Recoverability of lost illegal earnings

United Kingdom

Chung Man-Yau, Kwan Siu Hung v Sihon Co Ltd [1997] 3 HKC 197 (Court of Appeal). This was an appeal on quantum of damages in a personal injuries case in respect of loss of earnings for illegal hawking.

Facts

The plaintiff was injured whilst walking along a pavement by the collapse of part of the defendant's concrete balcony. The plaintiff sustained various injuries.

At the trial, a body of case law on illegal hawking was followed to disallow the plaintiff's claim for future loss of (illegal) earnings. Post-trial, the plaintiff was subsequently granted a hawker's licence for the exact location from which he had been operating prior to the accident. The plaintiff's claim for continuing loss after the grant of this licence was thus certainly recoverable, but the issue considered on the appeal was whether the loss of illegal earnings from the unlicensed hawking should also be recoverable from the day of the accident to the day when the licence was granted.

Illegality as a bar to recovery

The classic principle is that the courts will not lend their aid to a man so as to enable him to benefit from his own crime. Authorities indicated that the courts should examine the nature of the illegality complained of, the moral and criminal culpability and the plaintiff's conduct. Any relevant legislation must be considered, and having done that, the courts must decide whether in all those circumstances it would affront the public conscience or offend the ordinary right-thinking citizen if compensation for the loss concerned was ordered.

In this action the court considered the following:


  • the plaintiff was the godson of a licensed hawker who was too old to hawk from the stall herself

  • the stall in question was itself the subject of a valid licence

  • the plaintiff had previously applied for the transfer of that licence

  • the plaintiff now held a licence for that stall

  • there was no causal connection between the defendant's negligence and the illegality

  • the legislation gave no indication that an illegal hawker should be disentitled from recovery (the legislation was merely regulatory in nature and selling itself is not an illegal activity)

Held

Mortimer V-P commented that a plaintiff who had been injured and disabled through no fault of his own should not, save in a clear case, be deprived from recovering his loss, and held that the plaintiff was not disentitled by his illegal hawking activity from recovering the loss which he had suffered.

The other members of the Court of Appeal agreed, pointing out that hawking was at the least serious end of the range of illegal activity. V Bokhary J noted that there was no cause or link between, on the one hand the plaintiff's injuries and their consequences upon his earnings and, on the other hand the illegal element of his occupation. The situation might be different where, for example, an itinerant hawker was hit by a speeding motor car as he was fleeing from a hawker control force. In that situation, there would be a link between the injuries (and any consequential loss of earnings) and his illegality, but V Bokhary J did not go on to answer this question of whether loss of earnings would then be recoverable.

Implications

Although it was emphasised in the judgment that any decision in the plaintiff's favour would not in any way approve or endorse either chaos in the streets of Hong Kong or breaches of the hawking regulations, and given that the decision was intended to provide guidance only, this decision could potentially open the door to future claims for loss of earnings which were previously non-recoverable for illegality. If this decision is not narrowly construed by the courts, then the possibility that loss of illegal earnings may be recoverable will add a further complication to the calculation of insurers' reserves.