There is no accepted definition of what constitutes illegality, although it has been described as anything which is ‘morally reprehensible’. The word has often been used, not as a term of art, but simply to describe a state of affairs which is contrary to law; but mere unlawfulness does not necessarily equate with illegality, otherwise it would encompass a simple breach of contract. A cognate principle is sometimes referred to, known as public policy, by virtue of which restitutionary claims may be defeated. Reference to public policy creates uncertainty, because its requirements are uncertain and any notion of public policy is liable to change over time, but also because this confuses the definition of illegality with the public policy principles which underpin the defence. It is preferable to focus on a distinct concept of illegality and to refer to public policy to explain its operation.
A number of categories of illegality can be identified. It clearly encompasses the commission of criminal conduct, save perhaps where the criminality is minor, as will sometimes be the case where the crime involves a strict liability offence, at least where the claimant was unaware that his or her conduct was illegal. It also includes conduct which is subject to civil penalties, such as breach of competition law, involving payment to the claimant rather than the State, but where the relief still operates to punish the defendant rather than compensate the claimant for loss suffered. This has been described as ‘quasi-criminal’, because the interest of the State is engaged.
Lawful conduct which is considered to be immoral may also be characterized as illegal. This was recognized by Hamblen J in Nayyar v Denton Wilde Sapte, in holding that the receipt of a bribe was illegal because it evinced ‘serious moral turpitude’. Such immoral conduct has been held to include champertous agreements, conduct relating to prosti- tution, and agreements concerning the sale of offices and honours. Illegality by virtue of immorality is illustrated by Sutton v Mischon de Reya, where the claimant entered into what purported to be a cohabitation agreement with a third party. The relationship between the claimant and third party was one of master and slave and it was held that this made the contract illegal since it was a contract for sexual services. Although the expansion of the ambit of illegality to such immoral conduct has been justified on the ground that it too can be characterized as quasi-criminal,77 this treatment of perceived immoral conduct as illegal is controversial.78 It enables the law of restitution to be used to supplement the criminal law, through the denial of relief where the claimant’s conduct is considered to be unacceptable in some way, even though it is lawful, which is difficult to defend convincingly.
Conduct which is characterized as involving wrongdoing under the civil law is generally not considered to constitute illegality. Crucially, in Les Laboratoires Servier v Apotex the Supreme Court held that the infringement of a patent did not constitute a sufficient taint of illegality to engage the defence, because, although a patent is granted by the State, the public interest was not considered to be engaged by a breach of the patentee’s rights. Consequently, the infringement of private rights does not constitute illegality, although conduct which involves the commission of a tort has exceptionally been characterized as illegal where the tort requires proof of dishonesty, presumably because this can also be considered to be quasi-criminal. It follows that, generally, where private rights are wrongfully interfered with, there is no public interest in denying a remedy to the claimant, because, as Lord Sumption recognized, the ‘public interest is sufficiently served by the availability of a system of corrective justice to regulate the consequences as between the parties affected’.
Where the formation or performance of a transaction is prohibited by statute or the common law, the transaction is unenforceable by either party regardless of whether or not they knew of the illegality. In other cases, whether the transaction is enforceable depends on the parties’ intention or knowledge. So, for example, if both parties intend to commit an illegal act in the course of performing an otherwise legal transaction, or one party so intends and the other is aware of this illegal purpose, the transaction is unenforceable by both of them. If just one of the parties had such a purpose which was unknown to the other, the party with illegal purpose would not be able to enforce the transaction, but this would have no effect on the other party’s right of enforcement. If one party has an illegal purpose and the other subsequently discovers it, the latter can refuse to take any further part in the transaction and will have a restitutionary action in respect of the work he or she had already lawfully done.87
In determining the correct definition of illegality, it is important to consider the consequences of concluding that the claimant is tainted by illegality. For, if the illegality defence is interpreted as applying absolutely without qualification, this will lead to a desire for the defence to be interpreted narrowly. But, if the defence is analysed as not being absolute in its application, it is not necessary to restrict the definition of illegality artificially, because the effect of the taint of illegality will be assessed separately, and more appropriately, with regard to identified principles. If the defence can be applied flexibly it follows that it is entirely appropriate to expand the definition of illegality to encompass certain types of civil wrongdoing and even immoral conduct.
-  See H Beale (ed), Chitty on Contracts (31st edn, London: Sweet and Maxwell, 2012), paras 16-03 et seq.
-  Safeway Stores Ltd v Twigger  EWHC 11 (Comm),  2 Lloyd’s Rep 39,  (Flaux J).
-  Les Laboratoires Servier v Apotex  UKSC 55,  AC 430,  (Lord Sumption).
-  See p 732, below. 66 Kellar v Williams  UKPC 30,  (Lord Carswell).
-  67 Gray v Thames Trains Ltd  UKHL 33,  1 AC 1339,  (Lord Rodger).
-  68 Stones and Rolls Ltd v Moore Stephens  1 AC 1391, ,  (Lord Phillips).
-  69 SafewayStoresLtdvTwigger  EWHC 11 (Comm),  2 Lloyd’s Rep 39 (price-fixingcontraryto
-  the Competition Act 1998). Although Flaux J justified the application of the illegality defence with reference tothe claimant’s immoral conduct rather than because it was unlawful.
-  Les Laboratoires Servier v Apotex  UKSC 55,  AC 430,  (Lord Sumption).
-   EWHC 3218 (QB), . See also Les Laboratoires Servier v Apotex  UKSC 55,  AC430,  (Lord Sumption).
-  This may now be a crime: Bribery Act 2010. 73 Giles v Thompson  1 AC 142.
-  74 GirardyvRichardson (1793) 1Esp13,170ER265 . 75 ParkinsonvCollegeofAmbulance 2KB1.
-  76  EWHC 3166 (Ch).
-  77 Les Laboratoires Servier v Apotex  UKSC 55,  AC 430,  (Lord Sumption).
-  78 See J Goudkamp, ‘Ex Turpi Causa and Immoral Behaviour in the Tort Context’ (2011) LQR 354.
-   UKSC 55,  AC 430. 80 Ibid,  (Lord Sumption).
-  81 Parkingeye Ltd v Somerfield Stores Ltd  EWCA Civ 593;  Bus LR 80 (tort of deceit). See also
-  Brown Jenkinson and Co Ltd v Percy Dalton (London) Ltd  2 QB 621.
-  For example, the tort of deceit will typically, but not always, constitute a crime under the Fraud Act 2006.
-  Les Laboratoires Servier v Apotex  UKSC 55,  AC 430, .
-  Re Mahmoud and Ispahani  2 KB 716. 85 Pearce v Brooks (1866) LR 1 Ex 213.
-  86 Archbolds (Freightage) Ltd v Spanglett Ltd  QB 374.
-  87 Clay v Yates (1856) 1 H and N 73, 156 ER 1123.