Essays on Illegality

Question 1

‘The defence of illegality should be abolished’. Discuss.

1. Intro

Answer 1

While the defence of illegality seems to prima facie aid the courts in reaching fair judgments, it has been increasingly criticised by academics for being illogical and unnecessary, with Peel and Goudkamp scathingly calling it a ‘stain’ on the law of torts. Indeed, it might be the case that with the expansion of the doctrine of contributory negligence, there is less need for a defendant to rely on the defence of illegality to plead that the claimant’s wrongdoing absolved or reduced the defendant’s liability. Nonetheless, as can be seen from Lord Hoffmann’s restatement of illegality as a defence in Gray v Thames Trains Ltd into ‘wider’ and ‘narrower’ forms, this area of law is by no means straightforward – a closer look at the specific scenarios that the defence may apply will be required before a definitive conclusion can be drawn regarding the relevance of illegality in today’s law of torts. Each of these scenarios will be analysed in two prongs: first, whether the defence of illegality can be theoretically substantiated; and second, whether any developments in other parts of tort law has rendered it unnecessary. It is ultimately submitted that the defence of illegality seems to mostly be redundant in establishing liability in tort and should therefore be abolished.

Question 2

‘The defence of illegality should be abolished’. Discuss.

Para 2

Answer 2

Lord Hoffmann’s ‘wider’ and ‘narrower’ forms of the defence of illegality provides a useful starting point, with the latter being less controversial. In Gray v Thames Trains Ltd, the House of Lords allowed a plea of illegality as a defence in its narrower form, which embodies the principle that a claimant cannot recover for damage which is the consequence of a sentence imposed on him/her for a criminal act. The defendants in Gray argued that the claimant was not entitled to compensation for loss of earnings once he was found guilty of manslaughter and detained under the Mental Health Act 1983, which was eventually accepted by the House of Lords. Similarly, in Clunis v Camden and Islington Health Authority, the claimant failed to receive compensation for a loss of liberty resulting from his detainment after he killed someone, which he alleged that he would not have done but for the defendant’s negligence. These cases seem logical: allowing an offender to be compensated for the punitive measures imposed on him by the criminal law goes against the very essence of criminal prosecution and may even encourage more crime, given that offenders are aware that they could possibly be duly compensated for their time behind bars should anything go wrong. This is in line with the general principle underlying other areas of the common law that no one should be able to benefit from his/her own wrongdoing.

Question 3

‘The defence of illegality should be abolished’. Discuss.

Para 3

Answer 3

Despite the theoretical attractiveness of the narrower form of illegality, it could be argued that the doctrine is redundant in light of the other facets of tort law, specifically the tort of negligence. For instance, the judgment in Gray could very well be explained by way of causation – the defendants’ negligence cannot be said to have formed the legal cause of the claimant’s loss of earnings for the period for which he was going to be detained in hospital, especially since the claimant’s subsequent illegal act amounted to a novus actus interveniens which broke the chain of causation (STEEL: Though note this was rejected by Lord Hoffmann in Gray (at [29]) because of Corr v IBC). In many of these cases, while it could possibly be argued that there was but-for causation between the defendant’s negligence and the eventual loss, legal causation will scarcely be fulfilled as the claimant’s illegal actions would always constitute novus actus interveniens and the defendants would not be liable in any case. In this vein, it seems that the defence of illegality is then redundant and should therefore be abolished.

Question 4

‘The defence of illegality should be abolished’. Discuss.

Para 4

Answer 4

The wider form of the defence of illegality deserves a closer analysis. Lord Hoffmann in Gray explained that the wider form embodied the principle that a person cannot recover for damage which is the consequence of his/her own criminal act, as opposed to the consequence of a sentence which the narrower form focuses on. It is submitted that this can further be demarcated into two sub-categories for a more meaningful discussion. Firstly, there are scenarios where the tort precedes the crime, i.e. the claimant is pleading that he/she committed the criminal act as a result of the defendant’s negligence. Secondly, there are scenarios where the crime precedes the tort – often these entail situations where the claimant and defendant were engaging in an illegal act when one committed a tort against the other. In addition, there is a third category of scenarios not considered in Gray, whereby the claimant alleges that the defendant’s negligence caused him/her loss of earnings which would have been obtained through an illegal act. These will be addressed separately.

