(A) NO RELIANCE ON ILLEGALITY

Since the illegality defence is typically formulated in terms ofthe claimant being prevented from relying on the illegality to establish the claim,⁹² it follows that a claim may succeed where its elements can be established without needing to rely on the illegality.⁹³ In Tinsley v Milligan⁹⁴ a majority of the House of Lords recognized that the claimant could vindicate proprietary rights even though she had participated in an illegal transaction, since it was not necessary to plead the illegality because the presumption of resulting trust was engaged.⁹⁵ But, if the claimant needs to refer to illegality to make good the claim, it will be defeated for reasons of public policy.⁹⁶ Consequently, where money has been paid to the defendant pursuant to a contract which is void for illegality, the claimant will not be able to recover it if he or she has to rely on the illegality to establish the claim. Since the claimant needs to establish that the contract is no longer operative before a claim in unjust enrichment can be brought,⁹⁷ typically it will be necessary to plead the illegality to show that the contract is void and that a failure of basis can be identified,⁹⁸ save if another reason for invalidity of the contract could be established, or another mechanism for avoiding the taint of illegality can be identified.⁹⁹ This is a potentially significant expansion of the illegality defence within the law of unjust enrichment. In Patel v

Cf AS Burrows, The Law of Restitution (3rd edn, Oxford: Oxford University Press, 2011), 488.

• 89 Les Laboratoires Servier v Apotex [2014] UKSC 55, [2015] AC 430, [18] (Lord Sumption).
• 90 Rejected in Les Laboratoires Servier v Apotex, ibid, but consistent with the decision of the same court in Hounga v Allen [2014] UKSC 47, [2014] 1 WLR 2889. See also Gray v Thames Trains Ltd [2009] UKHL 33,

[2009] AC 1339, [30] (Lord Hoffmann).

• 91 Specifically, the no-reliance and close connection principles, see p 722, below.
• 92 See Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341, 343; 98 ER 1120, 1121; Taylor v Chester (1868-69) LR 4 QB 309; Stone and Rolls v Moore Stephens [2009] UKHL 39, [2009] 1 AC 1391, [86] (Lord Phillips).
• 93 See Bowmakers Ltd v Barnet Instruments Ltd [1945] KB 65.
• 94 [1994] 1 AC 340, 376 (Lord Browne-Wilkinson). See also O’Kelly v Davies [2014] EWCA Civ 1606, applying the same rule to the common intention constructive trust.
• 95 See p 590, below.
• 96 Patel v Mirza [2014] EWCA Civ 1047, [2015] 2 WLR 405, [20] (Rimer LJ), [102] (Vos LJ). See Barrett v Barrett [2008] EWHC 1061 (Ch), [2008] 2 P and CR 17.
• 97 Guinness plc v Saunders [1990] 2 AC 663, 697-8 (Lord Goff); Sandher v Pearson [2013] EWCA Civ 1822. See Chapter 7.
• 98 Berg v Sadler and Moore [1937] 2KB 158,163 (Lord Wright MR); Patel v Mirza [2014] EWCA Civ 1047, [2015] 2 WLR 405, [21] (Rimer LJ). Rimer LJ’s assertion that allowing the claim would involve the enforcement of the illegal contract is plainly incorrect since it harks back to the discredited thinking of such claims being grounded on implied contracts.
• 99 Such as withdrawal from the illegal purpose, which was engaged in Patel v Mirza [2014] EWCA Civ 1047, [2015] 2 WLR 405. See p 719, below.

Mirza^[1] Gloster LJ, rather than considering whether the claimant needed to rely on the illegality, preferred to consider whether the illegality necessarily formed an essential element of the claimant’s cause of action. But this simply repackages the rule and, anyway, in that case it was essential to the claim that the contract was void and this could only be established by reference to its illegal purpose.

Whether the claimant can establish the claim without relying on illegality is arbitrary and turns on chance. The Law Commission^[2] concluded that such a principle ‘produces complex and arbitrary results, depending on the detailed intricacies of trust law’.^[3] For example, the result in Tinsley v Milligan would have been different had the presumption of advancement applied, for then the claimant would have needed to plead the illegal agreement to rebut the presumption. Even where the claimant needs to plead the illegality to establish the claim, it does not necessarily follow that the claim will be defeated.^[4] Further, the illegality defence applies even if illegality has not been pleaded, since it may be raised by the judge.

In Cross v Kirby Beldam LJ said:^[5] ‘I do not believe that there is any general principle that the claimant must either plead, give evidence of or rely on his own illegality for the principle to apply. Such a technical approach is entirely absent from Lord Mansfield CJ’s exposition of the principle.’ Lord Phillips recognized in Stone and Rolls Ltd v Moore Stephens:^[6]

I do not believe... that it is right to proceed on the basis that the reliance test can automatically be applied as a rule of thumb. It is necessary to give consideration to the policy underlying ex turpi causa in order to decide whether this defence is bound to defeat [the claimant’s] claim.

Since there was no express reference in Holman v Johnson to the need to plead the illegality for the defence to be engaged, the preferable view is that this rule should be rejected for reasons of artifice and formalism. It follows that it should be possible for the claimant to refer to the illegality to establish, for example, that any contract does not provide a lawful basis for the defendant’s receipt of an enrichment.

• [1] [2014] EWCA Civ 1047, [2015] 2 WLR 405, [79].
• [2] The Illegality Defence (Law Com No 320, 2010). 102 Ibid, 2.
• [3] 103 In Silverwood v Silverwood (1997) 74 P and CR 453, 457 Peter Gibson LJ accepted that the claimant
• [4] could rely on the illegal purpose of the parties to rebut the defendant’s defence that the transferor of theproperty had intended it to be a gift to the defendant. See p 590, above.
• [5] Cross v Kirby [2000] EWCA Civ 426, [76].
• [6] [2009] UKHL 39, [2009] 1 AC 1391, [25].Affirmed by Lord Wilson in Houngav Allen [2014] UKSC 47,[2014] 1 WLR 2889, [30].