New Zealand Law Students Journal
Last Updated: 14 January 2013
COMMERCIAL SEXUAL SERVICE CONTRACTS AND PUBLIC POLICY: SECTION 7 OF THE PROSTITUTION REFORM ACT 2003
Section 7 of the Prostitution Reform Act 2003 states: “No contract for
the provision of, or arranging the provision of,
services is illegal or void on public policy or other similar
In essence, the section facilitates “freedom of contract” in
respect of sexual service contracts by abrogating
common law jurisdiction to refuse to enforce sexual service contracts
on public policy ground.
However, in enacting section 7, did Parliament intend
to facilitate “freedom of contract” to such an extent that the
courts will be required to enforce contracts in cases where the qualitative
nature of the sexual service contracted for constitutes
a sexually immoral act
or one that borders criminal assault?
A. Contracts contrary to Public Policy
It is well established at common law that a court can hold a contract
invalid or illegal because it is contrary to public policy.1 The
jurisdiction is embodied in the maxim: ex turpi causa non oritur
action (from an immoral consideration an action does not arise).
In New Zealand, the Illegal Contracts Act 1970 augments the consequences of
this doctrine.2 In order to be triggered, the ex turpi causa
rule does not require a contravention of law; it can be triggered by
consideration that is immoral but not illegal.
* B Ed, Candidate for LLB (Hons); BA, University of Auckland.
1 Smith v White  UKLawRpEq 59; (1866) L.R. 1 Eq. 626.
2 The common law is still relevant to determine whether a contract
is illegal. However, the common law consequences have been replaced
discretion powers of the court to grant relief where appropriate under s 7 of
the Illegal Contracts Act 1970.
The New Zealand Law Students’ Journal (2007) 1 NZLSJ
For centuries, the act of prostitution has been held to be contrary to
public policy and sufficient to justify the refusal of enforcement.
weight of immorality justified holding the contract to be invalid without the
need to contemplate other factors like
the qualitative nature of the sexual
service contracted for. Prostitution was so intensely immoral that it
a contract by association, even if the contract’s
consideration did not involve the act of prostitution.3
Today, the countervailing weight of public policy is less intense. Public
policy is temporally dependent; it is not immutable.4 Societal
opinion of sexual immorality has changed over time5 and this has been
reflected in the courts. It appears that the act of prostitution is no longer
sufficient to defeat a contract on
public policy grounds. The Hong Kong High
Court in Chuang Yue Chieng Eugene v Ho Yau Kwong Kevin6
expressed doubt that the taint of prostitution could justify a
strike-out application. Comparably, the Federal Court of Australia,
(t/as Exotic Studios) v Farrell7 has held that an employment
contract’s association with prostitution was insufficient to refuse a
claim for worker’s
These cases suggest that the current common law position regarding sexual
service contracts is that the act of prostitution is
insufficient to refuse to
enforce a sexual service contract: other factors are necessary to ‘tip the
balance’. As the
courts have not been required to consider the
qualitative nature of the sexual act in their determination, it is
that in certain cases the immoral nature of the sexual act contracted
for would tip the balance. This would leave sexual service
require the performance of a sexually deviant act open to
3 Pearce v Brooks  UKLawRpExch 22; (1866) LR 1 Exch 213; Smith v White  UKLawRpEq 59; (1866) L.R. 1 Eq. 626.
4 See H. Guest (ed.), Chitty on Contracts, 28th ed (1999) Vol. I, Para. 17-004.
5 Examples of such changes in opinion include the reduction of social stigma attached to:
adultery, homosexuality and some alternative sexual acts.
6 ChuangYue Chieng Eugene v Ho Yau Kwong Kevin  4 HKC 245.
7 Barac (t/as Exotic Studios) v Farrell  FCA 1389; (1994) 125 ALR
Commercial Sexual Service Contracts and Public Policy 193
B. Section 7 of the Prostitution Reform Act 2003
The Prostitution Reform Act 2003 was enacted for the purpose of
decriminalizing prostitution and providing a framework to safeguard
human rights of sex workers and for the promotion of their safety and
welfare.8 However, notwithstanding this intention, section 7 does
not apply to employment contracts for sex workers. Nor does it cover other
ancillary contracts like lease agreements for brothel premises or contracts
Section 7 contemplates two types of contract: commercial sexual
service contracts9 and contracts for the arrangement of a contract
for commercial sexual service. It applies to contracts that are
related to the provision of physical participation by a person in
sexual acts with, and for the gratification of another
which payment or other reward is provided.
