illegality (workbook)

Question 1

what used to be the general rule on illegality?

Answer 1

contracts to perform:
- an illegal act, or
- a contract contrary to public policy

would be declared void and unenforceable

Question 2

which case changed the general rule, meaning the court now adopts a discretionary approach, applying principles of public policy and proportionality?

Answer 2

Patel v Mirza

Question 3

what was the underling policy question in Patel v Mirza?

Answer 3

‘whether allowing recovery for something which was illegal would produce inconsistency and disharmony in the law, and so cause damage to the integrity of the legal system’.

Question 4

What were the ‘trio of necessary conditions’ established to determine whether illegality is applied?

Answer 4

(a) ‘to consider the underlying purpose of the prohibition which has been transgressed (prevention of insider trading?) and
whether that purpose will be enhanced by denial of the claim (will the prevention of insider dealing be enhanced by denying the return of Mr Patel’s money?),

(b) to consider any other relevant public policy on which the denial of the claim may have an
impact (illegal trades in financial services and adjacent industries?); AND

(c) to consider whether denial of the claim would be a proportionate response to the illegality,
bearing in mind that punishment is a matter for the criminal courts’.