Lloyd's Maritime and Commercial Law Quarterly
"AT THE EXPENSE OF" IN UNJUST ENRICHMENT: CAUSAL, DIRECT OR INTENTIONAL TRANSFERS OF VALUE?
William Day*
HMRC v ITC
The question of when a defendant's gain is "at the expense” of a claimant has vexed commentators and the courts in recent years. Lord Reed's judgment in Investment Trust Companies (ITC) was intended to bring some certainty to the issue. However, some fundamental questions remain. First, it is not entirely clear what "directness” means in the context of Lord Reed's direct dealings rule. Second, the scope of some of the "equivalents” to the direct dealings rule is open to debate. Subsequent cases will have to clarify, for instance, the principles by which shams and coordinated transactions are determined. Third, while Lord Reed proceeded on the assumption that there is a unitary rule for "at the expense of”, the implications of his judgment may lead to that assumption being challenged. This short article argues that many of these outstanding issues may be settled by reference to the parties' intentions when they purported to deal with each other.
Introduction
In HMRC v The Investment Trust Companies (in liquidation), 1 the claimants paid investment managers for services rendered. VAT was charged on the supply of those services when it ought not to have been. The managers deducted VAT chargeable on supplies that they in turn had acquired, and then accounted to the defendants, HMRC, in respect of the net
* Barrister, London. I am grateful to Rory Gregson, Ajay Ratan and Graham Virgo for comments on earlier drafts. All errors are my own.
The following abbreviations are used:
Ball: E Ball, Enrichment at the Claimant's Expense: Attribution Rules in Unjust Enrichment (Hart, Oxford, 2016);
Birks, Introduction: P Birks, An Introduction to the Law of Restitution, rev edn (Clarendon Press, Oxford, 1989);
Burrows, Restatement: A Burrows, A Restatement of the English Law of Unjust Enrichment (OUP, Oxford, 2012);
Burrows, Restitution: A Burrows, The Law of Restitution, 3rd edn (OUP, Oxford, 2011);
Edelman & Bant: J Edelman and E Bant, Unjust Enrichment, 2nd edn (Hart, Oxford, 2016);
Goff & Jones, 1st edn: R Goff and G Jones, The Law of Restitution (Sweet & Maxwell, London, 1966);
Goff & Jones, 8th edn: C Mitchell, P Mitchell and S Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 8th edn (Sweet & Maxwell, London, 2011);
Goff & Jones, 9th edn: C Mitchell, P Mitchell and S Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th edn (Sweet & Maxwell, London, 2016);
Virgo: G Virgo, The Principles of the Law of Restitution, 3rd edn (OUP, Oxford, 2015).
1. [2017] UKSC 29; [2017] 2 WLR 1200 (hereafter “ITC”).
“At the expense of” in unjust enrichment
589