Illegality and public policy

The illegality doctrine determines whether courts will enforce contracts or claims where parties have engaged in conduct contrary to law or public policy. Following Patel v Mirza [2016] UKSC 42, courts apply a policy-based test asking whether allowing the claim would be contrary to the public interest, considering: (a) the underlying purpose of the prohibition transgressed; (b) other relevant public policies on which denial of the claim may impact; (c) whether denial would be a proportionate response to the illegality, having regard to the seriousness of the conduct, its centrality to the contract, whether it was intentional, and any disparity in the parties' respective culpability. This replaced the formalistic reliance test from Tinsley v Milligan [1994] 1 AC 340. The doctrine's rationale is Lord Mansfield's maxim from Holman v Johnson (1775) 1 Cowp 341: courts will not lend aid to those founding claims on immoral or illegal acts.

Holman v Johnson (1775) 1 Cowp 341: Lord Mansfield articulated the foundational maxim ex turpi causa non oritur actio — no court will lend aid to a man who founds his cause of action upon an immoral or illegal act. Remains the doctrinal anchor despite evolving tests.

Patel v Mirza [2016] UKSC 42: Lord Toulson replaced the reliance test with the three-stage policy analysis examining the prohibition's purpose, other public policies, and proportionality. Essential as the modern framework for all illegality questions.

Henderson v Dorset Healthcare [2020] UKSC 43: Applied Patel to bar a claim where claimant killed her mother during psychotic episode then sued NHS for negligent supervision. Shows the test can deny claims where illegality is sufficiently serious and central.

Stoffel & Co v Grondona [2020] UKSC 42: Allowed negligence claim by mortgage fraudster against solicitors who failed to register discharge. Demonstrates the test's flexibility — illegality serious but not central to the professional negligence.

Esso Petroleum v Harper's Garage [1968] AC 269: Leading restraint of trade authority — 21-year solus tie unreasonable, 4-year reasonable. Applies the Nordenfelt reasonableness test to commercial agreements.

Courts first determine whether specific statutory prohibition applies — if statute expressly or impliedly renders contracts unenforceable, that ends the inquiry (St John Shipping Corp v Joseph Rank Ltd [1957] 1 QB 267). For common law illegality or where statute is silent, apply the Patel test systematically: identify the prohibition transgressed and its purpose; consider what other public policies might be affected by allowing or denying the claim; assess proportionality through the four factors (seriousness, centrality, intention, culpability). For restraint of trade, apply the Nordenfelt test first: is the restraint reasonable between the parties (duration, geography, legitimate interest) and reasonable in the public interest? The doctrine applies to both enforcement of contracts and restitutionary claims arising from illegal contracts. Post-Patel cases show courts will allow claims where the illegality is peripheral or denial would produce disproportionate injustice.

Never apply the Tinsley v Milligan reliance test — it was overruled by Patel. Don't assume illegality automatically bars claims; the Patel test is balanced and many claims succeed. Distinguish illegality from vitiating factors (mistake, misrepresentation, duress) which allow rescission rather than rendering contracts unenforceable. Always check for specific statutory provisions first before applying Patel — statutes like FSMA 2000 s.26 may expressly address enforceability. For restraint of trade questions, apply the Nordenfelt reasonableness test rather than jumping to general Patel analysis.