Menu
Home
Log in / Register
 
Home arrow Law arrow The principles of the law of restitution
Source

THE POLICIES UNDERPINNING THE ILLEGALITY DEFENCE

A number of policy reasons have been recognized for denying the claimant restitutionary remedies where he or she has been tainted by illegality. [1] Some of these policies had been identified by Etherton LJ in Les Laboratoires Servier v Apotex Inc,[2] although he emphasized that the defence does not necessarily apply simply because one of the policy rationales is relevant, but the defence ‘must find its justification firmly in one or more of them’.

(A) CONSISTENCY

Where the illegality constitutes the commission of a crime, it is not for the law to undermine, or stultify,[3] the criminal law by providing a remedy. Consequently, consistency between the criminal law and private law is a legitimate policy aim,[4] which is furthered by the illegality defence. As Lord Hughes said in Hounga v Allen, the law ‘cannot give with one hand what it takes away with another, nor condone when facing right what it condemns when facing left’.[5]

This policy assumes that there is a necessary inconsistency between criminal law and the law of restitution if a gain-based remedy is awarded, despite the claimant’s participation in criminal conduct. But that does not necessarily follow, especially where the claimant is less responsible for the illegality than the defendant and where a literal restitutionary remedy, rather than disgorgement remedy, is awarded to restore to the claimant what had been received by the defendant at the claimant’s expense. The inconsistency between the criminal law and the law of restitution would be much clearer if the award of a gain-based remedy enabled the claimant to profit from the commission of a crime, for it is a fundamental principle that a claimant should not be allowed to profit from his or her illegal conduct,[6] and it would not be appropriate for the law of restitution to enable the claimant to profit from the commission of a crime. This would apply where the claimant seeks an account of profits from the defendant where the profits arose from the commission of a crime.[7] But this will not occur where the claimant seeks a remedy to reverse the defendant’s unjust enrichment, since the defendant’s gain will necessarily correspond with the claimant’s loss.[8]

Further, the policy of consistency cannot generally operate where the illegality involves conduct which is not criminal,[9] although there may be circumstances where the principle should operate outside the criminal law where the claimant’s conduct is considered only to be civilly unlawful, for the denial of a remedy might be consistent with the reason why the conduct was rendered unlawful in the first place. This was recognized by the High Court of Australia in Equus Corp Pty Ltd v Haxton,[10] where a restitutionary claim was defeated by a defence of statutory illegality, since the Court was concerned to prevent the common law from stultifying the statute’s purpose.

  • [1] See JK Grodecki, ‘In Pari Delicto Potior est Conditio Defendentis’ (1955) 71 LQR 254, 265-73.
  • [2] [2012] EWCA Civ 593, [2013] Bus LR 80, [66]. This was based on the Law Commission’s ConsultationPaper No 189, The Illegality Defence (2009), para 3.142.
  • [3] E Weinrib, ‘Illegality as a Tort Defence’ (1976) 26 UTLJ 28, 52.
  • [4] See generally Hall v Hebert [1993] 2 SCR 159, 165 (McLachlan J); GJ Virgo, ‘We Do This in the CriminalLaw, and that in the Law of Tort: A New Fusion Debate’ in E Chamberlain, J Neyers, and S Pitel (eds),Challenging Orthodoxy in Tort Law (Oxford: Hart Publishing, 2013).
  • [5] Hounga v Allen [2014] UKSC 47, [2014] 1 WLR 2889, [55].
  • [6] Beresford v Royal Insurance Co Ltd [1938] AC 586. See also Hall v Hebert [1993] 2 SCR 159, 169(McLachlan J).
  • [7] Although those profits might be confiscated by the State. See Chapter 20.
  • [8] See Chapter 5, above. 45 See p 716, below. 46 [2012] HCA 7.
  • [9] 47 Euro-Diam Ltd v Bathurst [1990] QB 1, 35 (Kerr LJ).
  • [10] 48 Tinsley v Milligan [1994] 1 AC 340, 368 (Lord Lowry).
 
Source
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel