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1 2010 Exclusive Vehicle Services v. Ann David Headley
ST. GEORGE WEST COUNTY
PORT OF SPAIN PETTY CIVIL COURT
RULING ON THE ISSUE OF ILLEGALITY
CITATION: 2010 Exclusive Vehicle Services v. Ann David Headley
TITLE OF COURT: Port of Spain Petty Civil Court
FILE NO(s): No. 332 of 2013
DELIVERED ON: 10th March 2014
CORAM: Her Worship Magistrate Nalini Singh
St. George West County
Port of Spain Petty Civil Court Judge
REPRESENTATION:
Mr. Harish Jacelon for the claimant
Mr. Nigel Trancoso for the defendant
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TABLE OF CONTENTS
INTRODUCTION 3
THE STATEMENT OF CASE 3
THE ISSUES 5
1. Whether the rental agreement is tainted by illegality 5
The Submissions 5
The Law 12
The Finding 17
2. Whether the rental agreement is enforceable. 17
The Submissions 17
The Law 20
The Finding 22
3. Whether the fact that illegality was not pleaded as a defence precludes the Court
from considering the matter of illegality. 22
The Law 22
The Finding 25
THE CONCLUSION 25
THE ORDER 25
POSTSCRIPT 26
3 2010 Exclusive Vehicle Services v. Ann David Headley
1.0 INTRODUCTION
1.1 By ordinary summons dated and filed on the 28th
November 2013, the claimant company,
2010 Exclusive Vehicle Services claimed the sum of $13,029.20 TTD as well as interest and cost
from the defendant, Ann David Headley as monies due and owing pursuant to a written rental
contract entered into by both parties on or about the 25th
May 2012. The defendant was served
on the 20th
December 2013 and made his first appearance in the matter on the 15th
January 2014.
1.2 On the 28th
January 2014, before leave was given for the filing of a defence, counsel for
the defendant, Mr. Nigel Trancoso, submitted that the rental agreement was tainted by illegality
and was therefore unenforceable. The argument was premised on the basis that it appeared from
the statement of case that the agreement between the claimant company and the defendant,
concerned the rental by the claimant company to the defendant, of a car which was registered for
private use and not rental usage.
1.3 The issue which now concerns this Court is whether that rental agreement of the 26th
May
2012 is so tainted by illegality that the contract is not enforceable. In these circumstances the
appropriate place to start, on an examination of the pertinent facts, is with the statement of case
filed.
2.0 THE STATEMENT OF CASE
2.1 The claimant company set out in its statement of case filed on the 28th
November 2013,
its version of the events. According to the claimant company, in or about the 25th
May 2012,
they being the owner of motor vehicles PCJ 5135 and PBU 370, entered into a rental agreement
with the defendant.
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2.2 According to the terms of the agreement, the claimant company rented PCJ 5135 was
rented out to the defendant for the period 25th
May 2012 to the 27th
May 2012 at $300.00 TTD
per day. The defendant extended this rental period by two days which gave her use of the
claimant company's car until the 29th
May 2012. Owing to mechanical issues with PCJ 5135
however, the claimant company replaced the vehicle with PBU 370 on the 28th
May 2012 and
this is the vehicle which remained in the possession of the defendant until the expiration of the
rental agreement.
2.3 The rental agreement contemplated that the defendant herself and or any other person
being over the age of 25 years who was approved by the claimant company would be allowed to
drive the claimant company vehicle.
2.4 The claimant company had originally disallowed the defendant's daughter Cherry Ann
Faye Headley from contracting with them to rent and drive their vehicle since she was under 25
years of age and it was in these circumstances that the defendant entered into the rental contract
with the claimant company. This notwithstanding, on the 29th
May 2012, the defendant allowed
her 23 year old daughter Cherry Ann Faye Headley to use PBJ 370. Whilst Cherry Ann Faye
Headley was proceeding west along the Churchill Roosevelt Highway in the vicinity of the
University of Trinidad and Tobago (UTT), she collided with the rear end of motor vehicle
registration number PBM 499. PBJ 370 was damaged in this accident.
