![]() |
RDG
online Restitution Discussion Group Archives |
||||||||||||
![]() |
![]() |
||||||||||||
|
Dear all,
My initial thought is that the answer is no. The benefit
is not conferred under the contract. A confers a benefit on B of £X +
VAT. If we stop there B is enriched at the expense of A (fairly obviously).
That's B's VAT liability which he pays. If we stop there, I wonder whether
that is a disenriching change of position. B is no longer enriched by
the VAT money because he has paid it over to Customs in pursuance of his
liability. It is not that B was not enriched. He was. We are concerned
here with value received, subject to defences. At that point therefore
B can only be liable in unjust enrichment to the tune of £x. A recovers
the VAT. As Simon McDonald says the payment loops round in a big circle
and ends back at A. Whether B is enriched or not ceases to be an issue,
because any enrichment is not at the expense of A.
A is required to repay the VAT to customs. That in essence
puts us back in the position where A never reclaimed the VAT. But at that
point I do not see how A can reclaim the VAT money from B. Certainly he
may (or may not) have a claim against B for the £x, but B can claim he
has changed his position by accounting for the VAT liability to Customs
& Excise.
Customs sets off the VAT against B's other VAT liabilities.
I agree that B is now enriched at the expense of A because A has effectively
paid B's VAT liability, or some of it. I don't think that can be an enrichment
conferred under the contract. Initially yes it was. That enrichment was
"rubbed out" if you will and now a separate enrichment has arisen. We
could then say that A has effectively paid another's debt, and deal with
the matter accordingly. I am not, however, as sanguine as Simon McDonald
that A must be able to recover. If the demand for the repayment of the
VAT reclaim by A is linked to the illegality (and punishment therefor)
could we not argue that it defeats the point of the Customs claim against
A to allow A to get the money back from B? If the Customs claim is wholly
unrelated to the illegality then yes I can see no reason not to allow
recovery.
Dr Duncan Sheehan -----Original Message-----
On Behalf Of Simon Macdonald Dear Colleagues
I believe the present state of the
law (in spite of law comm. recommendations) to be that illegality stands
as a defence to a restitutionary claim except where the parties are
non in pari delicto.
This would seem to bite in relation
to benefits conferred under the illegal contract. I wonder whether the
benefit in the following scenario has been so conferred, or whether
the unjust enrichment, though causally linked to the illegal contract,
is remote enough to allow restitution?
1. A confers a benefit on B under an
illegal contract of £x plus VAT. B accounts to customs for the VAT.
A reclaims the VAT.
2. Following official discovery of
the illegality, A is required by customs, for whatever reason, to repay
to customs the VAT reclaimed by it.
3. customs then offsets that VAT against
entirely separate VAT liabilities owed by B. B is, surely, unjustly
enriched at the expense of A, since A has effectively paid part of B's
VAT bill.
So, the VAT element of A's initial
payment doesn't represent a benefit for B (as the payment simply goes
round in a circle back to A). The benefit only arises when customs intervenes
as if to reverse the cyclic transfer, but stops halfway.
So was the benefit which unjustly enriches
B transferred under the illegal contract? Presumably if the answer is
no, there is nothing to stop A seeking restitution against B. Alternatively
and even if the answer is yes, what public policy objective is achieved
by not allowing restitution. Say in the above scenario both A and B
have paid heavy fines vis a vis the illegality. Public policy would
be better served by a status quo re the VAT and both with their fingers
burnt re the illegal purpose surely? As it stands, B is not only enriched
to A's detriment, but the hardship intended by the fines he pays to
the state is undermined.
I would be very interested in any thoughts.
A fine weekend to you all
Simon MacDonald
<== Previous message Back to index Next message ==> |
||||||||||||
![]() |
![]() |
» » » » » |
|
![]() |
|||||||||
![]() |