Kwok Chung To v. Wong Chuen Sang

CACV000015/1968

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.15 OF 1968

(On appeal from K.C.J. Action No.8051 of 1967)

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Coram: Hogan, C.J., Rigby, S.P.J. & Mills-Owens, J.

Date of Judgment: 20 November 1968

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JUDGMENT

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Hogan, C.J.: This appeal has touched on the application of legal principles that give rise to difficulty but we have had the benefit of carefully prepared arguments from counsel which have been of great assistance to us.

2. It concerns premises in a resettlement estate. The statement of claim filed by the plaintiff sought a declaration that the defendant held the tenancy of the said premises in trust absolutely and that the defendant should be ordered to transfer the tenancy of the premises to the plaintiff and such further or other relief as was just. The defendant resisted that claim and filed a counterclaim asking for (1) the payment of a sum of money in respect of loss of earnings which was said to have resulted from his being kept out of the premises by the plaintiff, (2) a mandatory order for her removal from the premises together with her servants, (3) damages for trespass and (4) such other relief as might be thought appropriate.

3. The facts as found by the judge in the court below indicate that the plaintiff, who was not then entitled in her own right to resettlement in a resettlement estate, had entered into an agreement with a man called YEUNG Kit, who had a tenancy in the Wong Tai Sin Government Resettlement Estate, in respect of two shops, Nos. 11/19 on the ground floor of Block 19, whereby she undertook to pay him a total of $14,800 for the right to occupy the shops in place of him; that, in July, 1966, when she had become entitled to resettlement, she paid the defendant a sum of $600 to take a transfer of the tenancy of these shops, on the understanding that she would continue to remain in possession of these shops; that he would hold his tenancy on her behalf and that she would be responsible for providing the monthly rent of $115, which he would pay to the resettlement authorities.

4. The defendant contested this version of the facts, contending that he was entitled to the tenancy of the shops and that he had no obligation towards the plaintiff.

5. The judge, has indicated that, in so far as there was a conflict, he accepted the plaintiff's story, from which it appears that she was in possession of the premises throughout; that for a while, after the defendant became the registered tenant, he occupied a small portion of the shop for his trade of jade-cutting but that he had been excluded from it from the third of April, 1967, by the plaintiff and her husband. The judge does not deal more explicitly or at greater length with that particular aspect of the facts, but the evidence of the plaintiff which he appears to have accepted indicated that during this period of occupation the defendant was there as a licensee of the plaintiff.

6. The judge, having found the facts substantially in accordance with the plaintiff's evidence, went on, however, to hold that the plaintiff was in occupation illegally; that she was seeking to set up an illegal agreement with the defendant and that, as her claim rested essentially upon illegality, the court could not assist and her claim should be dismissed.

7. Dealing then with the counterclaim of the defendant, the judge said that the defendant was the registered tenant and that his claim for removal of the plaintiff could not be resisted. The judge went on, however, to say that he was not impressed with the evidence given by the defendant; that the loss alleged to have been suffered by the defendant, through having been kept out of the shops from April, 1967, had not been established nor the claim for damage to tools and equipment which he had also made, but that the defendant should have the rent from April, 1967, which he had paid to the Resettlement Department. The evidence, however, had shown that the plaintiff had tendered this rent to the defendant in accordance with the alleged bargain but he had refused to accept it and had paid the rent out of his own pocket.

