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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Dowling & Rutter & Ors v Abacus Frozen Foods Ltd [2000] ScotCS 69 (15 March 2000) URL: http://www.bailii.org/scot/cases/ScotCS/2000/69.html Cite as: [2000] ScotCS 69

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The pursuers trade as agricultural contractors and in 1997 supplied workers for the defenders' fish processing factory at Mintlaw near Peterhead. Between 8 January and 4 October 1997 the pursuers submitted invoices for the labour provided to the defenders, and these were paid. On 31 October 1997 immigration authorities visited the defenders' premises and advised that the workers supplied by the pursuers to the defenders were foreign nationals who did not have the appropriate work permits which would allow them to work in this country. The immigration authorities detained the workers and eventually returned them to their country of origin. As a result the workers did not go back to work for the defenders after 31 October 1997. Contrary to what is said on record, it appears to be agreed that no charges were laid against the immigrant workers; they were simply repatriated. No further workers were supplied by the pursuers to the defenders thereafter. The pursuers have submitted two invoices in respect of the supply of the workers for the periods from 6-12 October, and 13-18 October 1997 respectively to the defenders. There appears to be no doubt that the pursuers did in fact supply workers to the defenders on those dates and that the invoices correctly represent the value of the services provided. The total of the two invoices represent the sum sued for. The defenders have declined to pay these invoices on the ground that the pursuers performed their part of the contract between the parties unlawfully, by supplying workers who did not have the right to work in the United Kingdom. Further, the defenders maintain that as the pursuers failed to replace the immigrant workers after 31 October 1997 they have suffered pecuniary loss, which is the subject of the counterclaim. The case came out for debate on the pursuers' preliminary pleas, which are to the effect that the defences and the counter-claim are irrelevant.

From the careful and detailed submissions presented by both counsel it was clear that the parties were divided on several fundamental issues. During the debate discussion focused on various matters including an examination of the consequences of a statutory illegality affecting a contract as opposed to an illegality at common law, and the question of whether the defenders' averments were sufficiently specific and relevant to justify their claim that they had reason to decline to pay for the services provided by the pursuers. However, it became clear that the first question which had to be decided was whether Scots law recognises any distinction in principle between a contract which is illegal in its formation and a contract which is illegal because of the way in which it is performed.

Pursuers' counsel submitted that in essence there was such a difference between an illegality in the formation of contract and an illegality in its execution. His further submission was that it was necessary to determine the degree of seriousness of the illegality in every case, and in particular to decide whether the illegality was sufficiently serious to deprive the pursuers of their right to be paid for services illegally rendered. It was accepted that if the contract is held to be illegal the courts will not in normal circumstances directly enforce it; the illegality may be of such a fundamental nature that no redress is available. However, depending on the degree of seriousness of the illegality, the courts may be prepared to give effect to the incidental rights of parties arising out of the contract. Reference was made to Gloag on Contract (2^nd ed.) pp.549-550. Reference was also made to McKendrick on Contract Law pp. 286-7 where it is suggested that while the courts in general terms will not enforce a contract which is illegal, the question in practice is more complex because of competing policies, such as that parties should be as free as possible to regulate their own affairs, and that there is a need to prevent unjust enrichment.