Question 5

‘The defence of illegality should be abolished’. Discuss.

Para 5

Answer 5

The first scenario where the tort precedes the crime is similar to the cases applying the narrow form of the illegality defence cited above, in that the claimants in all these cases allege that the tort led to the crime. However, it is to be reiterated that there is an important distinction between this scenario and the narrower view, in that in the narrow view, the claim is for consequent damages arising from a sentence and not from the illegal act itself. So in Vellino v Chief Constable of Manchester Police, the claimant sought damages for injury suffered after he tried to illegally escape police custody, alleging that his crime was a result of the police’s negligence by not taking reasonable steps to stop his attempts to escape. The damages were resultant from the act, not from any subsequent sentencing. Theoretically, the only real difference between the two cases is that the narrow view involves criminal law and the other does not, which means that it can no longer be argued that tort law has to be consistent with criminal law. However, besides this, the other rationale behind the illegality defence in both cases seem to rest on the same premise that awarding such claimants damages would only encourage ex ante more illegal acts. This theoretical basis remains attractive in this regard.

Question 6

‘The defence of illegality should be abolished’. Discuss.

Para 6

Answer 6

That being said, the question of whether the defence of illegality is actually necessary to achieve this aim once again involves a question of causation and novus actus interveniens. It is submitted that as argued above, the role that the illegality defence plays can sufficiently be fulfilled by a test of legal causation – for instance, the loss suffered by the claimant in Vellino was not legally caused by the police’s negligence but by his own actions, which broke the chain of causation as a novus actus interveniens.

Question 7

‘The defence of illegality should be abolished’. Discuss.

Para 7

Answer 7

Scenarios where the crime precedes the tort should be analysed differently given that the question of causation between the tort and the crime no longer arises. To prevent illegality forming a blanket protection against liability for all torts, the courts have set out the basic test to successfully establish this defence in Cross v Kirby and Vellino: the defence of illegality will only be available in such a situation if the claimant’s crime was “sufficiently serious” and there was a “sufficiently close connection” between the defendant’s tort and the claimant’s crime. Therefore, in Joyce v O’Brien, the claimant failed to attain damages for injury suffered whilst he and the defendant were fleeing from the scene of the crime (albeit arising from the defendant’s negligence); in contrast, the claimant in Delaney v Pickett could sue on the defendant’s negligent driving even though they were in the midst of transporting cannabis – in the latter case there was no “sufficiently close connection” between the tort and the crime. Prima facie, the basic test seems to make sense on the grounds that a person breaking the law should not enjoy the protection from the law in the same regard. However, a closer look at the theoretical basis of this stance reveals problems. Why should the defendant, who is equally guilty of committing a crime, be absolved of tortious liability to the claimant? Doing so bears no ex post value: the claimant will not be prevented from profiting from his wrong because the claimant is simply seeking damages in respect of the injuries he suffered at the hands of the defendant’s negligence. On an ex ante basis it will also not deter offending, given that the tort proceedings and its outcomes are irrelevant to the criminal prosecution. In addition, just because the claimant has committed an illegal act does not mean that the protection of justice should not extend to him or her as well. Arguably, the claimant would be punished further than he ordinarily would have by being denied damages for the defendant’s negligence. Given this unjust outcome and the lack of any ex post or ex ante value of the illegality defence, it is not hard to see why Peel and Goudkamp argue that the defence serves “absolutely no useful function” in relation to these cases.

Question 8

‘The defence of illegality should be abolished’. Discuss.

Para 8

Answer 8

Furthermore, the existence of contributory negligence sufficiently performs the same functions as the defence of illegality. In such cases, especially those of joint enterprise, the illegality defence in this case will typically arise with contributory negligence, given that the claimant, in engaging in illegal conduct, could be said to be partly (or even wholly) responsible for his/her own injury. Pursuant to the Law Reform (Contributory Negligence) Act 1945, the claimant’s damages can be adjusted to account for his/her share in the responsibility for the damage. While this measure begins from a starting point of full damages rather than one of zero damages, it provides a spectrum through which the courts can give fairer and more nuanced rulings, as opposed to the ‘all or nothing’ defence of illegality. As such, alongside the loss of utility of the illegality defence as argued above, it seems to be the case that in this regard, the defence of illegality should in fact be abolished.

