England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE ALTMAN
(sitting as a deputy High Court judge))

		Royal Courts of Justice Strand London, WC2
		2nd November 2004

1. LORD JUSTICE BUXTON: This is an application for permission to appeal from a decision of His Honour Judge Altman sitting as a deputy judge of the Queen's Bench Division, a decision that was handed down on 16th April 2004. The judge's judgment is extremely full, extending to 50 pages of typescript and 146 paragraphs. I have also had the benefit on this application of an extensive skeleton argument by Mr Lederman, who appeared, as I understand, for Mr Soteriou below. The skeleton argument extends to 44 pages and 100 paragraphs, with extensive reference to authority.
2. I do not need in this judgment to set out the underlying facts. They are very thoroughly canvassed in the judge's judgment. If anyone other than the parties wishes to inform themselves further about this matter, they can easily apply there.
3. This, as is recognised, is a second appeal under the provisions of paragraph 52.13 of the Civil Procedure Rules, since the learned judge was hearing an appeal on a strike-out application from the decision in that application of Master Leslie. It is therefore necessary before this court can grant permission for it to be established that the appeal raises an important point of principle or practice. By that is meant not merely that such a point might arguably be discerned in the process, or might arise in the course of the appeal, but that the appeal significantly centres on such a point and that it is right that in the context of this appeal the facilities of this court should be used in order to decide that point.
4. The issues of principle said to arise are set out in paragraph 2 of the skeleton argument. They centre on, though are not limited to, the compatibility of the English law doctrine of illegality and more particularly (because the doctrine is not a single doctrine but applies differently in different chapters of the law) the law of illegality as it affects liability in contract.
5. The Employment Tribunal found in respect of Mr Soteriou's relations with his employers and of misrepresentations to the income tax authorities, in a passage quoted by the Master in paragraph 13 of his judgment:

"We find that, far from being a victim of Mr Brinton's [that is a representative of the employers] threatening and overbearing manner and being forced to maintain a status of self-employment for fear of losing his job, we conclude that Mr Soteriou was the prime mover in ensuring that his self-employed status was preserved following the Contributions Agency investigation. Not only that, but he made fraudulent statements to the investigators, knowing full well that the true position would have prejudiced that status. ... Accordingly, we find that it would be against public policy to allow Mr Soteriou to come to this tribunal to try to claim the benefits accorded to employees under the employment rights legislation. He volunteered to exclude himself from the employment protection system from the outset."

6. They quoted, and significantly in this context quoted, a very well-known passage from Lord Denning MR in support of that view in his judgment in Massey v Crown Life Insurance [1978] ICR 590, where Lord Denning said:

"An arrangement between two parties to put forward a dishonest description of their relationship so as to deceive the revenue would clearly be illegal and unenforceable."

7. The first question that the judge had to deal with, and which he dealt with at very considerable length, was whether there was an issue estoppel arising in the present, what I will call civil, proceedings from the findings of illegality in the Employment Tribunal. He so held at paragraph 143, sub-paragraph (i), as follows:

"The findings as to illegality in the Employment Tribunal operate as an issue estoppel. Accordingly, the High Court would be bound to find that the contract for breach of which the claimant seeks to sue is unenforceable and the claim would be bound to fail. This is also the case even if this is not a case of issue estoppel, but rather of alleged abuse, for the new matters are matters that could and should reasonably have been adduced before the Employment Tribunal."

The latter is a reference to extensive argument that had been addressed to him on the principle of Henderson v Henderson.