Counsel for the pursuers then made a further distinction in the circumstances under which a contract could be affected by an illegality. When a contract is not subject to any common law prohibition, but there is a statutory penalty, or a statutory declaration that the contract is void, the court may again still recognise rights incidentally arising out of the agreement (Gloag on Contract p.551; Cuthbertson v Lowes (1870) 8 M. 1073). If on the other hand statute prevents something but does not go on to say that the contract is void, what has to be examined is what the statute intended, and in particular whether the penalties envisaged by the statute were restricted to the fines provided within the statute itself or whether the statute appeared to leave open the possibility of further and perhaps more severe consequences. Pursuers' counsel accepted that if the illegality was so serious that it tainted the whole contract, then any subsequent loss would lie where it fell, irrespective of the size of that loss. However, in the present case, in respect of the two statutory offences described by the defenders on record, he submitted that it was clear from an examination of the statutes themselves that what Parliament intended was that a fine should be paid when such offences were committed, but that no further consequences for the offences were envisaged. The alleged illegality in the present case does not taint or criminalise the contract for the supply of labour, either at common law or in terms of the statute. The statutes referred to on record are not concerned with agreements to supply labour, but rather are directed at the conduct of the employers and of the workers themselves. In support of all of these various propositions reference was made to St John Shipping Corporation v Joseph Rank Ltd 1957 1 Q.B. 268.

Defenders' counsel submitted that under Scots law there is no difference between illegality in the formation of contract and illegality in its performance (McBryde on Contract (2^nd ed.) paras. 26-17 and 26-19; Jamieson v Watt's Trustees 1950 S.C. 265; Stewart v Gibson (1840) 1 Rob. App. 260). No court will lend its aid to a litigant who founds his cause on an immoral or illegal act (Bell's Principles section 35). Illegality in the formation of contract and illegality in the performance of contract are both associated with the maxim ex turpis causa non oritur actio. Accordingly, the court has to consider whether the contract is unlawful at common law, or whether it is expressly or implicitly prohibited by statute. If the answer is in the affirmative in either case, then the contract is unenforceable irrespective of whether the illegality occurs in the formation of the contract or its implementation. Defenders' counsel concluded that a contract may be illegal at common law on various grounds including immorality, criminality or because it was contrary to public policy. In the present case it was the defenders' submission that the contract was illegal at common law because it was criminal and separatim contrary to public policy. Defenders' counsel also submitted that the degree of illegality was not of importance and that the court should be very careful about enforcing any contracts which have the taint of illegality. A doctrine involving a test of public conscience had been developed in England, which in effect allowed courts to take a subjective view as to whether a contract affected by illegality might be enforced. However, in Tinsley v Milligan 1994 [1 A.C.] 340 this policy was emphatically brought to a halt. It was said in terms that such a doctrine could have no place in English law, however harsh the consequences (Lord Goff of Chieveley at p.362). In other words the court should not enforce legal contracts because the degree of illegality is not particularly serious. Finally, defenders' counsel maintained that a contract may be illegal at common law because it seeks to contravene a statute.

Turning to the question of statutory prohibition, defenders' counsel submitted that this could be express or implied, but the matter was not properly covered by Scottish authority. However, the case of St John Shipping Corporation v Joseph Rank Ltd was authority for the principle that a person who performs a legal contract in an illegal manner cannot sue on it. At p.283 of the report Devlin J. (as he then was) says:

Further, it is clear that the court should not hold that any contract or class of contract is prohibited by statute unless there is a clear implication and necessary inference that the statute so intended. Counsel maintained that although the St John Shipping Corporation case was developing principles of English law, this was precisely the position here. The illegal action of employing people not qualified to work lay at the centre of the contract. Scots law may have to develop what counsel described as paenumbral case jurisprudence where the criminal behaviour is very collateral or ancillary, but this had not been done so far and was not necessary here. In the present case the illegality averred by the defenders lay at the heart of the pursuers' claim.

I have concluded that although there appears to be no comprehensive binding authority in Scotland on this subject, what authority there is tends to favour the idea that a different approach should be taken to contracts which are illegal in their formation, and contracts which are legal in construction but which are performed illegally. I think that the statement that the two kinds of contract illegality should be considered on exactly the same basis is too broad. In Chapter XXXIII of Gloag on Contract the matter is not dealt with directly, but it is possible to argue that such a distinction between the formation and execution of a contract is implicit in what is said. In dealing with statutory illegality at p.549 the author writes that there can be either a direct provision in a statute that a particular object may not be secured by agreement, or the imposition of a penalty on the commission of a particular act. This is clearly correct, and in the latter instance it seems reasonable to infer that contracts legal in themselves may therefore become pacta illicita by virtue of a criminal act which takes place in their execution. At p.550 it is noted that illegality resting merely on a statutory avoidance may have no further results, and that other rights arising out of the contract may thereafter be enforced. At p.549 it is also suggested that there are degrees of illegality, ranging from: "a statutory prohibition of a particular method of entering into a contract which may be lawfully completed in other ways, at the one end of the scale, to contracts intended to secure the commission of a crime, or some act generally described as immoral, or subversive to the interests of the state, at the other".