Question 9

‘The defence of illegality should be abolished’. Discuss.

Para 9

Answer 9

Lastly, it is worth briefly addressing the category not considered in Gray, whereby the claimant alleges that the defendant’s negligence caused him/her loss of earnings which would have been obtained through an illegal act. It is trite that a claimant cannot benefit from his or her illegal act, and accordingly, a claimant will not be able to claim for a loss of earnings based on such an illegal act. Hounga v Allen is illustrative: while the claimant could claim for damages for discrimination in the termination of the employment contract, she could not claim for losses arising from the termination of contract because it was an illegal one and could not be enforced. While this is prima facie logical and theoretically sound, it is submitted that this could just possibly be a rule about the type of damages claimable in any tort and does not need a specific defence of illegality. This is especially so if legality fails to remain relevant in the main categories addressed above.

STEEL: One way of putting this might be to say that to suffer damage requires a comparison between where one is and where one ought to have been had the tort not occurred – in assessing that counterfactual, one assumes compliance with the criminal law.

Question 10

‘The defence of illegality should be abolished’. Discuss.

Conclusion

Answer 10

Ultimately, while the defence of illegality in tort seems to function well in common law and the courts, a closer look into the theoretical basis and utility of each aspect of its application yields the conclusion that it has since become outdated. That being said, it is inherent in the common law that for such radical change to occur, there requires a pressing need and accordingly a lacuna in the area of law, of which none seems to exist presently. Indeed, the Law Commission in 2001 acknowledged that the defence of illegality in tort was in no need of legislative change and that any improvements could adequately be brought through case law. As a result, this essay submits that as much as the theoretical basis of the illegality defence has whittled, there will only be a need to consider abolition when a sufficiently troubling case requires the court to do so.

STEEL: A thoughtful, robustly argued, piece. Some incorporation/acknowledgment of Patel would have been useful, however. 70.

Question 11

AN APPEAL TO ILLEGALITY

Introduction

Answer 11

It has been long established that no court will help a claimant who founds his claim on an immoral or illegal act.1 It is less clear in what circumstances an appellate court will help a claimant who thinks that this policy was wrongly applied at first instance to bar their cause of action.In Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd,2 an illegality case otherwise ‘bristling with simplicity’ (Hale borrowing expression from counsel) the Supreme Court unanimously declined to shed much light.

I say, respectfully, that this was a regrettable aspect of the decision. First, I will outline the position before Singularis, focusing especially o nthe approach to illegality developed in Patel v Mirza. Secondly, I will describe the decision in Singularis. Thirdly, I will comment on Singularis, developing an argument that the Supreme Court should have taken the opportunity to clarify what approach an appellate court should take on the appeal of a first instance application of the illegality doctrine. Lastly, I will argue that the Supreme Court should have endorsed, in part, the approach suggested by the Court of Appeal and held that an appellate court should only interfere where the primary judge has made an error of law

Question 12

AN APPEAL TO ILLEGALITY

2. The position before Singularis
   (a) Background

Answer 12

The doctrine of illegality operates to bar a claim which would otherwise be successful but for the illegality of the claimant’s actions. The doctrin eis a policy of ‘judicial abstention, by which the judicial power of the state is withheld where its exercise in accordance with ordinary rules ofprivate law would give effect to advantages derived from an illegal act.’ (Lord Sumption in Jetvia SA v Bilta). In the law of obligations, it has long been regarded as a mess (Burrows) because of its sliding between ‘rules’ criticised as over-rigid and ‘discretions’ criticised as unpredictable. I will suggest that that criticism has not been totally put to bed.

Question 13

AN APPEAL TO ILLEGALITY

2. The position before Singularis
   (b) The Decision in Patel v Mirza

Answer 13

In Patel v Mirza, the Supreme Court recast the approach to deciding which claims illegality should bar, and for what reasons. They rejected the old, rule-based approach to answering the illegality question and adopted a less ‘mechanistic’ proces (Lord Toulson).