8. The plaintiff in her notice of appeal against that judgment set out some 12 grounds, but her counsel, Mr. Swaine, told us that he was not going to pursue the first 11 of these grounds because, if he did, he would in effect be asking the Court to assist his client in carrying out an illegal transaction. No doubt bearing in mind the maxim "ex turpi causa oritur non actio", he felt that he could not do that but he was satisfied that he could resist any action by the defendant to remove his client from the premises and, therefore, adhered to ground 12, which reads:

He added a further ground, ground No. 13, to which counsel for the defendant does not object, and which reads as follows:

9. Those were the two grounds of appeal pursued before us and, in the course of his argument, Mr. Swaine summed up his case under four distinct propositions. His first proposition was that the Court should not assist either party to an illegal transaction of this kind and, in support of that contention, he referred to the following passage in Lewin or Trusts, which appears at page 70 of the 16th edition:

In addition counsel mentioned the old case of Brackenbury v. Brackenbury⁽¹⁾ which in the English Reports has the following headnote:

10. Reliance was also placed on a more recent case extensively canvassed before us; Chettiar v. Chettiar⁽²⁾. The headnote in the Law Reports says:

11. The Privy Council, in delivering this opinion, distinguished an earlier decision of their own in Sajan Singh v. Sardara Ali⁽³⁾, which had figured prominently in the argument, and, having propounded the proposition that the father could not set up his own fraudulent purpose, which he had fully achieved, as the foundation of his request for the court's assistance, they also dismissed the counterclaim by the son for an account of the rents and profits. of the 40 acres which the father had continued to manage and to operate as part of the original unitary estate. No reasons were given for this dismissal nor was any reference made to argument on the point.

12. The second proposition advanced by Mr. Swaine on behalf of the plaintiff was that his client had, as a result of the agreement with YEUNG Kit, obtained a special property in the two shops together with actual possession of these shops and that this special property was the equitable estate which, notwithstanding the illegality, could defeat the defendant's claim for possession. He supported this proposition by passages from Foa's General Law of Landlord & Tenant to the effect that, even where an estate is created in violation of a covenant not to transfer or sub-let, the transaction will not be void and an estate will be created, although the covenant had been breached. The passage reads as follows⁽⁴⁾:

Counsel supported this proposition by reference to the case of Paul v. Nurse⁽⁵⁾, where the landlord as owner was suing the assignee of a lease in respect of covenants in the lease. The assignee said that he had subsequently assigned his interest in the lease to a third party. It was claimed that this was in violation of the terms of the lease but the court held that since the claim of the landlord was based on privity of estate, that privity ended when the assignee made a further assignment to a third party, thereby, endorsing the view that the assignment, although in breach of covenant, transferred the estate. Mr. Swaine also relied on the case of Parker v. Jones⁽⁶⁾, which was to similar effect, and on the case of Singh v. Ali⁽³⁾, to which I will refer later.

13. His third proposition was that the court could not assist the defendant in the present case because this would enable the defendant to benefit by his own fraud and to perpetrate a dishonesty on the plaintiff, since he had gone into possession or rather had acquired the estate, if any, in this property as a result of a bargain which contemplated that the plaintiff would remain in occupation and possession of the property: a situation which, counsel said, was very similar to that in Bannister v. Bannister⁽⁷⁾, where a lady, having agreed to sell two cottages on the understanding that she would be allowed to remain as long as she wished in one of them and having carried out this agreement by conveying the two properties to the plaintiff in that case - by a conveyance which on the face of it appeared to be absolute and unfettered, was held entitled to defeat his claim to evict her because the oral agreement gave her a life estate and the plaintiff, in seeking to oust her, was seeking to give effect to a fraud. The headnote in the All England Law Reports says:

Counsel claimed that the facts of that case are particularly opposite to the proposition which he has put forward here because, in that case also, the defendant allowed the transferee of the two cottages to come in and occupy a part of the cottage of which he claimed possession but the court held that he and his wife did so only as licensees and that defendant continued in her possession of that cottage, a situation which, counsel said, is very similar to that which prevailed in the present case when, for a period, the defendant occupied a portion of the premises for his business.

