Hounga v. Allen at the Supreme Court

Introduction

The Supreme Court in Hounga v. Allen ¹ has overruled what can only be described as a less than satisfactory decision of the Court of Appeal. ² Lord Wilson ³ and Lord Hughes ⁴ delivered the judgement of the court and were unanimous in finding that the Court of Appeal had been wrong to hold that the defence of illegality prevented the appellant, an illegal immigrant, from bringing a claim for race discrimination. This was because there was no inextricable link between the claim and her illegal conduct. However, Lord Wilson went further than Lord Hughes and questioned whether the public interest was in favour of preventing a claim in these circumstances, even if the claim was linked to appellant’s illegality. His Lordship was of the opinion that the public interest in permitting a claim would outweigh the public interest in preventing a claim that had been tainted with illegality from succeeding. The significance of his Lordship’s approach is that potentially both the contractual claim to recover unpaid wages and the tortious discrimination claim could succeed, even if they were tainted by illegality. In the present case, only the tortious claim for statutory discrimination under the Race Relations Act 1976 (RRA 1976) ⁵ was being pursued. The Supreme Court reached its decision without accepting that in permitting a claim for discrimination to succeed, it was condoning the appellant’s illegal conduct. This can be contrasted with the approach taken by the Court of Appeal, which had held that to allow the claim to succeed would be to condone the appellant’s illegality.

Background facts

The appellant, Ms Hounga, is a Nigerian national, who had been approached in Nigeria by relatives of the respondent and was asked if she wished to move to the United Kingdom. The respondent, Mrs Allen, had offered the appellant employment in the United Kingdom and in exchange for her services the appellant was to receive £50 per month, accommodation, food and the opportunity to obtain an education. The prospect of obtaining a British education had been a strong motivation for accepting the offer of employment. At the time that the appellant had entered the United Kingdom, she claimed that she had been 14 years old. This claim was supported by expert evidence. The Supreme Court accepted that it was ‘reasonable to proceed’ on the basis that she had been 14 years old and accepted the expert’s findings. ⁶ Importantly, the appellant had knowingly participated in the scheme to facilitate her illegal entry in the United Kingdom. She had obtained a passport under false pretences by claiming to the Nigerian authorities, in a sworn affidavit, that she was born in 1986 and had used a different surname as an alias. Having obtained the passport, the appellant had proceeded to inform the British High Commission in Lagos that she wished to visit the United Kingdom in order to see her grandmother and thus obtained entry clearance for a maximum period of 6 months. Subsequently, upon arrival in the United Kingdom, the appellant informed British immigration officials at Heathrow Airport that she was visiting her grandmother. The significance of the appellant fully understanding that her actions were illegal had been emphasized in the Court of Appeal’s decision. The Supreme Court addressed the appellant’s ability to ascertain that what she was doing was wrong and accepted that the appellant had ‘knowingly participated’ in the enterprise by illegally obtaining entry into the United Kingdom. ⁷ Reference was made to the fact that the employment tribunal had found that the appellant understood that her actions were illegal and ‘knew the difference between right and wrong’. ⁸

Once in the United Kingdom, the appellant alleged that the respondent had mistreated her. The appellant claimed that she was threatened by the respondent and that she has been informed that if she left the respondent’s house then the police would arrest her and that she would go to prison. The appellant also alleged that the respondent had been physically violent towards her and that eventually the respondent had thrown her out of the house. The employment tribunal had accepted that the respondent had ‘inflicted serious physical abuse’ on the appellant and that she had been caused ‘extreme concern’ due to being informed that she would be imprisoned if she was discovered by the police. ⁹ The employment tribunal accepted the appellant’s account of being thrown out of the respondent’s house, after she had been smacked and hit, before having had water poured over her. At first, when responding to the claim, the respondent had denied that she knew the appellant. Eventually, the respondent accepted that the appellant had lived in her house.

The claim

The appellant’s original claim fell under two categories. The first was based on the contractual relationship between the parties, whilst the second was tortious and was for race discrimination under the RRA 1976. The defence of illegality had been successfully raised by the respondent and employment tribunal had dismissed the part of the claim that had been based on the appellant’s employment contract, which inter alia included breach of contract, payment for unpaid wages and unfair dismissal. The tribunal was satisfied that the appellant had clearly understood that the contract was illegal. However, whilst the employment tribunal upheld the claim for race discrimination that related to her dismissal, the claim for pre-dismissal race discrimination was unsuccessful. This was due to the appellant’s failure to comply with the statutory grievance procedure. ¹⁰ Upon appeal the Employment Appeal Tribunal had upheld the employment tribunal’s decision regarding the contractual claims and the pre-dismissal discrimination.