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2.5 The claimant company incurred expenses in repairing PBJ 370 and it is against this
backdrop that legal proceedings were instituted by the claimant company against the defendant
to recover same.
2.6 These events have given rise to three issues.
3.0 THE ISSUES
3.1 The three issues which have arisen for determination by me are:
i. Whether the rental agreement is tainted by illegality.
ii. Whether the rental agreement is enforceable.
iii. Whether the fact that illegality was not pleaded as a defence precludes the Court from
considering the matter of illegality.
4.0 THE LAW
i. Whether the rental agreement is tainted by illegality.
The Submissions
4.1 Counsel for the defendant, Mr. Nigel Trancoso contends that the rental agreement which
the claimant company is seeking to enforce is void ab initio arguing specifically that the contract
is illegal as formed.
4.2 Mr. Trancoso develops his argument in this way. He submits firstly that section 12(1)(a)
of the Motor Vehicles and Road Traffic Act Chap. 48:50 (hereinafter referred to as "the Act")
provides that no person shall permit to be used, any motor vehicle which is not registered under
6 2010 Exclusive Vehicle Services v. Ann David Headley
the Act. It provides further that a registered vehicle is to carry an appropriate identification
mark:
"12. (1) No person shall, in any place, use or keep for use or, being the owner,
permit any other person to use or keep for use any motor vehicle—
(a) not being a vehicle exempted from registration under this Act, unless it is
registered under this Act according to the procedures required by the Licensing
Authority or;
(b) being an agricultural tractor, agricultural trailer or industrial tractor, for any
purpose unless the Licensing Authority has granted its approval, in the prescribed
manner, of the use of the vehicles for that purpose.
(2) No person shall be liable to a penalty for a breach of this section if he proves
that he has taken all reasonable steps to comply with its requirements, and, when
the vehicle is in use on a road, that it is on its way for the purpose of being
registered.
(3) The Transport Officer to whom application is made shall, upon being satisfied
that the provisions of this Act and the Motor Vehicles Insurance (Third-party
Risks) Act and Regulations respectively made thereunder, have been complied
with, forthwith enter particulars of the vehicle in the register, and shall assign to
the vehicle a registered letter or letters and number, which shall become the
identification mark of such vehicle.
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(4) A certified copy of the entry in the register shall be given to the owner of the
vehicle, and such certificate of registration shall be regarded as prima facie
evidence that the vehicle to which it refers has been registered.
(5) If a motor vehicle does not bear on it an identification mark as required by the
Licensing Authority, this fact shall be regarded as prima facie evidence that the
vehicle has not been registered, and any constable may detain such a vehicle until
enquiries have been made.
(6) The onus of proving that a vehicle has been registered rests upon the owner of
the vehicle" (emphasis mine).
4.3 Section 7 of the Motor Vehicles and Road Traffic Regulations made under section
100 of the Act provides details of the appropriate identification marks which are to be carried by
respective registered motor vehicles stating in particular that rented vehicles are to carry a plate
with the index mark being an "R" as opposed to a private vehicle which is expected to bear a "P"
index mark. This section is set out as follows:
" 7. (1) The identification mark to be carried by a registered motor vehicle or
trailer in pursuance of section 12 of the Act, shall consist of two plates which
must conform as to size, lettering, numbering and otherwise with the following
provisions:
(a) (i) each plate must be rectangular and bear upon it the index mark of “P” for
private motor vehicles, “T” for goods vehicles, “R” for rented cars, “H” for public
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service vehicles, “X” for any other vehicle and the separate number assigned to
the motor vehicle by the Licensing Authority..." (emphasis mine).
4.4 Counsel argues that the failure to comply with these provision amounts to a criminal
offence and draws the Court's attention to sections 8 and 21 of the Motor Vehicles and Road
Traffic Regulations made under section 100 of the Act. This is what these section say. Section
8 says that:
" 8. No person shall use a motor vehicle for a purpose other than that for which it
is registered".
Further, section 21 in material part states that:
"21. (1) Save as is otherwise provided in this Act, if—
(b) any motor vehicle or trailer is used upon any road for a purpose which is
not authorised by the registration issued in respect thereof or is altered in a
manner which may conflict with the purpose or use for which it is registered,
without permission from the Licensing Authority or is in contravention of any
provisions of this Act...
the owner or the driver or other person in charge of the motor vehicle, as the case
may be, who contravenes—
... (ii) paragraph (b) or (c), is liable to a fine of eight thousand dollars".
