Date: Wed, 18 Jan 2006 09:54:29

From: Charles Mitchell

Subject: Illegal contracts and restitution

Hector asks whether a person can bring a restitutionary claim to recover money paid to procure a hitman, assuming that the agreement between the payor and recipient is void? Tinsley v Milligan suggests that the money would be held on resulting trust for the payor, who needs merely to demonstrate that it was paid over, and to assert that she received no consideration for the payment - according to Lord Browne-Wilkinson a presumption will then be raised that the money is held on resulting trust which the recipient cannot rebut without relying on evidence of the illegal scheme which he will not be permitted to do. Various objections can be made to this analysis. One is that it lays down a formalistic rule which precludes proper examination of all the circumstances of the case to decide as a discretionary matter whether it is desirable to order repayment. On the facts of Hector's case, though, there are several reasons why ordering repayment would be a good thing: one, trailed by Millett LJ in Tribe v Tribe, is that it lies in the public interest to encourage people to withdraw from illegal schemes; another is that the recipient has done nothing to justify his keeping the money.

Regards, Charles

At 20:25 17/01/2006 +0000, you wrote:

Dear Jason

Today's London Times contains a story under the headline, "A contract is still a contract - even if it is a contract to kill". The gist of the story is that a depressive woman paid a man a total of £20,000 over a series of transactions, the deal being that he would find a hitman to kill her. He didn't do this, and kept the money instead. She sued him for breach of contract (it says in The Times), and yesterday Maidstone Crown Court ordered him to pay her, not the £20,000, but £2,000. It seems, on closer inspection of the story, that the case was actually a criminal prosecution, not a civil action, and that the conman was jailed, the £2,000 being paid under a compensation order made by the court. None the less, from an obligations point of view, it's surely an interesting set of facts.

When I lecture first year law students on illegal contracts, I always give the hired assassin as the easy example of the person whose contract can't be enforced by either party; and probably restitution of any advance payments made won't be ordered either. But here the assassin is, so to speak, one step removed from the contracting parties. Can the would-be victim (another distinction from the usual case, because she is a party to the contract) enforce the deal, either by way of specific performance (surely unlikely) or a claim for damages? If so, could that include emotional trauma damages? Can she alternatively seek restitution if the contract is void or voidable for fraud? The latter seems more attractive to me than the other two possibilities.

From the other perspective (the potential recipient of the money), what happens if he finds a hitman but then the would-be victim doesn't pay up (and, say, perhaps, that he has already paid the hitman)? Presumably unenforceable and no question of restitution?

Anyway, my conclusion is that the Times headline is wrong in law. What do others think?

Professor Charles Mitchell
School of Law
King's College London
Strand
London WC2R 2LS

tel: 020 7848 2290
fax: 020 7848 2465

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