A Defendant in a mortgage fraud Action applied for Summary Judgment against the Plaintiff on the basis of the defence of ex turpi causa non oritur action (the Court may deny recovery on the basis of participation in an immoral or illegal scheme). The Defendant argued that the ex turpi defence applied because an employee of the Plaintiff was the primary organizing participant in the alleged fraud. The Plaintiff argued that the ex turpi defence was not available on the facts, because the acts of a rogue employee acting outside the scope of his employment and without the Plaintiff’s knowledge could not be attributed to the Plaintiff.

Romaine J. held that a Court may give Summary Judgment where it is satisfied that there is no genuine issue for Trial. However, where there are triable issues of fact or law, the matter is not suitable for Summary Judgment.

Romaine J. held that the ex turpi defence only applies where it is appropriate to deny recovery to a Plaintiff. To do otherwise would undermine the integrity of the justice system, either by permitting a Plaintiff to profit from an illegal act or to evade criminal penalty. However, in the present circumstances, the Plaintiff did not profit from the actions of the rogue employee who allegedly participated in the fraud. Romaine J. further held that the ex turpi defence may apply where one wrongdoer claims against another for financial loss arising from a joint illegal venture. However, that was not the case on the facts before the Court, and the Defendant failed to adduce evidence to demonstrate that the employee’s actions were authorized by the Plaintiff.

Romaine J. further held that in an Application for Summary Judgment, the Defendant had the burden of proving that the ex turpi defence applied. However, the Defendant failed to discharge this burden. There was no evidence that the Plaintiff was compliant in the employee’s alleged fraudulent activities. As such, there was insufficient evidence to warrant Summary Judgment on the basis of the ex turpi defence.