As different consequences may flow from statutory and common law illegalities, and as different degrees of illegality may exist, it would therefore not seem particularly useful to maintain a uniform approach to the questions of illegality in performance and in execution of contracts.

In the case of Cuthbertson v Lowes (1870) 8 M. 1073 all that was wrong with the performance of the contract was that the seller of potatoes insisted on supplying a quantity of goods in old Scotch measures, a practice which had been expressly prohibited by an earlier statute. This was held not to justify retention of the purchase price by the buyers. The ratio of the decision appears to have been that while the contract would have been unenforceable, in that for example an action for implement would have failed, the court held that there was no turpitude in selling potatoes by the Scotch rather than by the imperial acre, and that there was therefore no reason why the supplier should not receive the appropriate price once he had fulfilled his part of the contract. The court seems to have been influenced by the technical nature of the offence said to make the contract illegal and the manifest injustice of any other disposal of the case. This general approach was followed in St John Shipping Corporation v Joseph Rank Ltd. In that case a ship carrying grain put in to a port in Florida to take on bunkers which caused it to be overloaded, and its loadline to be submerged. The loadline was still submerged when it arrived at its destination in the United Kingdom and the master was charged with a criminal offence under the relevant legislation in respect of overloading and was subsequently fined. The defenders, who were holders of a bill of lading in respect of part of the cargo, paid most of the freight due, but withheld a sum equivalent to the additional cargo carried by the ship on the ground that the ship owners were not entitled to cover the costs of the grain to the extent it was overloaded because they had performed that part of the charter in an illegal manner. It was held that the infringement of a statute in the performance of a contract which was legal when made did not render the contract illegal unless the contract, as performed, was one which the statute meant to prohibit, and that in the circumstances of the case contracts for the carriage of goods did not fall within the ambit of the statute which was contravened. Clearly again this decision envisages a distinction between an illegality in the formation of the contract on the one hand and an illegality in the performance on the other, and I find the reasoning behind the decision persuasive in the present case.

However, in McBryde on Contract para. 26-19 the learned author asserts:

Reference is made in that context to the case of Jamieson v Watt's Trustees 1950 S.C. 265. That case was concerned with wartime legislation (Reg 56A of the Defence Regulations 1939 as amended) which declared unlawful any building work, with specified exceptions, done without a licence. A joiner was instructed to do all necessary building work to restore a property, and obtained the statutory licence for expenditure of £40 upon the joinery work. The total cost of the work turned out to be over £114. It was held that the pursuer was not entitled to payment for work not covered by the licence as his claim depended on a breach of a statutory regulation for which he himself had been responsible, and that the equitable doctrine of compensation was not available to him. The case of Cuthbertson v Lowes was distinguished on the grounds that in the earlier case the contract was in terms of the relevant statute void as opposed to being unenforceable, which left the court free to find that the buyer could not retain the goods without accounting for them to the seller. In the case of Jamieson v Watt's Trustees the court had no hesitation in concluding that anyone who has to rely on his own statutory breach in order to present a claim will not be entertained.

