The Law Commission published a consultation paper on illegality in contract and trusts in 1999.1 The final report on the illegality defence was published in March 2010.2 It has been a long-running saga, and some might have suspected a final report would never emerge. It now has. What welcome should it receive? This note is divided into two main sections. In the first we examine the welcome move away from discretion by the Commission over the past decade. In the second we give less of a welcome to the Commission’s proposals in the trust context.

In 1999 the Law Commission argued that the law on illegality in contract and trusts was in an intolerable mess. They suggested that the only way forward was to sweep away the law and replace it with a broad statutory discretion.3 The factors the Law Commission suggested the court should take into account included the seriousness of the illegality, the knowledge and intention of the claimant, deterrence, furtherance of the purpose behind the illegality, and the proportionality of the response. In 2001 their consultation paper on illegality in tort reached much the same position.4 The Commission argued that there should be a judicial discretion to disallow a claim when the claim arises from, or is connected to, the claimant’s illegal act,5 along with a presumption in favour of the claim going ahead.