SAFEWAY STORES LTD V TWIGGER

[2010] EWCA Civ 1472, Court of Appeal, Lord Justice Pill, Lord Justice Longmore and Lord Justice Lloyd, 21 December 2010

Tort - Ex turpi causa - Claim by employer against employees for indemnity for fines imposed for breach of Competition Act 1998 - Whether claim barred by ex turpi causa principle - Whether claim barred by Competition Act 1998

This was an application for summary judgment based on assumed facts. Safeway sought damages from ex-employees and ex-directors, following an inquiry by the Office of Fair Trading under the chapter I prohibition in the Competition Act 1998 into information changes for the price of milk which led to price-fixing by supermarkets including Safeway. A settlement was reached with the OFT in which breaches were conceded, and the likely penalty was in excess of £10 million. Safeway argued that each of the defendants was in breach of employment contracts and fiduciary duties in causing Safeway to participate in price-fixing. The defendants argued that Safeway had participated in the illegality, so that the ex turpi causa principle precluded recovery, and that the claim was contrary to the philosophy of the Competition Act 1998. The Court of Appeal, reversing Flaux J, held that the claim should be struck out. The liability of Safeway in the present case was personal and not vicarious, and the infringements of the legislation were sufficiently serious to attract the ex turpi causa principle. The claim was thus barred because Safeway was seeking to recover damages for its own wrongful act, and no question of attribution arose.