The normal role of the courts is to decide cases according to the law, and in doing so to provide a just resolution to the dispute between the parties. The illegality defence operates to prevent the courts from providing the claimant with the rights or remedies to which she would otherwise have been entitled because of illegal conduct linked to the claim.
If the courts dismiss the claim and allow the illegality defence, it often involves granting an unjustified windfall to the defendant, who may be equally implicated in the illegality or who may have been utterly negligent. However, if the courts refuse to allow the defence, they may be seen to be helping the claimant who has behaved illegally, allowing them to get away with it or to get something from it.
The starting point of the jurisprudence in this area was Holman v Johnson  1 Cowp 341, per Lord Mansfield, who said “No court will lend its aid to a man who founds his cause of action on an immoral or illegal act”. This case was decided in an era of little or no policing. The famous ‘highwayman’ case of Everet v Williams , noted at (1893) 9 LQR 197 was an early example of the court not wanting to sully its hands by dealing with criminal ventures. One highwayman sued the other for his share in the proceeds of their crimes and needless to say, the Court refused assistance and both were eventually hanged. Ironically, the solicitor who brought the case, was fined and committed to prison.
Judges’ attempts to set out rules to deal with cases where illegality is raised have been historically complex and confused. This is because of the infinite variety of circumstances in which the issue arises. It may arise in many different areas, including contract, tort, restitution, property rights & trusts law. It may involve a wide variety of illegal behaviour, from parking offences to fraud to unlawful killing. The conduct may be inextricably linked to the claim (as where a contract is to carry out a murder); or it may be just be one of many background facts (as where a speed limit is broken in the performance of a contract). The consequences may be visited upon the wrongdoer personally, or a third party (such as the wrongdoer’s creditors).
The law commission reported that the result was a body of law which was technical, uncertain and sometimes arbitrary. It often lacked transparency and occasionally it produced results which appeared unduly harsh (Law Comm. CP189).
Up until Tinsley v Milligan  1 AC 340 there was the rather vague ‘public conscience’ test, which was described as little different, if at all, from stating that the court simply has an open discretion as to whether to grant or refuse relief. Following Tinsley which introduced the ‘reliance’ test there was a period of certainty. However, this had its own problems, not least because it potentially resulted in indiscriminate and unjust results which depended on evidential presumptions such as ‘advancement’ and the ‘presumption of a resulting trust’ rather than a properly transparent analysis of the justice of a case.
It was for these reasons, and the fact that the Law Commission abandoned its recommendation for legislative reform in this area (save for one exception) and instead directed that the courts sort out the ‘illegality’ problem, that the Supreme Court deployed a 9-Judge panel in Patel v Mirza  AC 467. Lord Toulson, the former Head of the Law Commission, was unleashed, and in his leading speech introduced his all-important ‘policy balancing’ and ‘factors based’ approach. This approach was heavily influenced by Professor Burrows’ ‘Restatement” works (‘A Restatement of the English Law of Contract’ and ‘A Restatement of the English Law of Unjust Enrichment)
The Supreme Court have now dealt with the illegality defence at least eight times over past 5 or 6 years in various contexts, such as for enforcement of basic employment rights by a domestic servant employed under an illegal contract; or, as in Patel for the reversal of an unjust enrichment, where the claimant who conspired to commit insider dealing wanted his money back when the scheme did not go ahead; or where the claimant claimed compensation for the consequence of his sentence for manslaughter resulting from his PTSD acquired after a train crash caused by the negligence of the Defendants; or, for damages to pay for the costs of commercial surrogacy abroad, while it is criminalised in the UK.
Various criticisms and questions were raised after Patel as to its scope and application; whether it applied to all types of civil claims; and, whether it would lead to uncertainty. Some commentators, and indeed appellants, have mistakenly interpreted Patel as having widened the doctrine of illegality and that the court had been given an unlimited discretion to condemn illegal behaviour.
In 2019 the Supreme Court gave permission to the negligent solicitor in Stoffel v Grondona  UKSC 42 to appeal on the sole ground of whether the Court of Appeal had erred in their application of the test in Patel, and their recent judgment in this case gives further refinement and guidance on how Patel is to be applied.
The case of Stoffel is important on a number of levels. It is the first authoritative application of Patel in the context of professional negligence, especially in respect of solicitors. It sets out the method of applying the ‘trio of considerations’ of Lord Toulson, reminding us that the question of whether the claimant is ‘profiting’ from her conduct, is not the true focus of the enquiry. It emphasises the underpinning rationale of illegality and it confirms the position that was settled in Tinsley, that where property is transferred for an illegal purpose, the transferee nevertheless obtains good title, and this is so whether the title is legal or equitable. There is even a potential revival of the ‘reliance’ test in the context of centrality if the court has to consider proportionality.
Overall, the key to the doctrine of illegality is to protect the integrity of the legal system. This does not mean protecting the sensibilities of po-faced lawyers and judges who remark on the seriousness of the most minor of infractions, but to preserve the seamless coherence of all the strands of our legal system. In other words, to provide consistency and prevent stultification. As Lord Sumption in Patel emphasised in his speech, the law aspires to be a unified institution and at the most fundamental level of policy, its internal coherence requires that contract, tort and criminal law should be in harmony.
The civil law is not based on deterrence or punishment. Those are matters for the criminal law. As Lord Neuberger said in his speech in Patel, it is for the criminal law, not the civil law, to penalise a party or parties for entering into and/or performing a contract with an illegal component. And in so far as the civil law is fashioned by judges in a particular case, all they need to do is to ensure that it is not inconsistent with the criminal law. Beyond that, they must simply do their day-job. Opportunistic professional tortfeasors seeking to evade liability by trawling through their client’s affairs to find some illegal behaviour or purpose are only encouraged by censorious judges who draw up their skirts and refuse assistance at the first indication of unlawfulness. Hopefully, after Stoffel, those days are over.
Andrew Warnock Q.C. and Maurice Rifat of 1 Chancery Lane, and Laura Giachardi of 42 Bedford Row acted on behalf of the respondent in the Supreme Court.