The Constitution
Cases on Nullity
R v Registrar of Joint Stock Companies, ex p More
[1931] 2 KB 197 the English Registrar of commpanies refused to register a company whose s main object was to sell tickets in the Irish Sweep in the UK. The promoters applied for judicial review of the refusal to register. The court held that the sale of tickets would have been an offence under the
legislation then in force, and that the registrar was correct to refuse to register a company which was not formed “for a lawful purpose”.
R v Registrar of Companies
ex p Attorney-General [1991] BCLC 476 a promoter sough to to register a private limited company which had its stated object: “to carry on the business of prostitution”. The registrar accepted the registration name “Lindi St Clair (Personal Services) Ltd”. The the Attorney-General applied to the court to annul the registration on the basis that the company was incorporated for an unlawful purpose. The court held that the registration should be annuled . Although the company’s objects did not necessarily involve the commission of a criminal offence, contracts for the services of a prostitute would be unenforceable as contrary to public policy. The company was acccordingly not formed for a lawful purpose.
ACKNER LJ wrote
The Attorney General applies to quash the incorporation and registration by the Registrar of Companies nearly a year ago, that is on 18 December 1979, of Lindi St Claire (Personal Services) Ltd as a limited company under the provisions of the Companies Act 1948 to 1976.
The grounds of the application, to state them quite briefly, are these. In certifying the incorporation of a company and in registering the same the Registrar of Companies acted ultra vires or misdirected himself or otherwise erred in law, in particular as to the proper construction and application of s 1(1) of the Companies Act 1948 in that the company was not formed for any lawful purpose but, on the contrary, was formed expressly with the primary object of carrying on the business of prostitution, such being an unlawful purpose involving the commission of acts which are immoral and contrary to public policy.
The first point to consider is the validity of the procedure which has been adopted in this case, that is by way of application for judidial review, such application being made by the Attorney General.
Section 15 of the Companies Act 1948 provides:
‘(1) A certificate of incorporation given by the registrar in respect of any association shall be conclusive evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with, and that the association is a company authorised to be registered and duly registered under this Act . . .’
That on the face of it would appear to be a difficulty in the way of this application, but the matter was dealt with in the case of Bowman v Secular Society Ltd [1917] AC 406, [1916-17] All ER Rep 1. In that case the Secular Society was registered as a company limited by guarantee under the Companies Acts 1862 to 1893. The question which there had to be considered was whether its objects were legal, criminal or otherwise such that the company should not be registered.
The matter of procedure was dealt with by Lord Parker in his speech in these terms ([1917] AC 406 at 439, [1916-17] All ER Rep 1 at 17):
‘My Lords, some stress was laid on the public danger, or at any rate the anomaly, of the Courts recognising the corporate existence of a company all of whose objects, as specified in its memorandum of association, are transparently illegal. Such a case is not likely to occur, for the registrar fulfils a quasi-judicial function, and his duty is to determine whether an association applying for registration is authorised to be registered under the Acts. Only by misconduct or great carelessness on the part of the registrar could a company with objects wholly illegal obtain registration. If such a case did occur it would be open to the Court to stay its hand until an opportunity had been given for taking the appropriate steps for the cancellation of the certificate of registration. It should be observed that neither s 1 of the Companies Act, 1900, nor the corresponding section of the Companies (Consolidation) Act, 1908, is so expressed as to bind the Crown, and the Attorney-General, on behalf of the Crown, could institute proceedings by way of certiorari to cancel a registration which the registrar in affected discharge of his quasi-judicial duties had improperly or erroneously allowed.’
Then he deals with the instant case.
That view was expressly accepted in his speech by Lord Dunedin and was referred to by Lord Buckmaster in shorter terms at the conclusion of his speech (see [1917] AC 406 at 478, [1916-17] All ER Rep 1 at 38). So clearly the Attorney General is entitled to bring these proceedings.
Now as to the facts, these come within a very short compass and they amount to the following. A firm of certified accountants, Gilson Clipp & Co, on 16 August 1979 wrote to the Registrar of Companies at Companies House, Crown Way, Maindy, Cardiff pointing out that they had received a letter from the Inland Revenue Policy Division, who stated that they considered prostitution to be a trade which is fully taxable, and that they, the certified accountants, saw no reason why their client should not be able to organise her business by way of a limited company. They asked whether the name ‘Prostitute Ltd’ was available for registration as a limited company, pointing out the main object of the company would be that of organising the services of a prostitute.
The registrar did not like that name and did not accept it, nor did he accept another name ‘Hookers Ltd’ which was offered. But subsequently two further names were offered, ‘Lindi St Claire (Personal Services) Ltd’ and ‘Lindi St Claire (French Lessons) Ltd’, and it was the former which he registered.
The memorandum of association said in terms that the first of the objects of the company was ‘To carry on the business of prostitution’.
The only director of the company is Lindi St Claire, Miss St Claire describing herself specifically as ‘Prostitute’. The other person who owns also one share is a Miss Duggan, who is referred to as ‘the cashier’.
Leave having been obtained to apply for judicial review, Miss St Claire wrote in these terms:
‘I would like to say that prostitution is not at all unlawful, as you have stated, and I feel it is most unfair of you to take this view, especially when I am paying income tax on my earnings from prostitution to the government Inland Revenue.
Furthermore, I feel it is most unfair of you to imply that I have acted wrongly, as I was most explicit to all concerned about the sole trade of the company to be that of prostitution and nothing more. If my company should not be deemed valid, then it should have not been granted in the first place by the Board of Trade. It is most unfair of the government to allow me to go ahead with my company one moment, then quash it the next.’
In regard to that paragraph Miss St Claire is perfectly right that she was most explicit to all concerned as to the trade of the company, and in that paragraph she confirms that it was the sole trade of the company. Mr Simon Brown on behalf of the Attorney General, concedes that, if the company should not be deemed valid, then it should not have been registered in the first place by the Board of Trade, and therefore the issue with which we are concerned is the validity of the registration.
That takes us to s 1(1) of the Companies Act 1948, and I need only read that subsection:
‘Any seven or more persons, or, where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without limited liability.
It is well settled that a contract which is made upon a sexually immoral consideration or for a sexually immoral purpose is against public policy and is illegal and unenforceable. The fact that it does not involve or may not involve the commission of a criminal offence in no way prevents the contract being illegal, being against public policy and therefore being unenforceable. Here, as the documents clearly indicate, the association is for the purpose of carrying on a trade which involves illegal contracts because the purpose is a sexually immoral purpose and as such against public policy.
Mr Simon Brown submits that if that is the position, as indeed it clearly is on the authorities, then the association of the two or more persons cannot be for ‘any lawful purpose’.
To my mind this must follow. It is implicit in the speeches in the Bowman case to which I have just made reference. In my judgment, the contention of the Attorney General is a valid one and I would order that the registration be therefore quashed.