Judge Unsympathetic When Underground Job Goes Wrong

This case involved a verbal contract between two brothers for repairs to a home. The plaintiff, Bob, was the owner of a home that had been damaged by fire. He contracted with his brother, Sam, to perform the necessary repairs. Sam was to perform all carpentry work and supervise the construction. In return, he was to receive free room and board, as well as $10 an hour "under the table" as he was receiving Workman's Compensation, and did not wish to pay income tax or loose his benefits.

Sam eventually defaulted on the contract without performing any of the work. Bob sued him, but could not recover damages because of the illegal nature of the contract (i.e. that it was designed to evade income tax). It did not matter whether Sam received a benefit from the contract or not. Bob was fully aware that what he was doing was illegal. As he had willingly chosen to enter into an arrangement that was outside the law, the Judge stated that he could not then turn to the law for assistance when the deal went sour. As such, Bob was barred from recovering the damages he suffered as a result of the failure of Sam to perform his end of the contract.

Ontario Court of Justice - General Division
[1994] O.J. NO. 1174