14. Finally, counsel put forward a fourth proposition that the defendant had not established a title to the shops because he himself had never entered into possession of the two shops and, therefore, was not a tenant within the terms of the Resettlement Ordinance under which he claimed to derive his title. Briefly, under the Ordinance, people who are described as those entitled to resettlement - a term not otherwise defined - receive, after getting a resettlement card, a tenancy card on which their names are entered together with the names of their dependants; they and their dependants thereby become entitled to be in the premises in question. Under section 28, the person so named in the card becomes a tenant from the time when he enters into occupation; while anybody who is not named in the tenancy card is, by virtue of section 33, deemed to be, with certain exceptions, a trespasser if he remains, between the hours of 11 p.m. and 6 a.m., in the resettlement estate.

15. Counsel claimed to find support for this fourth proposition in Bullen & Leake's Precedents of Pleading, 11th edition, page 45, second paragraph, which contains the following passage:-

Counsel claims that the defendant in the present case was not able to show either that he had been in possession of these premises or that he had a good title as a tenant under the terms of the Resettlement Ordinance which would enable him to oust the plaintiff who was admittedly in possession.

16. In answer to these propositions, Mr. Wong for the defendant, argued that his client had a perfectly good title to these shops; that he was under the terms of the Resettlement Ordinance, the tenant; that there was nothing to show that he had obtained that tenancy from the resettlement authorities by any fraudulent or improper means; that he was able to rely on a good title without setting up any illegal bargain, and that consequently, relying on the principles which had been laid down in Bowmakers Ltd. v. Barnet Instruments Ltd.⁽⁸⁾, he was entitled to have possession of his own property. Counsel also claimed to find support for this proposition in the judgments in the Court of Appeal in the case of Mahmoud v. Ispahani⁽⁹⁾. He argued that the findings in the court below did not clearly show that his client's possession in the present case was due to any deception of the authorities and that to give the plaintiff - who admittedly was, from the outset, in wrongful occupation, if she was in occupation at all - relief and enable her to get the benefits of her illegal transaction, would be contrary to the accepted principle that courts do not assist in carrying out an illegal bargain. He maintained also that his client's possession of portion of the premises for a period was sufficient to satisfy the conditions of section 28(2) of the Resettlement Ordinance; because it was not necessary for him to be in possession of the whole of the premises - possession of a part was sufficient; and there was nothing in the evidence or in the findings of the judge to show that his possession was anything less than the possession required under the terms of the Resettlement Ordinance.

17. Returning then to the four propositions enunciated by Mr. Swaine; the first was that the court should not assist a party to carry out an illegal transaction. What is an illegal transaction for this purpose? Mr. Swaine contended that the present transaction clearly fell within this expression because it involved a fraud on, and deception of, the authorities. He relied particularly on the Chettiar case⁽²⁾ for this purpose. The fraud which he suggested was perpetrated on the authorities in the present case lay in the deception - the belief conveyed to the authorities - that someone other than the plaintiff was actually in possession of these premises and the intent so to deceive them. Mr. Swaine said that this was certainly as broad and effective a deception as anything which had appeared in the Chettiar case⁽²⁾. When pressed as to whether the Singh v. Ali case⁽³⁾ did not indicate that, despite the illegality of the transaction, an interest could be conveyed to either of the defaulting parties which he could sustain not only against his partner in the transaction but against others, Mr. Swaine, if I understand him rightly, said that he was not interested in establishing, and that he had abandoned the ground of appeal which perhaps established, that there was a right to enforce through the court an interest which had been created through the illegal transaction: he was interested, he said, merely in maintaining his client's possession and therefore fell clearly within the boundaries of the proposition "in pari delicto potior est conditio defendentis".

18. He said in the present case his client was in the position of a "defendentis" and the defendant should not be entitled, when he had this defective or fraudulently originated title to oust the plaintiff from actual physical possession. This argument seems to me to move into Mr. Swaine's second proposition that the bargain which had been made between the plaintiff and the tenant YEUNG Kit had been effective to create in the plaintiff an equitable estate which would prevail over that of the defendant. In doing so he stressed that nothing in this transaction could affect the right of the authorities under the Resettlement Ordinance to terminate the tenancy in the present instance because of the breach of covenant under the terms and conditions of the original tenancy. He said that, in so far as this court is concerned, we are only dealing with the rights between the plaintiff and the defendant, inter se; and that as between them there is a good and effective equitable title in the plaintiff which cannot be overridden or ousted by any claim of the defendant.

