'Contracts Against Public Policy: Contracts For Meretricious Sexual Services' by Angus Macauley in (2018) 40(4)
Sydney Law Review 527 comments
The law has historically held that contracts for the provision of meretricious sexual services — providing sexual services for reward — are contrary to public policy and are therefore void and unenforceable. In Ashton v Pratt (No 2) [2012] NSWSC 3 (16 January 2012), Brereton J held that this was still the position in 2012. However, this article posits that Brereton J’s holding was arguably incorrect, being premised upon: (a) a misapplication of the principles to be applied in determining whether a contract is contrary to public policy, and whether public policy requires that contract be unenforceable; and (b) an incorrect appreciation as to the present dictates of public policy in this area. Seismic changes to the legislative and social landscape in New South Wales (‘NSW’), particularly over the past 30 years, have heralded a substantial departure from the 18th and 19th century position as to the relative immorality of providing sexual services for reward. As such, at least in some contexts, and at least in NSW, greater social harm now arises from maintaining the historical prohibition on the enforceability of such contracts, as opposed to permitting such contracts to be curially enforced.
Macauley argues
Ms Ashton brought a claim against the estate of the late
Mr Richard Pratt, the successful businessman and chairman (until his death) of packaging and logistics giant Visy Industries. Ms Ashton’s claim revolved around a central allegation that in November 2003, in consideration for her not returning to the escort industry but providing services (non-exclusively) to Mr Pratt as his mistress, Mr Pratt orally promised to Ms Ashton to: (a) settle $2.5 million on trust for each of her two sons; (b) pay her an annual allowance of $500 000; (c) pay her an annual allowance of up to $36 000 for the purposes of rent or, alternatively, buy her a house in the eastern suburbs of Sydney; and (d) pay her $30 000 annually for expenses, particularly travel expenses. Subsequent to these oral promises, Mr Pratt did pay to Ms Ashton not insubstantial sums of money, and partly purchased for her a car and other items. However, the promises alleged by Ms Ashton largely went unfulfilled. Upon Mr Pratt’s death in April 2009, he had not settled any money on trust for Ms Ashton’s children, nor had he paid anything to Ms Ashton after early 2005.
At first instance, Brereton J held that Mr Pratt had made the above promises to Ms Ashton in November 2003.[2] Notwithstanding, his Honour dismissed Ms Ashton’s claims. His Honour’s primary reason for rejecting Ms Ashton’s claim for breach of contract was that the parties had not, by their conduct, intended to give rise to legal relations. However, Brereton J also held in obiter dicta that had any legally binding contract come into existence, such a contract, being one for the provision of meretricious sexual services, would have been contrary to public policy and, therefore, illegal and unenforceable. This holding equally defeated (among other reasons) Ms Ashton’s claim in estoppel, as that doctrine did not afford a means for circumventing the dictates of public policy.
On appeal, Brereton J’s orders were upheld. Relevantly, the New South Wales (‘NSW’) Court of Appeal deliberately refrained from commenting on the holding that any contract between Ms Ashton and Mr Pratt on the terms alleged was contrary to public policy and unenforceable. This reflected the fact that Mr Pratt’s representatives did not place any reliance on appeal on Brereton J’s holding in this regard, consistent with the approach taken at trial (where Mr Pratt’s representatives did not plead that any contract was unenforceable for being contrary to public policy, nor was any such submission advanced by Mr Pratt’s representatives, notwithstanding that Brereton J drew the matter to the parties’ attention and invited submissions on the issue).
Despite historical precedent in support of the conclusion reached by Brereton J, it is contended that his Honour’s obiter dicta remarks as to the unenforceability of contracts for meretricious sexual services were arguably incorrect. Whatever may have been the position historically, in the 21st century, public policy does not appear to demand that contracts for the provision of sexual services for reward be ineluctably held to be unenforceable. This is true at least in NSW, and potentially is the same in other states and territories in Australia with a similar legislative landscape relating to prostitution and the operation of brothels (namely, the Australian Capital Territory (‘ACT’), Queensland and Victoria).
This article posits that in Ashton (No 2), Brereton J’s conclusion was premised upon: (a) a misapplication of the principles that determine whether the enforcement of a contract is contrary to public policy, and when public policy can legitimately subordinate private rights in the name of the public interest; and (b) an incorrect determination, in the present day, and in light of the changes to the legislative and social landscape that had occurred over the past 30 years, that public policy in NSW still demanded that contracts for the provision of sexual services for reward be held unenforceable. When these matters are accounted for, real doubt is cast over the conclusion reached by Brereton J.
Indeed, contrary to the conclusion arrived at by Brereton J, and at least in NSW, it is argued in this article that contracts for meretricious sexual services are not innately contrary to public policy. As such, courts in NSW should enforce and grant relief in respect of those contracts, at least so far as actions are brought on them by the service provider for breach of contract or to recover remuneration (and other benefits promised) for sexual services rendered. This position may also prevail in the ACT, Queensland and Victoria. However, it is beyond the scope of this article to examine closely each of these jurisdictions and their legal frameworks concerning the commercial supply of sexual services, which varies and includes, in some states, licensing regimes, a point that may affect the reasoning that applies to the position as it exists in NSW. Accordingly, this article focuses on the position in NSW, with only passing reference made to these other states.
Whether public policy prevents the enforceability of such contracts beyond the above circumstances is less clear, and is an issue further explored below. However, at a minimum, it is draconian to maintain the historical prohibition on the enforceability of such contracts in response to a suit brought by the service provider for breach of contract for services rendered. Maintaining the prohibition in such circumstances condones the exploitation of such persons and is a disproportionate and unjust response to any perceived immorality associated with the provision of sexual services for reward. As such, in light of the current legislative and social landscape in NSW, the maintenance of the historical prohibition sees greater social harm done than arises from a limited recognition of the enforceability of such a contract.
This article is divided into the following sections. Part II of this article traverses the law concerning the meaning of ‘public policy’, how that policy is to be ascertained, and the circumstances that need to exist so as to justify public policy rendering unenforceable an otherwise lawful contract. Part III then analyses the historical head of public policy regarding contracts that promote sexual immorality, either directly (for example, contracts for the provision of meretricious sexual services or prostitution) or indirectly (for example, contracts facilitating prostitution). Part IV examines the reasoning in Ashton (No 2) in light of the matters raised in Parts II and III. Part V concludes the article.
