Neutral Citation Number: [2002] EWHC 2886 (QB)

Case No: HQ 0101579

IN THE HIGH COURT OF JUSTICE
 
QUEENS BENCH DIVISION 

Royal Courts of Justice 
Strand, London, WC2A 2LL

Date 29th October 2002

Before: 

THE HONOURABLE MR JUSTICE NELSON 

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Between:

                                            FLABIO GUIANNI FLAVIIS                              Claimant
- and –
                                        MALCOLM CHARLES PAULEY                        Defendant
LESLIE WILLIAM MORRISS
(Trading as Banjax Bike Hire)

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Michael Tillett QC (instructed by Royds RDW, Solicitors) for the Claimant
David Melville QC and Rohan Pershad (instructed by Taylor Wessing, Solicitors) for the Defendant
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Judgment
Mr Justice Nelson: 

1. 	The Defendant’s application is to re-open the issue of liability which had been conceded by letter dated 10.10.01 in a claim arising out of a serious road traffic accident which occurred on the 22nd April 1998. The Defendants paid £702,421.80 into court on 14 February 2002. It was accepted six days later, whilst the defendant’s employment expert, Mr Green, was in Brazil making enquiries into the Claimant’s academic success in view of the Defendants belief that he was exaggerating his claim for loss of earnings. 

2. 	Mr Green’s report revealed that the Claimant had lied about his claim, his age, his prospects and his entitlement to be in the UK. In fact he was an illegal immigrant who had overstayed his limited permission of five days to remain here granted on 11 December 1995. 

3. 	The Claimant has conceded that the stay, which was automatically imposed when he accepted the money paid into court, should be lifted, and that the money taken out on his behalf should be retained by his solicitors and repaid. The only issue before me was whether the Defendants should be entitled to litigate the question of liability as well as quantum, or as the Claimant asserts, only quantum. 

THE FACTS 

4. 	The Claimant arrived in England on 11 December 1995. He was born in Brazil on 30 May 1977. His Brazilian name is Wires De Silva. He arrived in England with a valid Brazilian passport but was only permitted to enter for five days. He failed to report for his return to Brazil and has lived in England, apart from a visit home to Brazil, ever since. 

5. 	He obtained a stolen Italian passport which he purported to be his. The passport showed his name as Fabio Guianni Flaviis, his date of birth to be 30 May 1975 and his place of birth to be in Brazil. The passport was stolen in Naples. It purported to be valid from January 1997 to January 2002. The Claimant has now obtained a new Italian passport to which he is also not entitled, purporting to be valid from 2002 for five years. He also obtained a stolen Italian driving licence, which gives his name as Flaviis, his date of birth as 30 May 1975 but his place of birth to be Parete, Caserta in Italy. 

6. 	These documents, a stolen Italian passport, and the stolen Italian driving licence, enabled the Claimant to present himself as an EU National, entitled to be and remain in the UK. Once he had created the lie in order to be able to stay in England, the Claimant then had to live the lie so as to ensure that his true identity did not cause him to be removed to Brazil. 

7. 	As a consequence the Claimant has deceived many as to his true identity and in the course of doing so, has lied to the court about his identity and the circumstances in which he came to have an Italian passport and an Italian driving licence.  He lie permitted his school records to be falsified so that they coincided with the name on his Italian passport, which was also the name in which he brought these proceedings. The extent to which he has exaggerated his scholastic achievements, his prospects and hence his claim will be for a court to determine on the issue of quantum, but his now admitted lies as to his identify, his age and his possession and use of stolen documents go to the heart, the Defendants submit, of his claim on liability, based as it is on the contract of hire of the motor cycle he was riding at the time of the accident, which he obtained by fraudulent misrepresentation. 

TITLE CLAIM 

8. 	The Claimant was working as a motor cycle courier. In place of his own machine which was out of service, he hired a motor cycle for the purposes of his work on 30 March 1998 from the Defendants. In doing so he presented the stolen driving licence and an insurance certificate which, by virtue of the fact that the claimant did not hold a valid driving licence, was itself invalid. The evidence from the Defendants is that if the true situation had been known the motor cycle would not have been hired to the Claimant. 

9. 	Each week during the course of the hire, the Claimant took the machine to the Defendants for a check and service. On the 21 April 1998 the Defendants issued an MOT certificate in respect of the machine which the Claimant was hiring, certifying that at the date of that examination the requirements of the regulations made under Section 45 of the Road Traffic Act 1988 were satisfied. 