19. The question whether an illegal transaction of this kind can convey a title to a party in that transaction has exercised the minds of a number of academic authors and writers of textbooks, some of whom maintain that there are no clear authorities to the effect that such a right can be conveyed. The case in which the courts, on the other hand, appear most clearly to have recognised the possibility of conveying such a right is Singh v. Ali⁽³⁾. In that case the defendant Singh had a haulage permit and a lorry which he wished to sell to the plaintiff Ali who had no permit but wished to buy the lorry despite the provisions of regulations which not only forbade the use of such a lorry for haulage without a permit but also the disposal or sale of a lorry to any person not holding a permit. Despite these regulations an agreement was made whereby Ali paid a sum of money to Singh and received the lorry. Subsequently, in circumstances not very fully disclosed in the report, Singh got back the lorry; and, when sued by Ali, claimed that he was not bound to return it because of the illegal nature of the transaction. Nevertheless, the Privy Council notwithstanding the principle "ex turpi causa non oritur actio" held that Ali was entitled to recover the lorry. In doing so reliance was placed on the principle enunciated in Scarfe v. Horgan⁽¹⁰⁾, that if the contract has been executed and a property, either special or general, has passed thereby the property must remain. The Board said:-

20. The acquisition of a title to property, notwithstanding that the conveyance of the title was part of an illegal bargain or transaction was similarly canvassed in the case of Bowmakers Ltd. v. Barnet Instruments Ltd.⁽⁸⁾ to which the Board also referred and when the Board also referred and when the Court of Appeal said of the maxim "in pari delicto potior est conditio possidentis", it's true meaning is that, when the circumstances are such that the court will refuse to assist either party, the consequence must follow that the party in possession will not be disturbed.

21. A more recent application of the principle is seen in the case of Selangor United Rubber Estates, Ltd. v. Cradock⁽¹¹⁾.

22. These cases seem to lend support to the argument of counsel for the plaintiff that his client had acquired a good and equitable title and that the court should recognize that title when the defendant seeks to oust her from the property. It seems clear that the case of Bannister v. Bannister⁽⁷⁾ on which he relied would be effective to sustain the plaintiff's claim to resist the order for possession if there was no illegality in the bargain. In that case, effect was given to the bargain, which was a perfectly legitimate bargain, between the former owner and the individual to whom she transferred the property, relying on the agreement for her continued occupancy of part of the premises.

23. Is there any reason why, in the present case, the same principle should not be applied because of the tainted origin of the defendant's title; because she acquired whatever title or rights she has in the property as a result of a transaction which involved a deception of the resettlement authorities? The nature of this deception is important, because an assignment in contravention of the covenant not to assign would not in itself prevent an interest being transferred. Under the terms of the tenancy created by the Resettlement Ordinance, the tenancy is not automatically terminated under such conditions although the resettlement authorities probably acquire a right to terminate the tenancy for breach of covenant: a right which has not been exercised in the present case.

24. Although it is not altogether easy at first sight to reconcile the decision in Singh v. Ali⁽³⁾, with the refusal in the Chettiar case⁽²⁾ to give to the son the relief sought in respect of the profits of the estate taken by the father, it may be that the courts thought it inequitable to make such an order about profits which the son had done nothing to earn while deeming it right to restore to Ali the possession of a lorry for which he had paid.

