The Law of Illegality and Trusts: A New Mess for the Old One

AuthorJennie Sehee Ham
PositionUniversity of Southampton
[2019] Vol.9
The Law of Illegality and Trusts: A New Mess for the Old One
Jennie Sehee Ham
University of Southampton
In Patel v Mirza,1 the Supreme Court overruled the highly controversial judgment of the House of
Lords in Tinsley v Milligan.2 The new ‘range of factors’ test adopted by the landmark decision, which
replaced the narrow ‘reliance’ test formulated in Tinsley v Milligan, however does not produce
different results in every single case. This article highlights the impact of the law on illegality of
contracts and its application to trusts. It seeks to identify whether factual scenarios like those of Tinsley
v Milligan would be decided differently today. Upon analysis of the relevant matters and case law, it
is submitted that the outcome would remain unchanged, but not the reasoning.
hen the ‘range of factors’ test applies to a particular set of circumstances like those in
Tinsley, the reasoning would be different under present law. This is because the issue is
no longer whether Ms Milligan had to rely upon her own illegality to establish a claim.
Nevertheless, the result would stay the same as the policy-based approach conferring judicial
discretion provides a wider scope than the previous rule-based approach. The outcome does not depend
upon whether it is a case of resulting trust or constructive trust, whether a presumption of resulting
trust, advancement or Stack v Dowden is invoked,3 and whether an illegal activity has been wholly or
partly performed. In all cases, the starting point is that illegality will not prevent a civil claim.
In order to develop a deeper understanding of the status quo, this article first discusses the historical
development of the illegality defence. The second part explores different approaches taken by the
Court of Appeal and House of Lords in Tinsley and analyses the ‘reliance’ test advocated in Tinsley

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