High court considers contracts prohibited by statute

RTA (Business Consultants) Ltd v Bracewell [2015] EWHC 630 (QB)

In this case, the High Court applied the law on contracts prohibited by statute. The case reaffirms the Supreme Court’s previous comments in the 2014 case Les Laboratoires Servier v Aptotex Inc, that the law against illegality often produces injustice.

Under the Money Laundering Regulations 2007, it is a criminal offence to conduct an unregistered estate agency business. The regulation provides that an unregistered estate agent ‘may not carry on the business or profession in question’. A defence exists under the Regulations for those who, taking due care, did not know they had to register.

The Facts

The claimant (RTA, Business Consultants) brought a claim against the defendant (Bracewell) for sums due under an agreement for ‘estate agency work’ provided to the defendant.

The court concluded that the legislation prohibited the unregistered estate agent from making any contract to sell or buy business premises for a customer, since that would be carrying on the business of estate agency.

The claimant’s contract with its customers, one of whom was the defendant, was therefore unenforceable, so the claim for unpaid fees and commission failed.