25. Be that as it may, I think the cases already quoted show that an estate in the property the subject of this action could have been created in favour of the plaintiff by her agreement with YEUNG Kit, and that that estate could persist when the defendant acquired his interest in the property in pursuance of a bargain which contemplated that she should remain in possession of the two shops while he would merely act as a nominee for the purpose of satisfying the resettlement authorities as to the eligibility of the ostensible tenant to be a tenant of the premises. That conclusion is sufficient to decide the issue of ejection and non-ejection, in favour of the plaintiff.

26. If I am wrong in that conclusion I would have been disposed to take the view that under section 28(2) of the Resettlement Ordinance the defendant had not shown that he had a title to these premises, which would give him the right to oust the plaintiff because he had not shown that, in addition to receiving a tenancy card, he had been let into occupation of these premises in his own right so as to make him a tenant for the purposes of the Ordinance. Question would, however, arise as to whether this point, which had not been raised in the court below, nor argued there, nor mentioned in the grounds of appeal, could properly be raised before us but I don't think it is necessary to reach a conclusion on that issue as I am not resting my decision on this ground.

27. In the appeal lodged before us the appellant asks merely that the order for eviction should be set aside. There is no prayer that the direction for payment of the rent, that is the sum of $805 which the defendant has disbursed from his own pocket, should be altered. It is indeed clearly equitable that he should get that money back from the plaintiff.

28. I would accordingly allow the appeal to the extent only of setting aside the order for the eviction of the plaintiff.

Representation:

J. Swaine (Edmund Cheung & Young) for the plaintiff (Appellant)

Henry Wong (Francis Chaine & Co.) for the Defendant (Respondent)

(1) 37, E.R., 677.

(2) (1962) A.C. 294.

(3) (1960) A.C. 167.

(4) Foa's General Law of Landlord & Tenant, 8th Edition, page 265.

(5) 8 B. & C. p.486

(6) (1910) 2 K.B.D. p.32.

(7) (1948) 2 All E.R. p.133

(8) (1945) 1 K.B.D. p.65.

(9) (1921) 2 Q.B.D. p.716.

(10) (1838) 4 M. & W. 270.

(11) (1968) 2 A.E.R. p.1073.

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.15 OF 1968

(On appeal from K.C.J.Action No.8051 of 1967)

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Coram: Hogan, C.J., Rigby, S.P.J. & Mills-Owens, J.

Date of Judgment: 20 November 1968

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JUDGMENT

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RIGBY, S.P.J.:

29. I agree with my Lord, the President, and I would allow that part of this appeal which is confined to the judgment of the trial judge in which, upon the counterclaim, he gives an order for the recovery of possession of the premises as against the present plaintiff. There is really very little I would wish to add to the judgment already delivered by my Lord, the President.

