Tinsley v Milligan: HL 28 Jun 1993

Two women parties used funds generated by a joint business venture to buy a house in which they lived together. It was vested in the sole name of the plaintiff but on the understanding that they were joint beneficial owners. The purpose of the arrangement was so that false benefit claims could be made to the Department of Social Security which was duly done. The money obtained helped the parties in a small way with their bills. Subsequently, the defendant repented of the frauds and told the DSS. The parties quarrelled and the plaintiff moved out. The plaintiff claimed possession and asserted that she was the sole owner of the property. The defendant counterclaimed for an order for sale and a declaration that the plaintiff owned the property on trust for the pair of them in equal shares.
Held: Illegality bars a claim under prescription only if the Plaintiff has to rely upon the illegal element to make out the claim. Illegality does not defeat claim unless the illegality goes to the root of the claim. The claimant cannot found his claim on an unlawful act. But when the claimant is not seeking to enforce an unlawful contract but founds his case on collateral rights acquired under the contract the court is neither bound nor entitled to reject the claim unless the illegality of necessity forms part of the claimant’s case. ‘It is important to observe that, as Lord Mansfield made clear, the principle is not a principle of justice; it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences as between the parties to litigation. Moreover, the principle allows no room for the exercise of any discretion by the court in favour of one party or the other.’ and `the following propositions emerge: (1) property in chattels and land can pass under a contract which is illegal and therefore would have been unenforceable as a contract; (2) a plaintiff can at law enforce property rights so acquired provided that he does not need to rely on the illegal contract for any purpose other than providing the basis of his claim to a property right; (3) it is irrelevant that the illegality of the underlying agreement was either pleaded or emerged in evidence: if the plaintiff has acquired legal title under the illegal contract that is enough.’
A ‘public conscience’ test has no place in determining the extent to which rights created by illegal transactions should be recognised. Lord Goff said that the adoption of that test: ‘would constitute a revolution in this branch of the law, under which what is in effect a discretion would become vested in the court to deal with the matter by the process of a balancing operation, in place of a system of rules, ultimately derived from the principle of public policy enunciated by Lord Mansfield C.J. in Holman v Johnson , 1 Cowp. 341 which lies at the root of the law relating to claims which are, in one way or another, tainted by illegality.’ and ‘It is important to observe that, as Lord Mansfield made clear, the principle is not a principle of justice; it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences as between the parties to the litigation. Moreover the principle allows no room for the exercise of any discretion by the court in favour of one party or the other.’
Lord Browne-Wilkinson said: ‘The law was developing in another direction during the 19th century. There was originally a difference of view as to whether a transaction entered into for an illegal purpose would be enforced at law or in equity if the party repented of his illegal purpose before it had been put into operation, i.e. the doctrine of locus poenitentiae. It was eventually recognised both at law and equity that if the plaintiff had repented before the illegal purpose was carried through, he could recover his property: see Taylor v Bowers, 1 Q.B.D. 291; Symes v Hughes, L.R. 9 Eq. 475. The principle of locus poenitentiae is in my judgment irreconcilable with any rule that where property is transferred for an illegal purpose no equitable proprietary right exists. The equitable right, if any, must arise at the time at which the property was voluntarily transferred to the third party or purchased in the name of the third party. The existence of the equitable interest cannot depend upon events occurring after that date. Therefore if, under the principle of locus poenitentiae, the courts recognise that an equitable interest did arise out of the underlying transaction, the same must be true where the illegal purpose was carried through. The carrying out of the illegal purpose cannot, by itself, destroy the equitable interest. The doctrine of locus poenitentiae therefore demonstrates that the effect of illegality is not to prevent a proprietary interest in equity from arising or to produce a forfeiture of such right: the effect is to render the equitable interest unenforceable in certain circumstances. The effect of illegality is not substantive but procedural. The question therefore is ‘In what circumstances will equity refuse to enforce equitable rights which undoubtedly exist?’


Lord Browne-Wilkinson, Lord Goff


Independent 06-Jul-1993, Times 28-Jun-1993, [1994] 1 AC 340, [1993] UKHL 3, [1993] 3 WLR 126, [1993] 3 All ER 65




England and Wales


Appeal fromTinsley v Milligan CA 1992
The court considered the defence of illegal user to a claim to have established an easement by prescription: ‘These authorities seem to me to establish that when applying the ‘ex turpi causa’ maxim in a case in which a defence of illegality has been . .
CitedHolman v Johnson 5-Jul-1775
ex turpi causa non oritur actio
A claim was made for the price of goods which the plaintiff sold to the defendant in Dunkirk, knowing that the defendant’s purpose was to smuggle the goods into England. The plaintiff was met with a defence of illegality.
Held: The defence . .
CitedCurtis v Perry 10-Mar-1802
Fraudulent Registrations Ineffective
Ships had been purchased by a partnership, but were then held separately in the name of one of them. Only later were they included within the partnership accounts, but the separate registrations were maintained, and unlawfully so as to avoid them . .
CitedBowmakers Ltd v Barnet Instruments Ltd CA 1945
An action was brought for the wrongful conversion of machine tools delivered under hire purchase agreements which contravened wartime statutory orders. The plaintiff established its legal title to the goods at issue without relying upon the illegal . .
ApprovedChettiar v Chettiar PC 14-Feb-1962
(Malaya) A father, in registering shares in the names of his children, had transferred the beneficial interest in those shares to them. Many years later the father had treated the shares as his own. The question arose as to whether this fact . .
DisapprovedEuro-Diam Ltd v Bathurst CA 1988
The court had found that securities had been registered misleadingly in the US. The court held that it could not aid illegality. The court considered the defence of ‘ex turpi cause non oritur actio’. Kerr L.J: ‘The ex turpi causa defence ultimately . .
MentionedPearce v Brooks 1866
The contract was for the hire of an ornamental brougham to a prostitute which was supplied with knowledge that it would be used ‘as part of her display’. She returned it in a damaged condition, and refused to make any payments under the contract as . .

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Fraudulent Intent Negated Trust
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Lists of cited by and citing cases may be incomplete.

Equity, Contract

Leading Case

Updated: 29 April 2022; Ref: scu.89901