Woolwich Building Society v. Commissioners of Inland Revenue, (1992) 145 N.R. 163 (HL)

• Case Date: July 20, 1992
• Jurisdiction: Canada (Federal)
• Citations: (1992), 145 N.R. 163 (HL)

Woolwich Building Soc. v. Inland Rev. (1992), 145 N.R. 163 (HL)

MLB headnote and full text

Woolwich Building Society (respondents) v. Commissioners of Inland Revenue

(appellants)

Indexed As: Woolwich Building Society v. Commissioners of Inland Revenue

House of Lords

London, England

Lord Keith of Kinkel, Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Browne-Wilkinson

and Lord Slynn of Hadley

July 20, 1992.

Summary:

Woolwich Building Society paid taxes to the Inland Revenue in 1986 and early 1987. The tax regulations under which the taxes were paid were declared ultra vires in July 1987. The Inland Revenue refunded the taxes, but argued that interest was payable only from July 1987, not from when the taxes were paid. The building society sued Inland Revenue for the interest accumulated before July 1987. The trial judge dismissed the building society's action. The building society appealed.

The Court of Appeal allowed the appeal and awarded the interest claimed by the building society. The court held that where money was paid under an illegal demand for taxation by a government body the payer had an immediate prima facie right to recover the payment. The Commissioners of Inland Revenue appealed.

The House of Lords, Lord Keith of Kinkel and Lord Goff of Chieveley, dissenting, dismissed the appeal.

Mistake - Topic 1706

Recovery of money paid under mistake - Mistake of law - Money paid under invalid legislation - [See first Restitution - Topic 69 ].

Restitution - Topic 69

Unjust enrichment - Where money paid under invalid law - The House of Lords held that money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by the citizen as of right - The court opined, that this principle might extend to cases in which a tax or other levy is wrongly exacted by a public au­thority under an erroneous interpretation of legislation - Further, the principle of recovery is not inapplicable simply because the citizen paid the money under a mistake of law.

Restitution - Topic 69

Unjust enrichment - Where money paid under invalid law - The Woolwich Build­ing Society paid taxes to the Crown under protest that the money was not due because the applicable taxing regulations were ultra vires - Woolwich immediately began judicial review proceedings to chal­lenge the validity of the regulations - Woolwich was successful and the regula­tions were declared ultra vires in July 1987 - The Crown refunded the tax plus interest which accrued after July 1987, but refused to pay interest accumulated prior to that date - Woolwich claimed that interest was payable from the time the payments of tax were made - The House of Lords held that the money paid under the ultra vires demand was recoverable by Woolwich and therefore Woolwich was entitled to interest as claimed.

Restitution - Topic 70

Unjust enrichment - Where money paid under mistake of law - [See first Restitu­tion - Topic 69 ].

Cases Noticed:

Sebel Products Ltd. v. Customs and Excise Commissioners, [1949] Ch. 409, refd to. [para. 5 et seq.].

Chetnik Developments Ltd. v. London Borough of Tower Hamlets, [1988] A.C. 858; 97 N.R. 358 (H.L.), refd to. [para. 6 et seq.].

R. v. Tower Hamlets L.B.C.; Ex parte Chetnik Developments Ltd. - see Che­tnik Developments Ltd. v. London Bor­ough of Tower Hamlets.

Fibrosa Spolka Akcyjna v. Fairbairn Law­son Combe Barbour Ltd., [1943] A.C. 32, refd to. [para. 9 et seq.].

Newdigate v. Davy (1693), 1 Ld. Raym. 742, refd to. [para. 9 et seq.].

Campbell v. Hall (1774), 1 Cowp. 204; 98 E.R. 1045, refd to. [para. 9 et seq.].

Dew v. Parsons (1819), 2 B. & Ald. 562, refd to. [para. 10 et seq.].

Mason v. New South Wales (1959), 102 C.L.R. 108 (Aust. H.C.), refd to. [para. 10 et seq.].

Morgan v. Palmer (1824), 2 B. & C. 729; 107 E.R. 554, refd to. [para. 10 et seq.].

Steele v. Williams (1853), 8 Ex. 625; 155 E.R. 1502, refd to. [para. 11 et seq.].

Hooper v. Exeter Corp. (1887), 56 L.J.Q.B. 457, refd to. [para 11 et seq.].

Slater v. Burnley Corp. (1888), 59 L.T. 636, refd to. [para. 12 et seq.].

Queens of the River Steamship Co. Ltd. v. Conservators of the River Thames (1899), 15 T.L.R. 474, refd to. [para. 12 et seq.].

Whiteley (William) Ltd. v. The King (1909), 101 L.T. 741, refd to. [para. 13 et seq.].

William Whiteley Ltd. - see Whiteley (William) Ltd.

Maskell v. Horner, [1915] 3 K.B. 106 (C.A.), refd to. [para. 14 et seq.].

Attorney General v. Wilts United Dairies Ltd. (1921), 37 T.L.R. 884, refd to. [para. 15 et seq.].

Brocklebank Ltd. v. R., [1924] 1 K.B. 647; [1925] 1 K.B. 52, refd to. [para. 15 et seq.].

National Pari-Mutual Association Ltd. v. The King (1930), 47 T.L.R. 110, refd to. [para. 16 et seq.].

Twyford v. Manchester Corp., [1946] Ch. 236, refd to. [para. 17 et seq.].

Glasgow Corp. v. Lord Advocate, [1959] S.C. 203, refd to. [para. 18 et seq.].

