Patel v Mirza [2016] UKSC 42

The question of when a party’s involvement in illegality bars a claim has come before the Supreme Court in several recent cases. This appeal raised the issue again, and it was heard by nine justices to allow a comprehensive review of the rationale and the application of the doctrine of illegality. Mr Patel had given Mr Mirza £620,000 to place bets on a bank’s share price with the benefit of insider information. The intended betting did not take place but Mr Mirza did not return the money to Mr Patel and he sued for its return. The Supreme Court unanimously upheld the decision of the Court of Appeal in favour of Mr Patel, but the court divided on the process of reasoning. Six of the justices adopted a flexible approach, taking into account a mix of factors relevant to the policy considerations behind the defence of illegality, in order to ascertain whether it would disproportionate to refuse relief to which a claimant would otherwise be entitled. Mr Patel satisfied the ordinary requirements of a claim for unjust enrichment and should not be debarred from enforcing his claim by reason only of the fact that the money was paid for an unlawful purpose. The other three justices preferred the existing rule-based approach, which they considered would preserve greater coherence or certainty in the application of the doctrine.