The ‘minority’ (technically unanimous but they differed in the approach it took to the question of on what basis the illegality question should be answered) led by Lord Sumption JSC, preferred the old reliancerule. The question under the reliance rule is whether the person making the claim is obliged to rely in support of it on an illegal act on hispart. Lord Sumption JSC preferred it for two groups of reasons. First, it ‘accord[ed] with principle.’12 It gave effect to the principle that a person may not profit from his wrong by establishing a ‘direct causal link between the illegality and the claim’, and was the ‘narrowest test of connection available.’ Secondly, Lord Sumption JSC argued that the ‘range of factors’ test was unprincipled, uncertain, and likely to generate litigation.13 That last prediction, at least from the perspective of the parties to Singularis, has proved correct.

The majority, led by Lord Toulson JSC and composed of Baroness Hale DPSC and Lords Kerr, Wilson and Hodge JJSC, based the doctrine on ‘two broad discernible policy reasons’.14 The first reason is that: ‘a person should not be allowed to profit from his own wrongdoing.’ The second reason is that: ‘the law should be coherent and not self-defeating, condoning illegality by giving with the left hand what it takes with the right hand.’ The essential rationale of the illegality doctrine was that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system.15 In assessing whether the public interest would be harmed in that way, it is necessary to consider:

a. The underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim;
b. Any other relevant public policy on which the denial of the claim may have an impact; and
c. 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. In considering whether it would be proportionate, potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties’ respective culpability (Toulson)

Finally, the majority commented that (Toulson):

‘Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate.

Question 14

AN APPEAL TO ILLEGALITY

3. THE DECISION IN SINGULARIS
   (a) The Facts of Singularis

Answer 14

Singularis was, by the time it reached the Supreme Court,18 a claim in negligence for breach of the duty owed by a bank to a customer to use reasonable care not to process suspicious payment instructions (a ‘Quincecare duty’).

Singularis, the claimant company, was established to manage thepersonal assets of Maan Al Sanea, a Saudi Arabian businessman. Daiwa, the defendant bank, held approximately US$204 million to its account. Mr Al Sanea instructed Daiwa to transfer that money to other companies in his broader business group. Singularis, acting through its liquidators, brought a claim against Daiwa in negligence for breach of the Quincecare duty by processing the payment instructions.

Question 15

AN APPEAL TO ILLEGALITY

3. THE DECISION IN SINGULARIS
   (b) Singularis in the Supreme Court

Answer 15

The Supreme Court unanimously (Baroness Hale PSC, Lord Reed DPSC,Lord Lloyd-Jones, Lord Sales JJSC, and Lord Thomas) dismissed Daiwa’sappeal in ‘short order’.37 Rose J was ‘correct for the reasons she gave’.38Once more, Daiwa failed on attribution and it was therefore unnecessaryto consider the illegality doctrine. But Baroness Hale PSC, giving thejudgment of the court, picked up Sir Geoffrey Vos C’s comment on thecircumstances in which an appellate court should interfere with a first-instance application of Patel v Mirza. Her Ladyship said:

‘I should, however, record my reservations about the view expressed bythe Court of Appeal as to the role of an appellate court in relation to theillegality defence … Daiwa point out that applying the defence is “notakin to the exercise of discretion” and an appellate court is as well placed to evaluate the arguments as is the trial judge. It is not necessary to resolve this in order to resolve this appeal and there are cases concerning the illegality defence pending in the Supreme Court where it should not be assumed that this Court will endorse the approach of the Court of Appeal.’

This last, rather ominous, sentence appears to be a reference to the decision of the Court of Appeal in Henderson v Dorset HealthcareUniversity NHS Foundation Trust,40 from which an appeal to the SupremeCourt is, at the time of writing, outstanding. It is hoped that judgment in the Henderson case will settle not just the question taken up here, but the controversial question of whether Patel – a claim for restitution for unjust enrichment – is binding in tort claims.

