Justice Goh Yihan: Lecture given at the 35th Singapore Law Review Annual Lecture

THE 35TH SINGAPORE LAW REVIEW ANNUAL LECTURE

"The Effect of Illegality on Private Law Claims"

Friday, 19 January 2024

The Honourable Justice Goh Yihan*

Supreme Court of Singapore

Introduction

1.               Thank you for the kind introduction and the immense privilege of delivering the Singapore Law Review Lecture 2024. I return to this venue with fond memories of my time as an academic at NUS Law exactly a decade ago. Indeed, it was in 2014 that I delivered one of my last lectures here.

2.               The topic of my lecture today is “The Effect of Illegality on Private Law Claims”. When I suggested it, I was mildly excited by the prospect of going through this notoriously difficult area of law. When I started preparing for this lecture, I began to regret the prospect of going through this very difficult area of law. Indeed, it is challenging to reconcile the various cases, and this is understandable since the entire law is premised upon the rather nebulous concept of public policy.⁽¹⁾ Be that as it may, I will try to provide some food for thought on this topic this evening.

3.               To begin with – and this will disappoint Dean Andrew Simester, who advised me as a junior academic that every good paper should have just one core question – I will go through a number of questions occasioned by the illegality defence without necessarily providing a definitive answer. I know you will understand that it may not be appropriate for me to advocate for a particular point of view, especially if that point of view has not been judicially determined in Singapore. I hope nonetheless that you will leave today’s lecture with a better understanding of this area of law.

4.               To achieve that, I will proceed in the following manner. First, I will discuss the state of the illegality defence in England and elsewhere, following the seminal UK Supreme Court case of Patel v Mirza.⁽²⁾ We will see that the so-called “range of factors” approach advanced by the majority in Patel has been adopted in many jurisdictions, including, more recently, Hong Kong and Malaysia. Second, I will explain the state of the illegality defence in Singapore. Many of us will be familiar with the important Court of Appeal decision of Ochroid Trading Ltd v Chua Siok Lui.⁽³⁾ Apart from discussing that case, I will explore how the Ochroid approach to the illegality defence has been applied in subsequent Singapore cases. In the final part of the lecture, I will suggest that reading Patel and Ochroid side by side highlights three outstanding questions in the Singapore context. These are:

1. First, does the Ochroid framework to the illegality defence apply across the whole of private law beyond contract cases?
2. Second, if the Ochroid framework applies across the whole of private law, how is it to be applied?
3. Third, more broadly, is the majority approach in Patel relevant in Singapore despite being rejected in Ochroid?

5.               With this overview in mind, I turn to the first part of my lecture, where we explore the state of the illegality defence in England and elsewhere following the seminal UK Supreme Court case of Patel.

The state of the illegality defence in England and elsewhere

Background to the illegality defence

6.               In seeking to understand the impact of Patel, it is important to explain the problem with the illegality defence that the majority approach addressed. We begin with Lord Mansfield’s celebrated dicta in Holman v Johnson, which is, “[n]o court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”.⁽⁴⁾ The widely accepted reason for this doctrine is the preservation of the integrity of the legal system: to allow an actionable claim founded upon an illegal act would produce “inconsistency and disharmony”,⁽⁵⁾ by “giving with the left hand what [the law] takes with the right”.⁽⁶⁾ However, as Tan Ming Zee points out, it is not possible for the defence of illegality to be absolute.⁽⁷⁾ He points out that, in certain cases, a claim tainted by illegality can and should be enforced by courts.⁽⁸⁾ The difficult problem is how the courts should decide when a claim tainted by illegality is enforceable. The struggle to resolve this problem led our Court of Appeal in Ting Siew May v Boon Lay Choo⁽⁹⁾ to de¬scribe the defence as being “one of the most confused (and confusing) areas in the common law of contract”.⁽¹⁰⁾

7.               At risk of over-simplification, the debate broadly comes down to a choice between a discretionary approach and a rule-based approach. The majority in Patel selected the former approach, under the label of the so-called “range of factors” approach.

England

Patel v Mirza

8.               In Patel, the claimant, Mr Patel, paid £620,000 to the defendant, Mr Mirza. This was done pursuant to an agreement by which Mr Mirza agreed to use the money to bet on the movement of shares using inside information.⁽¹¹⁾ However, such use of inside information is an offence. As it turned out, the agreement could not be carried out because the expected inside information did not become available. Mr Patel therefore sought repayment of the £620,000 as restitution of an unjust enrichment.⁽¹²⁾

9.               The UK Supreme Court unanimously upheld the English Court of Appeal’s decision not to allow Mr Mirza to rely on the illegality defence. For completeness, the English High Court had, at first instance, allowed Mr Mirza to rely on the illegality defence. At the Supreme Court, a majority of six Justices held that Mr Patel was entitled to restitution of the money paid by applying the “range of factors” approach. In contrast, the minority of three Justices came to the same conclusion by applying the “rule-based” approach.

10.               Turning first to the majority approach, Lord Toulson, who delivered the leading judgment, rejected a rule-based approach. In its place, Lord Toulson put forth a “range of factors” approach, by which a court should consider the policies involved and the need for proportionality.⁽¹³⁾ To achieve the high-level aim of avoiding inconsistency in the law, Lord Toulson advanced a trio of considerations. The three considerations were, first, the purpose of the illegality in question; second, any conflicting relevant policies; and third, the need to avoid a result that was disproportionate.⁽¹⁴⁾ In deciding on whether the result was disproportionate, Lord Toulson pointed to a number of relevant factors, including the seriousness of the illegal conduct, its significance to the claim, whether the conduct was intentional, and whether there was a marked difference in the blameworthiness of the parties’ conduct.⁽¹⁵⁾

11.               Since the facts of Patel concerned the restitution of an unjust enrichment, Lord Toulson also said that the default position in the law of unjust enrichment is that illegality should not be a defence. Therefore, it will be rare to deny a claim for illegality, if the claimant, without the illegality, would have been entitled to restitution for unjust enrichment.⁽¹⁶⁾ As Professor Burrows, as he then was, explained, “[t]his is no doubt because, far from upholding or enforcing illegality, the claimant is seeking to unwind it”.⁽¹⁷⁾ In Patel, if not for the illegality, Mr Patel would have been entitled to restitution of the money paid for a consideration that had totally failed as no part of the promised performance had been carried out.⁽¹⁸⁾ Since he was seeking to unwind an illegality, applying the flexible trio of considerations showed no reason to depart from the standard law on restitution of an unjust enrichment.

12.               Lord Sumption gave the leading minority judgment. According to the learned judge, Patel raised two issues: first, whether the contract was affected by illegality; and second, if so, whether Mr Patel was entitled to restitution despite that illegality.⁽¹⁹⁾

13.               In so far as the first issue is concerned, Lord Sumption regarded the reliance test as the correct approach to illegality. However, Lord Sumption advanced a novel understanding of the leading case of Tinsley v Milligan,⁽²⁰⁾ which underlaid this test and has been strongly criticised. As the learned judge put it, “[t]he problem about the reliance test is not so much the test itself as the way in which it was applied in Tinsley v Milligan".⁽²¹⁾ It is not necessary for present purposes to explore Lord Sumption’s rationalisation of Tinsley any further, save to say that it is not consistent with how that case has commonly been understood.

