This Consultation Paper gives provisional recommendations on whether a claimant who has been involved in illegal conduct should be entitled to enforce a claim in contract, unjust enrichment, trusts and tort. It follows earlier consultation papers on illegality in contacts and trusts (LCCP 154, 1999, 9780117302396) and the illegality defence in tort (LCCP 160, 2001, ISBN 9780117302457). How should the law respond if a claimant has been involved in some form of illegal conduct? Should this prevent the claimant winning his or her claim? It is difficult to set out hard and fast rules as the illegality defence may be used against claimants in such a wide variety of contexts. The courts have attempted to lay down a series of rules to apply in different circumstances. The result is a body of law which is uncertain and sometimes arbitrary, occasionally producing results which may appear unduly harsh or not harsh enough. The Commission believes that, in most areas of the law, it is up to the courts to develop clear, fair law, based on a set of policy rationales. Judges should base their decisions directly on the policies that underlie the illegality defence and explain their reasoning accordingly. The Commission makes proposals on what those policies should be. There is one area in which the Commission does not think that judicial clarification is possible: where a trust has been set up to hide true ownership for criminal purposes. The Commission feels that statutory reform is needed here, and is in the process of preparing a draft Bill which will be presented with the final report later this year.
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