I have however come to the conclusion that whatever else the case of Jamieson is authority for, it does not support the proposition that there is no difference in Scots law between an illegality in the formation of a contract on the one hand, and an illegality in the implementation of a contract on the other. I believe that the effect of what is said in McBryde and Jamieson v Watt's Trustees is confined to the proposition that a person cannot base a claim for repetition of money for services done when the whole or substantive basis of that claim depends upon the claimant's own admitted illegal statutory activities, whether that be in the formation or in the performance of the contract. However there would appear to be a number of ways in which a contract can be affected by a statutory illegality, other than by the pursuer's admitted statutory default. Accordingly, I have concluded that the preponderance of such persuasive authority which exists supports the view that contracts illegal in formation and contracts illegal by virtue of the way in which they are performed should be approached separately. This would appear to be appropriate, as different considerations might well apply in assessing whether the formation of a contract is illegal at statute, on the one hand, or at common law on the other; and the same would appear to be true in respect of the performance of contracts. For example, if a contract is illegal because of a statutory prohibition, the courts as in the case of Jamieson may well take the view that the maxim turpis causa excludes the right of any form of relief. That conclusion may be properly reached irrespective of how harsh the outcome may be for one party or the other, reflecting the maxim in pari casu potior est causa possidentis. However, if a legal contract is carried out in a way which involves an ancillary infraction of a statute, the courts may be prepared to conclude that there is no room for turpitude; it may be for example that the infraction was unwittingly done, or involved such a minor degree of criminality as to be irrelevant to the purposes of the contract; or to be outwith the ambit of the statute in question. In such situations the courts might not be prepared to surrender the right to grant the supplier of goods and services compensation for what he has sold or done, when it is manifestly equitable to do so.

It must therefore follow that in such cases the court has to assess the nature and quality of the illegality before deciding whether any remedy is available; "Illegality in contract admits of degree" (Gloag p.549). The illegality may be statutory or at common law; and the illegality may be in the formation of the contract or in its implementation. If the illegality is statutory, the first question is whether it renders the contract void or illegal. If it renders the contract void, the court will have an opportunity to recognise the ancillary rights which arise out of the arrangements between the parties (as in Cuthbertson v Lowes). If the contract is illegal in its formation because of a statutory prohibition and the court will not enforce the contract for that reason, it will also presumably find it difficult if not impossible to enforce any rights which might arise incidentally out of the contract. This is because of the need to sustain the supremacy of statute law, and it also reflects the maxim ex turpis causa non oritur actio. The court will accordingly refuse such claims irrespective of the consequences; the penalty for entering a contract prohibited by statute must be absolute, and any losses must lie where they fall. Also, a pursuer in presenting his claim in such circumstances has to rely on his own breach of statute, and the courts have made it clear on a number of occasions that they cannot entertain this. It is in respect of these various propositions that the case of Jamieson v Watt's Trs. is relevant, and also St John Shipping Corporation Joseph Rank Ltd where at p.228, Devlin J. says:

These propositions however would seem to be subject to this qualification, that the court should not hold that any contract or class of contract is prohibited unless the statute clearly so intends. It may be difficult to imagine any situation where a contract is affected by a statutory illegality not relevant to the formation of that contract, but in the event of such an eventuality it may be that the courts would recognise consequential or ancillary rights arising out of the contract. Further, innocence of the statutory prohibition may be extremely difficult to establish but could theoretically occur, and again in that situation the courts might consider the possibility of relief:

(Devlin J at p.288).