14.               Lord Sumption further explained that the reliance rule was subject to some well-recognised exceptions to the reliance rule, such as the locus poenitentiae exception. The learned judge reasoned that, in contrast to enforcement of a contract, restitution of benefits conferred under a contract affected by illegality should always be allowed even if the claimant had to rely on the illegality in order to substantiate its claim.⁽²²⁾ Thus, on the facts of Patel, since Mr Patel was not enforcing the contract, it did not matter whether he had voluntarily withdrawn or whether the contract had been wholly or partly performed.Mr Patel’s claim should succeed on the ground of restitution.⁽²³⁾

Two further UK Supreme Court decisions

15.               Despite being portrayed as pitting the “range of factors” approach against the “rule-based” approach, as James Goudkamp points out, Patel left numerous questions regarding the law of illegality unanswered.⁽²⁴⁾ Chief amongst these was whether the “range of factors” approach applied across the whole of private law, and how it interacted with specific rules developed in specific contexts of illegality,⁽²⁵⁾ such as Lord Hoffmann’s causal approach to the defence in Gray v Thames Trains Ltd.⁽²⁶⁾ The UK Supreme Court had the opportunity to resolve these questions inStoffel & Co v Grondona⁽²⁷⁾ andHenderson v Dorset Healthcare University NHS Foundation Trust.⁽²⁸⁾

16.               In Stoffel, Ms Grondona participated with one Mr Mitchell in a mortgage fraud: a lender was deceived into lending money for the purchase of a lease of a flat by Ms Grondona from Mr Mitchell.⁽²⁹⁾ However, the lease of the flat was never registered in Ms Grondona’s name due to the negligence of her solicitors. Thus, had it not been for her illegality, Ms Grondona would have succeeded in her claim against her solicitors for the sum of £78,000 plus interest. However, the solicitors argued that Ms Grondona’s illegal conduct meant that she was not entitled to her claim.⁽³⁰⁾ The UK Supreme Court, upholding the decision of the lower courts, held that the solicitors were not entitled to rely on the illegality defence.

17.               Lord Lloyd-Jones gave the leading judgment. Lord Burrows has said that four important points emerged from Lord Lloyd-Jones’s attempt to apply Lord Toulson’s “range of factors” approach in Patel.⁽³¹⁾

First, at a high level, the goal in applying the illegality defence is to avoid inconsistency within the legal system.
Secondly, the identification and assessment of the relevant policies in play normally falls within the competence of judges to carry out without the need for expert evidence.
Thirdly, that process of identifying and assessing the relevant policies should be flexible and should not become too mechanistic.
Fourthly, one may not need to move on to consider proportionality where it is clear from the first two of Lord Touslon’s trio of consideration, ie stages (a) and (b), that the defence of illegality should not be allowed.

18.               Applying the law to the facts, Lord Lloyd-Jones held that mortgage fraud would not be seriously deterred simply by allowing the illegality defence. In contrast, disallowing the illegality defence would not only reduce mortgage fraud, it would also help protect other victims of fraud, as well as recognise that Ms Grondona had a valid property interest.⁽³²⁾ It was also significant that Ms Grondona was seeking compensation for her loss as opposed to profit from wrongdoing.⁽³³⁾ All things considered, the policies clearly favoured disallowing the illegality defence. As such, there was no need to consider proportionality. However, the outcome would have been the same even if one did so. This is because allowing the illegality defence would be a disproportionate response since the solicitors’ negligence was distinct from the illegality. Ms Grondona’s claim for professional negligence therefore succeeded.⁽³⁴⁾

19.               In Henderson v Dorset Healthcare Foundation Trust,⁽³⁵⁾ the claimant suffered a psychotic episode and, in the most unfortunate circumstances, stabbed her mother to death. She pleaded diminished responsibility, which led to her being convicted of manslaughter. The claimant then sued the defendant health authority. The claimant argued that the defendant was negligent in failing to confine her to hospital, which led to her killing her mother, and which led to loss of her liberty and loss of her share to her mother’s estate. The defendant admitted that it was negligent but pleaded the illegality defence. The UK Supreme Court decided that the defendant could rely on the illegality defence.⁽³⁶⁾

20.               The more difficult issue in Henderson, as compared to Stoffel, was that the House of Lords had in Gray v Thames Trains Ltd allowed the defence of illegality on analogous facts. To be clear, the negligence in Gray was different in that it was in relation to a train accident in which the claimant had suffered PTSD. However, as Lord Burrows points out, the essential similarity was that, as a consequence of the negligence, the claimant had killed someone, was convicted of manslaughter, and then sought to recover damages for loss resulting from that conviction.⁽³⁷⁾

21.               Lord Hamblen gave the leading judgment in Henderson. The learned judge made a number of important points in relation to the application of Patel. Again, Lord Burrows has said that the six more important points are these:⁽³⁸⁾

(i) Although this was implicit in Stoffel, Lord Hamblen explicitly stated that the policy-based approach of Patel v Mirza applies across civil law and is not confined to claims in unjust enrichment or contract. It applies as in Stoffel and in this case to torts but also to claims based on property law.
(ii) As was also made clear in Stoffel, Lord Hamblen was of the view that usually evidence as to the policy considerations would be unnecessary.
(iii) Lord Hamblen clarified that the consideration of policies at stages (a) and (b) requires one to consider all the relevant policies in favour of applying the defence (ie, denying the claim) at (a) and then all the relevant policies for denying the defence (ie allowing the claim) at (b).
(iv) As was said in Stoffel, Lord Hamblen was of the view that, where the balancing of policy considerations comes down clearly against applying the defence of illegality, there is no need to go on to consider proportionality.
(v) Lord Hamblen made clear that Patel v Mirza was concerned with what can be labelled common law illegality and not statutory illegality.
(vi) As regards precedent, the adoption of the new policy-based approach in Patel v Mirza did not wipe away existing precedent. Patel v Mirza did not represent “year zero”. The exercise was one of checking whether past precedents were “Patel -compliant”.

22.               Applying the law to the facts, Lord Hamblen pointed out a number of policies which supported allowing the illegality defence. These policies included avoiding inconsistency in the legal system, the close connection between the crime and the claim, and the general deterrence of crimes.⁽³⁹⁾ In contrast, Lord Hamblen thought that the countervailing polices, such as upholding duties of care and providing compensation to the victims of torts, were not quite as strong.⁽⁴⁰⁾ Unlike Stoffel, since the policies on balance favoured allowing the illegality defence, it was necessary to move on to the third stage concerning proportionality. In this regard, Lord Hamblen reasoned that denying the claim would not be a disproportionate response since, among other things, the claimant knew what she was doing and that it was legally and morally wrong. The defence of illegality therefore succeeded.⁽⁴¹⁾ Moreover, this “range of factors” approach was consistent with the decision of the House of Lords decision of Gray. This means that Gray is “Patel -compliant” and there was no need to overrule that case.

23.               I make three points in relation to Henderson and Stoffel.

24.               First, it is clear that Stoffel and Henderson have sought to clarify the application of the trio of considerations laid down in Patel v Mirza. In sum, with the overall aim of avoiding inconsistency, the court must identify and weigh the relevant policies for and against the illegality defence and then, if the former outweigh the latter, one must go on to consider whether allowing the defence would be a disproportionate response.⁽⁴²⁾ What is especially helpful in both Stoffel and Henderson is that, unlike in Patel, the Justices actually identified the precise policies concerned, such as policy of protecting against mortgage fraud, as well as the general deterrence of crime. This provides guidance as to the kind of policies that might be relevant in the application of the “range of factors” approach.

25.               Second, as James Goudkamp points out, the selection of the relevant factors in the application of the “range of factors” approach is sensitive.⁽⁴³⁾ It may be unclear why a certain policy is considered whereas another is not. As an example, Goudkamp raises Lord Hamblen’s holding in Henderson that the claimant’s reliance on the wrongdoing is material to the approach in Patel.⁽⁴⁴⁾ According to the learned author, this arguably backtracks on the rejection of the reliance test in Patel and raises the question of whether reliance should even be considered.⁽⁴⁵⁾ More broadly, this suggests some uneasiness with how the factors are chosen in an instant case. It is one thing to say that the “range of factors” approach enhances transparency in decision-making by compelling judges to confront the relevant policies upfront, but it is quite another thing if the selection of those policies is opaque.

26.               Third, as a consequence of Lord Hamblen’s statement in Henderson that Patel did not represent “year zero”, there is now some uncertainty as to whether prior cases stating a different approach to the “range of factors” approach remain relevant.⁽⁴⁶⁾ As been said, it is unsatisfactory that Lord Hamblen suggested that the “range of factors” approach may simply lurk in the background in some cases and not be directly applicable.⁽⁴⁷⁾ This adds an unnecessary complication to the law.

Hong Kong

27.               It seems that the “range of factors” approach in Patel has been adopted by the appellate courts of several common law courts. I raise only two examples due to the time constraint.

28.               To start, in Monat Investment Limited v Lau Chi Kan Kenith & Ors,⁽⁴⁸⁾ the Hong Kong Court of Appeal delivered a unanimous judgment which followed the majority’s approach in Patel for the illegality defence in the context of adverse possession.

