Restitution of Overpaid Tax

The Tax Collector by Pieter Brueghel the Younger

Angus Trumble, Associate Curator of European Art, Art Gallery of South Australia, writes:

Old Master paintings offer abundant possibilities for examining the subject of systems of power, legislation, economy and the artist. … At the end of the sixteenth century, a costly war of independence was fought in the Netherlands between the Protestant Dutch in the north and Spanish armies occupying Flanders (modern Belgium, sometimes referred to as the Spanish Netherlands) in the south. … the crippling burden of additional war taxes, and levies raised to pay for the repair of sea walls and other public works destroyed in battles and skirmishes, made the tax-collector the most hated of petty officials on both sides of the conflict. …

The tax-collector’s office is one is one of approximately forty copies by the artist of a lost painting by his much more famous father, Pieter Brueghel the elder. … The artist mocks the wastefulness of this hive of bumbling officials by showing mountainous bundles of cancelled bills and receipts spilling carelessly across the office floor. …

We are delighted that the following have agreed to act as the chairs of the sessions at the conference:

Session 1: Malcolm Gammie CBE QC (One Essex Court)

Session 2: David Ewart QC (Pump Court Tax Chambers)

Session 3: Zoe O’Sullivan (One Essex Court)

Session 4: Claire Reffin (One Essex Court)

Session 5: The Hon Mr Justice Henderson

Hart Publishing, who will have a stand at the conference, have just announced publication of the eagerly-awaited:

Unjust Enrichment and Public Law. A Comparative Study of England, France and the EU
by Rebecca Williams

This book examines claims involving unjust enrichment and public bodies in France, England and the EU. Part 1 explores the law as it now stands in England and Wales as a result of cases such as Woolwich v IRC [1993] AC 70 (HL), those resulting from the decision of the European Court of Justice (ECJ) in Case C-410/98 Metallgesellschaft and Hoechst v IRC [2001] ECR I–4727, [2001] EUECJ C-410/98, [2001] Ch 620 (8 March 2001) and those involving Local Authority swaps transactions. So far these cases have been viewed from either a public or a private law perspective, whereas in fact both branches of the law are relevant, and the author argues that the courts ought not to lose sight of the public law issues when a claim is brought under the private law of unjust enrichment, or vice versa. In order to achieve this a hybrid approach is outlined which would allow the law access to both the public and private law aspects of such cases.

Since there has been much discussion, particularly in the context of public body cases, of the relationship between the common law and civilian approaches to unjust enrichment, or enrichment without cause, Part 2 considers the French approach in order to ascertain what lessons it holds for England and Wales. And finally, as the Metallgesellschaft case itself makes clear, no understanding of such cases can be complete without an examination of the relevant EU law. Thus Part 3 investigates the principle of unjust enrichment in the European Union and the division of labour between the European and the domestic courts in the ECJ’s so-called ‘remedies jurisprudence’. In particular it examines the extent to which the two relevant issues, public law and unjust enrichment, are defined in EU law, and to what extent this remains a task for the domestic courts.

Publication is timely as it comes on the eve of the important conference; and the author’s paper at the conference will discuss these themes.

The Venue page contains comprehensive practical and logistical information about:

*    Merton College,
*    Getting to Merton,
*    What to do on arrival,
*    The TS Eliot Lecture Theatre, and
*    Internet access at the conference.

For more detail, please follow the links under the above headings.

Enjoy the conference!

In Jiggens v Low [2010] EWHC 1566 (Ch) (29 June 2010), Roth J held that, although the principle in Hastings-Bass derives its name from the decision of the Court of Appeal in Re Hastings-Bass, deceased; Hastings v Inland Revenue [1974] EWCA Civ 13, [1975] Ch 25 (14 March 1974), the principle was comprehensively analysed and articulated more recently by Lloyd LJ, siting as a judge of the High Court, in Sieff v Fox [2005] EWHC 1312 (Ch), [2005] 1 WLR 3811 (23 June 2005) [119]:

Where trustees act under a discretion given to them by the terms of the trust, in circumstances in which they are free to decide whether or not to exercise that discretion, but the effect of the exercise is different from that which they intended, the court will interfere with their action if it is clear that they would not have acted as they did had they not failed to take into account considerations which they ought to have taken into account, or taken into account consideration which they ought not to have taken into account.

The principle has been applied in Ireland by Kelly J in Irish Pensions Trust Ltd v Central Remedial Clinic [2005] IEHC 87, [2006] 2 IR 126 (18 March 2005) and by Finlay-Geoghegan J in Boliden Tara Mines Limited v Cosgrove [2007] IEHC 60 (09 March 2007). More recently, in England and Wales, the Sieff v Fox formulation has been followed and applied by Robert Englehart QC (sitting as a Deputy Judge of the Chancery Division) in Pitt v Holt [2010] EWHC 45 (Ch) (18 January 2010), and by Norris J in Re Futter [2010] EWHC 449 (Ch) (11 March 2010), as well as by Roth J in Jiggens v Low. In that case, Roth J held that a deed of appointment made by the trustees of a settlement was void pursuant to the Hastings-Bass principle; he accepted evidence of the surviving trustees that the if they had properly understood the tax consequences of the exercise of their power of appointment, they would have acted differently. Roth J did not, on the facts, need to consider whether tax overpaid in such circumstances could be recovered. However, Monica Bhandari’s paper for the book will consider whether there is any reason to treat ordinary taxpayers and trustees differently when it comes to recovering overpaid tax.

