“A small claim generates an important point”, said the Supreme Court in this intriguing case regarding the circumstances in which the defence of illegality should defeat a complaint by an employee that an employer has discriminated against her by dismissing her in breach of section 4(2)(c) of the Race Relations Act 1976 – subsequently subsumed by section 39(2)(c) of the Equality Act 2010. In January 2007, at age 14, Miss Hounga (H), a Nigerian national, the appellant (in employment rather than immigration proceedings), entered the UK by assuming a false identity under which the UK immigration authorities granted her a visitor’s visa for six months. She came to work (without the right to do so) as a domestic servant for Mrs Allen (A), a dual Nigerian and British national, who “arranged” her entry into the UK. H appealed the Court of Appeal’s decision that her race discrimination claim against A failed because of the illegality of her contract of employment.
H was not paid for looking after A’s children and was seriously physically abused and threatened that if she left A’s house – from where she was ultimately ejected in July 2008 – the authorities would put her in prison because she did not have a visa. Apart from the human trafficking aspect, that lead the Supreme Court to touch upon some international law and jurisprudence, this case also produced significant analysis of contract and tort. Indeed, the towering figure of Lord Mansfield (LCJ, 1756–1788, see 2013 biography Justice in the Age of Reason ) – who famously held that, irrespective of the laws of the colonies, slavery had no legal basis in England and Wales – is also remembered in this judgment (albeit for different reasons).
The plan to traffick H into the UK was hatched by A’s affluent brother in Lagos in whose house H lived as a home help. Despite her good spoken English, the Employment Tribunal (ET) confirmed H’s illiteracy and it concluded that she willingly accepted A and her brother’s shady proposal to go live in the UK to work as a child-minder and go to school (attractive to H) and be paid £50 per month in addition to bed and board. H’s entry into the UK was achieved by first deceiving, using a falsely sworn affidavit, the Nigerian authorities into issuing her a passport with A’s mother’s surname. H was given entry clearance on the basis of a letter by A’s mother purporting to invite H to visit the UK. The ticket for her journey was purchased by A’s brother. (H confirmed to an immigration officer upon arrival that she was visiting her grandmother.)
Against this background, the ET found that H was aware (i) of the difference between right and wrong; (ii) that the assertions in her affidavit about her name and date of birth had been false; (iii) that she had secured the right to enter the UK on false pretences; (iv) that it was not legal for her to remain in the UK beyond 28 July 2007; and (v) that it was illegal for her to work in the UK. Although H was provided bed and board she was not enrolled in a school and was not paid anything at all. A did not accept the part she played in victimising H but the ET established that on the day when H was thrown out of A’s house, A attacked and beat her and poured water over her. The ET ordered her to pay H a sum of £6,187 for the resultant injury to her feelings. Moreover, the Employment Appeal Tribunal (EAT) dismissed A’s cross-appeal against the order. However, the Court of Appeal (Rimer & Longmore LJJ, Sir Scott Baker;  EWCA Civ 609) upheld a further cross-appeal pursued by A and set the order aside and held that the illegality of the contract of employment formed a material part of H’s complaint and that to acquiesce in it would amount to pardoning the illegality. H subsequently appealed the Court of Appeal’s order to the Supreme Court.
An additional point in these proceedings arose because both the ET and EAT dismissed H’s complaint of pre-dismissal harassment because she had not complied with the grievance procedure made applicable to such a complaint by Schedule 4 to the Employment Act 2002 and that she was therefore precluded from presenting it by section 32(2) of that Act. The Court of Appeal upheld H’s further appeal in this regard and decided that that the ET and the EAT had failed to consider her point that the circumstances were as specified in regulation 11(3)(c) of the Employment Act 2002 (Dispute Resolution) Regulations 2004 and that therefore, by regulation 11(1), the grievance procedure did not apply. However, Rimer LJ considered it futile to remit the point for determination by the tribunal because the complaint of discrimination in relation to pre-dismissal harassment would inevitably be defeated on the ground on which the court was rejecting the complaint of discrimination in relation to the dismissal itself.
