Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2017] CSOH 42

CA110/16

OPINION OF LORD TYRE

In the cause

D GEDDES (CONTRACTORS) LIMITED

Pursuer

against

NEIL JOHNSON HEALTH & SAFETY SERVICES LIMITED

Defender

Pursuer:  R Dunlop QC, Pugh; Thorntons Law LLP

Defender:  M Macleod QC, G Reid; CMS Cameron McKenna LLP

14 March 2017

Introduction
[1]        On 26 July 2012, Mr Joseph Troup, an employee of the pursuer, sustained a fatal accident while working at the pursuer’s premises at Hatton Mill Quarry, Angus.  Mr Troup was the driver of a lorry which was in the course of tipping a load of materials into a feed hopper.  At the edge of the raised area above the hopper there was a stop block referred to as a bund, whose purpose was to prevent lorries from reversing over the edge.  As Mr Troup went to tip his load, he reversed his lorry over the bund into the hopper and was killed.

[2]        The accident was investigated by the Health and Safety Executive.  It was found that there was a build up of tipped sand and gravel in front of the bund that had allowed it to act as a ramp over which a large-wheeled vehicle was capable of driving.  The HSE determined that the stop block had been ineffective due to a combination of insufficient height and the ramping effect of the sand and gravel. 

[3]        The pursuer was charged on indictment with a breach of Regulation 6 of the Quarries Regulations 1999, which requires a quarry operator to take the necessary measures to ensure, so far as is reasonably practicable, that the quarry and its plant are designed, constructed, equipped, commissioned, operated and maintained in such a way that persons at work can perform the work assigned to them without endangering their own health and safety or the health and safety of others.  A plea of guilty was tendered.   On 12 February 2015, the pursuer was convicted of the offence at Forfar Sheriff Court and, following a plea in mitigation, was fined £200,000.

[4]        At the time of Mr Troup’s accident, the defender was engaged by the pursuer as a health and safety advisor with regard to the operation of the quarry.  As part of the provision of that advice, the defender undertook regular inspections of the quarry and supplied inspection reports to the pursuer.  In this action the pursuer seeks to recover the £200,000 fine from the defender.  The pursuer avers inter alia that an ordinarily competent health and safety adviser exercising ordinary skill and care would have advised it that the bund was lower than the minimum height required by the relevant Approved Code of Practice, and of the need for the bund to be as vertical as possible to avoid ramping.  Had it been so advised, the pursuer avers that it would have taken the steps necessary to rectify those defects before the accident and resultant prosecution.

[5]        The defender denies having been negligent or in breach of contract, and contends inter alia that the accident occurred due to negligence on the part of the pursuer in failing to take measures to address the build up of tipped material in front of the bund.  The pursuer in turn also denies having been negligent.  The defender further asserts, however, as a preliminary issue, that the pursuer is not entitled to recover as damages a penalty imposed upon it for its own criminal act.  That issue came before me for debate.  The defender moved the court to grant decree of absolvitor.

Argument for the Defender
[6]        The defender’s argument was founded upon a special application of the general policy of the law that ex turpi causa non oritur actio, ie that no action may be founded upon turpitudinous conduct.  Under reference to the speech of Lord Hoffmann in Gray v Thames Trains Ltd [2009] AC 1339 at paragraph 32, it was submitted that this special application of the ex turpi causa principle had a wider and a narrower form.  In its wider form, compensation was not recoverable for loss suffered as a consequence of one’s own criminal act.  In its narrower form, compensation was not recoverable for damage that flowed from loss of liberty, a fine or other punishment lawfully imposed as a consequence of one’s own unlawful act.  The present case fell within the narrower form of the application.  It had a particular policy justification, namely to avoid inconsistency between the criminal and civil law.  Failure to have regard to the need for consistency was apt to bring the law into disrepute: cf Lord Rodger of Earlsferry in Gray v Thames Trains Ltd at paragraph 77.

[7]        In the present case it had to be assumed that the fine imposed by the criminal court reflected the pursuer’s culpability after taking account of any mitigating factors.  This was not a fixed penalty.  It would have been for the High Court of Justiciary on appeal, and not a civil court, to determine whether the sentence had been appropriately imposed on the pursuer.  It would, moreover, undermine the intention of Parliament if a person with statutory responsibility could escape punishment by passing the buck to another.  Regulation 21 of the Management of Health and Safety at Work Regulations 1999 (SI 1999/3242) provided expressly that it was not a defence to criminal proceedings that the contravention had occurred because of an act or default on the part of a health and safety advisor.