The conjoint effect of these two sections is that a vehicle which has affixed as its index mark, a
"P" rather than a "R" -when it is a rental car, makes the vehicle one that does not bear on it an
identification mark as required by the Licensing Authority and this is prima facie evidence that
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the vehicle has not been registered. As such Mr. Trancoso submits that the rental contract for
such a vehicle is tainted by illegality.
4.5 In support of his interpretation counsel relies specifically on the English case of Re
Mahamoud and Ispahani [1921] 2 KB 716 and the local judgment of Kerron Moe v. Gary
Harper Claim No. CV 2012-03569 which was delivered by his Lordship Mr. Justice Rajkumar
in 2013. Re Mahamoud and Ispahani (supra) was a case where the plaintiff vendor was unable
to sue on a contract of sale with an unlicensed purchaser on account of the Seeds, Oil and Fats
Order 1919 which provided that "a person shall not... buy or sell or otherwise deal in, any articles
specified in the schedule hereto... except under and in accordance with the terms of a license".
This is relevant according to counsel because it shows that once a transaction is contrary to
legislation, it cannot be considered legal.
4.6 More pertinent is Kerron Moe v. Gary Harper (supra) as it plainly illustrates that the use
of an unauthorized vehicle as a rental vehicle is illegal. On the facts of this case, the claimant
sued his father in respect of an alleged agreement relating to motor vehicle registration number
PCJ 3973. It was an agreement for its sale to the claimant by payments of installments over
time. The defendant contended however that the arrangement was a family arrangement under
which his son was permitted the use of the vehicle in return for payments to assist in defraying
its financial and insurance costs. The claimant conceded that the motor vehicle in question was
used by him as a taxi and further, the deprivation of the vehicle was causing him loss of
earnings/income in the sum of $1000.00 TTD per week. Indeed the statement of case itself
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disclosed that the claimant himself used the vehicle as a taxi. His Lordship characterised this use
of the vehicle as an unauthorized taxi as "illegal".
4.7 Counsel for the claimant Mr. Harish Jacelon responds in this way. Firstly, counsel
submits that the "small technicality with respect to the registration of the vehicle" does not make
the agreement between the claimant and the defendant one that is tainted by illegality. This point
according to counsel, is reinforced by the fact that the Act never explicitly stated that an
irregularity with the licence plate would render rental agreements illegal. Counsel relies on the
distinction which is made in the Act between a "rented car" and a "private motor car" to illustrate
his point that the rental agreement in this case is not tainted by illegality. According to the
definition section of the Act, a rented car is defined as:
"a motor vehicle, other than a motor cycle, of a type approved by the Licensing
Authority and having seating accommodation for not more than eight persons
including the driver, which is privately hired from the owner and which is not to
be used as a public service vehicle".
A private motor car is stated to mean a:
"...motor vehicle approved by the Authority for private use exclusively with
seating accommodation for not more than eight persons".
In light of these definitions, Mr. Jacelon submits that since his client rented its car as one that
was privately hired and not one that was used as a public service vehicle (which is defined in the
Act as a motor vehicle used for carrying passengers for hire or reward, whether at separate and
distinct fares for their respective places or not), there is no contravention of the Act with respect
to the private arrangement which was made between the claimant company and the defendant.
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As such the rental agreement is not illegal since there is nothing in the Act that expressly
prohibits the contract entered into; in the words of counsel, "the issue of illegality in this context
does not arise out of an express statutory restriction".
4.8 Counsel further submits that the object of the contract with his client and the defendant
was not the registration of the licence plate, but fulfilled the greater obligation between the
parties in agreeing for the vehicle to be used privately for consideration. Since the core object of
the contract did not therefore offend the registration provision in the Act it is Mr. Jacelon's
position that the Act should not be construed in a manner which affects the contract. In support
of this proposition counsel relies upon the learning in Halsbury's Laws of England Contract
Vol. 22 (2012) 5th Edition at paragraph 6 where it is stated that:
"In deciding whether a statute affecting a contract contains an implied prohibition
of the contract or things done thereunder so as to render it unenforceable by one
or both parties, the whole context and purpose of the statute must be taken into
account and no single consideration, however important, is conclusive...