I do not think therefore that contracts which are affected of statutory illegality can admit of a universal treatment. In the case of a statutory illegality in the implementation of a contract, I consider that it is open to assess the degree of illegality involved and what effect that illegality should have on the contract, and on the rights of the parties arising therefrom. The reasoning of Devlin J. on this subject in the case of St John Shipping Corporation v Joseph Rank Ltd  seems to me to be persuasive, and in my view this principle is not necessarily affected by the opinions of the Inner House in the case of Jamieson v Watt's Trustees. It seems clear that a statutory illegality in the implementation of a contract could in a number of ways make it manifestly inequitable to refuse to recognise rights arising out of the contract. For example, in the instance figured in the St John Shipping Corporation case, a purchaser might refuse to pay for goods because the supplier had exceeded the speed limit in effecting delivery. In the implementation of a contract therefore, there appears to be significantly more scope for considerations of inadvertence, irrelevance, immateriality, innocence and so on to mitigate significantly or even exclude questions of turpitude. The court would also be able to consider the question of whether the illegality described was in fact within the ambit of the statute. Equally, as in the case of Jamieson, the statutory illegality perpetrated by the pursuers may be of such a significant and central character that the court is not prepared to go beyond the unenforceability of the contract. It would therefore seem likely that in all cases of statutory illegality in contract performance there would have to be some form of enquiry unless the acknowledged facts of the case made it clear that the court could properly conclude that no remedies were available to the party seeking relief.

In cases where the contract is illegal at common law it would seem that the illegality can arise, as suggested by counsel for the defenders, from criminality, immorality or because the contract is against public policy or subversive to the interests of the state (Gloag p.550). These concepts are extremely vague, (as noted by McBryde para. 26-18) and the reported decisions provide little assistance in furnishing further practical definitions or descriptions. Whether the illegality is in the formation of the contract or in its implement it would however seem likely that in practice such considerations of criminality, immorality or contraventions of public policy are likely to be more difficult of identification than statutory illegalities, and it would seem also likely that common law illegalities and in particular the degree of seriousness that should properly be attached to them can only properly be determined after proof.

In the present case what is described by the pursuers and defenders is clearly a common law illegality in the execution of the contract. The principal agreement between the pursuers and defenders was for the supply of labour, which is not something prohibited either by statute or under the common law. The contract was capable of being implemented was in a legal fashion, by the supply of workers who were entitled to undertake employment in the United Kingdom. However, the workers supplied by the pursuers turned out to be not so qualified, and the implementation of the contract therefore became illegal or unlawful. What has to be decided at this stage is the nature of the pursuers' claim. In particular, as the pursuers submitted, the question which has to be determined is whether the illegal nature of the way in which the contract was implemented such that the pursuers should be deprived of their right to payment for the services that they had provided for the defenders. I have come to the conclusion that this matter can only be determined after an enquiry into the facts and the circumstances. As the question of common law illegality in the performance of a contract must be a matter of fact and degree in each case, I do not think the issue can be determined as a matter of relevancy. As I have suggested, it could be argued that a statutory illegality in the formation of the contract was of such an evidently illicit character that not even ancillary rights could properly be derived from the arrangement between the parties, particularly where the claimant was responsible for the illegality in question. However that is not the case here. For example the pursuers aver that they were wholly unaware of any difficulties over the work permits of those foreign nationals they sent to work for the defenders. While there are potential problems with this averment, as defenders' counsel pointed out, the pursuers are entitled to go to enquiry on their claim. It must at this stage in my view be regarded as an open question whether innocence can excuse the consequences of a common law illegality in the execution of a contract.

