“78 Interest in certain cases of official error (1) Where, due to an error on the part of the Commissioners, a person has- (a) accounted to them for an amount by way of output tax which was not output tax due from him and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him, or … then, if and to the extent that they would not be liable to do so apart from this section, they shall pay interest to him on that amount for the applicable period, but subject to the following provisions of this section. … (3) Interest under this section shall be payable at the rate applicable undersection 197 of the Finance Act 1996 . (4) The “applicable period” in case falling within subsection (1)(a) or (b) above is the period – (a) beginning with the appropriate commencement date, and (b) ending with the date on which the Commissioners authorise payment of the amount on which interest is payable.”
“In my judgment, the authorities give clear guidance that if Parliament creates a right which is inconsistent with a right given by the common law, the latter is displaced. By "inconsistent" I mean that the statutory remedy has some restriction in it which reflects some policy rule of the statute which is a cardinal feature of the statute. In those circumstances, the likely implication of the statute, in the absence of contrary provision, is that the statutory remedy is an exclusive one.”
“Any interest payable by the Commissioners (whether under an enactment or instrument or otherwise) to a person on a sum due to him under or by virtue of any provision of this Act shall be treated as an amount due by way of credit under section 25(3).”
“The section 78 interest regime is limited to cases where one of the four specified circumstances in paragraphs (a) to (d) of subsection (1) has occurred, and where the occurrence is "due to an error on the part of the Commissioners". This limitation defines the scope of the section, and in itself strongly implies that no interest is to be payable save in one of the four specified cases of official error. Further indications that the section 78 regime is meant to be comprehensive are the specified rates of interest laid down for the whole period back to 1973, the detailed rules for ascertaining the period for which interest is payable, the special limitation period for making claims in subsection (11), and the provision in subsection (2) which relieves the Commissioners from any obligation to pay interest under subsection (1) where the claimant is entitled to repayment supplement under section 79. All of these features would be subverted if a general right to recover interest at common law, whether sounding in contract, tort or restitution, were to be permitted to co-exist with section 78.”
“the court has a common law jurisdiction to award interest, simple and compound, as damages on claims for non-payment of debts as well as on other claims for breach of contract and in tort.”
“… The benefits transferred by Sempra to the Inland Revenue comprised, in short, (1) the amounts of tax paid to the Inland Revenue and, consequentially, (2) the opportunity for the Inland Revenue, or the Government of which the Inland Revenue is a department, to use this money for the period of prematurity. The Inland Revenue was enriched by the latter head in addition to the former. The payment of ACT was the equivalent of a massive interest free loan. Restitution, if it is to be complete, must encompass both heads. Restitution by the Revenue requires (1) repayment of the amounts of tax paid prematurely (this claim became spent once set off occurred) and (2) payment for having the use of the money for the period of prematurity.”
“Further, as with the damages claim in the present proceedings, so also with the two restitutionary claims, no difficulty arises from the fact that Sempra's ACT payments were mostly used before the inception of proceedings. The Inland Revenue had the benefit of the use of each payment of ACT for at least eight months. Setting off a payment of ACT against Sempra's mainstream corporation tax liability did not extinguish the Inland Revenue's restitutionary liability in respect of the interest benefits it had by then obtained from the ACT payments.”
“The unjust enrichment principle supports the free-standing cause of action to recover interest, which is the measure of the enrichment.”
“In the absence of provisions of Community law on this point, it is currently for the national authorities, in the case of reimbursement of dues improperly collected, to settle all ancillary questions relating to such reimbursement, such as any payment of interest.”
“16. To reply to this question it is sufficient to recall that, since disputes in connexion with the reimbursement of amounts collected for the Community are at the present time a matter for the national courts, they must be settled by those courts under national law in so far as Community law has not provided otherwise. 17. In the absence of provisions of Community law on this point it is at present for the national authorities, and particularly for national courts, in a case concerning the recovery of charges improperly imposed, to settle all ancillary questions relating to such reimbursement, such as the payment of interest, by applying their domestic rules regarding the rate of interest and the date from which interest must be calculated.”
