Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour

Karl Suleman Enterprizes Pty Ltd (in liq) was the appellant in proceedings before the Court of Appeal of New South Wales, appealing a decision to strike out its defence. The respondent, Babanour, had sought to strike out the defence on grounds of illegality and the doctrine of unclean hands.

The primary legal issues before the Court of Appeal were whether the defence of illegality was validly pleaded, and whether the equitable defence of unclean hands operated to bar the appellant's claim. Specifically, the court considered whether contracts entered into as part of an unregistered scheme were rendered illegal by statute, and whether such illegality, or the conduct of the party seeking to rely on it, precluded them from bringing proceedings.

The Court of Appeal held that the defence of illegality was not a bar to the proceedings. It reasoned that the relevant statute did not intend to render contracts entered into as part of an unregistered scheme illegal, and that unlawful conduct does not necessarily prevent a party from bringing proceedings. Regarding the doctrine of unclean hands, the court found that a party who has offended the principle may still "wash their hands" of the impropriety, implying that the defence is not absolute.

The appeal was allowed. The appellant was directed to file any amended pleading within 28 days. The respondent was ordered to pay the appellant's costs of the Notice of Motion before Windeyer J and 50% of the appellant's costs of the appeal.