Question 16

AN APPEAL TO ILLEGALITY

4. Commentary on singularis
   (a) Appeals from illegality

Answer 16

I say that the Supreme Court should have endorsed, in part, the approach suggested by the Court of Appeal and held that an appellate court should only interfere where the primary judge has made an error of law. I attempt to defend this conclusion in three stages. First, I say that this position is a better interpretation of the existing law. I develop what I say are the three key characteristics of legal questions which, in general, make appellate courts reticent to review them on appeal. Then I apply them to illegality as understood post-Patel, arguing that application ofPatel is, classically, a decision which should be reviewed only on an error of law basis. Secondly, I say that the Court of Appeal’s approach is more normatively desirable, because it better rations judicial resources.Thirdly, I consider, and reject, a powerful objection to the Court ofAppeal’s approach: that it buttresses arbitrary and unpredictable judicial discretion.

Question 17

AN APPEAL TO ILLEGALITY

4. Commentary on singularis
   (b) the Patel approach as demanding appellate restraint
   (i) the characteristics of decisions that demand appellate restraint

Answer 17

The reluctance with which an appellate court will overturn first instanc edecisions depends on the nature of the decision under review.41 For our purposes,42 I emphasise three aspects of the decision under review.These three characteristics are particularly important:

(1) the precision of the legal rule that has been applied;
(2) the number of factors involved in applying the legal rule and the element of proportionality involved in comparing and balancing those factors; and
(3) the importance of evaluations of fact to applying the legal rule, particularly evaluations of oral evidence.

Later, I argue normatively that these considerations are desirable, but for now confine myself to describing the law

First, where the legal rule is imprecise rather than precise, it demands a higher degree of appellate restraint. That a rule is imprecise is usually expressed by saying that it admits of more than one answer43 or that the limits of reasonable disagreement are generous.44 Hoffmann LJ (as he then was) said explicitly in Re Grayan Building Services:45 ‘the vaguer thestandard … the more reluctant an appellate court will be to interfere with the trial judge’s decision.’46 Again, in Designers Guild,47 he justified his conclusion that the appellate court should interfere by saying that the decision was ‘not altogether precise’

Secondly, where the legal rule involves the assessment of a number of factors and an element of proportionality in comparing and balancing those factors, the decision demands a higher degree of appellate restraint. The Court of Appeal has repeatedly held that where the test is ‘multifactorial’ or involves a ‘combination of features of varying importance’,49 the appellate tribunal should be ‘slow to interfere’50 or ‘show a real reluctance’ to interfere.51 It has also confirmed that the greater the number of factors involved, the greater the reluctance the appellate court should show.52 In particular, where the factors involved are incommensurable (they do not compare like with like), the SupremeCourt has confirmed that the appellate court should show particular restraint.

Thirdly, where evaluations of fact are important in applying the legal rule, particularly evaluations of oral evidence, the decision demands a higher degree of appellate restraint. The reason is that ‘specific findings of fact, even by the most meticulous judge, are inherently an incomplete state of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance … of which time and language do not permit exact expression’.54 That is particularly so where the judge had to assess the quality of oral evidence, which is obviously unavailable to the appellate court.55 There are nuances in evidence which properly influence the judge but which it would be unrealistic to expect to be available completely to the appellate court. The importance of evaluations of fact has recently been emphasised by the Court of Appeal

A classic, and apposite, illustration of each of these three characteristics is the apportionment of damages for contributory negligence.Apportionment of contributory negligence involves imprecise rules, the assessment of a number of factors, and is guided by evaluations of fact.Consequently, the Supreme Court has held that ‘differing views should be respected, within the limits of reasonable disagreement

Question 18

AN APPEAL TO ILLEGALITY

4. Commentary on singularis
   (b) the Patel approach as demanding appellate restraint
   (ii) Those Characteristics Applied to the Patel Approach

Answer 18

I argue that the Patel v Mirza displays each of these three characteristics clearly. Consequently, I argue the approach – a policy-based assessment for illegality – should demand a high degree of appellate restraint.

First, the Patel approach is necessarily imprecise in that its application in any one case admits of more than one answer. Judges may legitimately vary on the weight to be assigned to various factors and the direction in which they point in a particular case. In Singularis, counsel for Daiwa made a strong argument in the Court of Appeal and in the Supreme Court that Rose J should have put weight on the possibility that barring the claim could encourage non-executive directors to play an active role in the supervision of companies.’58 Although the point was not made to her,59 that argument might quite conceivably have convinced a different judge to take a different view. The Supreme Court did not deal with it.