“87. … In such circumstances, where the breach of Community law arises, not from the payment of the tax itself but from its being levied prematurely, the award of interest represents the “reimbursement” of that which was improperly paid and would appear to be essential in restoring the equal treatment guaranteed by Article 52 of the Treaty.”
“205. … where a Member State has levied charges in breach of the rules of Community law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax. As the Court held in paragraphs 87 and 88 of Metallgesellschaft and Others, that also includes losses constituted by the unavailability of sums of money as a result of a tax being levied prematurely.”
“1. Where a taxable person has overpaid VAT which was collected by the Member State contrary to the requirements of EU VAT legislation, does the remedy provided by a Member State accord with EU law if that remedy provides only for (a) reimbursement of the principal sums overpaid, and (b) simple interest on those sums in accordance with national legislation, such as section 78 of the VATA 1994? 2. If not, does EU law require that the remedy provided by a Member State should provide for (a) reimbursement of the principal sums overpaid, and (b) payment of compound interest as the measure of the use value of the sums overpaid in the hands of the Member State and/or the loss of the use value of the money in the hands of the taxpayer? 3. If the answer to both questions 1 and 2 is in the negative, what must the remedy that EU law requires the Member State to provide include, in addition to reimbursement of the principal sums overpaid, in respect of the use value of the overpayment and/or interest?”
“In the light of these considerations, Member States which have levied charges in breach of EU law must in principle, according to the Court’s more recent case-law, both reimburse the charges levied in breach of EU law and pay interest in compensation for the unavailability of the sums paid. The taxable person therefore has a right to reimbursement of the charge and a right to payment of interest. Those rights enjoyed by the taxable person are based on the provisions of EU law prohibiting the taxes levied.”
“Applying the case-law on the procedural autonomy of the Member States, it is for the Member States to lay down detailed substantive and procedural rules governing the taxable person’s interest claim under European Union law. The Member States are therefore entitled to determine the detailed rules relating to payment of interest having regard to the principles of effectiveness and equivalence. Those detailed rules include the decision whether interest is paid on the basis of a system of ‘simple interest’ or on the basis of a system of ‘compound interest’.”
“The United Kingdom reimbursed to the applicants in the main proceedings the VAT which had been obtained in the period between 1973 and 2004 in breach of EU law, amounting to approximately GBP 204 774 763 together with simple interest amounting to GBP 268 159 135. Accordingly, the applicants in the main proceedings were granted a claim for payment of simple interest pursuant to section 78 of the VATA 1994, under which the amount of interest accrued over a period of around 30 years (GBP 268 159 135) exceeds the principal sum (GBP 204 774 763) by more than 25%.”
“24. It is settled case-law that the right to a refund of charges levied in a Member State in breach of rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court (see, inter alia, Case 199/82 San Giorgio [1983] ECR 3595, paragraph 12, and Joined Cases C-397/98 and C-410/98 Metallgesellschaft and Others[2001] ECR I-1727 , paragraph 84). The Member State is therefore in principle required to repay charges levied in breach of Community law (Joined Cases C-192/95 to C-218/95 Comateb and Others[1997] ECR I-165 , paragraph 20; Metallgesellschaft, paragraph 84;Case C-147/01 Weber’s Wine World and Others[2003] ECR I-11365 , paragraph 93;Case C-446/04 Test Claimants in the FII Group Litigation[2006] ECR I-11753 , paragraph 202). 25 The Court has also held that, where a Member State has levied charges in breach of the rules of Community law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax. That also includes losses constituted by the unavailability of sums of money as a result of a tax being levied prematurely (Metallgesellschaft, paragraphs 87 to 89, and Test Claimants in the FII Group Litigation, paragraph 205). 26 It follows from that case-law that the principle of the obligation of Member States to repay with interest amounts of tax levied in breach of EU law follows from that law. 27 In the absence of EU legislation, it is for the internal legal order of each Member State to lay down the conditions in which such interest must be paid, particularly the rate of that interest and its method of calculation (simple or ‘compound’ interest). Those conditions must comply with the principles of equivalence and effectiveness; that is to say that they must not be less favourable than those concerning similar claims based on provisions of national law or arranged in such a way as to make the exercise of rights conferred by the EU legal order practically impossible (see, to that effect, San Giorgio, paragraph 12; Weber’s Wine World, paragraph 103; andCase C-291/03 MyTravel[2005] ECR I-8477 , paragraph 17). 28 Thus, according to consistent case-law, the principle of effectiveness prohibits a Member State from rendering the exercise of rights conferred by the EU legal order impossible in practice or excessively difficult (Case C-201/02 Wells[2004] ECR I-723 , paragraph 67, and Joined Cases C-392/04 and C-422/04 i-21 Germany and Arcor[2006] ECR I-8559 , paragraph 57). 29 In this case, that principle requires that the national rules referring in particular to the calculation of interest which may be due should not lead to depriving the taxpayer of an adequate indemnity for the loss occasioned through the undue payment of VAT.”
