understanding of the lawfulness of the proposed business, the defendant’s alleged professional responsibility to advise on lawful compliance, and whether notice or leave would have been obtained could all affect causation and the application of ex turpi causa.

5. Section 216 did not impose an absolute prohibition on continuing the business under a prohibited name. Trading could be legitimised by prescribed notice to creditors or leave of the court. That feature made it unsafe to determine the claimant’s culpability and causation on assumed facts.

6. The summary judgment jurisdiction was not a summary trial. Since the claimant might establish at trial that the offence was committed innocently, or that the alleged culpable conduct was insufficiently connected with the offence to break the chain of causation, a trial was required.