Secondly, the Patel approach involves the assessment of a number of factors and an element of proportionality in comparing and balancing those factors. There is no hard limit on the number of factors which may potentially be relevant at the third stage of the Patel approach, in considering whether the denial of the claim is a proportionate response to the illegality of the act. The majority’s judgment described three factors as ‘potentially relevant’ and a further eight factors61 as ‘helpful’.62More significantly, the approach requires these factors to be pitched against each other when they represent fundamentally incommensurable interests. akin to ‘asking [judges] whether five litres is greater than two meters.’63 This introduces a significant element of proportionality. In this respect it is similar to the contributory negligence apportionment exercise where, again: ‘The court is not comparing like with like.’64 The analogy between ‘proportionality’ in that context and in the Patel v Mirza approach is, I say, more than ‘hardly convincing’.65 In this respect, as I have argued above, the comparison between Patel and contributory negligence is apposite

Lord Neuberger PSC, endorsing the approach of the majority in Patel, commented: ‘Once a judge is required to take into account a significant number of relevant factors, and the question of how much weight to give each of them is a matter for the judge, the difference between judgment and discretion is, I think, in practice pretty slight.’66 In fact, the ‘minority’ in Patel argued against what has become the Patel approach by pointing out that ‘it converts a legal principle into an exercise of judicial discretion.’67 It is tolerably clear, then, that the approach gives, in practice, a degree of latitude to the judge and consequently to the appellate court. It is significant that the proposition that Patel is either close or equivalent to a discretion is accepted both by proponents of thePatel approach and by its detractorsThirdly, the Patel approach is dependent on evaluations of fact, and often on evaluations of oral evidence. In Singularis, Rose J based her application of the Patel approach, in particular her finding that Daiwa’s breaches of the Quincecare duty were ‘extensive’ and ‘obvious’, on detailed factual evaluation of Daiwa’s wrongdoing. She found that the precarious financial state of Singularis was ‘obvious’68 and that Daiwawas aware of its substantial debts.69 She found that Mr Al Sanea’s dishonesty was obvious70 and that the bogus documents he produced toperpetrate the fraud were obviously shams.71 It is impossible to avoid theconclusion that these findings were based on detailed evaluation of theoral evidence.72 Given the above, it becomes difficult to square this withDaiwa’s argument in the Supreme Court that ‘an appellate court is aswell placed to evaluate the arguments as is the trial judge.’73 - evaluatingthe arguments requires applying the facts as found at first instance.There is a strong argument that the judge’s findings were based onnuances in the evidence which the judge properly took into account butwhich simply were not available to the Supreme Court or the Court ofAppeal.

Therefore, I argue that the Patel approach to illegality shouldcorrespondingly demand a high degree of appellate restraint. JamesGoudkamp was, before Singularis, quite right in asserting that: ‘appealsregarding the illegality doctrine are now extremely unpromising … Sincethe policy-based test gives trial judges considerable freedom to decidewhich factors are material and the weight that they carry, the test ishighly discretionary. Consequently, decisions regarding the illegalitydoctrine will be largely impervious to appellate review.’

Question 19

AN APPEAL TO ILLEGALITY

4. Commentary on singularis
   (c) The Rationing Rationale

Answer 19

I also make a normative argument in favour of the Court of Appeal’sapproach: that it better rations judicial resources. First, I adoptFrederick Wilmot-Smith’s powerful argument that judicial resources arescare and should be allocated with care. Secondly, I apply that argumentto appellate review of first instance applications of Patel.

Frederick Wilmot-Smith has argued that ‘a question of distributive justicelies at the heart of most of private law: the question of who should beallocated scarce legal resources.’75 Tertiary rights (rights to call upon thestate to enforce primary or secondary rights) are themselves adistribuendum.76 They are a scarce distribuendum because: ‘Judges arebusy. They have nowhere near enough time to think about their cases, letalone to hear all the cases they possibly could. This makes court time scarce.’77 Therefore: the ‘allocation of tertiary rights … is one way inwhich we ration individuals’ entitlement to the scare resource of judicialresources.’78 Wilmot-Smith develops a framework for assessing (andcomparing) claims to judicial resources.79 Applying this framework to theillegality doctrine, he concludes with force that: ‘It is very hard to justify[the doctrine] as a rationing rule.