8. It is submitted by Mr Lederman that the present case would not be one of issue estoppel and, as I understand it, he would wish so to contend before this court. He says, firstly, the actions are not the same -- that is to say, Mr Soteriou can claim in the present claim against his employers whether or not he is employed or self-employed, and therefore the particular point precluding his access to the Employment Tribunal does not arise -- and, secondly, that since the decision of the Employment Tribunal the law has changed or may have changed in view of the intervention of the Human Rights Act 1998.
9. I would be prepared for present purposes to accept that one or other of those arguments might succeed. I do not say would succeed, but at least might succeed. But the immediate problem for Mr Soteriou in this case is the findings of fact made by the Employment Tribunal which I have just set out. True it is that again those findings of fact would not necessarily bind the court that was hearing these present proceedings. That also is a question that might arguably be contested under the heading of issue estoppel. But in the exercise on which we are presently embarked -- that is to say, whether this court should grant permission to appeal from the judge on the point that he decided -- it would be artificial not to proceed on the basis that in the present proceedings either Mr Soteriou would be bound by those findings or, at the very least, there is a very significant danger that if the facts were re-litigated the same result would be produced. I do not say it would be produced, but it is very likely that it would be.
10. The first question then is whether on the domestic law, forgetting for the moment the Convention, the doctrine of illegality would apply in Mr Soteriou's case.
11. Mr Lederman has taken me to two recent authorities, the judgment of this court in the case of Hall v Woolston Hall Leisure Ltd [2001] 1 WLR 225, and also the judgment of Colen v Cebrian [2004] ICR 568, decided by this court on 20th November 2003. The tests stated there distinguished between a case where the person seeking to enforce a contract had actually to rely on his illegal action and a case where he does not. Mr Lederman says that, for the reasons already indicated, this is a case where Mr Soteriou would not have to rely on the contract in respect of which he deceived the revenue. Again, I would accept that for present purposes. But if that is so, one then goes on to the question raised by Waller LJ in Colen, a passage relied on in this case:

"But if he does not have to [rely on his illegal action] ... then in my view the question is whether the method of performance chosen and the degree of participation in that illegal performance is such as to 'turn the contract into an illegal contract' ..."

The learned Lord Justice then quoted a number of well-known authorities, including the leading case decided by Devlin J (as he then was) of St John Shipping Corpn v Joseph Rank Ltd [1957] 1 QB 267.

12. The same view was taken by Peter Gibson LJ in Hall v Woolston Hall. The Lord Justice said:

"It is a question of fact in each case whether there has been a sufficient degree of participation by the employee."

