Restitution from Public Authorities and the Treasury's Position: Woolwich Equitable Building Society V IRC
| Date | 01 November 1993 |
| Author | Timothy Hill |
| Published date | 01 November 1993 |
| DOI | http://doi.org/10.1111/j.1468-2230.1993.tb01911.x |
CASES
Restitution from Public Authorities and the Treasury’s
Position:
Woolwich Equitable Building Society
v
IRC
Timothy
Hill
*
The purpose of this Note is to highlight the importance of a recent case which
significantly alters the law’s approach to unjust enrichment. In
Woolwich
Equitable Building Society
v
ZRC’
(‘
Woolwich
’),
the building society in question
made payments of tax to the Revenue pursuant to Regulations2 despite its belief
that the demands were
ultra vires.
(These ‘without prejudice’ payments were made
to avoid adverse publicity and the risk of incurring
penal tie^.^)
Subsequent
litigation held that these demands were
ultra vires
and void.4 The Revenue repaid
the sums together with interest from the
date
of
that judgment.
Yet the Society
wanted more: it claimed interest from the
date
of
payment;
for otherwise the
Revenue had a
f57
million interest-free loan.5 It followed from such a claim6
that the sums paid should be recoverable as money had and received from the date
of payment. The Society succeeded by a bare majority in the House of Lords.7
Three principal theories have been advanced in answer to the question of
whether a person who has made a payment demanded by a public official,
ultra
vires,
may succeed by claiming restitution. The first is, in essence, that the basis of
receovery should be limited to cases where the plaintiff paid the money under
duress
or
a mistake. Such an approach is said to be adequate if the ‘exception’
to
the mistake of law bar, as recognised in
Kiriri Cotton
Co
Ltd
v
Dewani,8
is
empl~yed.~ There, Lord Denning, giving the judgment of the Privy Council,
said:
The true proposition is that money paid under a mistake of law, by itself and without more, cannot be
recovered back
.
.
.
If there is something more in addition to the mistake of law
-
if there is something
in the defendant’s conduct which shows that,
of
the two of them, he is the one primarily responsible for
the mistake
-
then it may be recovered back.
Thus,
if as between the two of them the duty
of
observing
the law is placed on the shoulders of the one rather than the other
-
it being imposed on him specially
for
the
protection of the other
-
then they are not inpan‘
delicto
and the money can be recovered back.’O
*Barrister.
1
2
3
4
5
6
7
8
9
10
[I9931
AC
70.
Income
Tax
(Building Societies) Regulations
1986
(SI
1986
No
482).
The Society made it clear to the Revenue that it paid under protest, in the belief that the demands were
ultra vires.
It is important to note that the following litigation was argued on the basis that there had
been no mistake of law.
[1991]
1
WLR
1400
(HL).
The amount of interest, if due, was agreed between the parties to be
f6,730,000.
Pursuant to
s
35A
of the Supreme Court Act
1981.
Thus, as Glidewell
LJ
said, to succeed the Society
had to show
(1)
that the Revenue was under a legal obligation to repay the capital sum and thus owed
the Society a debt, and
(2)
that the Society had a right to be repaid,
so
that its cause of action arose at
the date on which it made the payments:
[1993]
AC
70, 78.
Lords Goff, Browne-Wilkinson and Slynn dismissing the Revenue’s appeal; Lords Keith and Jauncey
dissenting.
[1960]
AC
192
(PC).
Burrows, ‘Public Authorities,
Ultra Wres
Payments and Restitution’ in Burrows (ed),
Essays
on
the
Law
ofResriturion
(Oxford: Clarendon Press,
1991).
ibid
204.
0
The Modem Law Review Limited
1993
(MLR
565,
November). Published by Blackwell Publishers,
108
Cowley Road,
Oxford
OX4
1JF
and
238
Main Street, Cambridge, MA 02142,
USA.
856
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