I argue that Wilmot Smith’s ‘rationing rationale’ is a much better fit forthe rules relating to appellate review of illegality decisions (as of others)as opposed to the rules governing how those decisions are made in thefirst place. Errors of law (‘proceed[ing] on an erroneous legal basis,tak[ing] into account matters that [are] legally irrelevant, or fail[ing] totake into account matters that [are] legally relevant)81 are stronger claimson judicial resources than sub-optimal applications of law to specificfacts. This is so for two reasons.

First, errors of law, even at first instance, have a tendency to ‘ripple’.Just as the public at large benefits from correctly decided decisionsbecause the ‘names of people who brought cases in the past live on asshorthand for the legal rules and principles which their casesestablished’, the public at large suffers from incorrectly decided decisionsbecause they detract from certainty and clarity as to what the law is.Secondly, limiting review on appeal to errors of law deters speculativeappeals being brought on questions which can, within the limits ofreasonable disagreement, be given different, mutually inconsistentanswers. It prevents parties from going to an appellate court ‘simply inthe hope that the impression formed by the judges [there], or at least bytwo of them, will be different from that of the trial judge.’82 Appellatecourts need to reduce the number of appeals they hear. And only hearingcases where they are sure that they are going to ‘correct an error’ ratherthan cases where they risk giving another reasonable answer to aquestion which admits of more than one is a sensible way of doing so.

That is particularly so in the Supreme Court.84 As the Court unanimouslycautioned in Vedanta (in a different context):

‘Judicial restraint is of particular importance … where the Court ofAppeal has already concurred with the fact-finding and evaluativeanalysis of the first instance judge. The essential business of this court isto deal with issues of law, rather than fact-finding or the re-exercise ofdiscretion. The pursuit of detailed factual (or evaluative) analysis in thiscourt is therefore inappropriate, both because it is likely to involve aneedless and useless misapplication of the parties’ time and resources,and because it distracts this court from its proper focus upon real issuesof law.

Nicholas Strauss QC argues that ‘whether to impose a duty of care in anegligence claim often involves evaluation of a number of conflictingfactors, and questions of proportionality, but such decisions have neverbeen treated on appeal as open to review only on limited grounds.’86 Isuggest that the way in which appeals from applications of Caparo – thetest for existence of a duty in negligence – are approached actually servesas a constructive counter-example. The English approach to the duty ofcare question is based on incremental analogy with establishedauthorities.87 It is only in a novel case that the judge need draw thatanalogy based on the Caparo ingredients and, inter alia, considerwhether it is ‘fair, just, and reasonable’ to impose a duty of care.88Crucially, once a duty has been established, it is ‘unnecessary andinappropriate’ to reconsider whether the existence of the duty is fair, justand reasonable.89 That is to say, it is only in a novel case that thequestion involves ‘evaluation of a number of conflicting factors, andquestions of proportionality.’ The consequence is that when judges ‘get itwrong’, the error ‘ripples’ in the same way because the evaluative, factor-based exercise can properly only be done once, before the imposition of aduty of care on those facts becomes an ‘established principle’. Inparticular, where the defendant can frame their defence as a ‘duty ofcare’ issue, she can apply for the claim to be struck out without theinconvenience of a trial.90 A first instance decisions are persuasive for,albeit not binding on, other first instance judges.91 A decision at theCourt of Appeal level is binding on other first instance judges. Appealson wider grounds are a sensible allocation of judicial resources becausethe question of whether a duty of care ought to exist ripples across to allcases on the same fact pattern. It is, in one sense, not properly called a‘case-by-case’ question, as appeals to illegality would be

The obvious qualification to this argument is that appellate courtsproperly substitute their own view where the judge has reached adecision outside the range of reasonable decisions (in other ways, aWednesbury unreasonableness). In those cases, there seems to be astrong argument that the demands of bilateral justice in those cases areso strong that it is impossible to justify refusing review.