As the ambit is restricted to contracts directly related to the act
of prostitution, one could assume that section 7
is a statement that the
provision of sexual services is not contrary to public policy to such a degree
that contracts should be
refused enforcement. However, if this is the case, the
courts would be required to enforce contracts in cases where the qualitative
nature of the sexual service contracted for constitutes a sexually
immoral act or one that borders criminal assault.
Whether this is the true interpretation and effect of section 7 will turn on
whether “public policy” should be interpreted
public policy against prostitution or whether it should be interpreted as public
policy against commercial sexual
service contracts in general. If the
former is adopted, then section 7 precludes commercial sexual service contracts
being refused enforcement for the mere reason that they are
contracts for prostitution, which leaves the option
open in respect of
contracts requiring the performance of a sexual act which is independently
immoral and contrary to public policy.
If the latter interpretation is
adopted, then all sexual service contracts will be capable of
of the qualitative nature of the sexual act
contracted for, subject to the commission of illegal acts.
8 S 3 Prostitution Reform Act 2003.
9 S 4(1) Prostitution Reform Act 2003.
C. Possible Interpretations of Parliament’s intention
1. Affirmation of the Common Law Position
If public policy is interpreted as merely public policy
against prostitution, section 7 will have the effect of
affirming the common law
position taken by the courts in recent years. As this position is not
conclusive, an affirmation
in the form of section 7 would provide a degree
of certainty for New Zealand courts if asked to determine whether
prostitution is a sufficient justification to refuse enforcement of a sexual
Two issues arise with this particular interpretation. Firstly, it requires a
significant reading down of the term ‘public
is very restrictive in the light of the term’s wide interpretative
capability. It is also inconsistent
with the addend ‘other similar
grounds’ at the end of section 7, which suggests a wider ambit.
Secondly, the interpretative ambit of public policy only addresses policy against public policy and does not extend to public policy concerns flowing from the sexual acts contracted for. Therefore contracts involving “immoral sexual acts” would be open to defeat and sex workers who provide such services would be without contractual rights. This would be inconsistent with the aim of the Prostitution Reform Act
2003 being the promotion of safety and welfare of sex workers. It
would also be an illusory interpretation that ignores
the reality of the sex
industry; being that alternative or deviant sexual practices are commonly
demanded.10 The reality of the industry extends well past the
comfort zone of acts occurring within the marital bed or those
upon our television screens. Specialist acts like slave and
master, group sex, human defecation, and sado masochism11 are all
commonly engaged in by consenting adults. No doubt there are numerous
other acts in the light of the infinite
ambit of human gratification
10 J Jordan, The Sex Industry in New Zealand (2005)
Wellington: Ministry of Justice.
2. Contracts for Sexually Deviant Acts that are not Illegal
The issues identified above could be addressed by taking a wider interpretation of public policy. This would require “public policy” to bear the meaning of countervailing public policy against sexual service contracts generally, meaning that all public policy considerations surrounding sexual service contracts would be insufficient to refuse the enforcement of a sexual service contract.
Although this interpretation is wider and more consistent with the aims
of the Act and the reality of the context it is being applied to; it is not
absolute. Obviously section 7 could not be used
to protect sexual
service contracts that require the performance of an illegal act. To allow such
an interpretation would
result in absurdity with an extreme example
being that a person could enforce another to commit murder under a sexual
contract. But would all contraventions of law be considered outside the
protection of section 7?