Another important consideration is whether the act prohibited by the statute
affects the core of the contract. If the contract has as its whole object the doing of
the very act which the statute prohibits, there is generally a clear implication that
the contract is also prohibited; but this is not the case if the prohibited act is
merely incidental".
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The Law
4.9 According to Ellenborough CJ in Langton v. Hughes 1 M&S 593 at page 596, “(i)t may
be taken as a received rule of law, that what is done in contravention of an Act of Parliament,
cannot be made the subject-matter of an action”. As far as I am able to ascertain, there are three
types of acts of parliament.
4.10 The first is the act of parliament which prohibits certain types of activities and makes
these types of activities punishable in law. These types of activities can be engaged in without
ever entering into any kind of contract. An example of this type of act of parliament is section
62 of the Act which provides that:
"...it shall not be lawful for any person to drive a motor vehicle of any class or
description on any road—
...(b) within a built-up area at a speed greater than the speed specified in the
Second Schedule as the maximum speed in relation to a vehicle of that class or
description".
4.11 The second type of act of parliament is the statute which may refer to contracts or
commercial activity in attempting to define the precise activity which is punishable in law, but it
fails to go as far as stating whether the contravention of the act of parliament will have any effect
upon the enforceability of the particular contract in question or whether the imposition of the
criminal penalties stipulated will be the only sanction to be imposed. In my view an example of
this type of act of parliament is section 46 of the Summary Offences Act Chap. 11:02 which
provides that:
13 2010 Exclusive Vehicle Services v. Ann David Headley
" 46. A person convicted a second time of being an idle and disorderly person,
and a person apprehended as an idle and disorderly person violently resisting any
constable apprehending him and who is subsequently convicted of the offence for
which he was apprehended, and a person who commits any of the offences
mentioned below in this section, may be deemed a rogue and vagabond, and shall
be liable to imprisonment for two months—
...(g) any person who offers for sale or distribution or who exhibits to public view,
any profane, indecent, or obscene book, paper, print, drawing, painting, or
representation".
4.12 The third type of act of parliament is the one which actually states that the contracts to
which it refers, would be void and unenforceable. An example of this type of act of parliament is
in my view, section 8 of the Sales of Good Act Chap. 82:30 which states that:
"8. Where there is a contract for the sale of specific goods, and the goods, without
the knowledge of the seller, have perished at the time when the contract is made,
the contract is void".
4.13 There is authority to support the approach that contractual claims which fall within the
second category of cases are expressly prohibited on the ground that the statute refers expressly
to contracts -notwithstanding the fact that it does not go as far as making express provision for
consequences within the law of contract. This approach has been adopted in cases such as Re
Mahamoud and Ispahani (supra) where at page 731, Lord Justice Atkin made the point that:
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"When the Court has to deal with the question whether a particular contract or
class of contract is prohibited by statute, it may find an express prohibition in the
statute, or it may have to infer the prohibition from the fact that the statute
imposes a penalty upon the person entering into that class of contract. In the latter
case one has to examine very carefully the precise terms of the statute imposing
the penalty upon the individual. One may find that the statute imposes a penalty
upon an individual, and yet does not prohibit the contract if it is made with a party
who is innocent of the offence which is created by the statute... I think a question
might be raised whether or not it is right to say that those contracts are prohibited
by the common law. The right view may be that the common law refuses to
enforce them" (emphasis mine).