29.               In Monat, Monat commenced proceedings in 2015 to recover possession of a lot of land (the “Lot”). Monat has been the registered owner of the Lot since 11 July 1987. Lau subsequently counterclaimed against Monat. Lau contended that the Lot formed part of a larger piece of land, which he already acquired through adverse possession. In particular, Lau claimed that the said land was a gift from his deceased father through occupation by family members. These family members included his parents and siblings at various points in time.⁽⁴⁹⁾

30.               At first instance, Deputy High Court Judge Anthony To (as he then was) allowed Lau’s counterclaim. He granted a declaration that Monat’s title of the Lot was defeated by adverse possession of the land concerned. The learned judge therefore dismissed Monat’s claim entirely.

31.               On Monat’s appeal, the Court of Appeal upheld Judge To’s decision, albeit for different reasons. To begin with, Yuen JA disagreed with Judge To’s conclusion that the illegality defence did not apply to the law of adverse possession. In Yuen JA’s view, this conclusion was too “wide” and “sweeping” because adverse possession claims may also be affected by breaches of various Ordinances.⁽⁵⁰⁾

32.               As for which of the two approaches in relation to the illegality defence should be adopted in Hong Kong, Yuen JA decided that the “range of factors” approach in Patel should be followed and that the “reliance approach” in Tinsley is no longer good law. Among other reasons, Yuen JA held that it is illogical to abide by an outdated common law rule in Tinsley and not to follow Patel only because there was not a case on the point which has reached the Court of Final Appeal. Therefore, unless the Court of Final Appeal decides otherwise, Patel should represent the current position in Hong Kong given that there are no local circumstances that render Patel inappropriate.⁽⁵¹⁾

33.               On the facts, Yuen JA held that the illegality defence, based on the contravention of s 14 of the Buildings Ordinance, did not defeat the adverse possession claim. This is because the underlying purpose of the provision is to safeguard public safety by requiring building plans to be submitted and approved before erection of buildings, and neither the second defendant nor his mother, whom he succeeded, had erected the brick house in question. Further, the Buildings Ordinance as a whole is not meant to penalise squatters.⁽⁵²⁾

Malaysia

34.               Similar to Hong Kong, the Malaysian courts have also applied the majority approach in Patel. In this regard, the 2021 Malaysian Court of Appeal decision of Public Bank Bhd v Ria Realiti Sdn Bhd⁽⁵³⁾ is worth noting.

35.               In Public Bank, Public Bank provided two loans to Ria Realiti, which I shall refer to as the company. Crucially, the first loan was to partially finance the company for the purchase of 224 subleases of native land titles. Four of the company’s shareholders and directors guaranteed the loans. Eventually, the company was wound up due to internal problems among the four respondents. During the relevant winding up proceedings, the third and fourth respondents claimed that the sale and purchase agreements by which the company acquired the 224 subleases also included the transfer of the native land titles to the second respondent and, by extension, the company, which was not a native. While the second respondent was a native, the third and fourth respondents argued that the whole arrangement was designed to enable the company to own native land titles. This therefore contravened ss 17 and 64 of the (Sabah) Land Ordinance, which prohibited the transfer of the native land titles to non-natives.⁽⁵⁴⁾

36.               After the company was wound up, the bank sued all four respondents in their capacity as guarantors for the loan agreements. All four respondents pleaded the illegality defence. They argued that the loan agreements, as well as the guarantees, were meant to facilitate the company’s illegal purchase of native land titles. At first instance, the Malaysian High Court agreed that the respondents could rely on the illegality defence, and thus dismissed the bank’s claim. On the bank’s appeal, the Malaysian Court of Appeal allowed the appeal. As Adnan Trakic points out, the court made several important points about the illegality defence.⁽⁵⁵⁾

37.               First, the court had to decide if the bank’s loans and security documents were tainted with illegality. If not, the bank would be entitled to judgment without a need to consider if it was entitled to restitutionary relief. Among other things, Ravinthran Paramaguru JCA, who delivered the judgment of the Malaysian Court of Appeal, regarded it significant that the bank had no knowledge of any illegality. In fact, the bank had obtained a contractual representation from the respondents that the loan agreement would not contravene any law. The loan agreements and the security documents were therefore not tainted by illegality.⁽⁵⁶⁾

38.               Despite this, the court went on to consider if the bank would be entitled to restitutionary relief on the assumption that the agreements were tainted by illegality. Applying the “range of factors” approach, the court concluded that the bank would still be entitled to restitutionary relief. First, the court considered that, in terms of the underlying purpose of the prohibition which has been transgressed, both ss 17 and 64 of the (Sabah) Land Ordinance were enacted in 1930 during the colonial period “to protect native ownership of land held under native title and customary tenure”.⁽⁵⁷⁾ There was nothing on the face of the loan agreements that contravened this purpose. Moreover, “the appellant (the bank) is not seeking registration of any native title which can be construed as divesting ownership of land to a non-native owner”.⁽⁵⁸⁾ Rather, “the [bank] is only seeking to enforce remedies under the loan and guarantee agreements which will not have any impact on native ownership of land”.⁽⁵⁹⁾

39.               Second, in relation to any other relevant public policy on which the denial of the claim may have an impact, the court was reluctant to impose onerous duties that would render the banking business impractical and burdensome.⁽⁶⁰⁾ In this regard, the court observed that if it were to deny the bank’s claim for restitution of the money it had lent to the company, it would create practical difficulties for the bank. This is because the bank would then need to investigate how a lender had actually used the money, particularly if it was for an illegal purpose. Therefore, denying the bank’s claim would harm the banking business and the country’s economy.⁽⁶¹⁾

40.               Third, as to whether denial of the claim would be a proportionate response to the illegality, the court found as significant the fact that the bank was never aware that the company would use the borrowed money to purchase native land titles. Indeed, the court found that the bank’s culpability was “minuscule”, whereas the respondents’ “blatant and unmitigated illegality runs like a thread throughout the transaction in question”.⁽⁶²⁾ Furthermore, if the defence were allowed, the second to fifth respondents would reap a multi-million dollar windfall from a financial institution through their own illegal action.

Summary

41.               To summarise the discussion at this point, these recent decisions from Hong Kong and Malaysia, as well as from other jurisdictions that I have not gone through, show us three things.

42.               First, the “range of factors” approach in Patel has been applied in many common law courts. Some jurisdictions like Hong Kong, where English law remains highly persuasive, may have arguably done so somewhat unquestioningly. However, in other jurisdictions such as Malaysia, there appears to have been a careful consideration of the rationale behind Patel. Indeed, the Malaysian Court of Appeal considered that the rationale behind the “range of factors” approach, which it regarded to be the maintenance of consistency across the common law, to be highly convincing. This shows that courts are willing to adopt the “range of factors” approach despite quite legitimate concerns that it causes uncertainty.

43.               Second, despite academic concerns that Patel would confer on the courts an unchecked discretion in the application of the illegality defence, the Hong Kong and Malaysian cases show us that Lord Toulson’s trio of considerations can be applied consistently and clearly. This was also the case in the two latter UK Supreme Court cases. While there is obviously still an element of discretion in terms of how a court would frame the policies concerned, it is unreal to think a court decides cases without exercising any discretion.⁽⁶³⁾ Also, it may not be correct to think that a court conjures policies on its own accord. In practice, the courts are confined by the parties’ pleadings and cases and would be reluctant to freely venture out of these confines.

44.               Third, and this brings me neatly to the next section of the lecture, the widespread adoption of the “range of factors” approach elsewhere is seemingly at odds with rejection of this approach in Singapore. Is Singapore an outlier? Even if so, and I hasten to add that there is nothing wrong in being an outlier, is our approach justifiable?

The state of the illegality defence in Singapore post-Ochroid

What did Ochroid decide?

45.               I turn then to second part of the lecture, where we will explore the state of the illegality defence in Singapore following the Court of Appeal’s seminal decision inOchroid Trading Ltd v Chua Siok Lui,⁽⁶⁴⁾ which was delivered by Andrew Phang JA.