3. Mere Contraventions of Law
The phrase ‘or similar grounds’ at the end of section 7
suggests a category of circumstances that are similar
or related to public
policy, but are distinctive enough to be afforded a separate category. It may be
that this separate category
intends to cover circumstances where the
execution of the contract contravenes a law that does not expressly or impliedly
the contract. In substance, this refers to breaches of laws that are
regulatory in nature. This is the circumstance envisaged by
section 5 of the
Illegal Contracts Act 1970, which states:
A contract lawfully entered into shall not become illegal
or unenforceable by any party by reason of the fact that
its performance is in
breach of any enactment, unless the enactment expressly so provides or
its object clearly so requires.
If this interpretation is adopted, mere contraventions of law resulting
from the performance of a commercial sexual service contract
shielded by section 7. For example, in the context of the Prostitution Reform
Act 2003, if the performance of
the sexual service or arrangement
of the sexual service breached sections 8 or 10 of that
Act,12 sections which are merely regulatory in nature, this
would, with reference to section 5 of the Illegal Contracts Act 1970, be
justification to refuse enforcement of the contract.
Conversely, a breach of section 23 of the Prostitution Reform Act 2003 would fall outside of this ambit. That section prohibits the use of persons under eighteen years in a commercial sexual service contract and imposes a term of imprisonment of up to seven years. In light of the proviso in section 5 of the Illegal Contracts Act 1970, the offence’s
‘object clearly so requires’ that the contract be
D. Sexual Service Involving Bodily Harm
It is arguable whether Parliament intended for section 7 to apply to
commercial sexual service contracts, the performance of
which requires the
intentional infliction of bodily harm with the consent of a ‘victim’
who is sui juris.13
In England, the House of Lords in R v Brown14 held by a
3:2 majority, that a person cannot lawfully consent to criminal assault
for the purpose of sexual gratification
because there is no public
interest justifying the commission of the harm.15 The New Zealand
Court of Appeal in R v Lee16 considered Brown and
identified numerous problems and exceptions to the application of the rule,
ultimately favouring the minority position and judgment
of Lord Mustill in
Brown. The Court of Appeal held:17
[T]here is an ability to consent to the intentional infliction of harm
short of death unless there are good public policy reasons
to forbid it and
those policy reasons outweigh the social utility of the activity and
12 s 8 of the Prostitution Reform Act 2003 requires the taking of reasonable steps to adopt safe sex practices. s 10 requires compliance with the Health and Safety in Employment Act 1992.
13 Obviously there would be no issue if the party was not sui juris or if the contract could be avoided due to lack of consent on general principles of contract law.
14 R v Brown  UKHL 7;  2 All ER 75.
15 Ibid 75; In R v Wilson  QB 47 the English Courts held that activities involving bodily harm engaged upon within the confines of the marital bed were justifiable.
16 R v Lee  NZCA 60;  3 NZLR 42.
17 Ibid 116.
the value placed by our legal system on personal autonomy. A high value
should be placed on personal autonomy. Any constraints
on human activity
must be justified ... In cases where grievous bodily harm is intended,
however, there may be
policy reasons for criminalising such
conduct despite consent, even on the test we propose.
In the light of Lee, it follows that not all intentional inflictions
of bodily harm for the purposes of sexual gratification will constitute
assault. Therefore, the validity of a commercial sexual service
contract, the performance of which constitutes intentional infliction
bodily harm, will turn on the degree of harm intended and relevant
If “public policy” is given the meaning of public
policy against commercial sexual service contracts in
general then it is
possible that section 7 would protect sexual service contracts
involving the intentional infliction
of bodily harm provided the harm
does not constitute criminal assault. It is likely that this would represent
high water mark of section 7.
The operation of section 7 of the Prostitution Reform Act 2003 lies dormant awaiting its use as a defence against claims that a commercial sexual service contract should be suppressed or struck down on public policy grounds. The conservative interpretation of Parliament’s intention is that the provision merely affirms the common law. Given the issues of this approach, a pragmatist would suggest a wider interpretation to include contracts that involve sexually deviant conduct that may ‘tip the balance’. The pragmatic approach is the preferred interpretation in the light of the purpose of the Prostitution Reform Act 2003 and the context to which section 7 is to be applied.
The New Zealand Law Students’ Journal (2007) 1 NZLSJ