That these issues cannot be settled at this stage is further illustrated by an examination of the arguments relating to the specification of the defenders' pleadings put forward by the pursuers in support of their claim that the defences should be repelled at this stage. The defenders' case is essentially that the contract is illegal in its execution because of the way in which the contract was tainted by criminality, and was further contrary to public policy. In respect of the issue of specification, the legislation referred to in the pleadings by the defenders is the Immigration Act 1971 and the Asylum and Immigration Act 1996. In terms of section 24(1) of the Immigration Act 1971 as amended, a person who is not a British citizen is guilty of an offence if he does one of a number of things. These are in essence entering the United Kingdom without permission, remaining beyond the time limit of any leave granted to enter or remain in the United Kingdom, remaining without leave beyond the time allowed by section 8(1) of the Act, or failing to observe various conditions. The penalty for such an offence is a fine not exceeding £2,500 or a prison sentence of not more than six months, or both. Section 8(1) of the Asylum and Immigration Act 1996 makes it an offence for an employer to employ a person subject to immigration control if the employee has not been granted leave to enter or remain in the United Kingdom, or his leave is not valid and subsisting, or is subject to a condition precluding him from taking up employment. In terms of section 8(2) it is a defence to these various statutory charges if the employer can prove that before the employment began, there was produced to him a document which appeared to relate to the employee and to be of a description specified in an order made by the Secretary of State; and that either the document was retained by the employer, or a copy or other record of it was made in a manner specified in the appropriate order in relation to documents of that description. The description of the documents in question is provided in the Immigration (Restriction on Employment) Order 1996 (S.I. 3225). The maximum fine on the employer in respect of an offence under this section is £5,000. Accordingly, pursuers' counsel submitted that in the present case the labour had been supplied by the pursuers and a benefit gained by the defenders. The defenders now maintain that the illegal nature of the contract is such that they need not pay for the benefits they had received. Further, the defenders argue that there has been an infringement of public policy by the pursuers in supplying illegal labour and therefore the courts ought to refuse the pursuers' any contractual rights they may have to payment. In these circumstances, pursuers' counsel submitted firstly that there was no specification of the actus reus which constituted the alleged illegality said by the defenders to have been committed by the pursuers. When a criminal illegality is said to apply to a contract there must be full specification as to how the facts of the alleged illegality can be brought home to the party against whom it is pled. In the absence of averments of knowledge or intention the pleadings are irrelevant. In terms of section 24 of the 1971 Act the offence can only be committed by the workers, not by the suppliers of the labour force such as the pursuers. Section 24 contains a variety of offences, none of which have been specifically averred in the present case. It is for this reason that the defenders have chosen to aver that the pursuers were guilty of aiding and abetting, or of procuring and counselling the crime by reference to the Criminal Procedure (Scotland) Act 1995 section 293(2), as clearly they could not be said to be the principals in such offences. However, there is no specification of the nature of the illegality or how it was committed. The same criti

Secondly, it was submitted that there are no averments of mens rea. When a statutory illegality is pled there has to be shown to be an intention to perpetrate the wrong. There is a difference between the two statutory offences. In section 24 of the 1971 Act the offence has to be committed "knowingly" by the immigrant; equally therefore where a party is said to be acting art and part by aiding and abetting or counselling and procuring, that party must also be shown to have that knowledge. In the present case, it was submitted that there was a serious deficiency in the pleadings in that there are no averments of knowledge attributed to the pursuers to the effect that the workers were not entitled to stay in the country and were not in possession of permits to work. The defenders have failed to aver what the foundation of their belief to that effect is. It was accepted that section 8 of the 1996 Act does not require mens rea; it is clear from the terms of the section that an absolute offence is created, the only defence being that the appropriate documents had been examined and appeared valid and had been recorded in some way by the employers. However it was submitted that, knowledge would again be necessary for this offence to be established by aiding and abetting or counselling and procuring. So in both statutory cases, if the offence is said to be committed by accession rather than by a principal, knowledge, or at least averments of circumstances from which knowledge can be inferred, is required. Reference was made to Stair Encyclopaedia of the Laws of Scotland vol. 7, paragraph 102. As an illustration, the phrase "causing and permitting" suggested considerably less involvement than counselling or procuring but even causing or permitting required knowledge of the illegal act in order to fix criminal responsibility (Smith of Maddiston v McNab 1975 J.C. 48). In all the circumstances before it can be said that the pursuer should not be paid there must be averments by the defenders that the pursuers possessed intentions of illegality and here there are no such averments.