10. 	On the following day, 22 April 1998, the Claimant was riding the motor cycle along the M1 when he lost control of it and fell off. The independent evidence suggests that he was travelling at some 60 mph and that he began to slide along the road with the bike on top of him after he had fallen off. It may be that a lorry ran over him while he was lying in the roadway. He sustained very serious injuries to his right leg, as a result of which it had to be amputated later that day. 

11.	The two lorry drivers, Mr Savage and Mr Paull who were also travelling North along the M1, saw the motor cycle clearly struggling to maintain control. Mr Paull noticed the front wheel of the motor cycle start to wobble and when the motor cyclist was ten to fifteen yards in front of him there was a big wobble, the wheel came around square to the front of the bike and the rider came off. Mr Paull had first seen the motor cyclist when he had come alongside his vehicle which was travelling in the centre lane, the motor cycle being some 6ft or so away from him. He noticed when the front wing started to wobble and thought that it was odd that it had done so as the motor cyclist had not hit anything and the road surface was smooth and okay 

12. 	When the motor cycle was subsequently examined after the accident by the Police Vehicle Examiner, Mr D.J. Batchelor, it was found that the machine was in a ‘totally un-roadworthy condition’ due to severe corrosion of the machine’s frame and the condition of the front road bearings. The rear swing-arm was affected by the corrosion with the result that the machine’s rear road wheel was mis-aligned with the rest of the machine. Wear in the front wheel bearings allowed excessive side to side movement of the road wheel in relation to the spindle. The machine was in such poor general condition that the vehicle examiner was unable to find any specific defect that would have caused the rider to lose control. He said the defects were apparent to whoever was responsible for the machine’s maintenance. The Claimant’s expert, Mr Willoughby, of Peter Graham Associates, found the motor cycle to be in a dangerous condition, not fit for road use because of the corrosion of the rear swing arm and degree of movement in the front road wheel. The condition of the front wheel hearing, prior to its collapse, would have produced vibration to the steering, and the rear wheel mis-alignment would have affected the stability of the motor cycle. 

13. 	The Defendants did not serve an expert report in reply. When they admitted liability they had in their possession a statement from Mr Richards, another lorry driver travelling North along the M1 at the relevant time who had seen the Claimant riding past on his motor cycle at about 70-80 mph and had noticed him again before finally coming across the accident scene where he saw him lying in the middle of the road. He describes in his statement how some 50-65 minutes before coming across the accident scene, the Claimant had ridden so close to his lorry that he was able to and had, run his finger along the side of the lorry. He had done that when a Transit van had also been overtaking the lorry. Mr Richards had also seen the Claimant using his mobile telephone whilst riding. The Claimant had run his finger along the side of Mr Richards lorry twice, and on the first occasion after the motor cycle had gone past his lorry its rider waved to him. It was about half an hour after the second incident that Mr Richards came across the scene of the accident. 

14. 	The Defendants had sought to argue in correspondence that the Claimant was guilty of some 25% contributory negligence and made a Part 36 offer to that effect. This was rejected by the claimant and on 10th October 2001, some two days later, the Defendants informed the Claimants solicitors that liability for the accident was no longer in dispute. 

THE BASIS OF THE DEFENDANT’S APPLICATION 

15.	The Defendants submit that the contract of hire was illegal as formed, and illegal as performed. The contract is therefore void and unenforceable as a result of either fraudulent misrepresentation or illegality. As the Claimant would never have come into possession of the machine had he not made the misrepresentation, and as everything flowed from the contract, that is the end of the matter. No duty of care, can however arise in tort or for breach of statutory dub and the doctrine of ex turpi causa applies. The Claimant cannot contend that there was a separate act of negligence in the checking and servicing of the motor cycle and the granting of the MOT certificate as the opportunity to service only arose out of the illegal contract. 

16. 	The Defendants rely upon Chitty on Contracts 28th Edition, Vol.1 paragraph 17-007, - 17011 and 17-158-161. An illegal contract cannot be compromised see Chitty, para 17-013 and the general principles of public policy applied equally to contract and tort. Thus in SCB v PNSC (2000) 1 LLR 218 at 232 the Court of Appeal said:-

“There is in my view but one principle that is applicable to an action based upon contract, tort or recovery of property. It is, that public policy requires  that the courts will not lend their aid to a man who founds his action upon an immoral or illegal act. The action will not be founded on an immoral or illegal act, if it can be pleaded and proved without the reliance upon such an act.” 