The Court of Appeal’s decision

The Court of Appeal set aside the bar to the appellant claiming pre-dismissal discrimination. This however made little difference, as the Court of Appeal held that the defence of illegality defeated both discrimination claims. ¹¹ It is important to note that the contractual claim had not formed part of the appeal. Rimer LJ delivered the court’s judgment and was critical of the Employment Appeal Tribunal’s failure to see the link between the appellant’s illegality and the claim for race discrimination; as in the court’s opinion, this claim was only being brought as a consequence of the illegal contract. ¹² The Employment Appeal Tribunal had apportioned blame between the parties and attributed most of the blame to the respondent. This was something that Rimer LJ objected to, finding such an approach to be ‘flawed and wrong’ and irrelevant, due to the key fact that the appellant had been a willing participant. ¹³ Rimer LJ viewed this as a case of clear-cut illegality, with the claim being tainted due to contract being illegal from its inception. ¹⁴ Thus, the court held that to permit the claim to succeed would condone the appellant’s illegal conduct. ¹⁵

The Supreme Court’s decision

Ms Hounga appealed to the Supreme Court and the question for the court to determine was ‘[i]n what circumstances should the defence of illegality defeat a complaint’ for discrimination on the basis of race discrimination under section 4(2)(c) of the RRA 1976? ¹⁶ Lord Wilson acknowledged that although the point upon which the appellant was appealing ‘may well be said not to capture the gravamen’ of the case, the decision of the respondent to evict her ‘precipitated her rescue’ and was ‘a blessing for Miss Hounga’. ¹⁷ It was necessary for the court to consider whether the defence of illegality was applicable here to defeat the appellant’s claim for dismissal on the grounds of race discrimination. This entailed a consideration of the different tests developed in previous decisions and the approach adopted by the Court of Appeal. Making reference to the decision in National Coal Board v. England, ¹⁸ Lord Wilson observed that although the defence of illegality ‘will sometimes defeat an action in tort, the circumstances in which it will do so have never been fully settled’. ¹⁹ His Lordship noted the introduction of the public conscience test in Saunders v. Edwards, ²⁰ where Nicholls LJ had approved of the test formulated by counsel at first instance. According to Nicholls LJ the public conscience test:

[I]nvolved the court looking at the quality of the illegality relied on by the defendant and all the surrounding circumstances, without fine distinctions, and seeking to answer two questions: first, whether there had been illegality of which the court should take notice and, second, whether in all the circumstances it would be an affront to the public conscience if by affording him the relief sought the court was seen to be indirectly assisting or encouraging the plaintiff in his criminal act. ²¹

In addition to the reliance test, the courts had developed another test, the inextricable link test, which considered whether the claimant’s illegality was linked to the claim. In Hall v. Woolston Hall Leisure Ltd, ²⁸ the claimant had knowledge that her pay slips were incorrect and that her employer was deliberately attempting to defraud the inland revenue. The Court of Appeal had applied the inextricable link test and had permitted her claim for sexual discrimination to succeed. In Hall, Mance LJ had held that ‘it requires quite extreme circumstances before the test will exclude a tort claim’. ²⁹ Mance LJ observed that the statutory protection is ‘aimed at providing relief which affords “real and effective judicial protection” in respect of discriminatory… rather than relief which reflects any contractual entitlement which may or may not exist’. ³⁰ This approach was approved of in Rhys-Harper v. Relaxion Group plc, ³¹ where the fact that a contract was tainted by illegality did not preclude a claim in tort on the grounds of discrimination. Mummery LJ subsequently reconsidered the inextricable link test in Vakante v. Governing Body of Addey and Stanhope School (No 2). ³² The decision in Vakante concerned an employee who had lied to his employer about his ability to legally work in the United Kingdom. Mummery LJ viewed the test as not strictly one of causation, as the circumstances of the claim were also relevant. The relevant circumstances included ‘the nature and seriousness of the illegal conduct’ and ‘the extent of the applicant’s involvement in it’. ³³

Lord Wilson was aware of the problems in trying to formulate a test to determine when a claim would be prevented by reason of illegality, ‘[e]very formulation of a requirement to identify the active or effective cause of an event – or an act to which it is inextricably linked – has a potential for inconsistent application driven by subjective considerations’. ³⁴ His Lordship observed that the Court of Appeal had viewed the appellant’s claim as being inextricably linked with her own illegal conduct and that the appellant was an equal participant in the enterprise. The Court of Appeal had held that this case was factually similar to Vakante, with the exception of the respondent’s awareness and complicity. ³⁵ The Court of Appeal had contrasted the level of complicity between the claimants in Hall and Vakante, with the claimant in Hall being regarded as not having the same level of culpability as the claimant in Vakante. ³⁶ The assertion that the parties in the present case were equal participants when entering into the illegal contract was questioned by Lord Wilson who asked ‘[w]as there any doubt about the identity of the party who bore greater responsibility?’ ³⁷ Rather than accepting differing levels of culpability, the Court of Appeal had emphasised the active complicity of the appellant and her awareness that her own actions were illegal. The employment tribunal in finding that a claim for race discrimination in relation to the appellant’s dismissal should be permitted, had distinguished between the initial creation of the contract and the parties’ subsequent behaviour. The Court of Appeal did not follow this approach.