The pursuers' next submission was that a contract for the supply of labour is not in itself an illegal contract. Section 8 of the 1996 Act contemplates an entirely different contract from that entered into between the pursuers and defenders. In order to succeed the defenders must show that the contract between the parties is illegal. Even if the pursuer had assisted the workers to enter the country illegally, and knew that the workers had no permits, that would not taint the contract for the supply of labour between the parties. The contract for supply of labour is not affected or covered by the statutory prohibitions described by the defenders. In these circumstances these averments have to be regarded as wholly irrelevant.

Defenders' counsel however submitted that the criminal behaviour described in his pleadings was sufficiently averred. It is the case that the offence under section 24 of the 1971 Act can only be committed by the workers, but the defenders believe and aver that the pursuers were accessories to this criminal offence; the actus reus therefore is the placement of the workers. This is a normal feature of criminal law (Gordon on Criminal Law, (2^nd ed.), para. 5.01). In such circumstances all persons may be equally guilty; it is not a secondary liability to be guilty art and part or as an accessory. Neither was it necessary for each of the several offences available under section 24 to be libelled separately against each worker. The complaint in essence is that they stayed in the country without permission and it is in respect of that that the pursuers are said to be acting illegally.

Defenders' counsel accepted that Section 8 of the Asylum and Immigration Act 1996 strikes at contracts of employment. However, Section 8(8) is in very broad terms and covers contracts of employment written or informal, express or implied. The pursuers' case is that they are not the employers of the immigrant workers for the purpose of section 8; however the defenders' position as averred at p.11C-D of the Record makes it clear that the pursuers were not just an accessory to the commission of the offence under the 1996 Act (as they were under the 1971 Act), but that by placing the immigrants in work they assisted the employers in committing the offence for the purpose of the 1996 Act. The pursuers must be held to know precisely what contracts express or implied they have with the immigrant workers, but they have chosen to make no averments about this. The suggestion that the defenders are the employers is wrong, but that does not matter; in terms of the maxim in pari casu potior est conditio defendentis, the loss lies where it falls. In all these circumstances; the defenders do not know what the position is but consider that they have averred an appropriate inference from the facts to the effect that the pursuers are art and part guilty of a criminal act, which they intend to prove. The pursuers on the other hand must know perfectly well what their relationship is with their workers; for example they must also know if they checked whether the workers had the requisite permits. Further, the Immigration (Restriction on Employment) Order 1996 (S.I. 3225) clearly contemplates a defence that requires that the necessary permits should have either been kept or copied; they are not produced in the present case. Accordingly, it would seem that a strict liability operates in the present situation; the pursuers say they caused checks to be made, but they do not say that they ever saw the documents referred to in the statutory instrument or that they took copies of them. In these circumstances, the actus reus of offences under both the 1971 Act and the 1976 Act are properly averred by the defenders, and the actus reus in each case must be within the pursuers' knowledge.

In respect of mens rea, defenders' counsel argued that the principal offence in terms of section 8 of the 1996 Act inferred strict liability, but did accept that in order to establish that someone had been guilty of an accessory offence, mens rea, probably in the form of knowledge, was required. However, knowledge may be actual or constructive, reflected in the pleading terminology that the pursuers knew or ought to have known of the criminality of the act. In the present case there are sufficient averments to suggest that this actual constructive knowledge could be established. The pursuers are alleged to have taken on the responsibility of examining whether the immigrant workers had permits. The complaint that the statute only provides a fine as a penalty, and that the defenders' position is that the pursuers will suffer financially to an even greater extent, is not relevant. In the case of Jamieson v Watt's Trustees Lord Mackay at p.275 quoted with approval what was said by Lord Lindley in the case of Scott v Brown Doering McNab & Co (1892) 2 Q.B. 724 at 728:

This, it was said, emphasised that the test is that full criminal responsibility does not have to be established in every case, but that implication is enough to preclude relief. Counsel for the defenders submitted that the term "implicated" was wide; it certainly covers a person who is an accessory (Isaacson v Wiseman Hume's Decisions p.714). The averments in the closed record made it clear that the issue between the parties concerns the legality of foreign workers, so the pursuers cannot claim inspecific averments or lack of notice. Common law illegality includes criminality but is wider (Walker on Contracts etc para. 11.18). The criminal behaviour therefore was sufficiently averred; both the actus reus and mens rea were properly tabled in the averments by the defender on record.

