Snell v Unity Finance Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WILLMER,LORD JUSTICE DIPLOCK |
| Judgment Date | 25 June 1963 |
| Judgment citation (vLex) | [1963] EWCA Civ J0625-1 |
| Date | 25 June 1963 |
| Court | Court of Appeal |
Lord Justice Willmer
Lord Justice Dancewerts and
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal.
From Judge Michael Lee, Q. C.
Portsmouth County Court.
Revised
Mr DAVID P. CROOM-JOHNSON, Q. C., and Mr ERIC B. McLENNAN (Instructed by Messrs Waterhouse & Co., Agents for Messrs Glanvilles, Portsmouth) appeared on behalf of the Appellants (Defendants).
Mr ALAN S. TRAPNELL and Miss MONIQUE S. VINER (instructed by Messrs Watkins, Pulleyn & Ellison, Agents for Messrs Bernard Chill & Axtell, Southampton) appeared on behalf of the Respondent (Plaintiff).
This is an appeal from a Judgment of His Honour Judge Lee, given at Portsmouth County Court on the 13th November 1962, in an action brought by the plaintiff as hirer against a finance company in respect of the hire purchase of a Hillman motor car. The plaintiff's case was that the hire purchase agreement was subject to an implied condition that the car should be reasonably fit for the purpose for which it was hired, but that in breach of that condition the vehicle was not in factfit having regard to what was described as a "congeries of defects". That, it was contended, amounted to the breach of a fundamental condition of the contract, for which the plaintiff claimed damages. The defence consisted of a denial that there was any such implied term of the contract. Alternatively, if there was such an implied term, it was denied that the car was not fit for the purpose for which it was hired. The defendants in turn counterclaimed for the balance of the monthly instalments still due under the contract.
Not unnaturally, the evidence in the case was mainly directed to the condition of the motor car. The plaintiff gave evidence and was supported by two experts who also gave evidence in support of his contention. The only evidence called for the defence was that of a man named Jackson. Who was the agent for the dealer through whom the hire purchase transaction was effected.
The learned County Court Judge accepted the evidence of the plaintiff. He found that the condition of the car was such as to constitute a fundamental breach of the hire purchase agreement. In the result he held that the plaintiff was entitled to claim damages, and he assessed those damages at a sum which, I think, represented the instalments which the plaintiff had already paid, less an allowance for the value of the car and something for its use during the period whilst he had it. The learned Judge also dismissed the counterclaim.
The hire purchase agreement was dated the 8th October 1960. I need, I think, refer only to a few of the details entered in the schedule. The cash price of the car was stated to be £210. The cash allowance (that is to say, the amount said to have been paid in cash by the hirer) was stated to be £50, leaving a balance of £160. The addition of hire purchase charges brought the total up to £199.12s., which sum was to be paid by twenty-four monthly instalments of £8. 6s.4d. per month. The total hire purchase price, arrived at by adding £1 in respect of the option to purchase, was £250.12s.
In fact this particular car had been advertised for sale in a newspaper for the price of £185. We have been referred to the terms of that advertisement. That price, namely £185, put the plaintiff in some difficulty, for The Hire-purchase and Credit Sale Agreements (Control) Order 1960, which was then in force, required that in respect of a transaction such as this, a minimum deposit of 20 per cent of the cash price (that is to say, of £185) would have to be paid before entering into the hire purchase agreement. 20 per cent of £185 was more than the plaintiff could afford to pay in cash. To get over this difficulty the plaintiff and Jackson, according to the plaintiff's evidence (and as found by the learned Judge) resorted to what the Judge described as a dishonourable trick The plaintiff in fact paid only £25 in cash, but the hire purchase agreement (the material part of which I have already referred to) was filled up so as to show a false cash price of £210, and a false allowance for cash of £50. By taking that course, the plaintiff and Jackson made it appear as though the terms of The Hire-Purchase and Credit Sale Agreements (Control) Order had been complied with.