[8]        There was no exception from the narrower rule for strict liability cases.  The authorities founded upon by the pursuer were almost all wider rule cases where the particular policy issue of conflict between criminal and civil law did not arise.  The reasoning of the Court of Appeal in Osman v J Ralph Moss Ltd [1970] 1 Lloyds Rep 313, the case principally founded upon by the pursuer, was unsatisfactory and should not be followed.  The Court of Appeal ought instead to have followed the robust statement of policy by Rowlatt J in R Leslie Ltd v Reliable Advertising and Addressing Agency Ltd [1915] 1 KB 652.  This court should find the analysis in Gray v Thames Trains Ltd to be more persuasive than that in Osman.  The policy in relation to non-recovery of loss arising from lawful punishment was clear.

Argument for the Pursuer
[9]        On behalf of the pursuer, it was submitted that the applicability of the ex turpi causa principle could not be determined without proof.  The authorities established that the principle applied where the offence of which the claimant had been convicted required proof of mens rea: for example, in Gray v Thames Trains Ltd the claimant, although suffering from mental disorder allegedly caused by the defendant’s negligence, had had the necessary mens rea to commit the offence of manslaughter.  In the case of a strict liability offence where mens rea was absent, there was no policy reason to deny a right of recovery.  Osman v J Ralph Moss Ltd, in which a motorist convicted of driving without insurance was held entitled to recover his fine from an insurance broker who had misrepresented to him that he was insured, was authority for the proposition that the exclusion of a right of recovery did not apply in such a case.  That decision had been cited without adverse comment in text books.  It had been referred to by the Court of Appeal in Safeway Stores Ltd v Twigger [2011] 2 All ER 841 (Pill LJ at para 49) and by the Supreme Court in Patel v Mirza [2016] 3 WLR 399 (Lord Sumption at para 242) without any suggestion that it had been wrongly decided.  Reference was made to a number of other authorities which were consistent with the approach in Osman.

[10]      In policy terms, it was in the public interest that employers be obliged to act on expert health and safety advice: that was why the 1999 Regulations made it compulsory to employ such advisors.  Denying a claim against a negligent advisor did not enhance the protection of employees.  The policy considerations were different from those applicable when dealing with turpitude on the part of the claimant.  It would serve no good policy objective to deny a right of action in circumstances where the act or omission resulting in the imposition of a criminal penalty was neither intentional nor actionably negligent.  As a general rule, where there was a wrong, there should be a remedy (Jones v Kaney [2011] 2 AC 398, Lord Dyson at para 113).

Decision
[11]      I was not referred to, and am not aware of, any Scottish authority bearing directly on the point at issue.  Senior counsel for the pursuer helpfully drew my attention to Campbell v Campbell (1840) 1 Rob 1 (reported more fully at 7 Cl & F 166), in which one of the partners in a distillery business which had reached a settlement for payment of a penalty after conviction for purchasing illicitly distilled whisky sought to recover from the other partners a proportion of the sum that he had paid.  Unfortunately, because the ex turpi causa point had not been insisted upon by the defenders prior to or during the jury trial at which the case was heard, the House of Lords declined to entertain it (see the Cl & F report at 177-8).  The decision is accordingly of little assistance, and it is appropriate for this court to look to English (and other) authorities for guidance.

[12]      There is no absolute rule in English law that a person who has committed a criminal act is precluded from recovering damages sustained as a consequence of it.  In Burrows v Rhodes and Jameson [1899] 1 QB 816, which was an action for damages by a participant in the illegal Jameson raid on the South African Republic in 1895, the court held, as narrated in the headnote, that

“Where a person is induced by the fraudulent misrepresentation of another to do an act which, in consequence of such misrepresentation, he believes to be neither illegal nor immoral, but which is in fact a criminal offence, he has a right of action against the person so inducing him for damages sustained by him in consequence of his having done such act.”