“In that regard it should be noted that it is apparent from the order for reference that, under the provisions of section 78 of the VATA 1994, the Commissioners paid Littlewoods interest on the VAT levied in breach of EU law. Pursuant to those provisions, Littlewoods received payment of simple interest, in accordance with the said provisions, in an amount of GBP 268 159 135, corresponding to interest due over about 30 years, which amount exceeds by more than 23% that of the principal sum, which amounts to GBP 204 774 763.”
“Given the lack of European Union rules on the subject, it is for the domestic legal system of each Member State to designate, in accordance with the principle of procedural autonomy, the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from European Union law, provided, first, that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and, second, that they do not render virtually impossible or excessively difficult the exercise of rights conferred by European Union law (principle of effectiveness). In addition, contrary to the arguments of the Kingdom of Spain and the Portuguese Republic …, although the principle of procedural autonomy leaves it to the domestic legal system of each Member State to determine the procedural remedies for safeguarding rights which individuals derive from European Union law, that principle cannot have the consequence of restricting or undermining the substance of those rights.”
“In my opinion, the right to interest representing an adequate indemnity for the loss occasioned through the undue payment of tax contrary to European Union law ranks equally, in consequence of the Littlewoods Retail and Others judgment, with the right to repayment of the tax and is therefore a subjective right derived from the legal order of the European Union. In my opinion, that subjective right necessarily entails the payment of interest from the date of payment of the tax. It is obvious that it is from that date, and not from any other subsequent date, that the taxpayer suffers a loss arising from the unavailability of the sums in question.”
“26 As regards the principle of effectiveness, that principle requires, in a situation of repayment of a tax levied by a Member State in breach of European Union law, that the national rules referring in particular to the calculation of interest which may be due should not lead to depriving the taxpayer of adequate compensation for the loss sustained through the undue payment of the tax (see Littlewoods Retail and Others, paragraph 29). 27 In this case, it must be found that a system such as that at issue in the main proceedings, which limits interest to that accruing from the day following the date of the claim for repayment of the tax unduly levied, does not meet that requirement. 28 That loss depends, inter alia, on the duration of the unavailability of the sum unduly levied in breach of European Union law and thus occurs, in principle, during the period between the date of the undue payment of the tax at issue and the date of repayment thereof.”
