A matter of principle

The much analysed House of Lords’ decision in Stone & Rolls v Moore Stephens [2009] UKHL 39 focused  on the “illegality principle” (ex turpi causa non oritur actio) as a defence for claims against professionals. Given the economic climate, it is likely that insolvency practitioners will increasingly be engaged in civil claims to recover losses on behalf of creditors, so, given Stone & Rolls, practitioners should familiarise themselves with the operation of the ex turpi line of defence where the facts (often involving insolvency) permit its application.

The illegality principle is relevant in any case where a claimant seeks to base a civil action on his own criminal wrongdoing. In the professional negligence context the issue is most likely to arise in claims brought by companies against their professional advisers where a fraud has been committed by the managers of the company and which is alleged to have caused the company loss. Typically the allegation will be that the professional  has