46.               Ochroid was decided against the backdrop of an earlier Court of Appeal decision, Ting Siew May v Boon Lay Choo,⁽⁶⁵⁾ the judgment for which was also delivered by Phang JA. In that case, the court held that the effects of common law illegality cannot be determined merely by applying strict rules. Instead, such effects are subject to the principle of proportionality, taking into account such factors as (a) the purpose of the prohibiting rule, (b) the seriousness of the offence, (c) the causal link between the claim and the illegality, (d) the conduct of the parties, and (e) the proportionality of denying the claim.⁽⁶⁶⁾ However, Ting Siew May was only concerned with the enforceability of a contract tainted by illegality. It did not deal with the recovery of benefits passed pursuant to a contract that is void for illegality or, for that matter, across the whole of private law.⁽⁶⁷⁾ It was Ochroid that provided these further answers.

47.               In Ochroid, the claimants sought to recover a sum in excess of $10m on the basis of moneys due under contracts or on the ground of unjust enrichment. According to the claimants, the moneys were “investments” in the defendant’s business, for which the defendants were obliged to pay the claimants a fixed rate of “profit”. The High Court dismissed the claimant’s claims. It held that the arrangements were not real investments. Rather, they were loans made in breach of the Moneylenders Act.⁽⁶⁸⁾ The contracts therefore could not be enforced. Consequently, the claimants’ claim on the ground of unjust enrichment also had to be dismissed so as not to afford them a “backdoor” to enforcing the illegal contracts.⁽⁶⁹⁾

48.               On appeal to the Court of Appeal, Phang JA restated the law on illegality as follows:⁽⁷⁰⁾

(a)There are two stages when analysing the effects of illegality on contracts. At the first stage, it is necessary to ascertain if the contract is either expressly or impliedly prohibited by statute or by an established head of public policy. Where the contract is so prohibited, there can be no recovery pursuant to the prohibited contract.
(b) Where a contract is not illegal per se, but is entered into for an unlawful purpose or anticipates the commission of an unlawful act, whether the contract is enforceable (or not) is determined by the principle of proportionality laid down in Ting Siew May. To this limited extent, the court has discretion in determining the effects of illegality.
(c) Even if a contract is void and unenforceable by reason of illegality, a second stage of inquiry may still be necessary. This occurs where the claim seeks to recover, on a restitutionary basis, payments or benefits that have passed to the defendant under the invalid contract. Such recovery may be sought on at least three grounds: (a) the parties are not in pari delicto (the claimant is less blameworthy than the defendant); (b) locus poenitentiae (timely repudiation); and (c) where there is an independent cause of action (in, for example, tort, trusts or unjust enrichment).
(d) Where recovery is sought on the ground of restitution or unjust enrichment, the question whether the claim constitutes an independent cause of action is determined by reference to the reliance rule laid down in Tinsley v Milligan. However, “reliance” in this context is not to be understood in a procedural or formal sense, determined only by reference to the parties’ pleadings. Rather, it should be conceived of as a “normative or substantive principle which is only engaged when a plaintiff seeks to enforce, and thereby profit from, the illegal contract through his claim” [emphasis omitted]. ⁽⁷¹⁾
(e) The availability of such restitutionary relief is itself subject to the defence of illegality. The principle that guides the application of the defence in this context is that of stultification. On this principle, the court would not allow a restitutionary claim “if to do so would undermine the fundamental policy, be it statutory or common law, that rendered the contract in question void and unenforceable in the first place” [emphasis omitted].⁽⁷²⁾

49.               Importantly for present purposes, the court declined to adopt the “range of factors” approach advanced in Patel for a number of reasons.⁽⁷³⁾

50.               First, the “range of factors” approach is unprincipled⁽⁷⁴⁾ in so far as it overreaches to cover the entire field of common law illegality. As such, the court’s discretion was now extended to situations where it did not previously have such discretion. For example, this would mean a court now has the discretion to permit recovery even under a contract that is void at common law under an established head of public policy, when no such discretion previously existed.⁽⁷⁵⁾

51.               Second, and in any case, the “range of factors” approach is not needed in Singapore to address any unfairness from a rigid application of the illegality defence through a rule-based approach. This is because such flexibility is provided by Ting Siew May, albeit in a more circumscribed manner. Thus, courts can apply the proportionality principle in cases where the contract is not illegal per se (either because of a statutory prohibition or an established head of public policy) but is entered into with the objective of performing an unlawful act. In that situation, a court may reject the illegality defence if disallowing the claim would be a disproportionate response to the illegality concerned. It is sensible to confine the court’s discretion to this category of contracts since this is where the highest risk of unfairness would occur.⁽⁷⁶⁾

52.               Third, the “range of factors” approach is objectionable because it results in too much uncertainty.⁽⁷⁷⁾ In this regard, while the proportionality principle does result in uncertainty as well, that uncertainty is restricted since Ting Siew May expressly limits the application of the proportionality principle to the situation where a contract was entered into with the objective of performing an illegal act. In contrast, the “range of factors” approach applies much more widely and hence results in additional uncertainty.⁽⁷⁸⁾

53.               Applying the law to the facts, the Court of Appeal dismissed the appeal. The court affirmed the High Court’s finding that the parties had intended the transactions to be repaid with fixed (and high) interest rates, the transactions were prohibited by the Moneylenders Act. Because the policy underlying the Moneylenders Act is to preclude unlicensed moneylenders from recovering “any compensation whatsoever for their illegal loans” [emphasis in bold italics in original], the application of the principle of stultification also means that the claimant’s alternative recovery in unjust enrichment also failed.⁽⁷⁹⁾ This ensures that there was no backdoor to recovery which would diminish the central purpose of the Moneylenders Act to deter unlicensed moneylending.

The aftermath of Ochroid and three outstanding questions

54.               Ochroid undoubtedly set a new landmark in a complex area of law. In essence, the Court of Appeal rejected the “range of factors” approach, and chose, instead, “to strike a balance between the conflicting goals of certainty and fairness by preserving those rules and principles that have been stable over time, and confining judicial discretion to a ‘residual’ category of cases where some flexibility is needed to avoid obvious injustice”.⁽⁸⁰⁾ More practically, Ochroid laid down a framework to deal with the application of the illegality defence in contract: first, it is necessary to consider if the contract is void or unenforceable, second, despite the contract being void and unenforceable, if restitutionary recovery remains possible. More generally, it is necessary to restrict the court’s exercise of discretion, especially in relation to issues where it had no such discretion before, lest this leads to uncertainty. I shall term this as the Ochroid framework. This last-mentioned point led to the explicit rejection of the “range of factors” approach, even if the third consideration in that approach, that of proportionality, was preserved for a limited situation involving contracts entered into for the objective of committing an illegal act.

55.               Ochroid has since been cited in more than 40 Singapore cases but almost always in the contractual context. There are two notable exceptions. The first is a group of cases, the latest being the Court of Appeal decision of EFG Bank AG, Singapore Branch v Surewin Worldwide Ltd and others,⁽⁸¹⁾ which have applied the Ochroid framework in the context of foreign illegality. I will not discuss these cases as they are beyond the scope of today’s lecture. The second exception is in the area of trusts, the most recent being the High Court decision of Lau Sheng Jan Alistair v Lau Cheok Joo Richard and another,⁽⁸²⁾ which I will discuss later.

56.               I now seek to pull together the discussion from the first two parts of the lecture. To recap, we first discussed the state of the illegality defence in England and elsewhere after Patel. We then discussed the state of the illegality defence in Singapore following Ochroid. I now move on to the final part of the lecture, where I will discuss three outstanding questions that arise from reading Ochroid and Patel side by side. These are:

1. Does the Ochroid framework for the illegality defence apply across the whole of private law beyond contract cases?
2. If the Ochroid framework applies across the whole of private law, how is it to be applied?
3. More broadly, is the majority approach in Patel relevant in Singapore despite being rejected in Ochroid?

57.               I will try to answer these questions in the remaining time that I have.

Does the Ochroid framework to the illegality defence apply across the whole of private law beyond contract cases?

