Restitution Discussion Group Archives
| Sender: |
Andrew Tettenborn |
| Date: |
Mon, 28 Jan 2002 13:59:44 |
| Re: |
Change of position and liability incurred |
A nice case in the CA last Nov (I don't think it's been
picked up on RDG yet): how do you deal with change of position where a
liability is incurred but not yet paid?
In Pearce v
Lloyds Bank (Casetrack, 23/11/01), Fraudster buys gold bullion for
£90k from Pearce, a jeweller, by causing a forged transfer into Pearce's
account at Lloyds of that amount (all amounts approx). The bullion has
been bought for £90k by Pearce (ie no profit on the deal), but he buys
VAT free for £80k, being in due course accountable to Customs for the
£10k VAT element. Pearce is running on a shoestring, and Customs eventually
get their £10k from him 5 years later. The balloon duly goes up, and Lloyds
claims to debit Pearce's account by £90k. Writs fly.
Pearce is held entitled to change of position re £80k:
no problems. But what about the £10k? Pearce says he's entitled to have
the whole entry reversed as at the time of transfer into his account (and
hence he shouldn't have to pay o/d interest on the 10k). Lloyds say, No:
pay interest until you actually paid Customs, since otherwise you get
a free five-year o/d of £10k from us. CA say: Lloyds are right, and can
charge him interest, provided they accept liability for the £10k as and
when paid.
Is this the best way to deal with the problem? It seems
harsh that you get no relief for an item which appears on your balance
sheet straight away. Also, Pearce is effectively forced to give credit
to Lloyds - OK perhaps with a bank, but not necessarily where the payer
is less solid.
For these reasons, might a better way be to give Pearce
relief immediately for his liability to Customs, subject to a deduction
for interest between the time the £10k was credited to Pearce and the
time he paid it over to Customs?
Any thoughts?
Andrew
Andrew Tettenborn MA LLB Tel: 01392-263189 / +44-392-263189 (international) Snailmail: School of Law, [ Homepage: http://www.ex.ac.uk/law/
].
Bracton Professor of Law
Mobile: 07813-478102
Fax: 01392-263196 / +44-392-263196 (international)
University of Exeter,
Amory Building,
Rennes Drive,
Exeter EX4 4RJ
England
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