Sempra Metals Ltd. v. UK, (2007) 374 N.R. 105 (HL)

• Case Date: July 18, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 374 N.R. 105 (HL)

Sempra Metals Ltd. v. UK (2007), 374 N.R. 105 (HL)

MLB headnote and full text

Temp. Cite: [2008] N.R. TBEd. FE.006

Sempra Metals Limited (formerly Metallgesellschaft Limited) (respondents) v. Her Majesty's Commissioners of Inland Revenue and another (appellants)

([2007] UKHL 34)

Indexed As: Sempra Metals Ltd. v. United Kingdom (Commissioners of Inland Revenue) et al.

House of Lords

London, England

Lord Hope of Craighead, Lord Nicholls of Birkenhead, Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Mance

July 18, 2007.

Summary:

As a result of decisions of the European Court of Justice it was determined that a number of corporate taxpayers paid their advance corporation tax prematurely. A test claim with Sempra Metals Ltd. as claimant was commenced against the Commissioners of Inland Revenue seeking an award for restitution of the time value of money by which the Commissioners were unjustly enriched measured by compound interest. At first instance Park, J., decided that the compensation due to Sempra should be calculated on a compound basis ([2004] S.T.C. 1178). The Commissioners appealed.

The Court of Appeal, in a decision reported [2005] S.T.C. 687, dismissed the appeal. The Commissioners appealed again.

The House of Lords dealt with the compound interest issues in five separate judgments. The majority varied the judgments below as to the rate of compound interest, but otherwise dismissed the appeal.

Interest - Topic 5002

Interest as damages (prejudgment interest) - Jurisdiction - [See Interest - Topic 5482 ].

Interest - Topic 5009

Interest as damages (prejudgment interest) - Prejudgment interest - Calculation of (incl. rate) - [See Interest - Topic 5482 ].

Interest - Topic 5010

Interest as damages (prejudgment interest) - Calculation of interest - Simple or compound - [See Interest - Topic 5482 ].

Interest - Topic 5300

Interest as damages (prejudgment interest) - Interest on payment of money or debt withheld - General - [See Interest - Topic 5482 ].

Interest - Topic 5482

Interest as damages (prejudgment interest) - Particular claims - Restitution - As a result of decisions of the European Court of Justice it was determined that a number of corporate taxpayers paid their advance corporation tax prematurely - A test claim, with Sempra Metals Ltd. as claimant, was commenced against the Commissioners of Inland Revenue seeking an award for restitution of the time value of money by which the Commissioners were unjustly enriched measured by compound interest - The trial judge decided that the compensation due to Sempra should be calculated on a compound basis - The Commissioners appealed - The Court of Appeal dismissed the appeal - The Commissioners appealed again - The House of Lords held that the English courts had the power to award compound interest in this type of case and discussed how compound interest should be calculated in these circumstances - The court varied the judgments below as to the rate of compound interest, but otherwise dismissed the appeal - The court held that Sempra's claim for restitution ought to be measured by an award of compound interest at conventional rates calculated by reference to the rates of interest and other terms applicable to borrowing by the Government in the market during the relevant period.

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Authors and Works Noticed:

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Birks, Peter B.H., An Introduction to the Law of Restitution (1985), p. 413 [para. 119].

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Birks, Peter B.H., Unjust Enrichment (2nd Ed. 2005), pp. 3, 4 [para. 28]; 11 [para. 231]; 53 [paras. 33, 187, 232]; 55, 59 to 62 [para. 232]; 163 [para. 29]; 167 [paras. 29, 30, 41]; 168 [paras. 29, 30].

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Counsel:

Ian Glick, Q.C., Rupert Baldry and Gerry Facenna (Instructed by Solicitor's Office, HM Revenue and Customs), for the appellants;

Laurence Rabinowitz, Q.C., Francis Fitzpatrick and Steven Elliott (Instructed by Slaughter & May), for the respondents.

Agents:

[None disclosed.]

This appeal was heard by Lord Hope of Craighead, Lord Nicholls of Birkenhead, Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Mance. The decision of the House of Lords was delivered on July 18, 2007, when the following opinions were filed:

Lord Hope of Craighead - see paragraphs 1 to 50;

Lord Nicholls of Birkenhead - see paragraphs 51 to 131;

Lord Scott of Foscote - see paragraphs 132 to 153;

Lord Walker of Gestingthorpe - see paragraphs 154 to 188;

Lord Mance - see paragraphs 189 to 241.