Note: the image is a bronze statute of champion racehorse Mill Reef, at Park House Stables, Kingsclere, the stables of Capt Peter Robin Hood Hastings-Bass, whose marriage settlement was the subject of Re Hastings-Bass, and whose son-in-law Ian Balding now runs the stables.

The conference is constructed around the decision of the House of Lords in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 (HL) that taxes unlawfully exacted by the Revenue are recoverable by the taxpayer as of right. The speeches in the case were delivered on 30 July 1992. It will be reassessed at the conference by Dr Charlie Webb.

The principles in Woolwich were recently at issue in the House of Lords in Sempra Metals v IRC [2007] UKHL 34, [2008] 1 AC 561, in which the speeches were delivered on 18 July 2007. It will be discussed at the conference by Dr Tariq Baloch.

Given these connections with the month of July, it is entirely appropriate that this month should see this major conference on the whole issue of the recovery of overpaid tax.

The Taxation and Customs Union DG of the EU Commission has just published a Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax, with regard to the duration of the obligation to respect a minimum standard rate (COM (2010) 331 | 24/06/2010 | pdf). It proposes that the current minimum standard rate of VAT in Member States, set at 15%, be extended from 1 January 2011 to 31 December 2015. This rather technical change is unlikely to result in any overpayments of VAT giving rise to restitution claims, but many of the current cases arise because of the impact of EU law. The interaction of EU tax law and the domestic law of restitution will be considered by Maximilian Schlote in his contribution to the conference.

The final programme for the conference has now been published on the Programme page, and the Papers and Venue pages have also been updated.

We are delighted that Hart Publishing, Oxford will have a display stand at the conference.

This particularly welcome because many of their authors will be speaking at the conference. For example:

Dr Tariq Baloch (Freshfields, Dubai / LSE) will speak on Interest after Sempra; his book Unjust Enrichment and Contract is published by Hart;

Prof Elise Bant (Melbourne) will present a paper on When can change of position be a defence to claims for restitution of unlawfully exacted tax?; her book The Change of Position Defence is published by Hart;

Prof Catherine Barnard (Cambridge) & Julian Ghosh QC (Cambridge / Leiden / Pump Court) will speak on EU Remedies; Catherine Barnard is editor or co-editor of seven Hart publications, including the Cambridge Yearbook of European Legal Studies, Vol 12, 2009-2010 and The Outer Limits of European Union Law;

Monica Bhandari (KCL) will present a paper on Tax, restitution and Hastings-Bass; her book on Overpaid Tax will be published by Hart;

Prof James Edelman (Oxford) will speak on Change of position: A defence of “unjust disenrichment”; his book Gain-Based Damages is published by Hart;

James Lee (Birmingham) will speak on Defences to claims for restitution of overpaid tax; he is editor of From House of Lords to Supreme Court. Judges, Jurists and the Process of Judging published by Hart;

Prof Charles Mitchell (Oxford) will speak on The recovery of ultra vires payments by public bodies; he has edited or co-edited five books published by Hart, including Constructive and Resulting Trusts and Landmark Cases in the Law of Restitution;

William Swadling (Oxford) will discuss Prof Edelman’s contribution in a paper entitled Understanding the defence of change of position – A reply to Prof Edelman; he is editor of The Quistclose Trust. Critical Essays published by Hart; and

Dr Rebecca Williams (Oxford) will speak on Unjust enrichment, public law, and restitution of overpaid tax; her book Unjust Enrichment and Public Law. A Comparative Study of England, France and the EU is published by Hart.

Much of the litigation concerning restitution of overpaid tax arises because domestic tax provisions infringe EU law. In Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, [1983] EUECJ R-199/82 (9 November 1983), the ECJ (as the CJEU then was) held that EU law required the restitution of taxes exacted contrary to EU law. It is one of the leading cases on the principle against unjust enrichment in EU law. The CJEU (as the ECJ now is) has recently reaffirmed that general principle. In Case C-470/08 Kornelis van Dijk v Kampen (see ECJblog and Cearta), the Court held

[41] In accordance with the principles common to the laws of the Member States, the right to restitution from the person enriched is conditional upon there being no valid legal basis for the enrichment at issue (Case C-47/07 P Masdar (UK) v Commission [2008] [2008] ECR I‑0000, paragraphs 44 to 46 and 49).

The extent of the remedies mandated by the San Giorgio principle will be discussed by Prof Catherine Barnard and Julian Ghosh QC in their contribution to the conference.