The Doctrine of Clean Hands

The Doctrine of Clean Hands

A well-established principle of the law of equity is the doctrine of clean hands which states “he who comes into equity must come with clean hands.”

The clean hands doctrine serves to deny equitable relief for the misdeeds or misconduct as an immediate and necessary relation to the equity suit for- Hong Kong Bank of Canada v Wheeler holdings LTD (1993) 1 SCR 167

It must be shown, in order to justify a refusal of relief, that there is such an immediate and necessary relation between the relief sought and the delinquent behavior in question that it would be unjust to grant that particular relief.

The equitable doctrine of clean hands is related to the doctrine of “ex turpi causa “ which means that a person cannot found a claim or cause of action based on his own illegal or immoral acts- Norberg v Wynrib (1992) 2 SCR 226

In the Norberg case, a medical doctor was successfully sued for damages for prescribing prescription drugs to an addict in return for sexual favours.

In Werner v Werner (1987) BCJ 2546 (BCSC) the court refused the plaintiff’s relief stating that in order to prove his trust claim, the plaintiff had to testify as to the sham nature of the settlement agreement made in a family dispute with his wife to which he would be bound otherwise. If that agreement was valid, than his ex-wife was the owner of certain shares. The plaintiff’s claim was rejected on the basis of dirty hands.

The plaintiffs claim constituted an unlawful, immoral purpose, which had the effect of depriving the wife of an interest in property. In leading this evidence, the plaintiff ran afoul of the rule established by the Supreme Court of Canada in a series of cases including Goodfriend v Goodfriend (1972) SCR 640 that refine the rule to make it clear that the court will not accept evidence of an illegal purpose from a plaintiff who seeks to rebut the presumption of advancement.

In BMF Trading v Abraxis Holdings Ltd 2002 BCSC 590 the court stated:

“ most importantly and regardless of alternative remedies, I do not think that good conscious requires that this court should intercede in the circumstances. First, the parties deliberately structured the refers to insulate themselves from the burdens of ownership and they were cognizant of both the benefits and restrictions of such an arrangement. Now, the partners come the court alleging a relationship to four-star which directly conflicts with both the position the partners had taken in an earlier trial. The modern doctrine of constructive trust, which has been created to remedy an injustice to innocent are vulnerable parties, is not a device to be utilized by sophisticated businesspeople caught in the web of their own intrigue. Constructive trusts are not to be used as a reason Ward to parties who have gained advantage 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.”

A claim for constructive trust was dismissed in Mayer v Osbourne 2010 BCSC 1249 on the basis of inter alia that the plaintiff lacked clean hands because:

1) Failed to disclose evidence and knew that it was wrong;
2) gave evidence at his examination for discovery to mislead the opposing party and the examiner;
3) gave answers to some questions that he knew were not correct;
4) signed a settlement agreement knowing it was false when he signed it;
5) use the process of the court to affect a without prejudice dismissal of all of the claims advanced by the opposing party, including those that bear in the trust claims that the plaintiff advanced in the action.

The court dismissed the claims for resulting trust and constructive trust on the basis that the court could not overlook the plaintiffs lack of clean hands.- The court adopted the maximum that to accept the defence argument would be to condone chicannery if not actual fraud. No court will do so.