A similar approach is evident in the case of Melliss v. Shirley Local Board (1885) 16 QBD 966
at page 453 where Lord Justice Cotton said this:
"When the prohibition of an act is inferred from the infliction of a pecuniary
penalty for the doing of the act, the question often arises whether the penalty is
imposed for the purpose of preventing the act being done, or only for the purpose
of making the person who does it pay a certain sum of money. But in the present
case we need not consider that question, because there is an implied prohibition of
the contract in the first part of s. 193. For, in my opinion, when the Act prohibits
any officer or servant of a local authority being concerned or interested in any
contract with the local authority, there is a clear intention to prevent any such
contract from being entered into. It was evidently intended to prevent an officer of
a local authority from entering into a contract which he might have advised the
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local authority not to enter into, if he had not been himself interested in it. Not
only does the section impliedly (if it does not expressly) prohibit such a contract,
but it is in accordance with the whole object of the section that the contract should
be prohibited. It may be that the consequences of this construction will in some
cases be very harsh, but it is our duty only to construe the Act. And, in my
opinion, although penalties are imposed by the latter part of the section, that is not
all which the section does; but the making of such contracts is prohibited"
(emphasis mine).
Then in that same case at pages 453 to 454, Lord Justice Bowen set out the principle in this way:
"The established rule of law is, and always has been, that no action can be
maintained on a contract which is prohibited either by the common law or by
statute. The rule was so stated by Lord Ellenborough in Law v. Hodson (1), and it
was repeated by other judges in Taylor v. Crowland Gas and Coke Co. (2) We
have, therefore, only to consider whether this contract is prohibited either by
common law or by statute, and whether the action is brought to enforce the
contract. There is no question as to prohibition by common law, and the only
question is whether the contract is prohibited by s. 193. That is a pure matter of
construction. There are many similar cases to be found in the reports, but in the
end we have to find out, upon the construction of the Act, whether it was intended
by the legislature to prohibit the doing of a certain act altogether, or whether it
was only intended to say that, if the act was done, certain penalties should follow
as a consequence. If you can find out that the act is prohibited, then the principle
is that no man can recover in an action founded on that which is a breach of the
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provisions of a statute. It seems to me plain, from the language of s. 193, that
there is a prohibition of that which has been done. I think no language could be
plainer, and the mere fact that certain consequences are, by the latter part of the
section, attached to the illegal act, does not, in my opinion, make the previous
language less clear".
4.14 In my view, the provisions which set out how a rental car is to be registered, fall in the
second category of cases where statute refers tangentially to commercial activity in attempting to
define the precise activity which is prohibited by law. In so doing it fails to go as far as saying
whether the contravention of the relevant sections of the Act of parliament will have any effect
upon the enforceability of the particular contract in question or whether the imposition of the
criminal penalties stipulated will be the only sanction to be imposed. So section 7 of the Motor
Vehicles and Road Traffic Regulations made under section 100 of the Act, provides that the
appropriate index mark for a rented car is "R". The term "rented car" is defined in the Act as "a
motor vehicle ...which is privately hired from the owner and which is not to be used as a public
service vehicle". Finally, section 21 of the Motor Vehicles and Road Traffic Regulations
made under section 100 of the Act makes it an offence to permit another person to use a vehicle
unless it is registered as per the terms of the Act. So, whereas as the Act makes it clear that if a
car is to be "privately hired from the owner" i.e. rented, it must have an "R" index mark -as this
is the appropriate index mark for rented cars, and it also states that a failure to comply with same
is an offence, the Act never actually stipulates what is to happen to the rental agreement. This
being the case, and in light of the aforementioned cases I am of the view that the contractual
claim in this matter is expressly prohibited on the ground that the statute refers expressly to
17 2010 Exclusive Vehicle Services v. Ann David Headley
contracts notwithstanding the fact that it does not go as far as making express provision for
consequences within the law of contract. As such, it behooves this court to blatantly ignore what
is clearly stated to be the law of this country.
4.15 In my humble view, the distinctions which Mr. Jacelon rely upon between using a
privately hired car for public hire and the object of the contract being one for rental rather than
the licensing of the vehicle, have no bearing on the more basic question of whether the subject
matter of a rental agreement ought to be registered as per the terms of the Act so that it could be
used as such.
The Finding
4.16 In these circumstances the finding of this Court is that the rental agreement in this case is
one that contravenes an Act of Parliament and is ex facie illegal. I am fortified in this position by
the findings in material part in Kerron Moe v. Gary Harper (supra) which I respectfully adopt.
ii. Whether the loan agreement is enforceable.
