Gujra v Roath & Anor

The common-law defence of illegality requires a policy-based and proportionate assessment. The court must consider the purpose of the prohibition, any competing public policies, and whether denying relief would be disproportionate.

Where a claimant’s own pleaded facts strongly indicate complicity in a serious illegal enterprise, the court may infer dishonesty on a strike-out or summary-judgment application if no plausible innocent explanation is offered. In a joint criminal enterprise, the defence may apply where the injury arose from a foreseeable risk inherent in the enterprise, even if the immediate loss resulted from another participant’s conduct.

The claimant appealed against Master Davison’s order striking out his claim under CPR 3.4(2)(a), alternatively granting summary judgment under CPR 24.2. He alleged that the defendants had agreed to pay him to set fire to their vehicles, had failed to disclose their consent to the police, and had thereby maliciously procured his prosecution for arson.

For the purpose of the application, the pleaded facts were assumed to be true. The central issues were whether the Master could infer that the claimant knew of the alleged insurance fraud, whether the illegality defence had been correctly applied after Patel v Mirza, whether the illegal conduct was sufficiently connected with the tort, and whether the issues required a trial.

1. Appeal dismissed. Permission to appeal was granted, but the substantive appeal failed. The pleaded claim was barred by illegality and was suitable for summary determination.
2. The court accepted that, where dishonesty is genuinely in issue, it is generally inappropriate to determine the issue on paper. An exception applies where the evidence is so overwhelming that dishonesty is virtually inevitable. That exception was engaged here. The claimant positively relied on agreeing to set fire to two valuable vehicles, yet had offered no plausible explanation denying knowledge of the alleged insurance fraud. The Master was therefore entitled to infer dishonesty.
3. The correct approach to illegality was the three-stage policy inquiry in Patel v Mirza: identify the prohibition transgressed; consider the purposes of that prohibition and any competing public policies; and decide whether denial of relief would be a proportionate response.
4. The alleged conspiracy to defraud an insurer was fundamental to the transaction, rather than a minor or incidental illegality. Allowing a participant to recover for arrest, detention and bail conditions arising from a foreseeable risk of that enterprise would impair the purpose of deterring dishonest insurance claims and undermine the integrity of the legal system. The loss claimed was not disproportionate to the claimant’s conduct.
5. The connection between the illegality and the tort was sufficiently close. Applying Joyce v O’Brien, arrest and prosecution were foreseeable risks of the joint criminal enterprise, had been discussed between the parties, and materialised. The fact that the claimant relied on the defendants’ consent, and was acquitted, did not prevent the illegality defence from applying.
6. The uncertainty introduced by the range-of-factors approach did not require a trial. The relevant facts were confined and essentially undisputed for the application, so the issue was one of law suitable for determination summarily.

• High Court (Queen’s Bench Division): Master Davison struck out the claim under CPR 3.4(2)(a), alternatively granted summary judgment under CPR 24.2, on 2 October 2017. The High Court granted permission to appeal but dismissed the substantive appeal.