The Supreme Court
The court held that the defence of illegality did not bar H’s claim for the statutory tort of discrimination because the application of the defence amounted to an affront to the public policy of protecting the victims of human trafficking. Allowing the appeal in relation to H’s claim for the statutory tort of discrimination, committed in the course of dismissal, Lord Wilson JSC (with whom Lady Hale DPSC & Lord Kerr JSC concurred) said that unlawful discrimination is a statutory tort and that the application of the defence of illegality to claims in tort is problematic. His Lordship moreover remarked that:
23. … In the event it was Mrs Allen’s eviction of her which precipitated her rescue. Cruel though the manner of its execution was, the dismissal was, in a real sense, a blessing for Miss Hounga. But, while the facts upon which the present appeal is founded may not represent Miss Hounga’s essential case against Mrs Allen, the clean legal issue remains: was the Court of Appeal correct to hold that the illegality defence defeated the complaint of discrimination?
Lord Wilson JSC said at paragraph 22 that H’s claim in relation to alleged pre-dismissal harassment on grounds of race or ethnic origin should be remitted to the tribunal to decide whether the ground – i.e. that H’s situation satisfied regulation 11(3)(c) of the Employment Act 2002 (Dispute Resolution) Regulations 2004 and that therefore, by regulation 11(1), the grievance procedure did not apply – picked out by the Court of Appeal for possible disapplication of the grievance procedure existed and, if so, whether the complaint was established.
The Supreme Court considered the test of illegality at length and observed that it was held in the past that the defence of illegality to a complaint of discrimination should succeed only if there is an inextricable link between the complaint and the claimant’s illegal conduct.
The court noted that in the late 1980s and early 1990s the public conscience test was applied to defences of illegality to claims in both tort and in contract but in Tinsley v Milligan  1 AC 340 – where Lord Browne-Wilkinson said that a claimant is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction – the reliance test took hold. On the other hand, Lord Wilson JSC agreed with the Court of Appeal (that “the axe falls indiscriminately and the claim is barred, however good it might otherwise be”) and the House of Lords’ softening (Lord Philips thinking it improper “to proceed on the basis that the reliance test can automatically be applied as a rule of thumb”) of the reliance test’s effect in Stone & Rolls Ltd v Moore Stephens  EWCA Civ 644,  UKHL 39,  AC 1391 by requiring consideration of the policy underlying the defence.
Lord Wilson JSC concurred with Lord Phillips that it is necessary to give consideration to the policy underlying ex turpi causa in order to decide whether this defence is bound to defeat the claim; arguably the test was arbitrary. Observing that the Law Commission proposed that the reliance test should be replaced in relation to claims to equitable interests, Lord Wilson JSC explained that in tort the inextricable link test, with a focus on unlawful discrimination, overlapping with the reliance test but not coterminous with it, had been developed by the courts. For example, in Cross v Kirkby  EWCA Civ 426 (where the hunt saboteur claimant shouted to the local farmer defendant “You’re fucking dead” and jabbed him in the chest and throat with a broken baseball bat and in self-defence the defendant fractured the claimant’s skull after wrestling the bat away from him), holding that the claim for assault and battery failed both because the defendant was acting in self-defence and because it was defeated by the illegality defence, the Court of Appeal explained that:
the claimant’s claim is so closely connected or inextricably bound up with his own criminal or illegal conduct that the court could not permit him to recover without appearing to condone that conduct.
Moreover, Vakante v Governing Body of Addey and Stanhope School (No 2)  EWCA Civ 1065 involved an asylum seeker not entitled to work in the UK without a work permit but who misrepresented to a naïve school that he could work. The Court of Appeal held that his employment “was unlawful from top to bottom and from beginning to end” and that his complaint was so inextricably linked with the illegality of his employment that, were it to have upheld it, the tribunal would have appeared to condone the illegality. Whilst Mummery LJ had loosened the test it remained unclear whether that loosening had led to the wrong decision. In Gray v Thames Trains Ltd  UKHL 33, the House of Lords had expressed reservations about using metaphors like “inextricably linked” or “integral part” and to treat the question as simply one of causation. Reminding himself of Lord Mance JSC’s views in “Ex Turpi Causa – when Latin avoids liability” that “causation, like much else in the law, depends on context”, at paragraph 38 Lord Wilson JSC questioned the Court of Appeal’s conclusion that H’s complaint was “obviously” inextricably linked to her unlawful conduct because it considered A and H to have equally participated in entering into the illegal contract. The Supreme Court said this:
37. Every formulation of a requirement to identify the active or effective cause of an event – or an act to which it is inextricably linked – has a potential for inconsistent application driven by subjective considerations.