13. That, in my respectful judgement, is the test that would be applied in this case. On the facts of this case, there is a very high degree of likelihood, in view of the findings of the Employment Tribunal as to the involvement of and the motive force on the part of Mr Soteriou, that the law of domestic illegality would indeed bite in this case. In so saying I am not deciding that point, but I am merely for present purposes saying that it would be inappropriate to allow permission to appeal on any assumption that Mr Soteriou may escape from the domestic law of illegality in the present proceedings.
14. We then have to go on and consider whether Article 6 is engaged in this case; that is to say, whether the domestic law of illegality offends, or potentially offends, against the provisions of Article 6 allowing access to a court. Although the relationship between that Article and certain aspects of the domestic law has caused some difficulty in the past, most notably through the decision of the European Court of Human Rights in the case of Osman, it is now clearly established, both in Strasbourg and in the courts of this country, that the European Convention does not guarantee to the citizens of the member states any particular content for their civil rights. That was established by the Strasbourg court in the case of Z v United Kingdom, and was reinforced and adopted by the House of Lords in the case of Matthews v Ministry of Defence, more particularly in paragraph 3 of the speech of Lord Bingham of Cornhill.
15. In my judgement, it is clear -- and even if it is not clear, it is not sufficiently unclear to justify the pursuit of the point in this case as a second appeal -- that illegality is a question of the content of the right in domestic law, just as other defences (as they are called) to contractual claims, such as misrepresentation, duress and infancy, similarly define the content of the right that the claimant can assert when he comes to court. What they do not do is deprive the claimant of a right of access to the court in the first place. Putting it crudely, and no doubt it would be said somewhat broadly, Mr Soteriou can come to this court and have his issues litigated: even though he does not like the law that he finds when he gets here.
16. In that circumstance, therefore, the judge in my view was right to ask whether the law of illegality creates a procedural bar. It does not take away a right already accrued; it defines the content of that right in the place. It is, for instance, not like the law of limitation, which does say that you cannot come to court to assert what otherwise was a contractual right because you have failed in a procedural step; that is to say, not getting your case in early enough.
17. I was shown the case of Vakante v Addey & Stanhope School [2004] EWCA Civ 1065 in this connection. As I pointed out to Mr Lederman, it seemed to me that this court in that case was simply not addressing its mind to any question of Article 6. I did not find the case of any help, certainly not in any way establishing a perceived inconsistency between Article 6 and the doctrine of illegality.
18. All that being so, none of the questions of proportionality that were ventilated in the pleadings can arise either. Questions of proportionality become involved in Article 6 claims, even though the Article 6 right is an absolute right, only when it is asserted that a procedural step is an unreasonable bar to access to the court, for instance in cases of limitation. I therefore do not agree that Article 6 is engaged here or that it would be arguable that it was.
19. It was further claimed that Article 1 of the First Protocol was engaged. For the moment I would be prepared to accept that a future right can be a possession under Article 1, though the limits of that jurisprudence are far from clear in Convention authorities, more particularly in view of the early and so far not contradicted doubts cast on that rule in the case of Marckx v Belgium. However, what must be available in the future must be indeed a legal right. On the assumption that I have made for the purposes of this judgment that the law of illegality bites in this case, or that there is a high likelihood that it would, Mr Soteriou had no expectation at all that he would have a legal right in this court. That would only even structurally be the case if he did have a right but in some way he was prevented from litigating it by the law of illegality. As I have already said in connection with Article 6, that is not the right way to look at it. All that he had was a hope, a hope based on an incorrect view of the law.
20. Therefore that issue does not arise either. Even if it did, Mr Soteriou would be in serious difficulties in view of the provision of Article 1 that allows the state to make provisions depriving persons of possessions for securing "the use of property in accordance with the general interest". I quite agree that the wording of that provision does not easily fit Mr Soteriou's case. That is because Mr Soteriou's case does not easily fit into Article 1 in the first place; but it is undoubtedly the case that the public interest would come in in order to consider the position of the revenue.
21. I was taken to the case in this court of Stransal, also unreported. Mr Lederman said that in that case the court had been prepared to contemplate a right affected by the doctrine of illegality as being a possession, but on facts, as he said, much more serious than this case the court had said that such interference was justified.
22. Speaking for myself, I think that that is a rather optimistic analysis of that case. It is clear from the judgments both of Rix and of Laws LJJ at paragraphs 65 and 97 of the transcript that they approached the matter of whether illegality was affected by Article 1 as a matter of assumption not of decision -- that is how they express it -- because they were completely satisfied that the interference (if interference it was) was justified. I do not think that that case is in any way authority for saying that Mr Soteriou should be allowed to proceed on the assumption that it will be established that Article 1 is engaged in this case. In my view it clearly is not.
23. Complaint was raised under Article 14 that the present law of contract as it affects Mr Soteriou deals with him in a discriminatory way compared with the outcome that is to be found in cases like Tinsley v Milligan. I do not think that that point is arguable either. First of all, it is in my view very doubtful whether that issue can be said to come within the ambit, in terms of Article 14, of any Convention right. How that question is interpreted is a matter of some difficulty, following the decision of the House of Lords in the case of Ghaidan v Godin-Mendoza. In argument to their Lordships' House there was severe criticism made of the view that this court had taken in the Court of Appeal as to the reach of Article 14. The House did not need to decide that, but at the very least the matter is now in some doubt. That of course would not be a reason itself for not allowing Mr Soteriou permission on that point. But whether or not this is in principle an Article 14 case, I find it impossible to say that the law of illegality operates in a discriminatory way. Exactly the same rules are applied to everyone, Tinsley v Milligan or this case. It just so happens that the domestic law applies a different conclusion in some cases from that which it does in others. That is not a sufficient ground for saying that the matter is discriminatory, simply because a part of domestic substantive law creates different rights in one case rather than in another.
24. For all those reasons, therefore, I do not consider that there is any point in this case that is sufficiently clear to justify the bringing of a second appeal and I would not grant permission.

ORDER: Application for permission to appeal refused.

(Order not part of approved judgment) ______________________________