Restitution from Public Authorities and the Treasury's Position: Woolwich Equitable Building Society V IRC

Abstract

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 IRC1 ('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 penalties.3) 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 ?57 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 employed.9 There, Lord Denning, giving the judgment of the Privy Council, said: