Illegality defence CASES
In English law, the illegality defence prevents a claimant from enforcing rights or obtaining relief where the claim is closely connected to the claimant’s own illegal conduct.
Definition and principles
The defence is based on the principle that the courts should not assist a person to profit from their own wrongdoing. It applies across several areas of law, including contract, tort, and unjust enrichment.
The modern approach was clarified by the Supreme Court in Patel v Mirza, which rejected rigid rules in favour of a principled, flexible assessment.
Legal test
When considering whether the illegality defence applies, the court examines three key factors: the underlying purpose of the law that has been breached, any other relevant public policies, and whether denying the claim would be a proportionate response to the illegality.
Legal implications
If the defence succeeds, the claim may fail entirely, even where the defendant has acted improperly. However, the defence will not apply where doing so would undermine the purpose of the law or lead to disproportionate injustice.
Practical importance
The illegality defence promotes consistency between private law remedies and public law objectives, while allowing courts flexibility to reach just outcomes.
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Directors of VTL made £4.55m secret profit through fraudulent tax avoidance schemes, breaching their fiduciary duties. VTL's successor, Aquila, claimed proprietary rights to these funds under a constructive trust. The Supreme Court held that the directors' fraud could not be attributed to VTL, preserving Aquila's proprietary claim in priority to...
Bilta’s liquidators sued its former directors and their co-conspirators for losses caused by a VAT carousel fraud. The directors had breached their fiduciary duties by causing Bilta to participate in fraudulent transactions. The Supreme Court held that the illegality defence was not available to the defendants because attributing the directors’...
In the recent judgement Lewis-Ranwell v G4S Health Services (UKSC/2024/0040), the Supreme Court held that the illegality defence can bar a negligence claim even where the claimant was found not guilty by reason of insanity for unlawful killings that sit at the centre of the loss claimed.
A man who killed three people during a psychotic episode was found not guilty of murder by reason of insanity. He sued healthcare providers for negligence, claiming damages for his detention and other losses. The Supreme Court held that the illegality defence barred his civil claim despite his lack of...
Stone & Rolls Ltd, a one-man company used as a vehicle for large letter-of-credit frauds, sued its auditors Moore Stephens for negligent audits in failing to uncover and stop the fraud. The court held the illegality defence did not bar the claim, but struck out a compound interest head. Facts...
An 18-year-old pillion passenger, jointly engaged with a drunk, unlicensed rider in a reckless and illegal motorcycling escapade, was seriously injured in a collision. The Court of Appeal held that public policy barred his negligence claim against the rider’s estate, despite statutory abolition of volenti. Facts The appellant, Andrew James...
Hunt saboteur Cross attacked farmer Kirkby with a baseball bat while trespassing. Kirkby wrestled the bat away and struck Cross once, causing serious head injury. The Court of Appeal held Kirkby acted in lawful self-defence and alternatively that Cross's claim was barred by ex turpi causa as his injuries arose...