The defendant finance company was not, of course, a party to this arrangement, and so far as they were concerned they did not know anything other than that £210 was a perfectly proper cash price, and that £50 had in fact been paid in cash. It should be said that Jackson in his evidence denied that he was any party to a trick such as the plaintiff had described. It was his story that the plaintiff had in fact paid him £50 in cash, and he said in terms in the course of his evidence that the plaintiff's story was quite untrue. I think it is quite obvious, even from a reading of the learned Judge's note, that Jackson's evidence on this part of the case was completely unsatisfactory, and, not surprisingly, he was in fact disbelieved by the Judge, who found that the procedure described by the plaintiff had in fact been adopted.
Having found chose facts, the learned Judge did not give any effect to them, except in so far as he relied on the finding as a ground for discrediting Jackson's evidence on other parts of thecase. The defendant company now appeals to this court, and by the notice of appeal raises the question whether the agreement was ever a lawful agreement. Grounds 1 and 2 of the original notice of appeal are in these terms: "(1) That there was no evidence upon which the learned Judge could find that the agreement sued upon in the action was a lawful agreement; (2) That the conclusion of the learned Judge that the said agreement was a lawful agreement was against the weight of the evidence".
On the hearing of the appeal, leave was sought from us to amend the notice of appeal by striking out the two paragraphs and inserting a new paragraph 2, which perhaps I ought to read in full having regard to the course the argument has taken. What it is asked to insert is this: "That the learned Judge should have directed himself that the agreement sued upon was an illegal and/or unlawful agreement and unenforceable in law by reason of the following facts and matters: (a) that the learned Judge found as a fact that the deposit actually paid by the plaintiff was £25 and not more; (b) that by virtue of The Hire-Purchase and Credit Sale Agreements (Control) Order 1960 the minimum deposit for a transaction such as that sued upon was 20 per cent; (c) that the said sum of £25 was not and did not represent 20 per cent of the purchase price and was in the premises illegal; (d) that the said illegality appeared on the face of the plaintiff's case herein and on the facts as found by the learned Judge". We have so far given no ruling as to whether leave to amend the notice of appeal should be granted, taking the view that that must depend upon the merit of the point as it was developed in argument.
There is. I think, no room for doubt that on the learned Judge's findings, this was an unlawful transaction, in that it violated the terms of the Control Order to which I have already referred. It is the defendants' case on this appeal that, the truth having come to light on the plaintiff's own evidence, the court should not entertain any claim by either party in respect of such an unlawful transaction. In pursuance of that contention thedefendants readily admit that they themselves are equally disentitled from pursuing their counterclaim. No argument on the counterclaim has been addressed to us.
The plaintiff, on the other hand, says that it is not open to this court to give effect to the argument presented on behalf of the defendant company, since there was no allegation of illegality raised in the pleadings, and no point as to the illegality of the transaction was argued in the court below. The defendant company in turn counters that argument by saying that this is irrelevant, for the court of its own motion is bound to take note of the illegality which has been made to appear on the evidence, and, taking note of it, must refuse its assistance to give relief to either party.
The principle with regard to unlawful contracts was stated in 1775 by Lord Mansfield in ( Holman v. Johnson volume 1 Cowper's Reports, page 341), and the passage to which I would refer appears at page 343: "The objection that a contract is immoral or illegal as between plaintiff and defendant sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed, but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. 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 an illegal act. If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon this ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis".
We have been referred to a number of other cases in which that principle has been asserted. In ( Scott v. Brown, Peering, McNab & Company 1892 volume 2 Queen's Bench Division, page 724) the principle was...
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Contract Law
...12.78 The approach taken in ANC Holdings is clearly right. As Diplock LJ (as he then was) had observed in Snell v Unity Finance Co Ltd[1964] 2 QB 203 at 220: … any other rule would make a mockery of the law and leave it open to two parties to an illegal contract to enforce it as if it were ......