30. At the outset of the proceedings Mr. Swaine, in my view very rightly and properly, conceded that he could not successfully appeal against that part of the judgment of the learned trial judge dismissing the plaintiff's claim, and he made that concession on the ground that the trial judge was entitled, and indeed bound, of his own motion to take the point of illegality. There is clear authority for the proposition that an agreement which has as its object the defrauding or deception of the public administration is an illegal agreement which is not enforceable in law. It would defeat the whole purpose and intention of the legislation providing for the resettlement by government of squatters evicted or transferred from public land if upon such squatters being provided by government with new accommodation in resettlement estate areas, they were then able, in collusion with third parties and in consideration of payment made to them by third parties, to transfer the use and occupation of that new accommodation, provided for their exclusive use and benefit, to a third party or to third parties. And that is precisely what was done in this case. The question then arises as to whether the squatter - in this case the defendant - having been a ready and a willing party to the deception practised upon the resettlement Department, having received payment from the plaintiff for the express purpose of becoming the registered tenant of these premises but holding such tenancy for the use and occupation of those premises by the plaintiff, should now be assisted by an order of these courts - by reason solely of the fact that he is in name the registered tenant in obtaining the eviction of the plaintiff from these premises. In my judgment the answer to that question, both on grounds of equity and upon the law applicable, is in the negative. For this conclusion for myself I would be content to rely upon the cases, already referred to by the President, of Palaniappa Chettiar v. Arunasalam Chettiar⁽¹⁾ and Bannister v. Bannister⁽²⁾. In the Chettiar⁽¹⁾ case it is apparent that the father's claim for a declation that his son held land as trustee for himself was dismissed upon the ground that in order to support the father's claim he would have to prove that his sole purpose in transferring the land into his son's name was for the purposes of practising a deceit upon the public administration. That claim was dismissed by the Privy Council upon the principle and applying the dictum of Lord Mansfield that "No court would lend its aid to a man who founds his cause of action upon an immoral or an illegal act." However, in that same action the son, claiming that he was the owner of that very land by purchase, had counterclaimed against his father for an account of profits from the land. That counterclaim was dismissed. The position was, therefore, that although their Lordships found as a necessary consequence that the son had a valid title to the land, they dismissed the son's counterclaim for an account of the profits derived by the father from the land. No reason was given by their Lordships for the dismissal of that counterclaim. But it seems to me a not unreasonable inference that the court, upon the accepted principles that it was not prepared to allow the father to base his claim to title upon the admitted deception practised upon the administration, was equally not prepared in the circumstances of the case and upon ordinary principles of equity, to allow the son to benefit by his own breach of trust and thereby to enjoy the essential attributes of title which would normally go with the legal ownership of the land. By analogy it seems to me that in this case although the plaintiff cannot be permitted, for the purpose of establishing his own claim, to rely upon the deception practised upon the administration for the purpose, as I say, of establishing his own equitable interest in the premises, the defendant, although the registered tenant upon the facts as found, ought not to be permitted to make use of his legal tenancy for the purpose of evicting the plaintiff from her occupation and possession of the premises. Indeed, to allow the plaintiff to do so would be tantamount to allowing him to reap a material and substantial benefit and advantage by his own dishonesty and breach of good faith in his dealings with the plaintiff.

31. The other case to which I would refer and upon which I would seek to rely is the case of Bannister v. Bannister.⁽²⁾. There it was established that the plaintiff had purchased two cottages from the defendant subject to a prior oral undertaking given by the plaintiff that the defendant should be allowed to live in one of them as long as she desired. The plaintiff, having then acquired the ownership of those cottages, at some later stage instituted proceedings for recovery of possession of that cottage which was occupied by the defendant. In making that claim the plaintiff claimed that the defendant had been occupying the cottage as a tenant at will and that her tenancy at will had been duly determined by notice to quit. The defendant counter-claimed for a declaration that the plaintiff held the cottage in trust for her for her life. The trial judge found - and I am reading from the judgment of the Court of Appeal at page 135 -

The Court of Appeal upheld that finding and dismissed the plaintiff's claim. There are, as it seems to me, a number of points of similarity between that case and the present case. There is of course the important distinction that in Bannister's⁽²⁾ case there was no question of any illegality, whereas such a question is raised upon the facts in the instant appeal. But turning now to those points of similarity; the plaintiff in the present case - as was the defendant in Bannister's⁽²⁾ case - has been in possession of these premises throughout. In the present case - as did the defendant in Bannister's⁽²⁾ case - it was the plaintiff who arranged for the transfer of title to the defendant upon the undertaking that the plaintiff could remain in possession. Mr. Swaine concedes that because of the taint of illegality in the present case the plaintiff would not be entitled to ask for a declaration that the defendant held these premises in trust for the use and occupation of the plaintiff. But Mr. Swaine submits that it is open to him upon the facts of this case as found by the trial judge, to make use of those facts as a shield to prevent the defendant from claiming possession and from resiling from his part of the agreement upon which he obtained the registered title to these premises. For my part, I would agree with the argument advanced by Mr. Swaine that although the plaintiff, by reason of the taint of illegality colouring her claim, cannot make use of the established facts for the purpose of proving her claim to an equitable title in the property, she is entitled to rely upon those same facts as a shield to protect her from the defendant's counterclaim for the recovery of possession of the premises; a claim which by its very nature upon the facts as accepted by the learned trial judge, was based upon breach of trust by the defendant in his dealings with the plaintiff.

