ST. GEORGE WEST COUNTY PORT OF SPAIN...

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


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


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.


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.


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


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.


(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


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


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


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.


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".


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:


" 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:


"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


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


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


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


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


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.


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


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.


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


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


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:


“… 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.


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

Date post:	29-Apr-2018
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