“22. Article 6 of the Directive puts Member States under a duty to take the necessary measures to enable all persons who consider themselves wronged by discrimination to pursue their claims by judicial process. Such obligation implies that the measures in question should be sufficiently effective to achieve the objective of the Directive and should be capable of being effectively relied upon by the persons concerned before national courts. 23 As the Court held in the judgment in Case 14/83 Von Cohort and Kamann ν Land Nordrhein-Westfalen [1984] EC R 1891, at paragraph 18, Article 6 does not prescribe a specific measure to be taken in the event of a breach of the prohibition of discrimination, but leaves Member States free to choose between the different solutions suitable for achieving the objective of the Directive, depending on the different situations which may arise. 24 However, the objective is to arrive at real equality of opportunity and cannot therefore be attained in the absence of measures appropriate to restore such equality when it has not been observed. As the Court stated in paragraph 23 of the judgment in Von Colson and Kamann, cited above, those measures must be such as to guarantee real and effective judicial protection and have a real deterrent effect on the employer. 25. Such requirements necessarily entail that the particular circumstances of each breach of the principle of equal treatment should be taken into account. In the event of discriminatory dismissal contrary to Article 5(1) of the Directive, a situation of equality could not be restored without either reinstating the victim of discrimination or, in the alternative, granting financial compensation for the loss and damage sustained. 26 Where financial compensation is the measure adopted in order to achieve the objective indicated above, it must be adequate, in that it must enable the loss and damage actually sustained as a result of the discriminatory dismissal to be made good in full in accordance with the applicable national rules. The first and second questions 27 In its first question, the House of Lords seeks to establish whether it is contrary to Article 6 of the Directive for national provisions to lay down an upper limit on the amount of compensation recoverable by a victim of discrimination. 28. In its second question, the House of Lords asks whether Article 6 requires (a) that the compensation for the damage sustained as a result of the illegal discrimination should be full and (b) that it should include an award of interest on the principal amount from the date of the unlawful discrimination to the date when compensation is paid. 29 The Court's interpretation of Article 6 as set out above provides a direct reply to the first part of the second question relating to the level of compensation required by that provision. 30 It also follows from that interpretation that the fixing of an upper limit of the kind at issue in the main proceedings cannot, by definition, constitute proper implementation of Article 6 of the Directive, since it limits the amount of compensation a priori to a level which is not necessarily consistent with the requirement of ensuring real equality of opportunity through adequate reparation for the loss and damage sustained as a result of discriminatory dismissal. 31 With regard to the second part of the second question relating to the award of interest, suffice it to say that full compensation for the loss and damage sustained as a result of discriminatory dismissal cannot leave out of account factors, such as the effluxion of time, which may in fact reduce its value. The award of interest, in accordance with the applicable national rules, must therefore be regarded as an essential component of compensation for the purposes of restoring real equality of treatment.”
“For present purposes, it is sufficient to highlight the constraints on the broad and far-reaching nature of the interpretative obligation, namely that the meaning should “go with the grain of the legislation” and be “compatible with the underlying thrust of the legislation being construed”, and should not be “inconsistent with a fundamental or cardinal feature of the legislation” since this would cross the boundary between interpretation and legislation.”
“76. Ingenious though this approach is, it seems to me that it cannot work. For much the same reasons as I have given under issue 1, and as Warren J gave in John Wilkins, and as Arden LJ gave in Monro, the construction for which Mr Rabinowitz contends cuts straight across the grain of the legislation and is contrary to its fundamental or cardinal features. The legislation provided that taxpayers like Littlewoods should have only simple interest when they were repaid VAT upon an error being made by the Commissioners, and Mr Rabinowitz’s construction gives them something much more. That would not be construction but legislation. One may ask rhetorically, what on earth would have been the point of section 78 if its exclusionary words were to be construed as allowing a quite different common law interest remedy in every case? I have little doubt that, if there is an EU right to the use value of the money, that right can only be given effect by the dis-application of section 78 in cases where the right exists (which one may note will be substantially all cases to which it applies).”
“119. I have grave doubts as to whether that interpretation does not go against the grain of the legislation, since the “practice generally prevailing” condition is of long standing and has always been regarded as an important safeguard for the public revenue. I am inclined to think that Mr Aaronson was right (Day 2, pp 25-26) to call it a “cardinal feature” of the legislation. In my view the Marleasing principle can be applied in a simpler and more natural way by not construing section 33 as impliedly setting itself up as an exclusive provision (which it did not do expressly, unlikesection 80 of the Value Added Tax Act 1994 ). The test claimants submit that the application of Marleasing cannot rework section 33 in a way that serves any relevant purpose. But to read it as non-exclusive does not go against its grain. It would merely exclude an implication which is itself no more than a process of statutory construction. In practical terms the effect is the same as that which Henderson J reached by the second limb of his reasoning. I would therefore allow the appeal on this point (although it may not, in the end, make much practical difference).”
