The Defendant, Poon, was a straw buyer of a residential property. In return for a payment of $11,000, Poon agreed to be the legal owner of a property and sign a mortgage to the Plaintiff. Poon argued that he was told by the corporation that orchestrated the scheme that the transaction was legal. Poon further argued that he insisted that a lawyer be involved in the transaction, in order to ensure that it was legal. Poon attended at the law offices of the Third Party Defendant, Blumell, to sign papers, including the Mortgage, a Purchaser’s Acknowledgement and a Statutory Declaration. The documents signed by Poon included statements that Poon was personally liable for default under the Mortgage, and that the property must be owner-occupied. Poon did not tell Blumell about the circumstances surrounding the purchase of the property.

Blumell brought an Application for Summary Judgment, arguing that the Claim was bound to fail on the basis of the principle of ex turpicausa non orituractio [from a dishonorable cause an action does not arise]. The Application was granted by a Master, and Poon appealed.

Justice Kent held that a Party moving for Summary Judgment must show that there is no genuine issue for Trial, or that it is plain and obvious that the Claim cannot succeed. In order for the ex turpi doctrine to apply, the act forming the basis of the Claim must be causally linked to the illegal act. Justice Kent held that the foundation of the doctrine is that the wrongdoing must be related to the loss for which recovery is claimed.

Poon argued that Summary Judgment should not be granted because there had not been a finding that Poon was a willing participant in the illegal act. Poon argued that only a Judge, at Trial, weighing the evidence, can make such a finding of fact. Poon argued that his Claim was for indemnity, and that he sought compensation to put him back into the position he would have been in but for the conduct of Blumell.

Blumell argued that a finding could be made that Mr. Poon was a willing participant in the fraudulent scheme. Poon had not provided any explanation for why he thought it was legal to sign documents stating facts that were not true, and accept $11,000 for a couple of hours of work. Further, if the Claim against Blumell merely related to compensation rather than the illegal act, Poon would be overcompensated because he had received $11,000 for his participation in the fraudulent scheme.

Justice Kent held that Blumell had no knowledge that Poon was receiving a payment to buy the property for someone else. Justice Kent further held that Poon was a willing participant in an illegal act. Poon was an educated man who had previous experience in the real estate market. In the circumstances, Justice Kent determined that Poon’s claim of innocence was not credible.

Justice Kent held that the ex turpi doctrine applied, because allowing the Claim to succeed would create an inconsistency in the law. Poon engaged in an illegal act. Had the real estate market continued to rise, the property may have been resold, and Mr. Poon would have earned $11,000 for his actions. However, by intentionally not disclosing to Blumell that he was a straw buyer when there was a risk the real estate market would fall, Poon had a claim in his back pocket against his lawyer. Poon hedged his bets. If this was permitted, straw buyers effectively had no risk. The Court would, in essence, be saying that such an act is both illegal and legal. Such an approach would create an inconsistency in the law which attacks the integrity of the legal system. The Appeal was dismissed.