This is, in effect, the other side of the coin from the wider form of the application of the ex turpi causa principle.  The matter was put thus by Denning LJ in Strongman (1945) Ltd v Sincock [1955] 2 QB 525 at 535:

“It is, of course, a settled principle that a man cannot recover for the consequences of his own unlawful act, but this has always been confined to cases where the doer of the act knows it to be unlawful or is himself in some way morally culpable.  It does not apply when he is an entirely innocent party.”

Similarly, in Clunis v Camden and Islington Health Authority [1998] QB 978, the Court of Appeal observed:

“In the present case the plaintiff has been convicted of a serious criminal offence.  In such a case public policy would in our judgment preclude the court from entertaining the plaintiff's claim unless it could be said that he did not know the nature and quality of his act or that what he was doing was wrong.”

More recently, in Les Laboratoires Servier v Apotex Inc [2015] AC 430, Lord Sumption stated (para 29):

“It is right to add that there may be exceptional cases where even criminal and quasi-criminal acts will not constitute turpitude for the purposes of the illegality defence.  In Gray v Thames Trains Ltd [2009] AC 1339, para 83, Lord Rodger of Earlsferry suggested that some offences might be too trivial to engage the defence. In general, however, the exceptional cases are implicit in the rule itself.  This applies in particular where the act in question was not in reality the claimant’s at all.  Leaving aside questions of attribution which arise when an agent is involved, and which are no part of the present appeal, there is a recognised exception to the category of turpitudinous acts for cases of strict liability, generally arising under statute, where the claimant was not privy to the facts making his act unlawful: see Stone & Rolls Ltd v Moore Stephens [2009] AC 1391, paras 24, 27, per Lord Phillips of Worth Matravers.  In such cases, the fact that liability is strict and that the claimant was not aware of the facts making his conduct unlawful may provide a reason for holding that it is not turpitude at all.”

Gray v Thames Trains Ltd and Clunis v Camden and Islington Health Authority are both examples of cases where a claimant had personal (albeit diminished) responsibility for a criminal act, and was accordingly not entitled to sue for losses sustained as a result of having committed and been convicted of the offence. 

[13]      The question for determination in the present case, however, is whether a “strict liability” exception of the kind described by Lord Sumption in Les Laboratoires Servier applies to narrower form cases, ie where the loss that the claimant seeks to recover arises as a consequence of a punishment (or other disposal) imposed by a criminal court.  The clearest authority in favour of the pursuer’s contention that such an exception does apply is Osman v J Ralph Moss Ltd, the facts of which have already been noted.  Sachs LJ observed (page 316):

“Next I turn to the fine of £25.  Having examined the authorities as to cases where the person fined was under an absolute liability, it appears that such fine can be recovered in circumstances such as the present as damages unless it is shown that there was on the part of the person fined a degree of mens rea or of culpable negligence in the matter which resulted in the fine.  The onus in cases such as the present is on the defendants, who were the true cause of the sequence of events leading to the fine, to show that there are circumstances which make that fine irrecoverable as damages by the plaintiff…”

Edmund Davies LJ acknowledged (at 318) that there had been conflicting decisions as to the recoverability of a fine in civil proceedings, noting that recovery had been allowed in Cointat v Myham & Son [1913] 2 KB 220 but not in R Leslie Ltd v Reliable Advertising and Addressing Agency Ltd (above).  He regarded the former as preferable and more applicable to the circumstances of the case before him.  Phillimore LJ at 319-20, while noting that it had not been very fully argued, addressed the policy issue and concluded:

“Here is a case of absolute liability.  This man incurred that liability through no fault, no negligence or dishonesty on his part.  He incurred it because he was grossly misled by the insurance brokers whose duty it was to advise him.  It would, as I think, be quite wrong in such circumstances if he was not able to recover the amount of this fine as a just debt.”

[14]      The court in Osman thus took a different view from the one that had been taken in R Leslie Ltd v Reliable Advertising and Addressing Agency Ltd, a case concerning the illegal advertising of money lending to minors, by Rowlatt J who stated (page 658):

“I confess that when first I saw the nature of this action I formed and indicated a strong opinion that it was misconceived, on the broad ground that a person convicted of a criminal offence could never have the assistance of a civil Court to ease himself of the punishment by the recovery over either of the amount of any fine or costs or of damages to compensate him for any imprisonment, and that there could be no difference between cases where the Legislature had made an act or default punishable as a crime without the existence of a guilty mind and any other class of offence.”

