Stoffel & Co. v Grondona [2020] UKSC 42

KEY POINTS

• Where a claimant has been induced into an illegal transaction by a defendant's negligence or breach of duty, the defence of illegality should not automatically prevent the claimant from pursuing a negligence claim.

• The purpose of the defence of illegality is to protect the integrity of the legal system, not to allow negligent parties to escape liability for their actions.

FACTS

• Ms. Grondona engaged the services of Stoffel & Co., an unregulated investment firm, to manage her investments. However, the firm was unlicensed and operated in breach of statutory regulations.

• Ms. Grondona sought to recover her investments and claimed that Stoffel & Co. had been negligent in managing her funds.

• The defendants raised the defence of illegality, arguing that Ms. Grondona's claim should be barred because she had knowingly participated in an illegal investment scheme.

• The question before the court was whether the defence of illegality should prevent Ms. Grondona from pursuing her negligence claim.

COMMENTARY

• Stoffel & Co. v Grondona is a significant case that provides a clearer framework for the application of the defence of illegality in tort law.

• By allowing the negligence claim to proceed, the court acknowledged that there are circumstances where public policy considerations should not bar the pursuit of remedies for genuine wrongs suffered by claimants.

NOTES

• This case is recommended to be read in connection to Patel v Mirza. 

RELATED CASES

• Patel v Mirza