32. For these reasons, I would accordingly allow this appeal, with costs, to the extent which I have indicated.

Representation:

(1) (1962) A.C. 294

(2) (1948) 2 A.E.R. 133

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.15 OF 1968

(On appeal from K.C.J. Action No.8051 of 1967)

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Coram: Hogan, C.J., Rigby, S.P.J. & Mills-Owens, J.

Date of Judgment: 20 November 1968

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JUDGMENT

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MILLS-OWENS, J.:

33. I agree. In effect, the parties agreed to put up the defendant as a "dummy" so as to acquire a tenancy the real benefit of which was to be enjoyed by the plaintiff. That was a deception of the public administration and thus, on the authorities, an illegal transaction, in respect of which the parties were in pari delicto. If the plaintiff's rights are to be held to fail by reason of the illegality then so must the rights of the defendant be held to fail. There is nothing to choose between them, except that in respect of the counterclaim for possession the plaintiff was in the position of a defendant. The fact that the object was that the defendant should acquire the legal estate and the plaintiff the equitable interest is no ground for differentiating between them. The lack of writing evidencing the equitable interest is not of any consequence (see Bannister v. Bannister⁽¹⁾). The authorities support the view that, notwithstanding that a transaction is illegal, it is effective to transfer proprietary rights (see e.g. Scarfe v. Morgan⁽²⁾; Palaniappa Chettiar v. Arunasalam Chettiar⁽³⁾; Singh v. Ali⁽⁴⁾; and Selangor United Rubber Estates, Ltd. v. Cradock⁽⁵⁾). Applying that view, the plaintiff acquired a good equitable interest in the tenancy, coupled with possession. How then can the defendant seek to oust her? He, the defendant, was a bare trustee for her. Being sui juris, the plaintiff is, as between herself and the defendant (not, of course, as between herself and the Resettlement Department), entitled to remain in possession on the basis that, as between herself and the defendant, she is entitled to call for possession and for the legal estate to be vested in her⁽⁶⁾. Although the defendant did not plead illegality in the court below, once the real circumstances became apparent from the evidence the court was bound to take notice of the illegality; on the facts as found by the learned District Judge the illegality was clearly established. The general principle is clear:

34. It follows, in my view, that the defendant is not entitled to recover possession, whatever view be taken of the effect of the illegal transaction in relation to proprietary rights. If the transaction was effective to create proprietary rights so that the legal estate vested in the defendant, then equally the equitable interest vested in the plaintiff. It is not a case of the defendant being able to establish a legal title independently of the illegal transaction; his acquisition of the tenancy was a facet, an essential facet, of the transaction. In this respect I would contrast the case of Amar Singh v. Kulubya⁽¹⁰⁾. If the view were to be taken that no proprietary rights came into existence, because of the illegality, again, in my view, the defendant must fail; it is he who is driven to rely on the illegal transaction; the court will not lend him its aid to enjoy any of its fruits, and he fails in any event because he lacks any estate or interest competent to divest the plaintiff of her admitted possession; the plaintiff, being in possession, and being, in respect of the claim for possession, in the position of a defendant, does not require the court's aid.

35. Accordingly, I concur in the Judgment proposed by my Lord.

Representation:

(1) (1948) 2 All E.R. 133.

(2) (1838) 4 M. & W. 270.

(3) (1962) A.C. 294.

(4) (1960) A.C. 167.

(5) (1968) 2 All E.R. 1073 at

(6) Lewin on Trusts (16th Ed.) p.615.

(7) (1803) 3 East 222, 225.

(8) (1775) 1 Cowp. 341, 343.

(9) (1950) A.C. 327, 341.

(10) (1964) A.C. 142.