In the case of Patel v Mirza 2016 UKSC 42 Mr Patel was
entitled to restitution of £620,000.00 given to Mr Mirza to
place bets on a bank's share price with the benefit of insider
information. Mr Mirza's expectations were not fulfilled and the
intended betting did not take place.
Lord Toulson delivering the leading judgment, departed from the
reliance test expressed in Tinsley v Milligan  1 AC
240, which bars the claimant if he relies on the illegality in
order to bring the claim. The judgment also suggests that
Holman v Johnson  1 Cowp 341, where Lord Mansfield
said "no court will lend its aid to a man who founds his
cause of action upon an immoral or illegal act", will not
be followed in all cases.
Lord Toulson explained:
"The essential rationale of the illegality doctrine is
that it would be contrary to the public interest to enforce a claim
if to do so would be harmful to the integrity of the legal system
(or, possibly, certain aspects of public morality, the boundaries
of which have never been made entirely clear and which do not arise
for consideration in this case). In assessing whether the public
interest would be harmed in that way, it is necessary a) to
consider the underlying purpose of the prohibition which has been
transgressed and whether that purpose will be enhanced by denial of
the claim, b) to consider any other relevant public policy on which
the denial of the claim may have an impact and c) to consider
whether denial of the claim would be a proportionate response to
the illegality, bearing in mind that punishment is a matter for the
criminal courts. Within that framework, various factors may be
relevant, but it would be a mistake to suggest that the court is
free to decide a case in an undisciplined way. The public interest
is best served by a principled and transparent assessment of the
considerations identified, rather by than the application of a
formal approach capable of producing results which may appear
arbitrary, unjust or disproportionate."
The range of factors to be considered may include:
"(a) how seriously illegal or contrary to public policy
the conduct was;
(b) whether the party seeking enforcement knew of, or
intended, the conduct;
(c) how central to the contract or its performance the
(d) how serious a sanction the denial of enforcement is for
the party seeking enforcement;
(e) whether denying enforcement will further the purpose of
the rule which the conduct has infringed;
(f) whether denying enforcement will act as a deterrent to
conduct that is illegal or contrary to public policy;
(g) whether denying enforcement will ensure that the party
seeking enforcement does not profit from the conduct;
(h) whether denying enforcement will avoid inconsistency in
the law thereby maintaining the integrity of the legal
This line of reasoning was not shared by Lord Mance, Lord Clarke
and Lord Sumption who considered there was no basis for
substituting the clear cut principle identified in Holman v
Johnson, founded on the need to maintain the integrity of the
law with a mix of factors, which would not offer the same coherence
There is a considerable departure from the position in
Everet v Williams (1725) in which two highwaymen sought an
account of the division of their profits, the court not only
dismissed the action, but fined the plaintiff's solicitors for
the indignity visited upon it.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In the recent decision in Joyce Whitfield v Revenue & Customs Commissioners  UKFTT 685 (TC) the Tribunal considered that inflexible and disproportionate behaviour by a party's legal representative...
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