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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That's an Expensive Headache: Wife Receives Damages for Husband's Indifference

The Guardian has reported on the curious case of the French wife who sued for divorce based on, I assume, a violation of the duties of marriage under Article 242 of the French Civil Code. What makes the case interesting is the judge's decision to fine the husband 10,000 euros to compensate the wife for the particular violation complained of, namely "lack of sex over 21 years of marriage."

Under the antique English common law, marriage came with an abundance of rights and duties. The husband had the duty to provide his wife with the necessities of life and had the right to her domestic services, the right to her property and income, and the right to have her live with him and have sex with her as he wished, called consortium. It seems that the French civil code developed in a similar manner. Title V concerns the law on marriage, including the obligations marriage gives rise to (Chapter V) and the rights and and duties of spouses (Chapter VI), and Title VI concerns the law on divorce.

In this case the husband was sued for breach of Article 215 (Title V, Chapter VI), which provides that:

"Spouses mutually oblige themselves to a community of living."

The judge held that sexual relations are a part of a "community of living," and the Guardian quotes the judge as saying that:

"A sexual relationship between husband and wife is the expression of affection they have for each other, and in this case it was absent. By getting married, couples agree to sharing their life and this clearly implies they will have sex with each other."

Interestingly, from the size of the award, one can deduce that the going rate for sex in marriage is about 1.3 euros a day or about $1.80 Canadian at today's rate.

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What's "Without Prejudice" and What's Not

You'll often see certain lawyer's letters marked "without prejudice," and it's not always clear what "without prejudice" means, particularly for people who aren't lawyers. The question has recently come up in a file of mine, and I thought I'd take the opportunity to explain things.

"Without prejudice" protects settlement proposals

Because of the incredible expense and degree of uncertainty involved in trials, lawyers will usually make many attempts to settle a case before it heads to trial. Although settlement efforts can take many forms, the cheapest is correspondence: the exchange of letters setting out the terms on which the lawyer's client would be prepared to settle the case.

As a general but not invariable rule, settling a file means finding a compromise between the parties' positions, which means that neither party gets everything he or she is looking for. Someone who is asking for sole guardianship might compromise and agree to an order for joint guardianship as long as he or she has the children's primary residence; someone who is asking for 70% of the family assets might compromise and agree to take half the family assets as long as spousal support is paid for a certain number of years.

Now, although compromise might be necessary for settlement, the position a party takes to achieve settlement is rarely the position that the party takes at trial. At trial, the person seeking sole guardianship is still going be demanding sole guardianship, and the person after the majority of the family assets is still going to be after the majority of the family assets. But if this is the case, which it usually is, people need a way to communicate settlement proposals without affecting their positions at trial. In other words, if you're suing for twelve 1972 Ford Pintos, you need to be able to propose settlement for six 1972 Ford Pintos and three 1973 Ford Pintos without being held to that position at trial.

This is where "without prejudice" letters come in. Marking a letter "without prejudice" protects the contents of the letter from being disclosed; the letter is being sent without prejudice to the party's position at trial.

To be clear, however, just marking a letter "without prejudice" isn't going to automatically exclude the letter from use at trial. To be excluded, the letter must actually contain a settlement proposal; as our Court of Appeal said in a 1984 case called Belanger v. Gilbert, "not all letters so marked are to be held inadmissible." In another appeal case, Schetky v. Cochrane, from 1918, the court set out what was required to protect "without prejudice" letters:

"... the rule which excludes documents marked 'without prejudice' has no application unless some person is in dispute or negotiation with another, and terms are offered for the settlement of the dispute or negotiation...

"... before the privilege arises two conditions must exist, viz.: (a) a dispute or negotiation between two or more parties; and (b) in which terms are offered"

A "without prejudice" letter that meets this test cannot be put into evidence, whether at trial or as an exhibit to an affidavit.

To be even more clear, it is only the parts of "without prejudice" letters proposing settlement that are protected. A letter that talks about the number of Ford Pintos required to achieve settlement as well as setting hearing dates and the colour of the author's pants, can certainly be be put into evidence about the hearing dates and the author's pants, as long as the portion dealing with the Pintos is blocked out.

Costs

Proper "without prejudice" letters can't even be put into evidence to argue costs after trial, unless the letter contains a statement saying that the author intends to reply on the letter for the purpose of arguing costs. The English Court of Appeal summarized this point in a 1984 case called Cutts v. Head:

"...the court is able to examine and consider such correspondence, where the offeror, in the body of the correspondence in issue, expressly reserves the right to bring the letter to the notice of the judge on the issue of costs after judgment."

(Letters like these are sometimes called Calderbank letters, in reference to the 1975 case from the English Court of Appeal which authorized this narrow exception, Calderbank v. Calderbank.)

Subsequent letters not marked "without prejudice"

Interestingly, the protected status of "without prejudice" settlement proposals also applies to letters written in reply to such proposals that aren't marked "without prejudice." Halsbury's Laws of England says this at volume 15, paragraph 728 of the third edition:

Where the privilege exists, it covers not only the particular letter itself, but also all subsequent parts of the same correspondence on both sides, notwithstanding that they are not expressed to be “without prejudice," unless there is a clear break in the chain of correspondence to show that the ensuing letters are open. Moreover, where a letter offering terms, but not stated to be “without prejudice” is followed by another saying that the communications between the parties are to be “without prejudice” the former letter is protected.

"With prejudice" letters

"With prejudice" letters are different than "without prejudice" letters. Such letters not only deny any claim of protection from production to the court, they say that the letter will be produced to the court.

Of course, because marking a letter "with prejudice" doesn't make the contents of the letter any more true, or any more compelling and persuasive to judge who reads it, it's not entirely clear what is achieved by marking a letter "with prejudice" apart from expressing the author's conviction about the importance or accuracy of the contents.

Summary

1. "Without prejudice" letters allow people to discuss settlement proposals without worrying that their proposals will be held against them later.
2. The phrase "without prejudice" only protects settlement proposals. Marking your laundry list or any other communication "without prejudice" isn't going to stop the document from being used in court.
3. The parts of a "without prejudice" letter that don't talk about settlement can be used in court, as long as the parts which do talk about settlement are blocked out.
   
4. If a "without prejudice" letter is going to be used to argue costs down the road, the letter needs to say so or it can't be used to argue costs.

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Big Love Busted!

The CBC has today reported that Winston Blackmore and James Oler, the rival leaders of the religious community of Bountiful, British Columbia have each been charged with polygamy, an offence under the Criminal Code.

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