1 7. 	The Defendants also relied upon Ashmore, Benson Pease & Co. Ltd v. A v Dawson Ltd (1973) 1 WLR 828.

18. 	As to tort, it is clear, that the Defendants submitted, from Clerk & Lindsell 18th  Ed. Para 3-03 that the same principles apply and because of public policy no duty of tort could have been owed to the Claimant. His fraudulent misrepresentation prevented any duty in tort arising in the same way as it rendered the contract illegal. The text of para 3-03 states:-

“It is a well established maxim in contract that a claimant cannot found his claim on an illegal act or agreement. The rule applies where the claimant has to rely on the illegality in order to assert his claim. Where a claimants success in tort depends on establishing a contract, and that contract is tainted by illegality, the claim in tort fails too. As a matter of public policy the claimant is not permitted to ground the claim on illegality. No cause of action arises from illegal or flagrantly immoral acts; ex turpi causa non oritur actio.” 

19. 	There is no dispute between the parties as to the test to be applied in deciding whether permission should be given to the Defendants to withdraw their admission of liability. The test is three-fold, firstly whether the application is made in good faith, secondly whether it raises a triable issue with a reasonable prospect of success and thirdly that it will not prejudice the Claimant in a manner which cannot be adequately compensated Gale v Superdrug Store (1996) 1 WLR 1089. Mr Michael Tillett QC on behalf of the Claimant concedes that the Defendants are acting in good faith in making their application and that there is no prejudice to the Claimant which can be put before the court. The sole issue therefore is whether a triable issue arises with a reasonable prospect of success.

20. 	It should he noted that CPR Part 14.1(5) states that:-

“The court may allow a party to amend or withdraw an admission”. 

It is necessary for the court to consider all the circumstances before exercising its discretion under the CPR and to ensure that the case is dealt with justly in accordance with the overriding objective. 

THE CLAIMANT’S RESPONSE TO THE APPLICATION 

21. 	The Claimant submits that there is no proper basis for permitting the Defendants to withdraw their admission of liability. They gave careful consideration before making their admission, having provided a motor cycle which was in a dangerous condition and unfit for the road. The production of a false Italian driving licence does not make the contract of hire illegal in formation, either under statute or of common law. Levy v Yates (1838) 8A & E 129, Chitty 1708. 

22. 	Whilst it was accepted that the Claimant had told many lies, the only one which was relevant to the issue of liability was the production of the false Italian driving licence and the consequential lack of proper insurance. It was arguable that the performance of the contract was illegal in view of the riding of the motor cycle on the road without a valid driving licence or insurance but in such a case the court has to look at the circumstances in order to see whether on the facts and in public policy a Claimant be permitted to sue. The cases and in particular, Saunders v Edwards (1987) 1 WLR 1116, and Euro Diam Ltd v Bathurst (1990) 1 QB 1 required a weighing or balancing exercise to be carried out by the court of all the facts in order to determine the matter. It was only if it would be an “affront to the public conscience” to grant a claimant relief, that the doctrine of ex turpi causa applied. The analysis in Euro Diam Ltd, showed that the defence could not arise, where, as here, it was not any illegal act committed by the Claimant which brought about his loss, but the Defendant’s own breach of contract or negligence in, for example, providing a dangerous motor cycle for his use and permitting him to continue riding it after examination should have revealed that its condition was dangerous. 

23. 	It should he noted that none of the Claimant’s criminality was causative of the accident itself, save in the irrelevant sense that it was a causa sine qua non in that it brought about the hiring. The real cause of the accident and the terrible injuries was the Defendants own fault in providing and continuing to provide a motor cycle in a dangerous condition. 

24. 	The court was faced with the dilemma set out by Lord Justice Bingham in Saunders v Edwards at 1134 where he said:-

“Where issues of illegality are raised, the courts have (as it seems to me) to steer a middle course between two unacceptable positions. On the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of the transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss or how disproportionate his loss to the unlawfulness of his conduct.” 

Here, where the Claimant’s criminality was not a cause of the injury for which he suffers and where the Defendants conduct in providing him with a motor cycle in a dangerous condition was the cause of his injuries, it could not be said that his conduct was so grave that, as a matter of public policy, the Claimant should not be entitled to recover under a contract, or not be owed a duty of care in tort.  It was only in the very clear cases, such as Pitts v Hunt (1990) 3 AER 344, where the unlawful conduct is of a particularly grave nature and brings about the loss which is the subject matter of the claim, that public policy will preclude a duty of care From being owed. Pitts v Hunt also demonstrates that where there is an illegal joint enterprise, it may be impossible to judge what standard of care is owed by the potential tortfeasor. 