Question 20

AN APPEAL TO ILLEGALITY

4. Commentary on singularis
   (d) The Return of Judicial Discretion

Answer 20

A powerful objection to the Court of Appeal’s approach in Patel is that thejudgment set its face against the illegality doctrine becoming a‘potentially arbitrary and unpredictable discretion’.92 In particular, themajority stressed that the court was not free to decide a case ‘in anundisciplined way’93 and that what was required was ‘a principled andtransparent assessment of the considerations identified’.94 They held thatthe test was a discretion neither in law nor in practice and should not betreated as akin to one.95 The fear of arbitrary application wasconsistently invoked as a justification for changing the law on illegality.96Nicholas Strauss QC concludes that: ‘To extent the ambit of judicialdiscretion in this way would, it is submitted, be undesirable.

This objection is unpersuasive because it confuses the questions of: (1)what element of ‘discretion’ a test involves with (2) what level ofappellate restraint it should be afforded. I have described above theways in which these questions are linked by developing an argument thatthe more ‘discretionary’ a test is the higher the level of deference itshould be afforded. But the cure for ‘discretionary’ tests (to the extentthat they are undesirable) is to change those tests, not to increase thenumber of appeals brought against applications of those tests. It seemsthat Nicholas Strauss QC’s objection is to the strong role of ‘discretion’ inthe Patel approach itself, and not actually to the way in which it istreated on appeal. It is no mitigation for an arbitrary rule of law that itcan be easily appealed. Many parties cannot afford, or would notrationally, appeal. Whatever the merits of that approach, it no longerrepresents the law after Patel v Mirza

Question 21

AN APPEAL TO ILLEGALITY

5. CONCLUSION

Answer 21

I have attempted to show that the decision in Singularis was regrettablein that it did not clarify the approach which an appellate court shouldtake to a first instance application of the illegality doctrine which isattacked on appeal, even if it would technically have been obiter.Further, I explained why the Supreme Court was, in my view, wrong torecord reservations about the approach suggested by the Court ofAppeal. It should have held that an appellate court could only interferewhere the primary judge has made an error of law. First, I outlined inbrief terms the approach developed in Patel v Mirza. Secondly, Iexplained the decision in Singularis. Thirdly, I commented on Singularis,arguing that the Court of Appeal’s approach was right once the nature ofthe Patel v Mirza approach is understood clearly.

Question 22

Henderson v Dorset Healthcare University NHS Foundation Trust [2018] EWCA Civ 1841, [2018]

Answer 22

facts: C has history of paranoid schizophrenia, discharged from hospital and community support order made. Suffers a relapse and kills her mother. Pleads guilty to manslaughter on grounds of diminished responsibility and brings claim in negligence against D hospital trust.

Trust accepts it failed to discharge its duty

Contends the heads of claim are all irrecoverable for public policy grounds.

Claims:

Personal injury PTSD

Loss of liberty caused by compulsory detention

Loss of amenity arising from her killing her mother

If you kill someone (under forfeiture act) then you are denied inheritance

Damage for future losses (psychotherapy and care manager)

Key question: what was ratio of Gray v Thames Trains?

All claims struck out. Distinction between narrow and broad:

Narrow: if detention is from the crime then can’t get out of it (would clash with penal policy) – this is cost of imprisonment

Wider: all claims would fail because they all flowed from the illegal act.

What impact does Patel v Mirza have all of this? (a restitution and contract case where SC adopts a flexible approach to allowing claims to enforce the contract or reverse on the facts unjust enrichment). Reasoning based on Burrows and Law Commission.

Q: what impact does that decision have on tort claims?

Henderson said possible [87] concerned with doctrine of precedent – in Patel v Mirza, no suggestion that Grey v Thames train was wrong.

So in principle it can apply in tort, but can it override previous decisions in tort? And answer is no!

SC in Patel did not intend to overrule past decisions.

Tension between strict policy approach (i.e. C taking anything from criminal offences) vs Patel more flexible approach.

Question 23

XX v Whittington Hospital NHS Trust [2018]

Answer 23

Answer to the question what impact does it have?

Don’t see that tort is any different. Patel v Mirza can apply to a tort claim.

If you do allow it in then there is a more flexible balanced approach.