Lord Wilson considered the approach taken by Rimer LJ who had refused to be distracted by distinguishing between the different levels of culpability. Rimer LJ had observed that ‘[w]hichever party bore the greater responsibility for making the illegal contract … [the appellant] was a willing participant in it’. ³⁸ Lord Wilson also referred to a further point made by Rimer LJ:

Ms Hounga’s dismissal discrimination case was dependent upon the special vulnerability to which she was subject by reason of her illegal employment contract: she was relying on the facts that she was an illegal immigrant, had no rights to be employed here, effectively had no rights here at all and so could be treated less well because of her inferior situation. ³⁹

Certainly, the Court of Appeal’s decision implicitly rewards those who employ illegal immigrants (and here the appellant was a child at the time that she had, albeit voluntarily, entered the United Kingdom), by providing holding that the defence of illegality could defeat a tortious claim for discrimination. The Court of Appeal viewed the mistreatment and discriminated suffered as connected to the initial illegality, and therefore the claim was inextricability linked to her status as an illegal immigrant.

Whilst acknowledging the subjective nature of the test, Lord Wilson held that the inextricable link was not present. ⁴² Lord Hughes also agreed with Lord Wilson that the claim for discrimination arising from dismissal should succeed and that the pre-dismissal claim should be readmitted to the employment tribunal. ⁴³ Lord Hughes was of the opinion that the discrimination was not sufficiently linked to her illegal status. ⁴⁴ Nonetheless, his Lordship was clear that the appellant would not have been able to pursue her contractual claims due to her status as an illegal immigrant.

It was at this point that Lord Wilson went further than Lord Hughes and questioned whether public policy could permit a claim to succeed, even where the defence of illegality was available to the defendant. His Lordship examined the public policy rationale for the defence of illegality and referred to the Supreme Court of Canada’s decision in Hall v. Herbert, ⁴⁵ where McLachlin J had considered the justifications for the court’s power to prevent a claim from succeeding. McLachlin J had observed that these justifications were said to be based on the ‘duty of the courts to preserve the integrity of the legal system’ to prevent ‘an evasion or rebate of a penalty prescribed by law’ and the need to prevent the claimant from profiting from his/her own illegality. ⁴⁶ Applying these justifications to the present case, Lord Wilson held that they were not present on the facts. The idea that the appellant would profit from the illegal contract was rejected, as any damages obtained would be based on the injury to the appellant’s feelings, which she had suffered as a result of the abusive nature of her dismissal. ⁴⁷ Lord Wilson was equally dismissive of the threat posed to the integrity of the legal system by allowing the claim to succeed, as his Lordship was not convinced of the ‘fanciful’ idea that it would encourage others to enter into similar contracts. ⁴⁸ The public policy justification for the defence of illegality was considered to ‘scarcely exist’. ⁴⁹

Lord Wilson proceeded to question whether the respondent’s conduct amounted to people trafficking. Making reference to the United Nation’s Protocol to Prevent, Suppress and Punish Trafficking in Persons (the Palermo Protocol), his Lordship considered Article 3 which outlined the requirements that were needed for trafficking to occur. These requirements included the transportation of persons which was for the purpose of exploitation. ⁵⁰ The appellant had relied on a report by the Trafficking Programme Coordinator at Anti-Slavery International, who was of the opinion ‘that it was a classic case of the trafficking of a vulnerable child’. ⁵¹ His Lordship considered the International Labour Organization’s six indicators of forced labour and considered that at least three of these were present here. The actual question of whether this was a case of trafficking was answered in the negative. The reasons for this was ‘[j]udicious hesitation … [although] it was so close to [trafficking]’. ⁵² Nonetheless, Article 15(3) of the Council of Europe Convention on Action against Trafficking in Human Beings CETS No 197 provides that ‘[e]ach party shall provide, in its internal law, for the right of victims to be compensated from the perpetrators’. ⁵³ Lord Wilson held that Article 15(3) should apply beyond victims of trafficking to those who have suffered discrimination. ⁵⁴ Therefore, the defence of illegality would violate the United Kingdom’s obligations under international law. ⁵⁵ After considering the jurisprudence on Article 4 of the European Convention on Human Rights, his Lordship referred to the draft Modern Slavery Bill and the government’s proposed amendments, which would protect trafficked individuals and provide a defence where they had been forced to commit a criminal act. Crucially, Lord Wilson regarded the Court of Appeal’s decision to uphold the defence of illegality upon appeal was at odds with public policy, as the decision 'runs strikingly counter to the prominent strain of current public policy against trafficking and in favour of the protection of its victims’. ⁵⁶ His Lordship observed that the public policy for upholding the defence of illegality ‘should give way to the public policy to which its application is an affront’. ⁵⁷

