In the first case of its kind in Canada, the Nova Scotia Small Claims Court found in favour of a former sex worker and allowed recovery of unpaid fees for services.
Background Facts
This decision deals with unpaid fees for services provided to the Defendant by the Claimant.
The Claimant was a sex worker and carried on business registered with the Canada Revenue Agency. The Claimant charged for her services on an hourly basis, with rates varying depending on where she worked and the nature of the activities involved. The Claimant advertised the availability of her services on LeoLists, which is an advertising and social media/messaging platform used by sex workers and their clients.
In late January, 2022 the Defendant contacted the Claimant through LeoList and requested her services. The Claimant indicated that she was free immediately. The Defendant requested the Claimant come to his residence. The Claimant told the Defendant that outcalls, which is a more dangerous form of sex work, cost $300 per hour plus a transportation fee. The Defendant agreed and the Claimant travelled to the Defendant’s via an Uber paid for by the Defendant.
The Claimant arrived at the Defendant’s abode at 2:34 AM and stayed for 7 hours, until 9:30 AM. The total fee for services was $2,100.
The Defendant gave the Claimant his bank card to withdraw funds from an ATM to pay for her services. When the Claimant attended the designated ATM, the bank card did not allow access to the Defendant’s bank account. The Defendant gave various excuses to the Claimant throughout the day and reassurances that he would pay. Eventually, the Defendant claimed he sent the Claimant $300 via PayPal.
Arguments of the Parties
The Defendant argued that because it is an offence under the Criminal Code of Canada to “obtain for consideration…the sexual services of a person” under Section 286.1, the contract could not be valid and was unenforceable. In other words, a contract to commit a criminal offence is illegal and void.
The Claimant argued that a modern approach to illegal contracts should be taken, relying on the Federal Court of Appeal judgement in Still v Minister of National Revenue, 1997 CanLII 6379. The Claimant asserted that the modern approach is that enforceability of a contract depends on an assessment of the legislative purpose or objects underlying the statutory prohibition and not based on the legality of the services contracted for.
In the alternative, the Claimant argued that based on the equitable principles of restitution or unjust enrichment, the Defendant was enriched and benefiting from seven hours of the Claimant’s companionship and services without compensating her.
Decision
Firstly, the Adjudicator found that there was indeed a contract between the parties. There was an offer, acceptance, consideration in the form of a promise to pay based on a quoted hourly rate. The value of the service was $2,100 and the amount paid was $300, which left a balance of $1,800 owing.
The Adjudicator applied the modern approach in Still and found the contract was enforceable. Still considered an employment contract of an undocumented worker and found it would be contrary to public policy and contemporary values if the contract was not enforceable. The analysis of illegal contracts in Still has been widely adopted.
The Adjudicator considered the legislative purpose and objectives of the Criminal Code prohibition against purchasing sexual services.
The Adjudicator referred to and relied on Canada (Attorney General) v Bedford, 2013 SCC 72, the Supreme Court of Canada decision striking down the then existing provisions in the Criminal Code, starting from the principle that selling sex for financial gain is not illegal. The struck provisions of the Criminal Code contributed to the risks and exploitation inherent in sex work.
The Adjudicator discussed the Government of Canada’s response to Bedford, which was to enact Bill C-36, The Protection of Communities and Exploited Persons Act. The primary purpose of which was to protect from exploitation those who sell their sexual services, despite the legislation prohibition against clients purchasing sexual services.
The Adjudicator reasoned that from this “It follows if the work is legal and if the business arrangements supporting the work are legal, then normal commercial law benefits, afforded by civil law, should be available to sex workers”. It would be logistically inconsistent to allow a sex worker to pursue a business and not allow the business enterprise to have access to a civil claim in contract in the event of a breach. Not allowing recovery would be against the public interest and bring the law in disrepute.
Moreover, the Adjudicator pointed to the fact that the Claimant’s enterprise is a registered business that collects and remits GST/HST on her income. The Adjudicator reasoned that if civil aspects of federal tax law apply to sex workings regarding business earnings, then the full range of legal principles applicable to a business, including the law of contract, apply to sex workers. This includes the remedies for a breach of commercial or contractual obligations.
The Adjudicator held that in the alternative, the Claimant was successful in establishing a claim of unjust enrichment.
The Adjudicator summarized his findings:
[56] Rather than refusing to grant the Claimant relief, I conclude because:
- Sex work is not illegal, and the amendments protected those who sell sexual services from exploitation, which includes commercial exploitation by those refusing to pay for services willingly bargained for;
- Other legislation applies to sex workers, such as the Excise and Income Tax Acts involving GST/HST and the payment of income tax;
- Contact with the Claimant was initiated by the Defendant who voluntarily procured her services and agreed to pay for them. He reiterated after those services were provided, his intention to pay; and
- Public policy, requires the courts not to increase or contribute to exploitation of sex work, and thus favours a regime that gives aggrieved sex workers access to the civil courts when they have a civil claim the contract between the parties, even if it is illegal for the Defendant, should be enforceable
The Defendant was ordered to pay the Claimant $1,800 in damages, interest and costs.
Implications
To date, this is the first case in Canada to enforce a contract for sex work and allow recourse for unpaid sexual services. This decision acknowledges sex work as a valid business enterprise that includes the use of contracts for service and that those contracts should be held to the same standards as other commercial contracts. Moreover, this provides and opens the door for sex workers to access legal remedies and ensure they are paid for their services in full.