South of Scotland Electricity Board v. British Oxygen Co. Ltd., [1959] 1 W.L.R. 587; [1959] S.C. (H.L.) 17, refd to. [para. 19 et seq.].

British Oxygen Co. v. South of Scotland Electricity Board - see South of Scot­land Electricity Board v. British Oxygen Co. Ltd.

Great Western Railway Co. v. Sutton (1869), L.R. 4 H.L. 226, refd to. [para. 19 et seq.].

Sargood Brothers v. The Commonwealth (1910), 11 C.L.R. 258, refd to. [para. 23 et seq.].

Atchison, Topeka & Santa Fe Railway Co. v. O'Connor (1912), 223 U.S. 280 (Cir. Ct., Dist. of Colorado), refd to. [para. 23 et seq.].

Air Canada and Pacific Western Airlines Ltd. v. British Columbia (1989), 95 N.R. 1; 59 D.L.R.(4th) 161 (S.C.C.), refd to. [paras. 24, 46, 75, 114].

Bilbie v. Lumley (1802), 2 East 469, refd to. [para. 28 et seq.].

Henderson v. Folkestone Waterworks Co. (1885), 1 T.L.R. 329, refd to. [para. 28].

Eadie v. Brantford (Township) (1967), 63 D.L.R.(2d) 561 (S.C.C.), refd to. [para. 43].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 44].

Nepean Hydro Electric Commission v. Ontario Hydro (1982), 41 N.R. 1; 132 D.L.R.(3d) 193 (S.C.C.), refd to. [para. 46].

Hydro Electric Commission of Township of Nepean - see Nepean Hydro Electric Commission.

Auckland Harbour Board v. The King, [1924] A.C. 318, refd to. [para. 49].

Amministrazione delle Finanze dello Stato v. San Giorgio S.p.A. (Case 199/82), [1985] 2 C.M.L.R. 658 (Eur. C.J.), refd to. [para. 50].

Moses v. Macferlan (1760), 2 Burr. 1005, refd to. [para. 55 et seq.].

Fairbanks v. Snow (1887), 13 N.E.R. 596, refd to. [para. 76].

Statutes Noticed:

Bill of Rights Act (U.K.), 1688, art. 4 [para. 22].

Finance Act (U.K.), 1985, sect. 40 [para. 1].

Finance Act (U.K.), 1986, sect. 47(1) [para. 1].

Finance Act (U.K.), 1989, sect. 24, sect. 29 [para. 21].

Finance Act (U.K.), 1972, Schedule 20, sect. 4(2), sect. 4(3), sect. 10(3) [para. 36].

General Rate Act (U.K.), 1967, sect. 9 [paras. 6, 21, 79].

Income and Corporation Taxes Act (U.K.), 1970, sect. 343 [paras. 1, 36].

Income and Corporation Taxes Act Regu­lations (U.K.), Income Tax (Building Societies) Regulations, S.I. 1986, No. 482, generally [para. 1], sect. 7 [para. 36].

Income Tax (Building Societies) Regula­tions (U.K.) - see Income and Corpora­tion Taxes Act Regulations (U.K.), Income Tax (Building Societies) Regula­tions.

Inheritance Tax Act (U.K.), 1984, sect. 241 [para. 21].

Stamp Act (U.K.), 1891, sect. 13(4) [para. 21].

Supreme Court Act (U.K.), 1981, sect. 35A [paras. 3, 97].

Taxes Management Act (U.K.), 1970, sect. 33 [paras. 21, 35, 36, 102]; sect. 118(1) [para. 36].

Treaty of Rome, art. 174 [para. 103].

Authors and Works Noticed:

Birks, Introduction to the Law of Restitu­tion (1985), p. 295 [para. 85].

Birks, Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights, in Essays in Restitution, Finn Ed., p. 164 et seq. [para. 29].

Bullen and Leake, Precedents of Pleading (3rd. Ed. 1868), p. 50 [para. 33].

Burrows, Andrew, Public Authorities, Ultra Vires and Restitution, in Essays on the Law of Restitution, Burrows Ed. (1991), p. 39 et seq. [para. 43].

Cornish, W.R., Sultan Azlan Shah Lecture (1987), 14 Jo. of Mal. and Comp. Law 41, generally [para. 29].

Finn, Essays in Restitution, p. 164 et seq. [para. 29].

Leake on Contracts (5th Ed.), p. 61 [para. 33].

United Kingdom, Law Commission, Con­sultation Paper No. 120, Restitution of Payments Made Under a Mistake of Law (1991), generally [paras. 27, 28, 79], pp. 74-84 [para. 34].

Counsel:

Ian Glick, Q.C., A. Moses, Q.C., and D. Pannick, for the Commissioners of Inland Revenue;

John Gardiner, Q.C., N. Underhill and J. Peacock, for the Woolwich Building Society.

This appeal was heard on March 17-19, and 23-26, 1992, before Lord Keith of Kinkel, Lord Goff of Chieveley, Lord Jaun­cey of Tullichettle, Lord Browne-Wilkinson and Lord Slynn of Hadley, of the House of Lords. The decision of the court was delivered on July 20, 1992, including the following opinions:

Lord Keith of Kinkel (dissenting) - see paragraphs 1 to 25;

Lord Goff of Chieveley - see paragraphs 26 to 52;

Lord Jauncey of Tullichettle (dissenting) - see paragraphs 53 to 86;

Lord Browne-Wilkinson - see para­graphs 87 to 95;

Lord Slynn of Hadley - see paragraphs 96 to 125.