Rowlatt J did not have to decide the case on the basis that mens rea was irrelevant, because the statutory offence of which the claimants were convicted could only have been committed “knowingly”.  Burrows v Rhodes and Jameson could accordingly be distinguished, and the Leslie case is not authority for the proposition that absence of a “guilty mind” is irrelevant.

[15]      The decision in Osman v J Ralph Moss Ltd does not stand entirely alone.  It is supported by observations, in other cases, regarding fines, penalties, and the consequences of other forms of criminal sanction.  In Stone & Rolls Ltd v Moore Stephens [2009] AC 1391, Lord Walker of Gestingthorpe offered the following example (para 179):

“…Suppose for the sake of argument that a trader engages an accountant for the primary and express purpose of preparing financial statements that comply with all the requirements of company law and tax law, so that the lawfulness of the financial statements is the very thing that the accountant undertakes to do; and suppose that the accountant negligently fails to perform this task, and the trader is in consequence liable to some penalty or criminal sanction.  Could the accountant meet a claim for professional negligence by pleading the ex turpi causa defence?  It is obviously impossible to answer that question without knowing more about the facts.  If the trader had honestly supplied information which he believed to be correct and complete, and the accountant had negligently failed to notice that the information could not be correct and complete, it seems unlikely that such a regulatory breach, not involving dishonesty, would bring the ex turpi causa principle into play.”

In Safeway Stores Ltd v Twigger (above), Longmore LJ observed at paragraph 18 that “it has not been expressly decided whether the maxim (in either its narrower or wider version) applies where the criminal act is one of strict liability and the claimant may not have been at fault at all”.  This is somewhat curious because, as noted by Pill LJ in the same case at paragraphs 49-50, the point had been decided in Osman.  Pill LJ continued (paragraphs 51 and 52):

“It is not easy to provide a single, simple rule which applies to the wide range of situations in which civil claims may follow a conviction or quasi-conviction.  The principle is one of law but its application will vary with the circumstances.  Findings in this case, or by the House of Lords in Gray’s case, do not in my judgment necessarily have the effect of overruling cases cited where the principle has not been applied.

On the present statutory scheme, the answer is in my view clear but other situations may be more complex. Save to comment that there is a theme that, where there is a personal responsibility for the conviction, the principle ex turpi causa is normally applied, it is not necessary to consider them further.”

There is no suggestion here that a different test would apply to the narrower form of application of the ex turpi causa principle.

[15]      Further afield, the Singapore Court of Appeal held in United Project Consultants Pte Ltd v Leong Kwok Onn [2005] SGCA 38 that a company penalised for an innocent error in its tax return was entitled to recover a statutory penalty from the accountant who had negligently failed to warn the company that the return was incorrect.  Both Lord Walker in Stone & Rolls and Lord Sumption in Les Laboratoires Servier regarded this case as an example of the non-application of the ex turpi causa principle where the punishment is for a strict liability offence not implying turpitude on the part of the person punished.  The Singapore court postulated another hypothetical example (paragraph 61):

“Suppose a layperson were to employ the services of a solicitor to execute a trust for the benefit of his dependants.  The solicitor reviews the manner in which the client has structured his affairs and, whilst realising that there may be a potential statutory breach for evading stamp duties, chooses to remain quiet.  IRAS [ie the revenue authority] subsequently imposes a penalty on the client for failing to pay the requisite amount of stamp duty.  In these circumstances, it cannot be countenanced that the solicitor was not answerable to the client for having negligently failed to warn the latter of the potential liability for failure to pay stamp duty merely because the client had committed a statutory offence.”

[16]      Finally, in Patel v Mirza (above), Lord Sumption observed once again, without distinguishing between the wider and narrower applications of the principle, that the ex turpi causa exclusion did not apply where “the claimant’s participation in the illegal act is treated as involuntary: for example, it may have been brought about by fraud, undue influence or duress on the part of the defendant who seeks to invoke the defence”.

[17]      I conclude from the foregoing review that there is no authority for the proposition that recovery of a loss consisting of a criminal penalty or the consequences of imposition of a criminal sanction is necessarily excluded by the in turpi causa principle.  I note that in Gray v Thames Trains Ltd, the case in which the distinction between wider and narrower application of the principle was drawn, and which concerned losses falling both within and outwith the narrower application, the House of Lords reached the same decision on both categories and for the same reason, namely that the claimant had to be taken to have been responsible for the commission of the crime that led to the losses being sustained.  The decision in Gray appears to me to support rather than cast doubt upon the proposition that responsibility for commission of the offence, rather than the nature of the loss claimed, is the most important factor to be considered.  It is certainly true that the courts have placed emphasis, in narrower form cases, on the need to avoid inconsistency between the criminal and civil law so that the law does not, as it was put by McLachlin J in the Supreme Court of Canada in Hall v Hebert [1993] 2 SCR 159 at 178, give with one hand what it takes away with the other.  The opinion of Lord Rodger of Earlsferry in Gray expressed forcefully the reasons why “the civil court should cleave to the same policy as the criminal court” (para 82).  But all of these observations were made in the context of a claimant who was, or was at least presumed to have been, aware of what he was doing when he committed the offence.  When one is considering the position of a person with no such awareness but who has nevertheless been punished for commission of an offence, it seems to me that a different balancing of policy considerations is required.  I, for my part, am satisfied that the court in Osman reached a decision which is entirely supportable in terms of policy and which does not give rise to unacceptable difficulties of inconsistency between civil and criminal law.  On the contrary, to have refused a right of action to the “innocent” motorist convicted of driving without insurance because of the negligent conduct of the broker would, in my view, have been more likely to bring the law into disrepute than to allow it.

[18]      What the authorities make clear, however, is that intentional wrongdoing on the part of the claimant is not the only basis upon which a right of recovery of criminal penalties may be excluded by the ex turpi causa principle.  Use of the term mens rea may be appropriate in, for example, cases concerning mental disorder such as Gray v Thames Trains Ltd, but it is insufficient, in my opinion, to cover the whole range of circumstances in which a defence based on the principle may be available.  The key concept, as it seems to me, is responsibility rather than mens rea.  A number of the dicta that I have quoted from the authorities demonstrate that a right of recovery will be excluded not only by intentional wrongdoing but also by negligence: see, for example, the observations (above) of Sachs LJ and Phillimore LJ in Osman and of Pill LJ in Safeway Stores Ltd v Twigger.   These are consistent with the following passage from the judgment of Denning LJ in Strongman (1945) Ltd v Sincock (above) at page 536:

“…Although a man may have been guilty of an offence which is absolutely prohibited so that he is answerable in a criminal court, nevertheless if he has been led to commit that offence by the representation or by the promise of another, then in those circumstances he can recover damages for fraud if there is fraud, or for breach of promise or warranty if he prove such to have been given, provided always that he himself has not been guilty of culpable negligence on his part disabling him from that remedy.”

They are also consistent with the earlier decision of Denning J (as he then was) in Askey v Golden Wine Co Ltd [1948] 2 KB 35, in which recovery of a fine for selling cocktails contaminated with methylated spirit was denied on the ground of the claimant’s “gross negligence”.

[19]      It is important to note that in a case where a person convicted of an offence seeks to recover the penalty from a third party on grounds of, say, fraud or negligence, and the defence is that the claimant was himself guilty of negligence, the court’s task is not one of weighing up the parties’ respective culpability.  If negligence on the part of the claimant is established, the ex turpi causa principle excludes his claim altogether.  As Lord Walker of Gestingthorpe remarked in Stone & Rolls Ltd v Moore Stephens (above) at paragraph 181, in the analogous situation of dishonesty, this is not a matter of rewarding a wrongdoer; it is because public policy requires the claimant to be denied a remedy.  The same policy considerations apply, in my view, to deny recovery by a negligent claimant.  “The essential point is that a principle of causation cannot… trump ex turpi causa where the latter principle applies, however short of merits the defendant may be” (Lord Walker, ibid, paragraph 183). 

Disposal
[20]      For the foregoing reasons I am satisfied that the pursuer has pled a case for recovery of the £200,000 fine which is relevant for proof.  In response, the defender avers that Mr Troup’s accident was caused by the fault of and breach of statutory duty by the pursuer.  That defence, if established, may constitute the basis for application of the ex turpi causa principle.  A proof before answer is accordingly necessary.  I shall allow such a proof, with all pleas in law left standing, and put the case out by order to discuss timetabling.