58.               Turning first to the universal applicability of the Ochroid framework, it may be useful to first consider why we would even want a universal framework. In this regard, Tan Zhong Xing has argued in an illuminating article that more work can be done in extending the reach of the “range of factors” approach as a re-interpretive tool for reconciling the existing jurisprudence across various domains of private law.⁽⁸³⁾ In his assessment, while the common law may be resistant to unified frameworks, the “range of factors” approach provides a quality framework that can serve the aims of the law more comprehensively than others before it.⁽⁸⁴⁾ Ultimately, the learned author suggests that a universal framework guides coherent decision-making, which I very much agree with, though I hasten to add that our endorsement of universality is necessarily a limited one – attentive to its attractions yet prepared to hold it to anxious scrutiny.

59.               Indeed, this quest for universality is not unfamiliar in Singapore. More than 15 years ago, the Court of Appeal in Spandeck v Defence Science & Technology Agency⁽⁸⁵⁾ urged the adoption of a universal framework in the ascertainment of a duty of care in the tort of negligence that is unaffected by the type of loss suffered by the claimant. Of course, the degree of universality cannot be absolute. The Singapore courts have had to develop the relevant factors for different types of loss in subsequent cases. But through it all, the presence of a universal framework, founded on a two-stage process and underpinned by negative policy considerations, served to guide the judicial decision-making process.

60.               I suggest that the Ochroid framework cannot be fully applied in the form of a test to all areas of private law. This is because it was formulated specifically in response to an allegedly illegal contract. It therefore made sense in that context to ask whether the contract concerned was void or unenforceable because of a statutory or common law prohibition. It may also, as the High Court posited in Lau Sheng Jan Alistair, be possible to apply a modified version of the Ochroid framework in a trusts claim, due to some similarity between an attempt to enforce a contract tainted by illegality and an attempt to do the same with a trust similarly affected by illegality.

61.               However, it would not make sense to ask that same question in relation to a tort claim. Not only is there nothing like a contract in such a claim, it also does not make sense to ask if the tort is prohibited because of a statutory or common law prohibition. The same might be said about a restitution claim. The question in such claims would be whether to allow the claimant’s claim, despite the claimant’s involvement in an illegality. The consequent question would then be how a court is to do this. In this regard, I think that the Ochroid framework provides some guidance: discretion is possible, but in a limited sense. Thus, just as the Court of Appeal in Ochroid and Ting Siew May allowed the limited exercise of judicial discretion through the application of the “principle of proportionality” to assess if it is a proportionate response to allow the illegality defence, it may be possible to apply that same principle in relation to tort and restitution claims.

62.               Therefore, while it may not be possible to apply the Ochroid framework as a “test” across the whole of private law in the same way as the “range of factors” approach may be applied, it is still possible to derive universal guidance from the Ochroid framework in a number of ways. First, the framework provides broad guidance on how to analyse cases involving the illegality defence. Second, the framework also makes clear that while the exercise of judicial discretion as to the effects of illegality is permitted, this must be limited. More specifically, the exercise of judicial discretion is allowed if there was no previous “prohibition”, so to speak, such as in relation to contracts rendered unenforceable by virtue of an established head of public policy. Also, in place of the wider “range of factors” approach, the “principle of proportionality” is to be applied.

63.               More practically then, how does the Ochroid framework, whether in a modified form or at the broader level of providing guidance, apply in various areas of private law? I turn now to address this question.

If the Ochroid framework applies in some manner across the whole of private law, how is it to be applied?

Contract

64.               Ochroid has dealt with applicable approach in contract. There is no need to repeat the approach, save to mention that there remains only a limited application of the proportionality test to consider the enforceability of contracts that are entered into with the objective of committing an illegal act. Apart from that, there is to be no exercise of discretion pursuant to the proportionality test where the contract is (a) expressly prohibited by statute, (b) impliedly prohibited by statute, and (c) otherwise illegal under an established head of common law public policy.

Restitution

65.               In so far as restitution is concerned, Ochroid has clarified that there are three avenues of recovery in the face of an illegality, especially an illegal contract.

66.               The first avenue is where the parties are not in pari delicto, and this has as its underlying premise, the idea that the party who is seeking restitutionary recovery is not, or at least is not legally deemed to be, equally at fault.⁽⁸⁶⁾

67.               The second avenue comprises the doctrine of repentance or timely repudiation, the conceptual justification being to encourage the contracting parties to withdraw from illegal contracts.⁽⁸⁷⁾

68.               The third avenue is premised on reliance upon an independent cause of action. Recovery here is permitted because the claimant is not relying on the illegality as such but, instead, on a cause of action that lies, for the most part, independent of the illegal conduct.⁽⁸⁸⁾ In this regard, Ochroid held that even if there would otherwise have been restitutionary recovery pursuant an independent cause of action in unjust enrichment, the court might nevertheless deny such recovery if to permit recovery would be to stultify the fundamental policy that rendered the underlying contract void and unenforceable in the first place.⁽⁸⁹⁾

69.               More broadly, this can be applied even if the underlying illegal conduct is not a contract. Further, to ensure consistency with the “principle of proportionality”, the principle of stultification may be refashioned as a test of proportionality. This suggestion is not inconsistent with the court’s sentiments in Ochroid.

Trusts

70.               The High Court in the case of Lau Sheng Jan Alistair v Lau Cheok Joo Richard and another⁽⁹⁰⁾ had occasion to consider the application of the Ochroid framework in the law of trusts. In that case, the applicant was a 26-year-old Singaporean. The first and second respondents are the father and mother of the applicant, respectively. On 13 July 2023, the respondents entered into an option to purchase the Property concerned for a total consideration of $4.925m. At that time, the respondents were in their mid-50s, and the first respondent had retired.

71.               Subsequently, the respondents jointly engaged solicitors to draft and execute a Trust Deed dated 27 July 2020 (“the Trust”). Pursuant to the Trust, the respondents were to hold the Property, or alternatively, the net proceeds of the sale of the Property, on trust as joint trustees for the applicant’s sole benefit. The Trust was said by the first respondent to be for the purpose of avoiding Additional Buyer’s Stamp Duty (“ABSD”), whereas the applicant and first respondent took the position that the Trust was created to gift the applicant, the respondents’ elder child and only son, a legacy property while the respondents were still alive.

72.               Sometime in 2021, the second respondent commenced divorce proceedings against the first respondent, who had moved out of the Property to stay at another flat. In light of this development, the applicant wished to terminate the Trust in order to have the Property vest in him immediately. According to the applicant, this was to prevent any more disputes between the respondents, and to ensure that the second respondent, his sister, and him would have a place to stay after the divorce proceedings between the respondents were finalised.

73.               To that end, the applicant made an application to court to terminate the Trust pursuant to the rule in Saunders v Vautier⁽⁹¹⁾ (“the rule in Saunders v Vautier"). However, the first respondent filed a reply affidavit objecting to the application. In essence, the first respondent’s objection was that the Trust was a sham instrument to avoid paying ABSD and was therefore invalid, or that the Trust was illegal and therefore unenforceable.

74.               The High Court allowed the applicant’s claim. To begin with, the applicant established a prima facie case for the termination of the Trust pursuant to the rule in Saunders v Vautier. Thus, the applicant’s entitlement to have the Property transferred to him would only be defeated if the first respondent’s arguments that the Trust was a sham instrument or illegal succeeded.

75.               The court held that it was clear that the formal reliance principle in Tinsley v Milligan⁽⁹²⁾ had been the subject of strong judicial disapproval and should not be applied. Instead, the Ochroid framework should broadly apply in the trusts context with the appropriate modifications. As applied in the context of trusts, the Ochroid framework comprised only the first stage. The second stage of the Ochroid Trading framework should not apply in the trusts context where the claim was for the enforcement of a proprietary interest, as it would not make sense to ask whether there could be restitutionary recovery in that context.

76.               In so far as the first stage was concerned, the court should first consider whether the trust in question was illegal in itself and therefore void and unenforceable; a trust was illegal in itself when it was expressly or impliedly prohibited by statute or fell within an established category of situations that rendered it void and unenforceable.

77.               Second, if the trust was not illegal in itself, the court should then consider whether the trust concerned was created for an illegal purpose or arose as an incidental consequence of the illegal purpose. If so, the proportionality analysis applied to determine a proportionate response to the illegality, and the factors to be considered included: (a) whether allowing the claim would undermine the purpose of the prohibiting rule; (b) the nature and gravity of the illegality; (c) the remoteness or centrality of the illegality to the trust; (d) the object, intent, and conduct of the parties; and (e) the consequences of denying the claim. The Ochroid framework there applied to restrict how the court should exercise its discretion through an endorsement of the “principle of proportionality”.

