(B) DETERRENCE
The deterrence policy is founded on the principle that the court should not assist or encourage the claimant in his or her illegal conduct or encourage others in similar acts.[1] But it is difficult to see how this policy justifies the denial of restitutionary relief to a claimant who has participated in illegal conduct.[2] Whether the denial of a remedy will actually deter participation in illegal activity depends on a variety of assumptions, particularly that the claimant knows or suspects that the conduct is illegal and is aware of the existence and effect of the illegality defence. In fact, if the defendant, who expects to receive a benefit from the claimant, is aware of the illegality and of the policy denying restitution, he or she is much more likely to participate in the transaction, knowing that any benefit which is received may be retained.[3] The policy of deterrence is just as likely to be fulfilled by allowing restitution to a claimant who has been tainted by illegality than by denying relief to such a person.[4] But this is a highly artificial argument, since it is unlikely that either party will be aware of the illegality defence and its implications.[5] Even if the parties were so aware, it would be very difficult for them to predict whether or not restitution would be denied because of the uncertain operation of the defence. Also, in those cases where the illegality is criminal, it is unlikely that the denial of a remedy will be a greater deterrent than that of the criminal law.52
- [1] 49 Nelson v Nelson (1995) 70 ALJR47, 88 (McHugh J).
- [2] 50 Smith v Bromley (1760) 2 Doug 696n, 698; 99 ER 441, 443 (Lord Mansfield).
- [3] 51 See Tribe v Tribe [1996] Ch 107, 134 (Millett LJ).
- [4] 52 Hewison v Meridian ShippingPte Ltd [2002] EWCA Civ 1821, [2003] ICR 766, [73] (Ward LJ).
- [5] 53 Tinsley v Milligan [1992] Ch 310, 334 (Ralph Gibson LJ).