“This provision applies only to assessed taxes, and therefore only to a very small part of the present claims. It confers a right subject to highly restrictive conditions to invoke what is essentially a discretionary power of the Commissioners to grant a refund of overpaid tax. No one suggests on this appeal that such a limited remedy could possibly be enough in itself to satisfy the virtually unqualified obligation of the United Kingdom to provide an effective means of recovering tax overcharged contrary to EU law. This does not of course matter if it is an additional remedy as opposed to an exclusive one. There is certainly nothing in the provision which expressly excludes the availability of other causes of action at common law. If that is its effect, it must be by implication. In the ordinary way, such an exclusion might be implied, on the ground that where Parliament confers a restricted right of recovery, that must impliedly displace a corresponding right at common law which would be unrestricted. However, it is axiomatic that the courts cannot imply an exclusion of unrestricted rights of action at common law where that would be inconsistent with an overriding rule of EU law that an unrestricted right must be available. Section 33 cannot therefore be an exclusive right to recover tax overcharged contrary to EU law. Whether it is an exclusive right in other circumstances, is not a point which needs to be considered on this appeal.”
“On that basis, the next main question is whether Mr Swift is right in his submissions about the appropriate starting point, and the distinction which he draws between the position in the present case and the position in the FII litigation. In my judgment he is plainly right to draw attention to the fact that of VATA 1994 is a statutory provision of long standing, which as a matter of national law provides an exclusive remedy for the recovery of overpaid VAT, and rules out any common law cause of action which might otherwise co-exist with it. In that respect, the position is clearly different from that which faced the FII test Claimants. But does the distinction remain important once the exclusionary effect of s 80 has been disapplied by EU law? My answer to that question is no. In my judgment, once the exclusionary rule in s 80(7) has been over-ridden, the position is the same as it would be if common law causes of action had always been permitted to co-exist with s 80, and in those circumstances no warrant can be found, in either English or EU law, for confining a Claimant to only one such common law remedy, or for trying to identify the remedy which objectively provides the best fit for the claim. That was, in essence, what the Court of Appeal held should be done in FII (CA), but that approach has now been shown to be wrong by the majority in the Supreme Court. In short, once the exclusionary rule has been removed by force of EU law, I see no answer to the simple point that the normal principle of freedom of choice under English domestic law should be allowed to prevail.”
“is clear authority for the proposition that the English court will not dis-apply an exclusionary rule so as to allow an alternative remedy to give effect to a San Giorgio right, if another remedy is already available without the need for such a dis-application. The Court of Appeal decided obiter that the English court could choose which of two remedies should be provided to give effect to the San Giorgio right, if both required the dis-application of some domestic law rule to allow them to comply with the principle of effectiveness. ”
“225. We have held, in respect of Issues 11 and 12, that a demand is not an essential ingredient of the Woolwich cause of action, and that that cause of action provides an effective remedy for all the claimants' San Giorgio claims. Thus the cause of action for repayment of monies paid under a mistake is not a cause of action required by Community law. The cause of action for repayment of monies paid under a mistake is a domestic remedy of wide application, which Community law does not require the Member States to provide, attended by a limitation period (i.e.s32(1)(c) of the Limitation Act 1980 ) that goes beyond the requirements of Community law: see Marks & Spencer ([2002] STC 1036 ,[2003] QB 866 , para 35 of the judgment), in which the ECJ considered a three-year limitation period to be reasonable. Community law restricts the effectiveness of domestic legislation curtailing a limitation period applicable to a domestic cause of action that protects a Community right. That domestic cause of action is the Woolwich claim, and it is unaffected by ss320 and 107.”