The Submissions
4.17 In respect of enforceability, Mr. Trancoso submits that the Court cannot enforce an
agreement which both the claimant and defendant know to be illegal. Counsel relies upon two
cases to support this proposition of law. One is Pearce v. Brooks (1866) LR 1 Ex 213. On the
facts of this case, the plaintiffs hired out a coach to the defendant knowing full well that she
intended to use it in plying her trade as a prostitute. She defaulted in her payments for the coach
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and the plaintiffs sued to recover same. The court held that since the plaintiff knew of the illegal
purpose for which the carriage was to be used, it precluded them from suing.
4.18 Similarly, in Ashmore, Benson Pease & Co v. Dawson [1973] 1 WLR 828 the plaintiffs
manufactured a large piece of engineering equipment called "tube bank" which weighed twenty-
five tones and they entered into a contract with the defendant carriers who undertook to transport
the "tube bank" to the port of Hull for shipment. The vehicle which was used by the defendants
had a maximum weight of thirty tones. As the unladed weight of the vehicle was ten tones, the
total weight of the vehicle with the "tube bank" exceeded the prescribed maximum by five tones
thereby contravening the Motor Vehicles (Construction and Use) Regulations which was in
force. The court of appeal rejected the plaintiff's claim on the basis that since the plaintiff was
present whilst the "tube bank" was being loaded, he knew that the defendant was performing the
contract in an illegal manner and as such the contract was unenforceable.
4.19 Mr Jacelon's line of argument regarding this point is that if at all the Act is construed in a
manner to taint the rental agreement with illegality, it pertains only to the method of performing
the contract and as such does not invalidate the rental agreement to make it unenforceable.
Indeed he submits that a distinction is to be made between a statute that expressly prohibits or
invalidates a contract as opposed to one that controls the manner in which a contract is
performed. Counsel relies on the case of St. John Shipping Corp v. Joseph Rank Ltd. [1957]
1 QB 267 in support of the point that the instant matter falls in the latter category of cases and is
accordingly capable of being enforced in a court of law. On the facts of this case, a ship owner
committed a statutory offence by overloading his ship while performing a number of contracts
19 2010 Exclusive Vehicle Services v. Ann David Headley
for the carriage of goods. Justice Devlin held that the object of the statute was to prevent
overloading and not to prohibit contracts. This object was to be achieved by imposing a fine, and
not by subjecting the ship owner to the additional financial loss which would result from
invalidating the contracts of carriage. Counsel argues that following the reasoning used in this
case, the object of the Act in the present matter is to deal specifically with the technicality of
having the car registered for its use, but not to prevent the operation of the contract between the
parties. As such it is enforceable.
4.20 Counsel then directs the Court's attention to the case of Smith v. Mawhood (1845) 14
M&W 452 which lends guidance on the question of whether a contract is unenforceable in law.
This is what is said:
"where a statute imposes a penalty on one or both of the parties to a contract, as a
result of their entering into the contract or of their manner of performing it, the
court will consider whether on the construction and purpose of the statute the
doing of the particular act is forbidden as illegal or whether there is merely a
charge imposed on it. If it is the latter, it is clear that the contract itself is not
prohibited".
In counsel's view, this case shows that the courts are willing to compromise between two
extremes to allow for flexibility. It is his argument that this Court should adopt a similar
approach and therefore hold that the rental contract in the instant matter is enforceable.
20 2010 Exclusive Vehicle Services v. Ann David Headley
The Law
4.21 It is generally the case that contracts which are tainted by illegality are unenforceable in
law. This principle can be traced back to the case of Holman v. Johnson (1775) 98 ER 1120
where Lord Mansfield stated at page 1121 that:
“The principle of public policy is this; ex dolo malo non oritur actio. No Court
will lend its aid to a man who founds his cause of action upon an immoral or
illegal act”.
This means that neither contracting party can claim monies owed, or recover monies paid, under
an illegal contract if to do so, requires a contracting party to base his claim on illegality or,
disclose illegality in proving the claim. Indeed losses lie where they fall. As Lord Eldon put it
in Muckleston v. Brown (1801) 31 ER 934 at page 942:
“[T]he plaintiff stating, he has been guilty of a fraud upon the law, … to
disappoint, the provision of the legislature, to which he is bound to submit, and
coming to equity to be relieved against his own act, and the defence being
dishonest, between the two species of dishonesty, the court will not act; but would
say ‘let the estate lie where it falls’”.
