is an English contract law case concerning the scope of the

illegality A wrong (from Old English – 'crooked') is an act that is illegal or immoral. Legal wrongs are usually quite clearly defined in the law of a state and/or jurisdiction. They can be divided into civil wrongs and crimes (or ''criminal offenses'') ...

principle relating to insider trading under section 52 of the

Criminal Justice Act 1993 The Criminal Justice Act 1993c 36 is a United Kingdom Act of Parliament that set out new rules regarding drug trafficking, proceeds and profit of crime, financing of terrorism and insider dealing. Overview Section 52 creates an offence of insider ...

. In 2020, the Supreme Court described this case as having set out a "a significant development in the law relating to illegality at

common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...

Facts

Mr. Patel paid £620,000 to Mr. Mirza pursuant to an agreement under which Mr. Mirza would bet on the price of some shares in Royal Bank of Scotland, on the basis of insider information Mr. Mirza had from his contacts at the bank about a pending government announcement that would affect it. Using advance insider information to profit from trading in securities is an offence under section 52 of the

. The scheme did not come to fruition as the expected insider information was mistaken, and Mr. Mirza did not return the funds to Mr. Patel as promised. Thereafter, Mr. Patel brought a claim based on contract and unjust enrichment for the return of £620,000. Mr. Mirza argued that no such obligation could be enforced because the whole contract was illegal, and any claim would be precluded by the principle of ''

ex turpi causa non oritur actio ' (Latin "from a dishonorable cause an action does not arise") is a legal doctrine which states that a plaintiff will be unable to pursue legal relief and damages if it arises in connection with their own tortious act. Particularly relevant in t ...

.''

Judgment

The UK Supreme Court unanimously dismissed Mr Mirza's appeal, holding that Mr Patel could recover the money he had paid to Mr Mirza and that the formal test in ''

Tinsley v Milligan is an English trusts law case, concerning resulting trusts, the presumption of advancement and illegality. The decision was criticised as "creating capricious results". It has now been overruled by . Facts Miss Tinsley sought possession of ...

'' was no longer representative of the law. A person who satisfies the ordinary requirements for a claim in

unjust enrichment In laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is unjustly enriched, the law imposes an obligation upon the recipient to make re ...

should be entitled to the return of his property; he should not ''prima facie'' be debarred from recovering his property just because the consideration which had failed was an unlawful consideration. Mr Patel's claim should be allowed since it would have the effect of returning the parties to their positions prior to the conclusion of the illegal contract, as well as prevent Mr Mirza from being unjustly enriched. Lord Toulson considered the state of the law concerning illegality:

016 HV-016 is a former military unit of Norway, that was a part of the Home Guard. It was established after 1985 to "stop terror- or sabotage actions that could weaken or paralyze Norway's ability to mobilize its military and its ability to resist". ...

UKSC 42, at 9/ref> Thus, the prior test in ''

'' is inconsistent with the coherence and integrity of the legal system. Instead, the Court should consider whether the public interest would be harmed by the enforcement of the illegal agreement, taking into account: # the purpose of the prohibition which has been transgressed, and whether the purpose would be enhanced by the denial of the claim; # any other relevant public policy on which the denial of the claim may have an impact; and # 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.

Facts

Judgment

References

See also