Flogging a dead maxim? The future viability of the ex turpi rule in Australian law

Abstract

In 1775 Lord Mansfield penned the classic formulation of the common law maxim ex turpi causa non oritur actio. ‘No court’, his Honour said, ‘will lend its aid to a man who founds his cause of action upon an immoral or an illegal act’. 250 years later, the scope of the ex turpi maxim is unclear. It has long been accepted that illegality may operate as a defence to civil claims by depriving a claimant of their otherwise legal rights on the ground of public policy. Yet the issue of when a party to a contract impacted in some way by illegality will be barred from enforcing their bargain, or recovering property transferred under it, remains uncertain. Case law regarding the maxim has been heavily criticised, not necessarily for producing incorrect outcomes, but for being notoriously difficult, inexplicable and inflexible. Parties to contracts, from everyday consumers to billion dollar businesses and innocent third parties, are left in doubt as to whether rights acquired or lost under contracts will be protected by the courts if their bargain is affected by statutory or common law illegality. This undermines the rule of law, which requires that the law be knowable and internally consistent, and exacerbates demands upon courts. The UK, Canada, Singapore and South Australia have toyed with creating a statutory judicial discretion to resolve questions of illegality but declined to implement legislative reform, except New Zealand. This research critically analyses the scope and character of the ex turpi maxim in Australia and synthesises from the common law a binding legal rule with clear exceptions to determine the effect of illegality in contract. That Synthesised Rule should be codified to better protect the maxim, promote greater clarity and consumer confidence. While the maxim is not the unruly horse of public policy it was once feared to be, statutory reform would guard against judicial error and jurisdictional creep which threaten to lure it away from orderly pastures.