4.22 Assuming that Mr. Jacelon is right when he says that the primary purpose of the contract
-rental; was legal, but the performance of it was not -in that an unregistered vehicle was hired
out, this still leaves counsel with one hurdle to overcome and that is the issue of shared guilt.
Specifically stated, courts appear willing to enforce a contract which is lawful at its inception
that is illegally performed innocently. This is illustrated in the case of Archbold's (Freightage)
v. Spanglett [1961] 1 QB 374. In this case the defendant had undertaken to transport the
21 2010 Exclusive Vehicle Services v. Ann David Headley
plaintiff's cargo of whiskey from Leeds to London and in the process of so doing the cargo was
stolen. In an action for breach of contract, the defendants made the point that they had
performed the contract in an unlicensed vehicle and as such even the plaintiffs who were
unaware of this and were therefore innocent, were precluded from enforcing the contract. The
court of appeal held that the contract did not implicitly identify a particular van which was to be
used to transport the whiskey so the agreement was therefore one that was capable at the outset
of legal performance. The case was then decided in favour of the plaintiffs.
4.23 It is to be noted however that the facts of Archbold's (Freightage) v. Spanglett (supra) are
diametrically opposed to the facts of the matter at hand since the rental contract specifically
identified PCJ 5135 as the vehicle which was to be rented to the defendant by the claimant and,
this was the vehicle that the claimant accepted. Then, when the initial rental of this vehicle
expired and the period of rental was extended by the claimant, it was done whilst she was still in
possession of PCJ 5135. Furthermore, when PCJ 5135 was replaced during the extended phase
of the initial rental contract, the claimant company offered and the defendant accepted another
incorrectly registered car i.e. PBU 370. In this light, it cannot be said that the contract was legal
at its inception to therefore argue illegal performance. That said, the particular factual matrix of
the instant matter therefore puts it squarely in the class of cases such as Ashmore, Benson Pease
& Co v. Dawson (supra) where contracting parties are precluded from enforcing the contract
because of their conscious involvement in the illegal performance. I say conscious because as
far as the defendant is concerned she is a driver, and the claimant company is in the business of
vehicle services. They are by virtue of their respective positions deemed to be aware of the laws
contained in the Act.
22 2010 Exclusive Vehicle Services v. Ann David Headley
The Finding
4.24 Being guided by the aforementioned cited authorities I find that the rental agreement in
this matter is unenforceable.
iii. Whether the fact that illegality was not pleaded as a defence precludes the Court from
considering the matter of illegality.
The Law
4.25 Having arrived at the conclusion that this contract is tainted by illegality and is
unenforceable, I note that the defence of illegality was never pleaded because the objection was
taken before a defence was even filed in the matter. The question which therefore confronts the
Court is this. What approach should a court adopt in a case where evidence of illegality is before
the court but has not been relied on in the pleaded defence? Halsbury’s Laws of England
Volume 22 (5th
edition) 2012 at paragraph 426 states that “In the event that unpleaded facts
are revealed in evidence and show that the contract is illegal or void, the court should decline to
enforce the contract, if satisfied that all the relevant facts are before it”.
4.26 This learning is borne out in the cases as well. So in the matter of Scott v. Brown,
Doering, McNab & Co. (supra) where the agreement for “rigging” the market came to light
during the presentation of the plaintiff’s case, Lindley L.J. made the point at page 656 that:
“No court ought to enforce an illegal contract or allow itself to be made the
instrument of enforcing obligations alleged to arise out of a contract or transaction
which is illegal, if the illegality is duly brought to the notice of the court, and if
the person invoking the aid of the court is himself implicated in the illegality. It
23 2010 Exclusive Vehicle Services v. Ann David Headley
matters not whether the defendant has pleaded the illegality or whether he has not.
If the evidence adduced by the plaintiff proves the illegality the court ought not to
assist him. If authority is wanted for this proposition it will be found in the well-
known judgment of LORD MANSFIELD in Holman v Johnson (1)”.