78.               Third, if the court decided that the trust was created for an illegal purpose and should not be enforceable, the court might consider if the party seeking to enforce the trust in question could nonetheless establish an alternative basis for enforcing a proprietary interest by the operation of trusts law, such as by a resulting trust if his claim to enforce an express trust failed because the express trust was found to be unenforceable. In considering this, the court should apply the principle of stultification to determine if, in allowing the claim, the fundamental policy that prohibited the trust in question in the first place would be undermined.

79.               Applying these principles to the facts, the court found that the Trust was not unenforceable for illegality. The Trust did not fall into any established categories that would render the Trust illegal in itself. From s 4(1)(a ) read with Art 3(bf )(iii) of the First Schedule to the Stamp Duties Act 1929 (Cap 312, 2006 Rev Ed), there was also no express statutory prohibition of trusts created to avoid ABSD obligations, and it was difficult to conclude that there was a necessary or clear implication that such trusts were illegal. Furthermore, following from the conclusion that the Trust Deed was not a sham instrument to avoid ABSD, the Trust was not created for an illegal purpose.

Torts

80.               Whether and how the Ochroid framework should apply to torts has not been decided. To begin with, this question is complicated by the threshold question of whether illegality even has any place in tort.⁽⁹³⁾ In this regard, corrective justice theorists maintain that illegality is a “conceptual misfit within the law of torts” because many torts are “zero sum” games involving rights violations.⁽⁹⁴⁾ Thus, if it is accepted that the illegality defence is founded on the rationale that a person should not be allowed to profit from his own wrongdoing, then this is unlikely to be applicable in the usual torts case, where the claimant would be claiming compensation for a wrong done to him and thus would not be profiting from his own wrong. The idea is that, unlike contracts or trusts will illegal objects,⁽⁹⁵⁾ where the law’s power-conferring aspect is abused, tort cases generally engage the law’s duty-imposing function where personal or proprietary rights are breached in the context of an illegal transaction. Thus, if the claimant is suing for compensation only, there is no possibility of him profiting from his own wrong.⁽⁹⁶⁾

81.               However, as Tan points out, such an argument is too sweeping, and it remains possible to apply the “range of factors” approach in a variety of tort situations. As Tan explains, this can arise in a few situations.⁽⁹⁷⁾ By extension, it should be possible to apply the principle of proportionality within the Ochroid framework to torts as well, with the necessary modifications.

82.               For example, it is possible for tortious duties to arise pursuant to an arrangement or transaction, which, being facilitative of an illegal aim, may not support a claim for compensation.⁽⁹⁸⁾ Thus, in Gujra v Roath,⁽⁹⁹⁾ the defendants entered into an illegal agreement with the claimant for the claimant to set fire to their cars so as to make a fraudulent insurance claim. The claimant was later charged for arson. Although he was eventually acquitted, he sued the defendants for damages arising from malicious prosecution and the defendants’ breach of a duty of care to disclose that they had consented to the damage of the cars. The court dismissed the claim and held that it stemmed “from an agreement which was fundamentally illegal because it formed part of a conspiracy to defraud an insurance company”, and that it was analogous to a claim for the breach of an implied term of an illegal contract. Thus, while tort law exists to protect private rights, the duty of disclosure that the claimant was relying on arose solely out of the illegal arrangement.⁽¹⁰⁰⁾ There was thus too close a connection with the illegal outcome. Considering that arson is rather serious, it would not be disproportionate to disallow the claim. The “range of factors” approach could conceivably apply in such a case.

83.               The UK Supreme Court case of Stoffel is an example where the duties arising under the arrangement are not so closely connected to the illegality, such that applying the “range of factors” approach points towards allowing the claim.⁽¹⁰¹⁾ In that case, despite the solicitors’ negligence in failing to register the title to the property concerned, and the registration process being dispositive of the fraudulent scheme, it could be said that a client’s right to have his solicitors act with due care in the conveyance was unaffected. Indeed, the illegal conduct was not central to what was in fact a proper contract of retainer. Instead, the illegal contract was part of the backdrop, which mitigated the risk that enforcing the claim would undermine the integrity of the justice system.⁽¹⁰²⁾

84.               It is also possible for tort law to recognise duties that protect against the illegal activity. As Tan points out, the question here is the extent to which tort law recognises duties which allow the claimant to “shift sanctions” to the defendant.⁽¹⁰³⁾ If so, the claimant’s compensation ultimately serves to indemnify the claimant for the consequences of his illegal conduct that may undermine the deterrent or other purpose of the criminal law.⁽¹⁰⁴⁾ The English cases of Henderson and Gray are good examples of such a situation. They show that it is possible to apply the “range of factors” approach to torts cases of this type. In these cases, allowing a claim for losses occasioned by the imposition of a criminal sentence would mean that a person who is blameworthy of a serious offence like manslaughter can harness tort law to avoid the deterrent or retributive function of the criminal law.⁽¹⁰⁵⁾ This would, to use the word preferred in Ochroid, “stultify” the effect of the criminal law. Further, proportionality considerations may also be relevant, especially when the criminal offence committed can be regarded as serious.

85.               It appears to me that a clear application of the “range of factors” approach, or a “principle of proportionality” as required under the Ochroid framework, is preferable to the current state of the illegality defence in torts law. In this regard, the Ting Siew May proportionality factors of (a) the purpose of the prohibiting rule, (b) the seriousness of the offence, (c) the causal link between the claim and the illegality, (d) the conduct of the parties, and (e) the proportionality of denying the claim, can quite easily be adapted to fit in the tort context. It may be said that these factors are implicit in the courts’ decisions in whether to allow an illegality defence in a tort claim.

86.               Indeed, the current state of the law suffers from several uncertainties that would be addressed more clearly and obviously through an overt application of the “principle of proportionality”.

87.               First, it is said that where the act or conduct constitutes a crime, the offence must be sufficiently serious. Thus, it seems clear that a minor statutory offence would not suffice to raise the defence.⁽¹⁰⁶⁾ For example, United Project Consultants Pte Ltd v Leong Kwok Onn,⁽¹⁰⁷⁾ the Court of Appeal held that a company’s failure to file tax returns was a statutory offence rather than one of a criminal nature. However, even so, it can be unclear just when a crime is sufficiently serious. It may be better for courts to address the underlying policies head-on by way of a proportionality test. As imperfect as that may be, it is preferable to dealing with the more nebulous concept of “sufficient seriousness”.

88.               Second, it is said that the damage suffered by the claimant must be sufficiently connected to the claimant’s wrongdoing in order for the illegality defence to apply.⁽¹⁰⁸⁾ Yet, if it is already acknowledged that the strength of the connection, and even proportionality, has a role to play in deciding whether the illegality defence can apply in a torts case, why not simply recognise that as part of a “range of factors” approach or a “principle of proportionality” under the Ochroid framework? Indeed, a “close connection” test is inherently imprecise and certainly more imprecise than a “range of factors” approach.

More broadly, is the majority approach in Patel v Mirza relevant in Singapore despite being rejected in Ochroid?

89.               I come now to the point at which I try to bring the discussion together and to, I suspect, an appreciated end.

90.               The central and final question I am concerned with is – to what extent is the “range of factors” approach applicable in Singapore? Recognising that Ochroid has not accepted this approach, and bearing in mind that that remains binding authority from the Court of Appeal, I make five points.

91.               First, it is reasonably clear that the approach in Ochroid is not completely distinct from that “range of factors” approach in Patel.⁽¹⁰⁹⁾ Indeed, Phang JA acknowledged that the proportionality principle in Ting Siew May actually aligns with the majority’s approach in Patel because it requires the court to carry out a discretionary and balancing exercise to determine the legal enforceability of a contract.⁽¹¹⁰⁾ Thus, it appears that the court’s concern in Ochroid was not so much against uncertainty per se but wider uncertainty than may be necessary. From this perspective, the approach propounded in Ochroid is perhaps a refinement of, rather than a radical departure from, that of the Patel majority.

