Stoffel & Co v Grondona
A mortgage fraudster could sue her negligent solicitors, because denying the claim would not serve the purpose of the law against mortgage fraud.
Facts
Ms Grondona agreed with Mr Mitchell to take part in a mortgage fraud. Mr Mitchell transferred a flat to her, and she obtained a mortgage on the flat by making false statements to the lender, intending that Mr Mitchell would pay the mortgage and she would transfer the flat back to him. Her solicitors, Stoffel & Co, negligently failed to register the transfer and the new charge at the Land Registry. Mr Mitchell stopped paying, and the lender sued Ms Grondona for the debt. She sued the solicitors for negligence, and they argued that her claim was barred by illegality.
Legal principle
The Supreme Court held that Ms Grondona's claim was not barred by illegality. Applying the approach in Patel v Mirza, the purpose of the law against mortgage fraud would not be enhanced by denying her claim, because the solicitors' duties to register the transfer and charge were owed regardless of her purpose and the lender's interests were also protected by registration. Denying the claim would allow the solicitors to escape liability for their own negligence, and would not be a proportionate response to the illegality. Lord Lloyd-Jones confirmed that Patel v Mirza applies to all illegality defences in private law claims.
Related cases on illegality and restraint of trade
- Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374
- Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269
- Fitch v Dewes [1921] 2 AC 158
- Herbert Morris Ltd v Saxelby [1916] 1 AC 688
- Holman v Johnson (1775) 1 Cowp 341
- Les Laboratoires Servier v Apotex Inc [2014] UKSC 55, [2015] AC 430
- Re Mahmoud and Ispahani [1921] 2 KB 716
- Mason v Provident Clothing and Supply Co Ltd [1913] AC 724
Studying contract law? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
