CLIVE FREEDMAN QC IN CA WIN ON LAW OF ILLEGALITY IN COMMERCIAL CONTRACTS

Clive Freedman QC acted for the successful Respondents in the decision of ParkingEye Limited v Somerfield Stores Ltd [2012] EWCA Civ 1338. He was instructed by Michael Kennedy of Pannone LLP and led Andrew Grantham of Kings’ Chambers. The Judgment was handed down on 17 October 2012.

It is an important decision in the law of illegality as it affects commercial contracts. Sir Robin Jacob said that “illegality and the law of contract is notoriously knotty territory”. Toulson LJ said that that was a mild way of describing it. Illegality is “one of the least satisfactory parts of the law of contract”, but that Sir Robin Jacob’s Judgment had “cut through the knots”.

ParkingEye had a long term contract for the operation of car parks for a supermarket chain, receiving its money from payments required of persons overstaying the permitted time or having no right to be there at all. Somerfield was found at trial to be in repudiatory breach of contract, but it contended that the contract was void for illegality on the basis of an allegation that the agreed method of performance involved a deceit on customers.

The Court of Appeal accepted that the contract could be performed by lawful means, and there was no intention on the part of ParkingEye to obtain money to which it did not believe itself to be entitled. ParkingEye did not rely on any illegality as part of its case and illegal performance was not an object of the contract nor necessary for its performance. Further, and of significance in the law of illegality, applying a test of proportionality, Sir Robin Jacob said “I do not think the facts of this case, considered with a sense of proportionality, involve such an invasion of any of the policy rationales [in respect of the illegality doctrine]as to deprive ParkingEye of its remedy.”

To view the judgement please click here.