(E) ILLEGALITY IN EQUITY
A principle restricting recovery in cases of illegality also exists in Equity in the form of the maxim that the claimant who comes to Equity must come with clean hands.28 This means that, if the claimant’s conduct is regarded as improper, relief in Equity will be refused. In the leading case on this maxim, Dering v Earl of Winchelsea,29 it was held that such improper conduct does not arise if there is merely moral impropriety; the impropriety must arise in a legal sense. Such impropriety does not, however, necessarily equate with illegality. Where there is illegality the transaction will be unenforceable both at Law and in Equity,30 but where there is no illegality Equity may still deny relief by virtue of the unclean hands maxim.
The question of the operation of this equitable maxim was considered by Lord Goff in his dissenting judgment in Tinsley v Milligan,31 where he concluded that it was not possible to vindicate proprietary rights in Equity where those rights had arisen under an illegal transaction, simply because the claimant must come to the court with clean hands. In fact, Lord Goff’s interpretation of the clean hands maxim was mistaken because that maxim has a particular function which is very different to that of the illegality defence. This was recognized by Mummery LJ in Dunbar v Plant,32 who emphasized that, whereas the ex turpi causa principle is a principle of public policy33 which must be strictly applied by the court, the clean hands principle is a principle of justice which is designed to prevent those guilty of serious misconduct from securing an equitable remedy, such as specific performance34 or an injunction.35 The consequence of making this distinction between [1] [2] [3] [4] [5] [6] [7] [8]
principles of public policy and principles of justice is that the clean hands maxim only applies where the claimant seeks a discretionary equitable remedy and it does not apply where the claimant seeks equitable remedies as a matter of right, such as where he or she seeks to vindicate an equitable proprietary right.[9]
- [1] [1919] 2 KB 544, 566.
- [2] See Groves v Groves (1829) 3 Y and J 163, 174; 148 ER 1136, 1141 (Lord Alexander CB); Tinker v Tinker[1970] P 136,143 (Salmon LJ); Tinsley v Milligan [1994] 1 AC 340, 357 (Lord Goff) and Nelson v Nelson (1995)70 ALJR 47, 68 (Dawson J).
- [3] (178 7) 1 Cox 318, 29 ER 1184. 30 Ayerst v Jenkins (1873) LR 16 Eq 275.
- [4] 31 [1994] 1 AC 340. 32 [1998] Ch 412, 422.
- [5] 33 As had been recognized by Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341, 343; 98 ER 1120,1121.
- [6] 34 See, for example, Coatsworth v Johnson (1886) 54 LT 520.
- [7] 35 See Argyll (Duchess) v Argyll (Duke) [1967] Ch 302, although the maxim did not apply on the facts
- [8] because the claimant’s unacceptable conduct was considered to be too remote.
- [9] This is consistent with the approach of the majority in Tinsley v Milligan [1994] 1 AC 340, examined atp 590, above.
