POL I CY The Israeli Insurance, Pension & Finance Newspaper 20 Special edition 2022 The Latin maxim Ex Turpi Causa non oritur actio, means that no action can be based on an illegal act, and the Court will grant no remedy to a plaintiff whose claim arises from his or her illegal act. This principle was the basis of a judgement of the Tel Aviv District Court which dismissed the claim in the case of Ronen Mashiach v. Shuki Vita (1). A professional negligence claim was submitted by Plaintiff against his accountants arguing that the latter submitted to the Tax Authorities fraudulent documents including false costs of salaries of non- existing employees, in order to lower the tax levies. When the Tax Authorities discovered the fraud, a criminal indictment was initiated against Plaintiff who in turn filed a civil action in court against his accountants arguing that the accountants failed to prevent him from using these documents and led thereby to the criminal charges. The accountant filed a statement of defence inwhich he denied any causal connection between the filing of the documents and the criminal acts of Plaintiff which had been committed previously. Simultaneously with the Statement of Defence, the accountant submitted a motion to dismiss the claim in limine, based on the argument of Ex Turpi Causa Non Oritur Actio. The Court accepted the motion and dismissed the claim without hearing the claim to its merits. The Court determined that the offences which were committed by the Plaintiff have been committed for several years and started several years before he hired of the accountant. There is a clear public interest in deterring potential tax criminals that steal from the public coffers, and hence the courts are guided to impose imprisonment and heavy penalties on the offenders. Therefore, the claim against the accountants should be dismissed as the court will not assist a party whose claim is based on its own criminal acts. An appeal to the Supreme Court was recently withdrawn, in accordance with a strong recommendation of the Court that the claim lacks any legal chance. The same outcome was in a claim (Third Party Notice) filed by a convicted criminal against his partner to the theft of a car. In Eldan v. Raziel (2) the Defendant was sued for damages by a rental company after being convicted in a criminal case, and sought contribution from his accomplice, to share the damages on the basis of Joint Tortfeasors. The Court dismissed the TPN based on the principle of Ex Turpi Causa, in view of two factors: the heavy culpability of the plaintiff’s behavior, and the causal connection between his conduct and the damage caused. The court cited the Ronen Mashiach case and denied any remedy to Raziel. The application of the defence is not a strict matter, but rather based on the discretion of the Court while weighing legal and public policy considerations as it sometimes led to doubts whether the court should leave the position between two wrongdoers untouched, or whether some relief may be given in view of the circumstances. The UK case of Patel v. Mirza (3), dealt with an agreement between two parties who unlawfully purchased certain shares based on inside information. It turned out that the inside information was mistaken, and the scheme failed, and a dispute arose concerning the recovery of the money paid by Plaintiff upon signing the agreement. The claim was based on the causes of contract and unjust enrichment. The defendant argued that the contractual obligation could not be enforced in court because the whole contract was illegal. TheUKSupreme Court held that Plaintiff was entitled to repayment of the money, based on legal and public policy considerations and the principle of proportionality. Thus, the parties would be returned to their position prior to signing the illegal contract. In another Professional Negligence claim, (against lawyers) Day v. Womble Bond Dickinson (4) Plaintiff was convicted of a criminal offence andsuedhis lawyers for failing to raise various arguments which, as alleged, could have assisted his criminal appeal. The Court determined that for public policy considerations, no legal civil claim would be allowed to attack a criminal conviction. Back to Israel, for the full picture, in the Israeli Contracts Law (General Part), 1973, where a contract was concluded for an illegal purpose, it is within the discretion of the Court to enforce the contract in full or in part, if the court deems it just (5). (1) C.C. 31914-07-19.The defendant was represented by Adv. Zamir and Bloch of Levitan, Sharon & co. (2) C.C 32849-09-16 | (3) (2016) UKSC 42. | (4) (2020) EWCA Civ 447 | (5) Article 31 Illegal Act will serve no Basis for a Claim in Court By Peggy Sharon, Adv. Levitan, Sharon & Co. Law Office
RkJQdWJsaXNoZXIy MjgzNzA=