Accountants PI: The Illegality Defence

A recent High Court decision has highlighted the difficulty in relying upon the illegality defence to defeat a claim in the context of a professional negligence claim, where a claimant is claiming losses flowing from his conviction for a strict liability criminal offence.

Background

The Claimant, Mr Griffin, operated a drinks company selling "Saxon 1050" apple juice, which went into creditors' voluntary liquidation. At that time, he set up a new company that took over the selling of the brand of apple juice. This contravened rules in the Insolvency Act that were designed to strike down the "phoenix phenomenon" and Mr Griffin was convicted of the strict liability offence and fined £1,000. He had instructed the accountancy firm, Hacker Young, to advise him on the winding up and he alleged that they failed to advise him that his conduct was illegal. He claimed various losses flowing from his conviction including the loss of a significant shareholding in a US