25.	In SCB v PNSC Lord Justice Evans considered the balancing exercise necessary in assessing the defence of ex turpi causa and concluded:-

“The conduct of SCB was not so egregious, though potentially unlawful, and its share of responsibility for its own loss was not so weighty that the court had to refuse to entertain the claim.” (Paragraph 57). 

When the facts here are analysed in a similar manner, it can be seen that the conduct of the Claimant was not so serious, nor its share of responsibility for the accident, so weighty, that it could be found that his claim was barred by public policy. The facts of the case are such that the defences of illegality and or ex turpi causa were not properly arguable. 

26. 	I raised with Mr David Melville QC on behalf of the defendants the extent to which he sought to withdraw the admission of liability. He submitted that he sought to open the whole issue including negligence and contributory negligence as the Claimant had now proved to be so incapable of credit that the whole issue of liability should be reopened, even though no new evidence in respect of negligence or contributory negligence had emerged. Mr Michael Tillett QC on behalf of the Claimant submitted that the Defendants had had in their possession all relevant statements on those issues from Mr Paull. Mr Savage and the police, and had made their admitted liability only after unsuccessfully attempting to argue contributory negligence. As nothing new on those issues had emerged, it would be wrong to permit negligence and contributory negligence to be raised by the Defendants now. 

DECISION 

27. 	I have reminded myself that my task is to decide whether there is a triable issue with reasonable prospects of success; I am not deciding the issue itself. I am satisfied on the material and argument before me that, it is arguable that the contract of hire was illegal in its performance, which necessarily involved the commission of criminal offences in driving without a valid driving licence or valid insurance. It seems to me that in those circumstances a court would have to balance and weigh all relevant factors in deciding, firstly, whether a claim could be made under contract and secondly, whether a duty of care in tort was owed. 

28. 	The task of carrying out the balancing exercise is not one which this court can perform at this stage. To attempt to do so would be to decide the issue itself. Nor can it be said that upon any basis the result of such an exercise would so clearly be decided in the claimant’s favour that the matter is not properly arguable by the Defendants. 

29. 	I also consider it to be arguable that the contract was illegal as formed. This is a more difficult argument for the Defendants but it is in my judgment properly arguable. Whether or not a duty of care is nevertheless owed in tort in the circumstances of this case, is a matter which will also have to be determined by the court. I have had a foretaste of the interesting arguments which will be raised upon these issues. What I am clear about is that the matters are arguable and that they cannot be said to be matters which will be so obviously decided in the Claimant’s favour that the Defendants could not properly argue it. 

30. 	I am however equally satisfied that it would be unjust and disproportionate for the Defendants to be able to raise the issue of negligence or contributory negligence at this stage. None of the acts of dishonestly or numerous lies of which the claimant is undoubtedly guilty are relevant to the happening of the accident itself. The Defendants had fully investigated that issue, taken statements from the relevant witnesses including Mr Richards, and made a decision, having failed to persuade the Claimant to accept a deduction for contributory negligence, to admit liability. When they made that decision they had before them all relevant facts before making it. They already suspected the Claimant of exaggerating his claim at that time. Whilst they were not to know the extent to which Mr Green would find dishonesty by the Claimants, they already suspected some dishonesty in his pursuit of his claim and did not have to admit liability when they did. 

31. 	Furthermore, the evidence demonstrates that their decision to admit liability was rational and right. Whatever Mr Richards may have seen, in any event, plainly some miles beforehand, the evidence of Mr Savage and Mr Paull, leaving aside the Claimant’s own evidence, shows that the loss of control of the motor cycle was unexplained by the riding of the Claimant himself, and could only properly be explained by the condition of the machine he was riding. 

32. 	It would in these circumstances be inappropriate to permit the defendants to re-open the issue of negligence and contributory negligence simply upon the basis that the credibility of the Claimant is so damaged that nothing he says can be accepted. Even though the burden of proof is upon the claimant, the independent evidence, without consideration of his own evidence, clearly demonstrates the Defendants were right to admit liability. 

33. 	I therefore give leave to the Defendants to withdraw their admission of liability so that they can put forward a defence that the contract was illegal as formed, alternatively illegal as performed, that no duty of care in negligence or breach of statutory duty was owed, and that the claimants claim must therefore fail. I do not permit them to withdraw their admission of liability so as to re-open the issue of either negligence or contributory negligence.