The claimant carried on business as business transfer agents and agreed, for a fee, to find a buyer for the defendant's business. A dispute arose, the defendant failed to pay the balance of the fee due, and the claimant issued proceedings for recovery. The defendant contended that the agreement was not enforceable for illegality, on the basis that:
- The claimant's activities fell within the definition of "estate agency work" in s.1(1) of the Estate Agents Act 1979
- The claimant therefore fell within the remit of the Money Laundering Regulations 2007 ("the Regulations")
- In breach of the Regulations, the claimant was not registered with the OFT
The court dismissed both the claim and counterclaim. Whilst the claimant's failure to register with the OFT did not indicate dishonesty or turpitude (and the OFT plainly took the same view, as it had not sought to impose any civil penalty on, or to prosecute, the claimant), so as to render the contract void for illegality for that reason alone, on a proper construction of the Regulations, the effect of the breach (failing to register with the OFT when registration was required) was that the claimant was prohibited from carrying on the relevant work. It followed that the agreement was illegal and consequently unenforceable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
