Illegality, (void for)

Johnson v. Lazzarino, 1999 CanLII 18678 (ON CA)

BY THE COURT: We agree with the analysis of Sharpe J. The Rule in question was intended to regulate the professional conduct of members of the Institute of Chartered Accountants of Ontario by prohibiting contingency fees. It did not provide that contracts entered into in contravention of the Rule were void or otherwise unenforceable.

The professional consequences to the respondent flowing from his alleged breach of that Rule are for the Institute. The effect, if any, of the breach of that Rule on the validity of the contract made between the parties is for the court to determine applying judge-made rules applicable to allegations that a contract is void for illegality.

As Sharpe J. observes, this court favours an approach which looks to the purpose animating the statute which is said to have been violated, and the circumstances under which the particular contract was made and then asks whether it would be contrary to public policy to enforce the contract: Beer v. Townsgate I Ltd. (1997), 1997 CanLII 976 (ON CA), 36 O.R. (3d) 136, 152 D.L.R. (4th) 671 (C.A.). In this case, the alleged breach of the Rule had no impact on the creation of the contract, caused no harm to the appellants, and did not affect the performance of the contract. Indeed, by the time payment was due under the contract, the rules had been amended so as to permit contingency fees like that contemplated in this agreement.

To give effect to the appellant's argument would be to sanction to unjust enrichment of the appellant without in any way furthering the regulatory purposes of the Rule. In our view, that would not be good public policy.