Illegal Contracts Does Not Preclude Discrimination Claims
In Hounga v Allen, the U.K. Supreme Court addressed an issue that has not received much attention from the courts recently: the defence of illegality, also called the “ex turpi causa” doctrine. The U.K. Supreme Court had the opportunity to shed light on this defense in the context of employment discrimination towards an illegal immigrant.
The appellant, Ms. Hounga, came from Nigeria to the United Kingdom under a false identity following arrangements made with the respondent, Mrs. Allen. Pursuant to these arrangements, Mrs. Allen promised Ms. Hounga £50 per month to work as a housekeeper and the opportunity to go to school. After 18 months, Mrs. Allen evicted Ms. Hounga from her home and dismissed her from her employment.
Ms. Hounga initally brought both contract claims and complaints in tort for discrimination, claiming that Mrs. Allen abused Ms. Hounga’s illegal immigration status.
Mrs. Allen claimed that it was unlawful (and indeed a criminal offence under the Immigration Act 1971) for Ms. Hounga to enter into a contract of employment with Mrs. Allen. Unlawful discrimination is, however, a statutory tort, whereby the application of the defense of illegality is “highly problematic” ().
The only claim to reach the Supreme Court was the tort complaint, for which the Court of Appeal had held that the illegality formed a material part of Ms. Hounga’s complaint and that to uphold it would be to condone the illegality.
The Supreme Court came to the unanimous conclusion that Ms. Hounga’s complaint cannot be defeated by the defence of illegality.
The five judges were of the opinion that there was no inextricable link or close connection between Ms. Hounga’s immigration offences and her claim in torts, the illegal contract being “no more than the context in which Mrs Allen then perpetrated the acts of physical, verbal and emotional abuse by which, among other things, she dismissed Ms. Hounga from her employment.” ()
As there was no sufficient connection between Ms. Hounga’s illegal conduct and her claim, the Court concluded that allowing her to recover for the tort of discrimination would not amount to the court condoning illegality.
Although reaching the same conclusion, Lord Wilson, writing for the majority, went further in his reasons in addressing the issue from the standpoint of balancing public policy considerations. While the minority, i.e. Lord Hughes, was reluctant to use a “separate trumping test of public policy”, Lord Wilson supported his conclusions by stating that applying the defence of illegality to Ms. Hounga’s claim would run strikingly counter to the public policy against human trafficking.
The majority provide an approach whereby competing public policy interests are balanced, whereas the minority do not think that there should be a “separate trumping test of public policy” (). Even if Ms. Hounga’s contract claim were not challenged before the Supreme Court, Lord Wilson suggested that her claim could have been upheld for public policy reasons.
It will be interesting to see if this decision echoes in Canada, just as there were recent debates on the enforceability of clauses based on public policy considerations. While the use of the doctrine of ex turpi causa is not a genuine issue in Canadian contract law, Lord Wilson’s words may open the door to a claim seeking the enforcement of an illegal contract in Canada, whereby public policy considerations militate against applying the defense of illegality.
Hounga v. Allen,  UKSC 47
Date of Decision: July 30, 2014
defence of illegability ex turpi causa public policy Supreme Court of United Kingdom