Which side of the line? Football, police and determining whether the Woolwich principle applies

Introduction

The case involved a dispute between Ipswich Town Football Club Limited (“the Club”) and the Chief Constable of Suffolk Constabulary (“the Police”) over the extent to which the Police could charge the Club for the provision of policing services during football matches.  In essence, if the police services provided are deemed normal operational policing, then the Police cannot charge the Club; however, if the services amount to Special Police Services (“SPS”), the Police can charge (under section 25(1) of the Police Act 1996). 

In the first stage of the litigation, the Court considered the circumstances in which the Police could charge for SPS.  In the second stage of the litigation, the Court considered the Club’s restitution claim for sums paid to the Police for services that the Police had no authority to charge for.  This article considers that second judgment (“the Judgment”), particularly as it relates to the Club’s Woolwich principle claim.

The Woolwich principle and the Club’s restitutionary claim

The “Woolwich principle” is derived from Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70, in which the House of Lords considered a restitutionary claim for taxes paid pursuant to an unlawful demand. Woolwich paid tax to the Revenue under certain regulations which were subsequently held to be unlawful.  The Revenue repaid the taxes plus interest from the date of judgment.  Woolwich argued before the High Court that it should also receive interest from the date of payment.  The High Court dismissed this claim ([1989] 1 WLR 137).  The Court of Appeal held that the right to recovery of monies paid following an ultra vires demand accrued immediately upon payment (and therefore interest was payable from the date of payment to the Revenue) ([1991] 3 WLR 790).  The House of Lords upheld the Court of Appeal’s judgment and confirmed that money paid by a citizen to a public authority in the form of taxes or other levies pursuant to an ultra vires demand by the authority was prima facie recoverable by the citizen as of right. 

The Club argued that it was entitled to restitution by the Police on the basis, inter alia, of the Woolwich principle.  In response, the Police argued that the Woolwich principle did not apply, because: (1) the Woolwich principle only applies to taxes and other analogous levies, which the charges for SPS were not; (2) the Woolwich principle was a special rule for unlawful charges by public authorities, and the policy rationale underlying that rule did not extend to private transactions such as charges for SPS; and, (3) the Club requested the policing in the full knowledge that they would be required to pay for it.  (See [31-35] of the Judgment.)  The issue was important because the Police could not rely on various equitable defences (such as change of position / quantum meruit) if the Club was entitled to repayment under the Woolwich principle. 

The Court’s consideration of the application of the Woolwich principle

Considering Woolwich in detail (particularly Lord Goff’s judgment in the House of Lords), Green J made the following observations (at [49-53] of the Judgment):

(1)  “Compulsion” to pay the demanded sum is an expansive concept, to be broadly construed.  The concept includes situations where, for example, the payor and payee are on unequal footing, there is no consideration, or there is an element of pressure.

(2)  In considering where “justice” lies, the court should take into account a wide range of factors; generally, common justice requires the money to be repaid unless special circumstances or some principle of policy require otherwise.

(3)  Lord Goff deemed the extension of the law by Woolwich justified by the unconstitutional nature of the Revenue’s demand and the unpleasant economic and social consequences that Woolwich would face if they refused to pay.

The Court then reviewed the evolution of the law following Woolwich.  Green J observed (at [54-70] of the Judgment):

(1)  In Kleinwort Benson Ltd v Lincoln City Borough Council et ors [1998] UKHL 38; [1999] AC 349, the House of Lords held that a “private transaction”, even if made by a public body, was not subject to the Woolwich principle.  In Kleinwort, at page 381G-H, Lord Goff drew a distinction between payments of “taxes and other similar charges”, and payments made under ordinary private transactions.

(2)  In Deutsche Morgan Grenfell Group Plc v Her Majesty’s Commissioners for Inland Revenue et ors [2006] UKHL 49, the House of Lords considered restitution of taxes paid under a statute that had since been held unlawful by the European Court of Justice.  At [13], Lord Hoffmann made a distinction between the payment of “taxes and the like”, to which the Woolwich principle applied, and “private transactions” which it did not.  However, he also held that the Woolwich principle and restitution on the basis of mistake are not mutually exclusive.  At [45-46], Lord Hope summarised his understanding of Lord Goff’s judgment in Woolwich and considered the distinction made between private transactions and taxes by Lord Goff in Kleinwort.  Lord Hope concluded that the phrase “taxes and other similar charges” was not sufficiently precise to define the extent of an exception to a general right of recovery.  At [48], Lord Hope stated that all ultra vires demands fall easily within Lord Goff’s “similar charges” category.  At [140], Lord Walker rejected the suggestion that Woolwich only covered cases where there was a statutory regime governing recovery, and made clear that Woolwich was not limited to taxes in any strict sense. 

(3)  In Waikato Regional Airport Limited v AG [2003] UKPC 50, the Privy Council held that the Woolwich principle was not restricted to tax cases.

(4)  In South of Scotland Electricity Board v British Oxygen Company Ltd [1959] 1 WLR 587  (this judgment pre-dates Woolwich but was considered by the House of Lords in Woolwich and DMG, and by the Privy Council in Waikato), the House of Lords considered an overcharge of levies demanded by a statutory electricity supplier (notably, not a tax or analogous levy).  It was held that the authority had no right to retain the overcharge and thus had a duty to repay the sums. 

(5)  In FII Group Test Claimant v Revenue and Customs Commissioners [2012] UKSC 19, at [173-174], Lord Sumption considered what amounted to a “demand” for payment under the Woolwich principle.  He held that in Woolwich “demand” simply meant requiring payment of the taxpayer by way of regulations (which were subsequently held unlawful); it did not mean a formal demand or proceedings for enforcement.  At [79], Lord Walker also held that the “demand” could be merely an obligation to pay, rather than an implicit or explicit demand.

In the light of that law, Green J concluded that the Club’s restitutionary claim was covered by the Woolwich principle.  He did so for the following reasons (set out at [72-77] of the Judgment):

(1)  Case law shows that “a limitation of the Woolwich principle strictly to tax cases is unwarranted”. 

(2)  Although “compulsion” is a feature of many cases in which the Woolwich principle applies, the absence of coercive or penal powers does not disqualify a case from being covered by the Woolwich principle.  Moreover, even if some degree of compulsion were necessary to bring a case into the Woolwich category, a tangible economic power to compel adherence to terms (such as the threat of cancellation of matches owing to lack of sufficient policing) would suffice.  

(3)  If Woolwich can apply in principle where the payor is required to pay for the service provided by the payee (see, for example, cases such as Waikato and South of Scotland Electric) then a fortiori it should also apply where there is no such requirement (such as the Club’s being wrongly charged for the provision of operational policing, which should have been free).  

(4   Parliamentary authority (section 25(1) of the Police Act 1996) was wrongly relied on by the Police in charging the Club.   

(5)  Common justice, a broad concept, requires restitution.

(6)  The distinction between public cases and private transactions is not clean cut.  Rather, the law recognises a “continuum between public and private transactions where, somewhere along the spectrum, the rules change”.  In this matter, the Police were a public body, purporting to exercise a statutory power and in doing so demanding payment for a service they had a duty to provide free of charge.  This case was therefore “on the public and not the private side of the line”.

Conclusion

Green J’s detailed overview of the case law considering the Woolwich principle, and his careful application of the principle to the facts of this case helps to clarify the parameters of this aspect of the law of restitution.  It will likely be of assistance to those seeking restitutionary damages against public bodies, particularly where there is some argument as to the public or private nature of the transaction.

Nick De Marco acted for the Club in the hearing.