Patel v. Mirza (2016) — Illegality & Unjust Enrichment (UKSC)

Patel paid £620,000 to Mirza to place bets using inside information. The plan never happened. Patel asked for his money back. The UK Supreme Court said: courts should look at public policy and proportionality. Here, refusing repayment would be unfair and would let Mirza keep an unjust gain. So Patel could recover.

• Illegality is not an automatic bar; context and fairness matter.
• If the illegal plan is not carried out, refund may be ordered.

1. Can Patel recover money paid for an illegal purpose when the plan was not carried out?

• A claim may be refused if it would undermine public policy (e.g., encourage crime).
• But if refusing the claim would be disproportionate or contrary to policy, the court may allow recovery.

The Supreme Court allowed restitution. Using a policy-and-proportionality test, it found that refusing repayment would unfairly reward Mirza and would not advance public policy.

• Ask: Would denying the claim harm or promote public policy?
• Would denial be proportionate to the illegality?
• If denial is contrary to policy or disproportionate → allow recovery.

Patel v. Mirza is a landmark on illegality. It replaces rigid bars with a balanced test. It protects against unjust enrichment while still respecting public policy.

Mnemonic: “PPP” — Purpose • Policy • Proportion

1. Purpose: Was money for an illegal aim? Did it happen?
2. Policy: Would denying recovery promote or harm policy?
3. Proportion: Is denial too harsh? If yes, allow refund.

Illegality

When a contract or purpose breaks the law or public policy.

Unjust Enrichment

One side keeps a benefit unfairly; law may order repayment.

Proportionality

The remedy should fit the wrong—no excessive punishment.