“Illegal trust participants can recover property without relying on illegality”
The House of Lords held that Milligan could establish her equitable interest in the property. A party can recover property if they can establish their case without relying on their own illegal conduct, even if the arrangement was tainted by illegality.
Two women purchased a house as joint beneficial owners but put legal title in one name only (Tinsley) to enable the other (Milligan) to make fraudulent benefit claims. After a relationship breakdown, Tinsley claimed sole ownership. Milligan sought to establish her equitable interest in the property.
Whether a party to an illegal transaction can recover property or enforce rights arising from that transaction, and specifically whether Milligan could establish her equitable interest without relying on the illegality.
The majority applied the 'reliance principle' - if a claimant can establish their legal or equitable rights without pleading or relying on the illegal transaction, they may succeed. Milligan could prove her equitable interest through evidence of contributions and resulting trust principles without needing to rely on the benefit fraud.
This case established the reliance principle as the governing approach to illegality in property disputes, confirming that it applied to both legal and equitable claims. However, the Supreme Court in Patel v Mirza [2016] UKSC 42 expressly departed from Tinsley, holding that the reliance test should no longer be followed and replacing it with a range-of-factors approach centred on the public interest.
A party to an illegal transaction can still claim property rights in equity if they can establish their claim without having to rely on or plead the illegal purpose.
The House of Lords allowed Milligan's claim to a beneficial interest because she could prove it through her contributions without needing to rely on the benefit fraud.
It established the 'reliance test' for illegality in property claims and shows how resulting trusts can survive illegality, but the Supreme Court departed from it in Patel v Mirza [2016] UKSC 42, holding that the reliance test should no longer be followed.
Lord Browne-Wilkinson noted that the reliance test, while producing harsh results in some cases, provided greater certainty than a discretionary approach based on public policy considerations.
OSCOLA Citation
Tinsley v Milligan [1994] 1 AC 340 (HL)
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[2026] EWHC 426 (Ch)
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