4.27 Similar sentiments were made by Kennedy J. in the matter of Gedge v. Royal Exchange
Assurance Corpn [1900] 2 QB 214 at page 219 that:
“It appears to me that when upon the trial of an action the plaintiffs’ case, as
happens here, discloses that the transaction which is the basis of the plaintiffs’
claim is illegal, the Court cannot properly ignore the illegality and give effect to
the claim”.
4.28 Similarly, in Montefiore v. Menday Motor Components Co Ltd [1918] 2 KB 241 it
was held that once illegality of a contract was disclosed on the evidence, although it was never
pleaded, a court has a duty to take the objection. As Du Parcq J. stated at page 90 of
Commercial Air Hire Ltd. v. Wrightways Ltd. [1938] 1 All ER 89:
“There is no plea here by the defendant that the contract was illegal, or that the
purposes for which the contract is made were illegal, but it is, of course, clear law
that, even though the defendant does not take the point that the contract is illegal,
and therefore against public policy, the court must take it and consider it, and, if
necessary, if the point is a good one, send the parties away without further
considering their claim, or, at any rate, without awarding damages to a person
24 2010 Exclusive Vehicle Services v. Ann David Headley
who comes before the court as one who either broke the law or did his best to
break the law”.
4.29 What then is the approach to be taken when confronted with this issue? The approach
was set out in the judgment in Edler v. Auerbach [1950] 1 QB 359, 371. In that case Devlin J
stated four propositions which emerged from the earlier decision of the House of Lords in North
Western Salt Company Limited v. Electrolytic Alkali Company Limited [1914] AC 461 as
follows:
“First that, where a contract is ex facie illegal, the court will not enforce it
whether the illegality is pleaded or not. Secondly, that where, as here, the contract
is not ex facie illegal, evidence of extraneous circumstances tending to show that
it has an illegal object should not be admitted unless the circumstances relied on
are pleaded. Thirdly, that where unpleaded facts, which taken by themselves show
an illegal object, have been revealed in evidence (because perhaps no objection
was raised or because they were adduced for some other purpose) the court should
not act on them unless it is satisfied that the whole of the relevant circumstances
are before it but, fourthly, that where the court is satisfied that all the relevant
facts are before it and it can see clearly from them that the contract had an illegal
object, it may not enforce the contract whether the facts were pleaded or not.”
4.30 Sedley L.J. in Birkett v. Acorn Business Machines (supra) qualified this approach by
adding that:
25 2010 Exclusive Vehicle Services v. Ann David Headley
“… it is only where the court can eliminate any possible answer with complete
confidence that an unpleaded case of illegality should be allowed to succeed. …
… anything which leaves open a genuine possibility that the apparent illegality
may not in reality have occurred is enough to prevent the making of the finding”.
The Finding
4.31 There is nothing in the material before me which leaves open a genuine possibility that
the apparent illegality may not in reality have occurred. Being so satisfied, I find that this illegal
rental agreement which is unenforceable remains unenforceable in law and the fact that illegality
was never in reality set down in pleadings does not preclude the Court from so finding.
5.0 CONCLUSION
5.1 It is clear that there was an actual rental agreement which was negotiated between the
claimant company and the defendant but it is also true that not only was the agreement tainted by
illegality but, it was performed illegally with both parties sharing guilt. Under these
circumstances it is the inexorable conclusion of this Court that the claimant company must look
elsewhere than to this Court of Justice for such assistance as may be required if the claim to such
assistance is based on illegality.
6.0 ORDER
6.1 Upon this ground and without going further into the case I find that the claimant
company is not entitled to judgment in this Court.
26 2010 Exclusive Vehicle Services v. Ann David Headley
7.0 POSTSCRIPT
7.1 The Court takes the opportunity to thank Mr. Harish Jacelon and Mr. Nigel Trancoso for
the benefit of their industry. In this matter, the Court had the very helpful oral and written
submissions of both advocates which were plainly the result of thorough research. Such
assistance offered by them is greatly appreciated.
…………………………………………
Her Worship Magistrate Nalini Singh
Petty Civil Court Judge