Lord Wilson JSC rejected as superficial Rimer LJ’s view that H effectively had no rights in the UK at all and so could be treated less well because of her inferior (immigration) situation. The Supreme Court thought that A’s cruel misuse of H’s perceived vulnerability arising out of the illegality, by making threats about the consequences of her exposure to the authorities, could not be a further justification for the defeat of her complaint because:
39. … such threats are an indicator that Miss Hounga was the victim of forced labour but in the hands of the Court of Appeal they become a ground for denial of her complaint.
Lord Wilson JSC went on to hold at paragraph 40 that if the test applicable to A’s defence of illegality involves an inextricable link then upon a subjective analysis the link was absent because entry into the illegal contract and its operation provided no more than the context in which A perpetrated the acts of abuse by which she had dismissed H from her employment.
But the more important question was whether the inextricable link test applied to A’s defence? Remembering the classic approach taken by Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341 (“no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”), the Supreme Court said at paragraph 42 that “the defence of illegality rests upon the foundation of public policy.” Lord Wilson JSC also took account of Bowen LJ’s decision in Maxim Nordenfelt Guns and Ammunition Co v Nordenfelt  1 Ch 630, 661 where the court concluded that rules which rest upon the foundation of public policy are capable, on proper occasion, of expansion or modification.
His Lordship therefore thought that two questions needed answering.
Q.1. What is the aspect of public policy which founds the defence?
The Canadian Supreme Court answered this question by majority in Hall v Hebert  2 SCR 159 where McLachlin J held that the illegality of a claimant’s driving did not bar his claim against the defendant but that the claimant was contributorily negligent as to 50% and said that, as she saw it, the basis of the power to bar recovery in tort on the ground of illegality lies in the duty of the courts to preserve the integrity of the legal system, and is exercisable only where this concern is in issue. Accordingly, Lord Wilson JSC said at paragraph 44 that concern to preserve the integrity of the legal system was a helpful rationale of the policy founding the defence. Observing the intricacies of the tribunal’s award – which did not allow H to profit from her wrongful conduct, did not permit evasion of a criminal penalty, did not encourage others to enter illegal contracts, and was clear that the illegality defence would allow those such as A to discriminate with impunity – his Lordship held at paragraph 45 that “the considerations of public policy which militate in favour of applying the defence so as to defeat Miss Hounga’s complaint scarcely exist.”
Q.2. But is there another aspect of public policy to which application of the defence would run counter?
For Lord Wilson JSC, to answer this question one needed to consider whether A was guilty of trafficking in bringing H to the UK. In light of the accepted international definition of trafficking set out in the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons (“the Palermo Protocol”) signed in 2000 and ratified by the UK on 9 February 2006, at paragraph 49 his Lordship found “it hard to resist the conclusion that A was guilty of trafficking” despite noting that H was not locked in the home. Since no finding as regards whether H was the victim of trafficking had been made, the Supreme Court considered that its duty to be fair to A “demands that it should approach the issue with the utmost caution.” Lord Wilson JSC noted that three – (i) physical harm or threats of it; (ii) withholding wages; (iii) and threats of denunciation to the authorities where the worker has an irregular immigration status – out of the International Labour Organisation’s six indicators of forced labour existed in the instant case and therefore his Lordship held that:
49. Judicious hesitation leads me to conclude that, if Miss Hounga’s case was not one of trafficking on the part of Mrs Allen and her family, it was so close to it that the distinction will not matter for the purpose of what follows.
