20 November 2011

Decision on Role of Illegal Conduct in Family Law Cases

The kerfuffle surrounding the tabling of the Family Law Act has done nothing to staunch the flow of decisions issuing from the courts. That's a good thing, because in the judgment recently released in the case of Daemore v. Von Windheim, the Supreme Court had the rare opportunity to consider how a party's illegal conduct should play into its analysis of a family law problem.

The Latin maxim ex turpi causa non oritur actio — no right of action arises from a base cause — often abbreviated as ex turpi or ex turpi causa, stands for the principle that you shouldn't be able bring a law suit out of a problem which stems from your own wrongful conduct. For example, a thief injured while burgling a property shouldn't be able to sue the owner for negligence, and a drug dealer shouldn't be able to sue to recover his stolen stash. As you can imagine, this legal principle rarely crops up in family law disputes.

At the time of trial, the husband was 69 and the wife was 55. They had been together since the wife was in her late teens and had married in 1981, but were separated for 16 years by the time the husband's claims for spousal support and certain orders relating to property were heard. This is how the judge summarized the peculiar nature of the case:
"[3] The claims which are advanced by the parties are not, in concept, unusual. The circumstances which underlie these claims, however, are extraordinary. ... Both parties have repeatedly and on an ongoing basis, including in recent years, jointly engaged in various forms of wrongful activity. Their three children have participated in some of these forms of illicit or wrongful conduct. Several of the witnesses who appeared before me unabashedly acknowledged their involvement in earlier activity that was either criminal or fraudulent."
The parties' separate criminal careers, as summarized by the judge, are astonishing for their breadth and manifest disregard for the law; the problem this caused at trial was the judge's inability to accept the testimony of either of them. At the end of the day, however, the truthfulness of the parties was eclipsed by yet another problem:

"[60] I do not consider that there is any merit to any of the disparate claims advanced by Mr. Daemore or Ms. Von Windheim. Each of their respective claims suffers from various deficiencies arising from the application of those legal principles which are relevant to the particular claim. There is, moreover, an overarching impediment to many of these claims. This impediment is the result of the criminality and illegality which pervades most of the claims before me.

"[61] The maxim ex turpi causa non oritur actio, generally raised as a defence, but available to the court on its own motion, is directly relevant. The issues engaged by application of the maxim were not raised in the pleadings of the parties. They were raised by me in advance of argument and counsel were provided with a further opportunity to supplement their submissions in writing."

The judge then summarized the law on the issue (I've put the important bits in bold):
  • Hall v. Hebert, 1993 Supreme Court of Canada: "The power expressed in the maxim ... finds its roots in the insistence of the courts that the judicial process not be used for abusive, illegal purposes."
  • British Columbia v. Zastowny, 2008 Supreme Court of Canada: "The following principles and approach are established in Hall v. Hebert and are applicable in the present case. 1) Application of the ex turpi doctrine in the tort context invalidates otherwise valid and enforceable actions in tort. 2) ... its application must be ... made subject to clear limits and should occur 'in very limited circumstances'. 3) The only justification for its application is the preservation of the integrity of the legal system. This concern is only in issue where a damage award in a civil suit would allow a person to profit from illegal or wrongful conduct or would permit evasion or rebate of a penalty prescribed by the criminal law."
  • Randhawa v. 420413 B.C. Ltd., 2007 BC Court of Appeal: The maxim "applies in contract and in tort to maintain the internal consistency of the law ... The justification for the rule is the preservation of the integrity of the legal system; it should be applied sparingly. ... [I]t is not necessary to plead the doctrine. It is a question of law. It is necessary to plead the material facts to support the application of the doctrine."
These cases all deal with ex turpi causa in the context of contracts and torts. In Daemor, however, some of property claims were based in statute and others in the law of trusts. The judge continued:
  • BMF Trading v. Abraxis Holdings Ltd., 2002 BC Supreme Court: "The modern doctrine of constructive trust, which has been created to remedy injustice to innocent or vulnerable parties, is not a device to be utilized by sophisticated business people caught in the web of their own intrigue. Constructive trusts are not to be used as a reward to parties who have gained advantages by denying legal ownership of an asset, only then to assert ownership when it suits them at a later date. This court must not facilitate such manipulation."
  • Stoneman v. Gladman, 2005 Ontario Superior Court of Justice: "The trustee’s disinterest does not confer legal capacity on the plaintiffs, and unlike the trustee, they remain tainted by their professed acknowledgment that the scheme that they seek to have enforced is dishonourable and illegal."
  • J.T.L. v. R.G.L., 2010 BC Supreme Court: "Ex turpi causa is concerned not specifically with the lawfulness of contracts, but generally with the enforcement of rights by the courts. The courts will not enforce a right, which would otherwise be enforceable, if the right arises out of an act committed by the person asserting the right which is sufficiently anti-social to justify courts refusing to enforce that right. ... The purpose of the ex turpi causa rule is to defend the integrity of the legal system and the repute in which courts ought to be held by law-abiding members of the community."
Having thus established that ex turpi causa is a principle of general application available to the court whenever the integrity of the justice system is imperiled, the judge observed that:
"[77] ... The unlawful conduct of Mr. Daemore and Ms. Von Windheim is flagrant and pervasive. It arises not as a matter of inference, but is unequivocally acknowledged. Importantly, such illegality is central to many of the claims being advanced."
And further:
"[118] Here, the evidence of both parties is unreliable. There are also few proven facts from which I can make or draw appropriate inferences. Any such exercise would be wholly speculative. As a result, I do not consider that there is any principled basis for me to conclude that either party holds any specific additional property or to fix the value of any further family assets. If any unfairness results to the parties ... they have only themselves to blame."
Ultimately, the court dismissed the husband's claim for spousal support and certain orders based on the law of trusts; dismissed the wife's claim for child support but entirely reapportioned to her the properties she had been solely responsible for maintaining over the parties' lengthy separation.

Frankly, the specific result doesn't much matter; what does matter is the court's overview of the ex turpi causa maxim, his summary of its key legal principles, and his clear conclusion that the maxim applies to any relief claimed in court, whether under based on statute law or the law of contract, trusts or tort. This case will be essential reading whenever a party's criminal conduct relates to a claim he or she elects to advance in court.

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