92.               Second, the facts of Ochroid and Ting Siew May are important. They each concerned a contract that was ultimately found to be illegal. Because these were concerned with a contract, the framework by which contracts can be rendered illegal was front and centre of the court’s consideration. Thus, the court was concerned with whether and how discretion should be exercised when a contract contravened an established head of common law public policy. In that context, it is understandable why the court in Ochroid was anxious to constrain what it saw to be unjustified extension of discretion to a situation in which the courts have never exercised discretion before. Framed this way, the concern was not about the exercise of discretion per se, but instead about the overreach of judicial discretion. However, such concerns may not arise in other areas of private law, as I have tried to show.

93.               Third, when we say that we are applying the Ochroid framework, we should not understand it to mean that we are applying the framework as the Court of Appeal developed for contract law wholesale to other areas of private law. As I have sought to demonstrate, and as the court explained in Lau Sheng Jan Alistair, parts of the framework would not make sense in certain areas of private law. Rather, we could see the Ochroid framework being concerned with a series of logical and necessary questions. Framed in such a general manner, the Ochroid framework can be meaningfully developed in other areas of the private law, especially the law of trusts, but not others. But more broadly, we should be mindful of the Court of Appeal’s concern in Ochroid that the courts do not over-reach the exercise of discretion, which may result in unnecessary uncertainty. Yet this does not mean that necessary uncertainty cannot be tolerated. Thus, where, as in torts, the “range of factors” approach could apply, perhaps that can be replaced by an overt “principle of proportionality” in Singapore in the mould of Ting Siew May.

94.               Fourth, while the Court of Appeal in Ting Siew May has provided some relevant factors in the application of the principle of proportionality, it may be necessary to flesh this out further in future cases. Apart from the practical application of this principle, it is also necessary to develop a cohesive theoretical understanding of what proportionality means, so as to guide its application. Indeed, as Lim and Francisco Urbina argue, it may even be necessary to draw on lessons learned from the proportionality test in public law to clarify the use of proportionality in private law.⁽¹¹¹⁾ As we do this, it may be worthwhile to adopt, as Tan puts it, “an attitude of cautious optimism towards the trajectory of proportionality, or in other words, remain ‘proportional about proportionality’”.⁽¹¹²⁾

95.               Fifth, while there will be legitimate concerns about uncertainty caused by the use of even a limited principle of proportionality, there will always be some uncertainty in the law. Concepts such as “reasonableness” engender uncertainty. It is also important to be clear what “uncertainty” really means instead of using it uncritically as a criticism.⁽¹¹³⁾ At the very least, as Ernest Lim points out, whether the “range of factors” approach results in greater uncertainty can only be assessed empirically and only time will tell if this is the case.⁽¹¹⁴⁾ But in as much these concepts generate uncertainty, they also promote flexibility in the law. They enable the courts to do common-sense justice that is in accord with principles of law. Thus, to the extent that commentators, such as Robert Stevens, suggest that “unelected judges lack the political competence to weigh competing policy claims” or that “judges lack the technical competence to assess all the reasons which could … be taken into account in reaching a decision [given that they] are not economists or social scientists”,⁽¹¹⁵⁾ I do not think that we should be overly detained by these concerns. While it is in theory incommensurable to ask a judge to decide whether “Mozart or chocolate is better”, the fact is that judicial decision-making does not take place in a vacuum and in the absence of arguments.⁽¹¹⁶⁾ Moreover, as Stevens rightly acknowledges, his criticisms are inconsistent with how academics and judges reason in specific cases.⁽¹¹⁷⁾ As Burrows rightly points out, the mistake that Stevens and other “policy minimalists” make is to assume that, when judges are balancing policy concerns, they are acting as “mini-legislators” and stepping beyond the constitutional boundaries of their roles.⁽¹¹⁸⁾ Judges certainly are not doing that for the reason that they do not decide policy in the same broad way that legislators do. Instead, the judicial decision-making process is constrained by the cases that come before the courts, as well as institutional safeguards such as stare decisis.⁽¹¹⁹⁾ At the end of the day, perhaps we should trust our judges more to make the right decisions by both the letter and the spirit of the law.

Conclusions

96.               In conclusion, Lord Mansfield’s celebrated dicta in Holman v Johnson, that is, “[n]o court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”,⁽¹²⁰⁾ is easy enough to understand. But its application to particular facts has confounded theorists and practitioners for centuries. Perhaps that is a function of real-life facts being messy. It is not possible to feed facts into a machine and have the outcome determined by the application of a simple rule. Such is human life and human nature. But if we accept this to be so, it may well be that we also recognise the need for judges to explicitly weigh and consider, within the limits identified by the Court of Appeal in Ochroid, the underlying policy considerations and explicitly explain how these lead to the ultimate conclusions. In Singapore, following Ochroid, these policies would have to be limited to those concerned with proportionality.

97.               Indeed, while Lord Burrows has described himself as a strong believer in legal rules,⁽¹²¹⁾ he expressed support for the “range of factors” approach and, by extension, the clearer exposition of the exercise of judicial discretion. He provided three reasons for his support, namely, (a) that illegality involves so many variables that the normal formulation of rules is problematic, (b) the traditional rules that the courts have developed are plainly unsatisfactory and lead to unfair results, and (c) no judge or academic has succeeded in formulating a series of rules that stands up to scrutiny.⁽¹²²⁾ In as much as these reasons apply to the continued application of the “principle of proportionality” within the confines imposed by the Ochroid framework, I would respectfully agree.

98.               In sum, I would think it is hard to argue against clarity in reasoning,⁽¹²³⁾ especially if existing hard rules not only result in unfairness, but also mask these underlying considerations. This can apply for the illegality defence in Singapore, with a consistent application of the “principle of proportionality” and parts of the Ochroid framework.

