[2009] EWHC 3218 (QB)

http://www.bailii.org/ew/cases/EWHC/QB/2009/3218.html

The court applied the ex turpi causa rule and dismissed the claims against Denton Wilde Sapte and a solicitor employed by the firm in its India Group. The court was satisfied that payments totalling about £340,000 made by the claimants to a third party were intended to be a bribe to secure a sole agency for Air India. The agency was not awarded to the claimants and their attempt to recover their losses failed since the claim was tainted by illegality.

Had the ex turpi causa defence failed, the judge would have held that the claimants had proved negligence and breach of duty on the part of the solicitor, Ms Advani. She had acted as a deal broker and assured them that all would be well despite the claimants’ concerns about the security of the payment of the monies.

As for Denton Wilde Sapte’s vicarious liability for her negligence and breach of duty, the judge held that Ms Advani’s deal broking role went far beyond her employed position either as a marketing and business developer or as a solicitor. It was being carried out primarily for her own personal gain (there was evidence that she was to be paid a fee of £250,000) and it would not therefore be fair to impose vicarious liability on the firm.

Comment: this case is a clear and straightforward application of the ex turpi causa rule and of little note in that sense although the circumstances in which the claim arose do raise interesting questions about the increasingly complex roles of solicitors. (For a more complex example of an ex turpi causa defence in a professional negligence claim, see this month’s decision in Griffin v UHY Hacker Young & Partners where the judge refused to strike out a claim on this ground.) According to the judgment, Ms Advani (now Head of Eversheds’ India group) was at the relevant time being paid commission of 5% of fees billed from work done by the firm for clients or projects introduced to the India practice by her, up to a maximum of £250,000 per annum. Her role was primarily a business development role but she was continuing to carry out legal services, although on this occasion the judge rejected the claimants’ argument that she had been acting as a transactional lawyer.

Once the Bribery Bill comes into force (see below), firms of solicitors will need to be much more cautious about creating business development roles such as Ms Advani’s, particularly where the employee in question is rewarded by commission.