We do have general provision in England for the clawing-back by creditors of assets transferred by a bankrupt at an undervalue: it might be that if old Mr Tribe conveyed his shares to his son hoping that illegality would bar their recovery that would indeed be a transaction at an undervalue, and hence attackable by his creditors.

On the general point, however, I see nothing wrong with the idea that if a claimant is undeserving of recovery, his creditors should be in no better position than he if he goes bankrupt. I'm interested in one further thing. In German law as I understand it (and I may have got it wrong) a person knowingly transferring assets under an illegal transaction is barred from bringing unjustified enrichment proceedings based on the voidness of the transaction. Are his creditors in a better position in this respect?

Andrew

I also find Tribe v Tribe problematic, but for a somewhat different reason.

If the old man can recover, then the shares (or the claim against his son for surrender of the shares) form part of his assets and are available for satisfying the claims of his creditors in case he cannot service his debts.

If the old man cannot recover from the son, his creditors may have no access to  the transferred shares. And that is the bit which I find most problematic. While insolvency law might help in this situation, I would not take this for being guaranteed.

Tribe v Tribe seems to indicate that the old man can recover because he did not default on his debts, but that there is no recovery if he goes bankrupt. In combination, this gives a perfect incentive for transferring your assets if you fear that you might become insolvent.

Best wishes,
Gerhard

Am 12.08.2014 19:19, schrieb Gerard Sadlier:

Hard to disagree with your comments on Tribe.

What follows is a hunch. I suspect however that there are those,
particularly those who contemplate "white collar crimes" such as
insider trading, who may well be aware of the law's attitude to
illegal transactions. If I am right about that, then deterrants
becomes less fanciful.  It would require singular honour among insider
traders for X to give money to Y to put through such a trade, if he
knew that if Y did not repay him, he (X) would have no recourse.
Moreover, I suspect that the disappointed would be insider trader is
less likely to be prosecuted for an attempt than you would be if it
were to come to light in court that you had engaged the services of an
asassin.

On 8/12/14, Robert Stevens <robert.stevens@law.ox.ac.uk> wrote:

Tribe v Tribe is, if anything, even worse. There the illegal purpose had in
fact been fulfilled. The father's purpose in putting the shares into his
son's name was to hide the asset from his creditors in case he went into
bankruptcy. It did not form part of the father's purpose that he in fact
went into bankruptcy. Indeed, the father no doubt preferred not becoming
bankrupt, and not in fact deceiving anyone. The only undone part of the
illegal transaction was the return of the shares by the son: which the court
compelled to be done.

Again, a case where the court illegitimately ducked what the rule requires
because they didn't like treating the (dishonest) old man unfairly vis a vis
his (dishonest and disloyal) son.

The Latin is unfortunate, as the rule is nothing to do with penitence.

If I pay a hitman a sum to kill my rival, if the rival dies before the hit
is carried out, do I now get to claim my money back on the basis of
'withdrawal'?

I very much doubt whether this part of the civil law has any discernible
impact on the behaviour of criminals, but who knows? I have heard it argued
that it is a good thing that this area is an uncertain mess because that way
criminals can't be sure how to structure their transactions in a way so as
to avoid the rule.
________________________________________
From: Enrichment - Restitution & Unjust Enrichment Legal Issues
[ENRICHMENT@LISTS.MCGILL.CA] on behalf of Gerard Sadlier
[gerard.sadlier@GMAIL.COM]
Sent: 12 August 2014 17:22
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: Re: [RDG] Illegality Again

The decision of the majority seems required by Tribe v Tribe [1996] Ch 107.

In Tribe, there was no true repentance, in the sense of remorse, either.

For myself, I agree that there is a lot to be said for simply refusing
relief in both cases on the basis that this will deter at least some
such transactions.

On 8/12/14, Robert Stevens <robert.stevens@law.ox.ac.uk> wrote:

---------- Forwarded message ----------
From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Date: 12-Aug-2014 9:56 am
Subject: Illegality Again
To: Obligations Discussion Group <odg@law.ox.ac.uk>
Cc:

A decision of the Court of Appeal in Patel v Mirza.
http://www.bailii.org/ew/cases/EWCA/Civ/2014/1047.html

The case concerns a claim to recover a sum that had been paid in order to
make money through insider trading that never actually occurred.

So, one of the conspirators  says he has access to meetings between the
bank
RBS and the UK government when the former was in crisis. He says he can
make
money on the spread betting market by using this info to place bets on
RBS'
share price. A clear example of the crime of insider trading. The claimant
hands over cash to facilitate the bets, but the meetings, and hence the
bets, never occur. Claimant now wants his money back.

CA unanimously hold that the money is recoverable.

In my view, this result is clearly wrong, but then I don't approve of the
recent 'developments' in the law.

The claimant relies on his own illegality in making the claim. He even
pleaded it. On its face then, following Tinsley v Milligan, the
requirement
of legal coherence means the claim fails.

The claimant then relies upon an exception to this rule, the locus
poenitentiae doctrine. Rimer and Vos LJJ both consider that the case fell
within that exception, and that it did not matter that the claimant's
withdrawal occurred after the scheme became impossible to carry out.

But this seems obviously wrong. If the exception exists, we have it to
encourage people to withdraw from illegal transactions. If they cannot
recover back their money there is no such encouragement, and they may as
well carry it through. This is nothing to do with penitence, as Timer LJ
thinks.

If, for example, I pay a hitman to kill a colleague of mine in order to
further my career, but then discover that my career will prosper even more
if he lives, I should be able to recover my money before the murder,
regardless of my being wholly impenitent. We don't wish to discourage
withdrawal. But in this case the crime was no longer capable of being
committed, there was nothing to draw back from.

Gloster LJ gives additional and even more radical reasons for the result.
So, rejecting the Tinsley v Milligan approach she engages with a wide
ranging discussion of whether the policy underlying the illegality of
insider trading is or is not engaged, concluding that it is not. She
considers it important that the claimant was not seeking to enforce the
agreement, but recover back money paid.

Somewhat oddly, the decision in Parkinson v Royal College of Ambulance, on
facts that as far as I can see are materially identical, is not cited by
anyone. Presumably it is no longer good law.

The problem with the illegality principle is that it requires the court to
do injustice. As between claimant and defendant, it was clearly fair that
the money was repaid. It takes a certain firmness from a judge to say that
regardless of what fairness between the parties requires, the coherence of
the law requires a different conclusion.

If this is not overturned, then I accept that my recently expressed view
that this is not a matter worth referring back, with heavy heart, to the
Law
Commission was wrong.
Rob

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This message was delivered through the Restitution Discussion Group, an international internet LISTSERV devoted to all aspects of the law of unjust enrichment. To subscribe, send "subscribe enrichment" in the body of a message to <listserv@lists.mcgill.ca>. To unsubscribe, send "signoff enrichment" to the same address. To make a posting to all group members, send to <enrichment@lists.mcgill.ca>. The list is run by Lionel Smith of McGill University, <lionel.smith@mcgill.ca>.