However, Lord Hughes disagreed with Lord Wilson as to whether the Palermo Protocol entitled the appellant, as of right, to recover damages for race discrimination. Lord Hughes was of the view that ‘it was not possible to read across from the law of human trafficking to provide a separate or additional reason for the outcome’. ⁵⁸ Whereas Lord Wilson argued that regardless of the appellant's illegal conduct, public policy required that those who had been trafficked should be able to recover damages, regardless the illegal status of their employment. Lord Hughes could not see how Article 6(6) of the Palermo Protocol (which placed a State Party under an obligation to ensure that it was possible for those who had been trafficked to obtain compensation) could be interpreted as ‘requiring English law to depart from its general principles of illegality’ and thus entitle the appellant to claim her wages. ⁵⁹ This can be contrasted with Lord Wilson who had interpreted this obligation as extending to the acts of discrimination and not just trafficking. ⁶⁰ According to Lord Wilson, the appellant’s contractual claim for unpaid wages may well have succeeded had it been pursued, due to ‘considerations of public policy [which] … might conceivably have yielded a different conclusion’. ⁶¹

Conclusion

The decision of the Supreme Court in Hounga v. Allen is to be welcomed, as it has reversed a problematic decision of the Court of Appeal. The decision of the Court of Appeal in Hounga v. Allen had the potential of condoning the actions of those who assist illegal immigrants to enter the United Kingdom and then subsequently discriminate against them. Previously, the author has critiqued the Court of Appeal’s decision for this very reason. ⁶² It must be noted that the Court of Appeal’s decision did not negate the criminal sanctions that are available for people trafficking or assisting an illegal immigrant to enter the United Kingdom. ⁶³ It is important to observe that Lord Wilson was reluctant to find that the respondent was a people trafficker. However, unless either a prosecution takes place, or a person in the appellant’s position is able to recover damages for discrimination, the person responsible will face neither criminal, nor civil, sanction. Indeed, the decision could be said to reinforce the perception that there is an incentive in employing illegal immigrants because of the apparent immunity from civil liability. This case shows that the employer can use the threat of discovery by the authorities against an illegal immigrant employed by them, in the knowledge that the employee will be in fear of being prosecuted and deported.

Following the Court of Appeal’s decision there was arguably little incentive for an illegal immigrant (if they have knowingly engaged in illegal conduct) who has been the victim of discrimination to bring a claim against their employer. Someone in the appellant’s position would be unable to recover damages no matter how appalling their treatment has been, or how vulnerable they were once they had arrived in the United Kingdom. It is not being argued here that persons who facilitate the entry of illegal immigrants into the United Kingdom are immune from criminal prosecution, or that there are no circumstances where a successful claim could be brought. This immunity from civil liability, or to put it another way, an apparent incentive to exploit the vulnerable, was not a deliberate objective of the Court of Appeal, or one that their Lordships would have intended. Rather it was the unfortunate result of the Court of Appeal’s decision to find that the appellant’s claim was tainted with illegality.

In deciding that the defence of illegality could defeat a claim for pre-dismissal and dismissal discrimination (as to uphold the claim would be contrary to public policy), the Court of Appeal focused on the appellant’s complicity in falsely obtaining a passport to travel to the United Kingdom, lying to British immigration officials and then working illegally once she had arrived. The initial illegality, which had given rise to an illegal employment contract, according to the Court of Appeal tainted the ongoing contract. Consequentially, this rendered any tortious claim for race discrimination (that emanated from the respondent’s mistreatment of the appellant during the lifetime and the subsequent termination of that tainted contract) void, regardless of the surrounding circumstances.

The Supreme Court was unanimous in its decision to set aside the decision of the Court of Appeal. All of the Justices agreed that the defence of illegality was not applicable here due to there being no link between the claimant’s illegality and the tortious claims for race discrimination. Whilst acknowledging the subjective nature of the test for determining whether the defence of illegality applied, Lord Wilson was highly critical of the reasoning adopted by the Court of Appeal. The approach adopted by the Supreme Court is a sensible one, as to follow the Court of Appeal’s reasoning would arguably prevent any similar discrimination claims that originated from an illegal contract of employment. Clearly, there was no inextricable link to taint the claim and to find otherwise amounts to an overzealous application of the defence of illegality. It is submitted that such zealousness does nothing to serve the public interest upon which the defence operates, as there is a tangible distinction between a claim enforcing the terms of the illegal contract and a claim for discrimination suffered as a consequence of performing the contract.