Web Chapter 2 Guidance on questions

Question

In Montgomery’s garden there is a tree on which a protection order has been issued, the effect of which is to make it an offence, unless there has been official dispensation, to cause the tree to be destroyed or damaged. Montgomery wishes to have the tree removed, and consults his solicitor Nefaria. Nefaria explains the steps required to obtain dispensation and then adds, ‘But if I were you I should just have it taken out and say it was struck by lightning.’  Montgomery then contracts with Onion, who does not know of the order, to have the tree removed, and Onion removes it. Can either Nefaria or Onion sue Montgomery for the price of their services?

Answer guidance

Remember you are asked to advise each of Nefaria and Onion whether they can sue Montgomery for the price of their services. If we assume that each of them has fully performed their obligations under their respective contracts, it is clear that normally each would have a very straightforward action for the agreed price. However, on these facts, what is the impact of illegality? 

You will need to consider first whether the words of the statute, which you are told ‘creates a criminal offence’, expressly or impliedly prohibits the particular type of contract. This seems unlikely on the facts, so proceed to consider whether the common law rules on illegality bar enforcement of the contract, or whether any other remedies are available to Nefaria and Onion? In particular, can either of them bring a restitutionary action for the reasonable value of the work they have done for the benefit of Montgomery? The question of whether such a restitutionary action is available is now covered by the policy-based approach of the Supreme Court in Patel v Mirza, and it is probably safe to assume that illegality as a defence to an action to enforce a contract will also now be dealt with under Patel v Mirza (though this remains to be authoritatively established).  Where a contract is tainted with illegality, the courts are generally more willing to reverse unjust enrichment by a restitutionary remedy for the recovery of money paid in advance than they are to enforce the contract by an action for specific performance or expectation damages (which put the parties into the position they would have been in had the contract been performed), but notice that here a restitutionary action (for a reasonable sum) would closely resemble an action on the contract for the price, so the same approach is likely to be taken to both.

In Patel v Mirza, Lord Toulson’s policy-based discretionary approach centred on whether allowing a claim, which is in some way tainted by illegality, would be contrary to the public interest, because it would be harmful to the integrity of the legal system. This involved (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality.  Proportionality was approached as follows:

In considering whether it would be disproportionate to refuse relief to which the claimant would otherwise be entitled, as a matter of public policy, various factors may be relevant … I would not attempt to lay down a prescriptive or definitive list because of the infinite possible variety of cases. Potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties' respective culpability.

On this basis, especially the final factor of marked disparity in the parties’ respective culpability, it is possible that Nefaria’s claim would fail as being tainted by illegality, but it seems certain that Onion’s would succeed.