Parkingeye Ltd v Somerfield Stores Ltd: CA 17 Oct 2012

The claimant company operated parking management for the defendant, charging customers for overparking. The defendant came to believe that the claimant’s behaviour was over-aggressive, and the use of falsehoods, and terminated the contract. The defendant appealed against rejection of its claim that the contract was void for illegality. The court now considered the effect of a finding that the contract had been operated unlawfully.
Held: The appeal by Somerfield failed: ‘the contract was not a one-off contract, such as a contract for the sale or carriage of goods, but a contract creating a relationship that was to last for a minimum term of 15 months. The claim is for loss caused to ParkingEye by Somerfield’s termination the contract after a little over 6 months. It could have been lawfully performed for the rest of the contractual term, and it would have been if Somerfield had drawn attention to the objectionable feature of pro forma letter 3 which it had previously approved. The objectionable feature of that letter was neither essential nor central to the performance of the contract as a whole.’
Sir Robin Jacob recognised the role of proportionality in deciding whether to allow or refuse enforcement of a contract for illegality, not by a discretion based on public conscience, but rather ‘It involves the assessment of how far refusal of the remedy furthers one or more of the specific policies underlying the defence of illegality.’
Toulson LJ stated that: ‘Rather than having over-complex rules which are indiscriminate in theory but less so in practice, it is better and more honest that the court should look openly at the underlying policy factors and reach a balanced judgment in each case for reasons articulated by it’ and ‘In some parts of the law of contract it is necessary in the interests of commercial certainty to have fixed rules, sometimes with exceptions. But in the area of illegality, experience has shown that it is better to recognise that there may be conflicting considerations and that the rules need to be developed and applied in away which enables the court to balance them fairly’ He continued to refer to long established authority illustrating that ‘One can see the justice of treating a party who deliberately sets out to break the law in a serious respect, such as overloading a vessel, differently from a party who breaks the law without meaning to do so or in a way which may be minor’.


Laws, Toulson LJJ, Sir Robin Jacob


[2012] EWCA Civ 1338, [2013] 2 WLR 939, [2013] 1 QB 840, [2012] 2 Lloyd’s Rep 679




England and Wales


CitedB and B Viennese Fashions v Losame CA 1952
Jenkins J considered tha illegal performance of a valid contract saying: ‘It is plain from Anderson Ltd. v. Daniel that illegality in the performance of a contract may avoid it although the contract was not illegal an initio. That being so, one has . .
CitedColen and Another v Cebrian (UK) Limited CA 20-Nov-2003
The company paid the claimant sales commission. Part was diverted and paid to his wife to reduce the tax payable. The employer had appealed a finding of unfair disamissal, the company arguing that the contract was illegal.
Held: The contract . .
Appeal fromParkingeye Ltd v Somerfield Stores Ltd ChD 18-Mar-2011
The claimant said that the defendant had wrongfully terminated its contract for management of parking at the defendant’s supermarkets. The defendant replied that the contract was unenforceable for illegality. . .
CitedLes Laboratoires Servier and Another v Apotex Inc and Others CA 3-May-2012
The court was asked as to ‘the availability of the defence of illegality to a claim on a cross-undertaking in damages where (1) the holder of a patent enforceable in this jurisdiction has obtained an interim injunction against the defendant from . .
CitedSt John Shipping Corporation v Joseph Rank Limited 1956
The defendants held a bill of lading for part of the cargo carried on the plaintiffs’ vessel from Mobile, Alabama, to Birkenhead. The vessel was over laden and the plaintiffs were guilty of an offence under the 1932 Act. The defendants relied on the . .
CitedWaugh v Morris 1873
Defence of Illegality of contract failed
Under a voyage charterparty, for a voyage from Trouville to London, pressed hay was to be loaded at Trouville and brought to London where it was to be taken from the ship alongside. The charterer’s agent told the master that the consignees under the . .
CitedAnglo Petroleum Ltd and Another v TFB (Mortgages) Ltd CA 16-May-2007
Challenge to validity of mortgages executed by company – allegation that funds used for financial assistance in purchase of own shares – effect on loan.
Toulson LJ approved the case of Waugh v Morris, saying: ‘130 years later, this statement of . .
CitedBrown Jenkinson and Co Limited v Percy Dalton (London) Limited CA 1957
The claimants owned a vessel on which the defendants shipped a cargo of orange juice, packed in barrels which were old, frail and leaky. The claimants said they would issue a claused bill of lading stating the defects in the barrels. The defendants . .
CitedAnglo Petroleum Ltd v TFB (Mortgages) Ltd ChD 24-Feb-2006
The company sought to say that loans of 15 million pounds were void under s151 of the 1985 Act. It was said that the loans infringed the provisions of s151 being unlawful financial assistance.
Held: The loans were valid: ‘if it is lawful for a . .

Cited by:

CitedThe Ritz Hotel Casino Ltd v Al Daher QBD 15-Aug-2014
The claimant sought to recover andpound;1m on unpaid cheques. The cheques represented half of the sum gambled away by the defendant in one evening. She now alleged that the claimant had not complied with its duties under the 2005 Act to act . .
CitedPatel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Lists of cited by and citing cases may be incomplete.


Updated: 29 April 2022; Ref: scu.464939