In Ireland, it already has. The leading case on change of position is Murphy v AG [1982] IR 241 (SC), where there is some sympathy for the security of the public purse (cp Air Canada) and it was applied in a Woolwich context in O'Rourke v Revenue Commissioners [1996] 2 IR 1 (HC) where there is much less sympathy for the fiscal chaos argument.

In Murphy v AG [1982] IR 241 (SC) the Irish Supreme Court held that certain sections of the Income Tax Act, 1967 were unconstitutional, and the plaintiffs sought restitution of the unconstitutionally exacted taxes which they had paid. Henchy J (Griffin and Parke JJ concurring; Kenny J to similar effect) held that the State was therefore unjustly enriched, and the overpaid taxes were therefore prima facie recoverable, as money paid under duress colore officii. However, to this prima facie cause of action, Henchy J (Griffin and Parke JJ concurring; Kenny J did not address this issue) held that the State could rely in part upon the defence of change of position:

it is beyond question that the State in its executive capacity received the moneys in question in good faith, in reliance on the presumption that the now condemned sections were favoured with constitutionality. In every tax year from the enactment of the Income Tax Act, 1967, until the institution of these proceedings in March, 1978, the State justifiably altered its position by spending the taxes thus collected and by arranging its fiscal and taxation policies and programmes accordingly.

In other words, for so long as there was no objection to the tax, the State's receipt was in good faith or bona fide; and in reliance on that bona fide receipt, the State had changed its position by expending the moneys so received. In respect of those taxpayers who had never objected, the State was therefore secure in its receipt of their taxes; however, once the plaintiffs had objected by instituting proceedings, the State's receipt was no longer bona fide, and, in respect of tax paid by the plaintiffs after the date of that objection, the State could no longer rely on the defence of change of position. Since the plaintiffs in the present case were the only taxpayers who had objected in that way, it was only in respect of their claim that the State could not rely on the defence of change of position; in respect of all other taxpayers, it could. Consequently, Henchy J concluded that, in the circumstances

it would be inequitable, unjust and unreal to expect the State to make full restitution ... there is ample authority for the conclusion that the radical change of circumstances of the kind I have indicated would be sufficient to defeat, at least in part, the taxpayers' claim.

In justification for the conclusion that the defence of change of position would be available, Henchy J held that, for

a variety of reasons it would be inequitable, if not impractical, to expect restitution. Each tax year involves a different group of taxpayers … Restitution could be effected only by means of a special statutory provision, which would involve the imposition of fresh taxation to meet what would become an unquantifiable number of claims with the passage of time… But when, as happened here, the State was led to believe, by the protracted absence of a claim to the contrary, that it was legally and constitutionally proper to spend the money thus collected, the position had become so altered, the logistics of reparation so weighted and distorted by factors such as inflation and interest, the prima facie right of the taxpayers to be recouped so devalued by the fact that, as members of the community, and more particularly, as married couples, they had benefited from the taxes thus collected, that it would be inequitable, unjust and unreal to expect the State to make full restitution.

On one view, these policy factors might be taken simply to justify the application of the enrichment-related version of the defence of change of position discussed above. On another, on an application of the justice-related version of the defence, they might constitute subsequent alterations in the circumstances between the parties which directly bear on the balance of the relative equities between them. This seems to be how they were treated by Keane J sitting as a High Court judge in O'Rourke v Revenue Commissioners, [1996] 2 IR 1 (HC). Having been repaid overpaid tax, the plaintiff (and 90 or so similarly circumstanced social welfare branch managers) sought interest. On the basis of the principle in Woolwich v IRC, Keane J in the High Court held that the plaintiff was entitled to restitution of the overpaid taxes as of right, and to interest on that amount. However, the defendant sought to rely on the judgment of Henchy J in Murphy, which Keane J thought would, "if applicable … undoubtedly provide an answer to the plaintiff's claim". However, there was a great contrast between the circumstances in Murphy and the facts before him: in O'Rourke, the court was

concerned with eighty to ninety social welfare branch managers and the retrospective fiscal adjustments [we]re of minimal significance in comparison to what was involved in Murphy. The conclusion of the majority in the latter case - that restitution would be 'inequitable, unjust and unreal' - is not necessarily applicable to the circumstances of the present case … the numbers affected [are] so relatively small as to render the distortion to the State's finances minimal and legitimately outweighed by the injustice to the plaintiff of having his money withheld from him

To my mind, the West Sussex Properties Ltd v Chichester DC situation seems a lot closer to O'Rourke than to Murphy, and that the CA in West Sussex and Keane J in O'Rourke were perfectly right to hold that there was no impediment to restitution.

Eoin.

EOIN O'DELL BCL(NUI) BCL(Oxon)
Editor, Dublin University Law Journal.
Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland.
(353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m)
(All opinions are personal. No legal responsibility whatsoever is accepted.)