In respect of public policy, defenders' counsel submitted that placing workmen in such a position was subversive to the interests of the state. The issue of public policy was an entirely separate and independent consideration. The defenders aver at page 11E-12A of the record that the relevant policy here is to prevent foreign nationals without the right to work from doing so in this country. Reference was made to Chitty, section 17.05; and Walker on Contracts etc paras. 11.12 and 11.34 (where the learned author quotes Bell and Jamieson v Watt); and to Trevalion & Co v Blanche & Co 1919 S.C. 617. The court in this case is not being asked to establish a new kind of public policy as the pursuers suggested, but rather to recognise an example of an established ground. It is clear what Parliament's policy is in respect of this matter; it was inconsistent with public policy to allow enforcement of a contract which directly contravenes the purpose of the statute.

In my view there are clear and sufficient averments covering both actus reus and mens rea within the defenders' pleadings to justify the case going to enquiry. The defenders' case is simply to the effect that the question of the workforce having appropriate permits was in issue between the parties; that the pursuers knew or ought to have known what the true position was; and that in providing workers without the necessary permits the pursuers were therefore accessories to a course of specified criminal behaviour. In support of their claim that the contract between the parties is illegal because of the pursuers' criminal behaviour, I do not see that the defenders require to specify anything more, nor do I consider that the averments are in any way inadequate in respect of the conclusion they seek to support.

As far as public policy is concerned the position is much more vague. I am far from certain that it can be said in every case where the execution of a contract is found to be illegal under a statute that would justify the conclusion that the illegal conduct was therefore contrary to public policy. However, bearing in mind that the present case is concerned with a claim that the implementation of the contract was illegal at common law as opposed to statute, and particularly in the absence of authority, I am satisfied that this is a matter which can only be properly examined once the principal issues in the case have been resolved.

On the question of restitution which was touched on briefly by both parties, I accept that this may be an available remedy in certain situations. The judges in the Jamieson case appear in part to have thought that they were being asked to provide a remedy in recompense and found themselves unable to do so. It is I think reasonably clear why that would be. Jamieson was a case of statutory informality or illegality in the execution of the contract which the court clearly found to be of such a fundamental nature that it was not disposed to offer a remedy. It is difficult to say exactly what motivated the court to take such a serious view, although there were plenty of grounds available, such as the national emergency which prompted the legislation, the clear knowledge on the part of the pursuer that he was in error, and the comprehensive illegality of the basis of his claim. Accordingly, it may be difficult for the pursuers to succeed in an action based on restitution, but I do not think it would be helpful to anticipate matters further in this respect, other than to say that should the question of restitution be pled I should be disposed, as at present advised, to submit that matter to enquiry also.

Finally, there were complaints by the pursuers that the defenders' averments in the counterclaim, in support of their calculations of loss as a result of the pursuers' breach of contract, lacked specification. These complaints were chiefly concerned with the production of a spreadsheet which purported to show the measure of the defenders' loss after 31 October 1997, by reference to the kind of profits which they were able to make while they still enjoyed the benefit of the workforce supplied by the pursuers. Counsel for the defenders maintained that the information contained in the spreadsheet was sufficiently clear to justify enquiry. I feel that there was some measure of force in the pursuers' complaints, as the detail in the spreadsheet was not immediately obvious, but I have no doubt that a competent accountant could make sufficient sense of this material to allow suitable comment to be made. Other arguments canvassed at debate I have not dealt with as I understood them not to be central, or not insisted upon.

In all the circumstances of the case I propose to send the matter to enquiry. I shall not repel the pursuers' plea at this time because no motion to that effect was made. I shall reserve the question of expenses.