The European Convention on Action against Trafficking in Human Beings 2005, CETS No 197 (or the Anti-Trafficking Convention) imports the definition of trafficking set out in the Palermo Protocol. It also requires participants to provide, in its internal law, for the right of victims to compensation from the perpetrators. Therefore, following Lord Hoffman’s approach in R v Lyons  UKHL 44, Lord Wilson JSC held that the UK would be in breach of its international obligations if domestic law caused H’s complaint to be defeated by the defence of illegality and his Lordship also explained at paragraph 50 that “it was too technical an approach to contend that compensation should be provided only for trafficking and not for related acts of discrimination.”
The Supreme Court emphasised that article 4 ECHR required protection from forced labour and Lord Wilson JSC relied on some Strasbourg jurisprudence to reach his conclusion: Rantsev v Cyprus and Russia (2010) 51 EHRR 1 (where the Strasbourg Court concluded that trafficking itself, within the meaning of article 3(a) of the Palermo Protocol and article 4(a) of the Anti-Trafficking Convention, falls within the scope of article 4 ECHR), Siliadin v France (2006) 43 EHRR 16 (where the court held ruled that a 15-year-old girl, brought from Togo to France and made to work for a family without pay for 15 hours a day, had been held in servitude and required to perform forced labour and that France had violated article 4 by having failed to introduce criminal legislation which would afford effective protection to her) and CN v United Kingdom (2013) 56 EHRR 24 (where the court made an analogous ruling against the UK after which Parliament by section 71 of the Coroners and Justice Act 2009 decided that it is a specific criminal offence to hold someone in slavery or servitude or to require her/him to perform forced labour). Furthermore, mindful of the Draft Modern Slavery Bill (2013) (Cm 8770) and the amendments to it proposed by the government (2014) (Cm 8889), Lord Wilson JSC explained that:
52. … one such amendment would provide a statutory defence to a victim of trafficking who, as a result, has been compelled to commit a crime. Although Miss Hounga is not in that category, the decision of the Court of Appeal to uphold Mrs Allen’s defence of illegality to her complaint runs strikingly counter to the prominent strain of current public policy against trafficking and in favour of the protection of its victims. The public policy in support of the application of that defence, to the extent that it exists at all, should give way to the public policy to which its application is an affront; and Miss Hounga’s appeal should be allowed.
Lord Hughes JSC (Lord Carnwath JSC concurring) opined at paragraph 56 that although not a comprehensive test as regards illegality, Lord Mansfield’s words in Holman v Johnson (1775) 1 Cowp 341 – “the objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say” – accorded with elementary justice because “when a court is considering whether illegality bars a civil claim, it is concentrating on the position of the claimant vis-à-vis the court from which she seeks relief.”
Lord Hughes JSC held at paragraph 67 that there was insufficiently close connection between H’s immigration offences and her claims under the tort of discrimination to uphold the illegality defence because her immigration offences merely provided the setting or context in which that tort was committed, and to allow her to recover for that tort would not amount to the court condoning what it otherwise condemns.
On the other hand, unlike Lord Wilson JSC, his Lordship entered a partial note of dissent because he did not find it possible to read across from the law of human trafficking to provide a separate or additional reason for this outcome. Lord Hughes JSC also said at paragraph 66 that the amendments to Draft Modern Slavery Bill (2013) (Cm 8770) proposed by the government (2014) (Cm 8889) “are at present proposals only and there can be no certainty that they will be enacted in the form currently suggested.”
Ultimately, he reasoned at paragraph 65 that “the UK’s obligations regarding trafficking” under the Palermo Convention (its resonance with the Anti-Trafficking Convention and Directive 2011/36/EU notwithstanding) “could not be interpreted to permit her to recover damages for the statutory tort of discrimination” because “that tort was not co-extensive with trafficking or exploitation” and he concluded that even if H’s treatment had amounted to forced labour, and even if it was assumed that A had brought her to UK with the purpose of mistreating her, H did not appear to have been compelled to commit her immigration offences.