99.               Thank you very much for your kind attention.

_{*       Judge of the High Court, Supreme Court of Singapore. This paper was delivered at the Singapore Law Review Lecture held at the Faculty of Law, National University of Singapore on 19 January 2024. I would like to thank my law clerk, Mr Adam Goh, for all his excellent assistance in the preparation of this lecture. All views expressed are my own and do not represent those of the Supreme Court of Singapore.
(1)       Andrew Phang and Goh Yihan, Contract Law in Singapore (Wolters Kluwer, 2021) at para 943.
(2)       [2017] AC 467.
(3)       [2018] 1 SLR 363.
(4)       (1775) 1 Cowp 341 at 343.
(5)       Tan Ming Zee, “The Defence of Illegality Defended: Analysing Patel v Mirza in light of Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SCLR 26 at 26, citing Hall v Herbert (1993) 2 SCR 159 at para 100.
(6)       Tan Ming Zee, “The Defence of Illegality Defended: Analysing Patel v Mirza in light of Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SCLR 26 at 26, citing Patel v Mirza [2017] AC 467 at para 99.
(7)       Tan Ming Zee, “The Defence of Illegality Defended: Analysing Patel v Mirza in light of Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SCLR 26 at 26.
(8)       Tan Ming Zee, “The Defence of Illegality Defended: Analysing Patel v Mirza in light of Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SCLR 26 at 26.
(9)       [2014] 3 SLR 609.
(10)       [2014] 3 SLR 609 at para 3.
(11)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 57.
(12)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 57.
(13)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 58.
(14)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 58.
(15)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 58–59.
(16)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 59.
(17)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 59.
(18)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 59.
(19)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 62.
(20)       [1994] 1 AC 340.
(21)       [2017] AC 467 at para 236.
(22)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 63.
(23)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 63.
(24)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 173. See also Nicholas Strauss QC, “Illegality decisions after Patel v Mirza” (2018) 134 LQR 538.
(25)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 173–174.
(26)       [2009] AC 1339.
(27)       [2021] AC 540. See Janet O’Sullivan, “Illegality and tort in the Supreme Court” [2021] CLJ 215. See also Tan Zhong Xing, “Illegality and professional negligence: applying the ‘range of factors’ approach” (2019) 35 PN 121 for a commentary of the English Court of Appeal decision.
(28)       [2021] AC 563.
(29)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 3.
(30)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 3.
(31)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 3.
(32)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 3.
(33)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 3.
(34)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 4.
(35)       [2021] AC 563. See also Ivan Sin, “The illegality defence and sanction-shifting: in defence of Gray v Thames Train Ltd” [2023] CLJ 292.
(36)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 4.
(37)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 4.
(38)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 4.
(39)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 5.
(40)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 5.
(41)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 5.
(42)       Lord Burrows, “The Illegality Defence after Patel v Mirza: The Professor Jill Poole Memorial Lecture 2022” (delivered at Aston University on 24 October 2022) at 5.
(43)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 178.
(44)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 178.
(45)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 178.
(46)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 176.
(47)       James Goudkamp, “Henderson v Dorset Healthcare University NHS Foundation Trust” (2021) 37 PN 171 at 180.
(48)       [2023] HKCA 479.
(49)       Andrew Li, et al, “Will a Squatter’s Claim for Adverse Possession be barred by acts of illegality? Hong Kong Court of Appeal applies Patel v Mirza over Tinsley v Milligan”, online at: https://robertsonshk.com/en/news/will-a-squatters-claim-for-adverse-possession-be-barred-by-acts-of-illegality-hong-kong-court-of-appeal-applies-patel-v-mirza-over-tinsley-v-milligan (12 July 2023).
(50)       Andrew Li, et al, “Will a Squatter’s Claim for Adverse Possession be barred by acts of illegality? Hong Kong Court of Appeal applies Patel v Mirza over Tinsley v Milligan”, online at: https://robertsonshk.com/en/news/will-a-squatters-claim-for-adverse-possession-be-barred-by-acts-of-illegality-hong-kong-court-of-appeal-applies-patel-v-mirza-over-tinsley-v-milligan (12 July 2023).
(51)       Andrew Li, et al, “Will a Squatter’s Claim for Adverse Possession be barred by acts of illegality? Hong Kong Court of Appeal applies Patel v Mirza over Tinsley v Milligan”, online at: https://robertsonshk.com/en/news/will-a-squatters-claim-for-adverse-possession-be-barred-by-acts-of-illegality-hong-kong-court-of-appeal-applies-patel-v-mirza-over-tinsley-v-milligan (12 July 2023).
(52)       Andrew Li, et al, “Will a Squatter’s Claim for Adverse Possession be barred by acts of illegality? Hong Kong Court of Appeal applies Patel v Mirza over Tinsley v Milligan”, online at: https://robertsonshk.com/en/news/will-a-squatters-claim-for-adverse-possession-be-barred-by-acts-of-illegality-hong-kong-court-of-appeal-applies-patel-v-mirza-over-tinsley-v-milligan (12 July 2023).
(53)       [2021] 3 CLJ 772.
(54)       Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 238.
(55)       Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 239.
(56)       Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 239–240.
(57)       [2021] 3 CLJ 772 at 794. See also Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240.
(58)       [2021] 3 CLJ 772 at 794. See also Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240.
(59)       [2021] 3 CLJ 772 at 794. See also Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240.
(60)       [2021] 3 CLJ 772 at 795. See also Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240.
(61)       Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240.
(62)       [2021] 3 CLJ 772 at 797. See also Adnan Trakic, “Illegality and Restitution in Malaysia: How Far Have We Come? (2023) 38 JCL 229 at 240–241.
(63)       On what is judicial discretion, see Graham Virgo, “Jones Day Professorship of Commercial Law Lecture 2019 – ‘The State of Illegality’” (2019) 31 SAcLJ 747 at 748–749.
(64)       [2018] 1 SLR 363.
(65)       [2014] 3 SLR 609.
(66)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.81.
(67)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.81.
(68)       Cap 188, 1985 Rev Ed.
(69)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.82.
(70)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.83.
(71)       Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 at para 128.
(72)       Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 at para 148.
(73)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at [12.84]. See also Andrew Phang, Goh Yihan and Jerrold Soh, “The Development of Singapore Law: A Bicentennial Perspective” (2020) 32 SAcLJ 804 at 852–853, as well as Andrew Phang, “The Intractable Problems of Illegality and Public Policy in the Law of Contract – A Comparative Perspective” in Essays in Memory of Jill Poole – Coherence, Modernisation and Integration in Contract, Commercial and Corporate Laws (Rob Merkin & James Devenney gen eds) (Informa Law, 2018) ch 12.
(74)       Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 at paras 114–115.
(75)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.84.
(76)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.84.
(77)       Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 at para 123.
(78)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.84.
(79)       Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363 at para 219.
(80)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.86.
(81)       [2022] 5 SLR 915.
(82)       [2023] SGHC 196.
(83)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 450.
(84)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 450.
(85)       [2007] 4 SLR(R) 100.
(86)       Andrew Phang and Goh Yihan, Contract Law in Singapore (Wolters Kluwer, 2021) at para 1062.
(87)       Andrew Phang and Goh Yihan, Contract Law in Singapore (Wolters Kluwer, 2021) at para 1083.
(88)       Andrew Phang and Goh Yihan, Contract Law in Singapore (Wolters Kluwer, 2021) at para 1067.
(89)       Andrew Phang and Goh Yihan, Contract Law in Singapore (Wolters Kluwer, 2021) at para 1061.
(90)       [2023] SGHC 196.
(91)       (1841) 4 Beav 115.
(92)       [1994] 1 AC 340.
(93)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 437. For an overview on the defence of illegality in tort law, see Mark Ashley, “The illegality defence in tort” (2016) 4 JPI Law 212.
(94)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 437.
(95)       Tan Zhong Xing, “Illegality and professional negligence: applying the ‘range of factors’ approach” (2019) 35 PN 121 at 123–124.
(96)       Tan Zhong Xing, “Illegality and professional negligence: applying the ‘range of factors’ approach” (2019) 35 PN 121 at 123–124, referring to Ernest Weinrib, “Illegality as a Tort Defence” (1976) UTLJ 28 at 50.
(97)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 437.
(98)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 437.
(99)       [2018] 1 WLR 3208.
(100)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 438.
(101)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 438.
(102)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 438.
(103)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 438.
(104)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 438.
(105)       Tan Zhong Xing, “Illegality and the promise of universality” [2020] JBL 428 at 439.
(106)       Gary Chan, The Law of Torts in Singapore (Academy Publishing, 2nd ed, 2015) at para 08.011.
(107)       [2005] 4 SLR(R) 214.
(108)       Gary Chan, The Law of Torts in Singapore (Academy Publishing, 2nd ed, 2015) at para 08.012.
(109)       Goh Yihan, Lee Pey Woan and Tham Chee Ho, “Contract Law” (2017) 18 SAL Ann Rev 304 at para 12.87.
(110)       [2018] 1 WLR 3208.
(111)       Ernest Lim and Francisco J Urbina, “Understanding proportionality in the illegality defence” (2020) 136 LQR 575 at 597.
(112)       Tan Zhong Xing, “The Proportionality Puzzle in Contract Law: A Challenge for Private Law Theory?” (2020) 33 Can JL & Juris 215 At 244. See also Yap Ji Lian, “The role of proportionality in contractual illegality – a comparative analysis” (2022) 33 ICCLR 477.
(113)       See generally, Rick Bigwood and Joachim Dietrich, “Uncertainty in Private Law: Rhetorical Device or Substantive Legal Argument?” (2021) 45 Melb U L Rev 60.
(114)       Ernest Lim, “Ex Turpi Causa: Reformation not Revolution” (2017) 80 MLR 927 at 936. See also Ernest Lim, “Tensions in private law judicial decision-making: a case study on the illegality defence” [2016] JBL 325 at 334 and James Goudkamp, “The end of an era? Illegality in private law in the Supreme Court” (2017) 133 LQR 14 at 17.
(115)       Robert Stevens, Torts and Rights (Oxford University Press, 2007) at ch 14.
(116)       Robert Stevens, Torts and Rights (Oxford University Press, 2007) at ch 14.
(117)       Robert Stevens, Torts and Rights (Oxford University Press, 2007) at ch 14. See also Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 68.
(118)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 70.
(119)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 70.
(120)       (1775) 1 Cowp 341 at 343.
(121)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 55.
(122)       Andrew Burrows, “Illegality after Patel v Mirza” (2017) 70 CLP 55 at 56–57.
(123)       See Anthony Grabiner, “Illegality and restitution explained by the Supreme Court” [2017] CLJ 18 at 21.}