“37. However, as the Court held in paragraph 38 of Marks & Spencer, whilst national legislation reducing the period within which repayment of sums collected in breach of EU law may be sought is not incompatible with the principle of effectiveness, it is subject to the condition not only that the new limitation period is reasonable but also that the new legislation includes transitional arrangements allowing an adequate period after the enactment of the legislation for lodging the claims for repayment which persons were entitled to submit under the previous legislation. Such transitional arrangements are necessary where the immediate application to those claims of a limitation period shorter than that which was previously in force would have the effect of retroactively depriving some individuals of their right to repayment, or of allowing them too short a period for asserting that right. 38. It follows that national legislation curtailing, retroactively and without any transitional arrangements, the period within which repayment could be sought of sums collected in breach of EU law is incompatible with the principle of effectiveness (see, to that effect, Marks & Spencer, paragraph 47). 39. The fact that in the Marks & Spencer case the taxpayer had only one legal remedy, whilst in the case in the main proceedings the taxpayer has two such remedies, cannot, in circumstances such as those in issue before the referring court, lead to a different conclusion.”
“[20] The crucial question, however, is whether the retrospective application of that limitation period to claims based on mistake was in conformity with the principles of equivalence and effectiveness, as explained by the Grand Chamber in its judgment in these proceedings:Case C-446/04 [2007] STC 404 , para 203. I accept, of course, that the Woolwich remedy on its own was an effective way of vindicating the San Giorgio right. But what about the principle of equivalence which, as Lord Reed points out in para 218, is a complementary requirement? The Woolwich remedy was not the only remedy in domestic law, as it was held in DMG that a taxpayer who wrongly paid tax under a mistake of law is entitled to a restitutionary remedy against the revenue. The theory is that judicial decisions must be taken to declare the law that applies to the case with retrospective effect, whenever the events that gave rise to the claim occurred. So, in the events that have happened, the DMG remedy must be taken to have been always available. It is not just a mirror image of the remedy that is afforded under Woolwich. Both remedies lead to the same result. But they are different remedies founded upon different principles and they are subject to different limitation periods. There may be other differences, depending on the facts and circumstances of each case. [21] There is no obvious way of deciding which of these two remedies must be adopted if only one can be allowed. Is it to be held the Claimant is under an obligation, if both are available, to select the remedy which best suits his opponent? This would be an odd result, as I said in DMG[2007] 1 AC 558 , para 51. For the reasons which I gave in that paragraph, I think that domestic law must reject this idea because it has no basis in principle. In fairness, the Claimant ought to be free to choose the remedy that best suits his case. The principle of equivalence requires that the rules regulating the right to recover taxes levied in breach of EU law must be no less favourable than those governing similar domestic actions. So it seems to me that it must follow, if the means of recovering of taxes levied contrary to EU law are to match those in domestic law, that both remedies should be available.”
“In considering that issue, there appear to me to be three central questions, which can at this stage be broadly stated as follows. The first is whether the ground of action enabling taxes levied in breach of EU law to be recovered on the basis of mistake falls within the ambit of the EU principle of effectiveness. It is argued that it does not, since the ground of action based on an unlawful demand in itself fully satisfies the requirement of EU law that there should be an effective remedy. Since no additional remedy is required by the principle of effectiveness, it follows, so the argument runs, that the additional ground of action which English law provides, based on mistake, falls outside the scope of that principle. I disagree. As I shall explain, it appears to me that the EU principle of equivalence, which is the complement of the principle of effectiveness, applies to the grounds of action available for the recovery of taxes in domestic law. Where an action for the recovery of taxes under domestic law can be based either on the ground of mistake or on the ground of unlawful demand (or, as in the present case, on both grounds), it follows from the principle of equivalence that both grounds of action should also be available in similar circumstances to enforce an analogous right under EU law. So long as they must both be available, they must also both be effective. The principle of effectiveness therefore applies to both grounds of action.”
“All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression [“enforceable EU right”] and similar expressions shall be read as referring to one to which this subsection applies.”
“In the absence of EU legislation, it is for the internal legal order of each Member State to lay down the conditions in which such interest must be paid, particularly the rate of that interest and its method of calculation (simple or 'compound' interest). Those conditions must comply with the principles of equivalence and effectiveness; that is to say that they must not be less favourable than those concerning similar claims based on provisions of national law or arranged in such a way as to make the exercise of rights conferred by the EU legal order practically impossible (see, to that effect, San Giorgio, paragraph 12; Weber's Wine World, paragraph 103; andCase C-291/03 MyTravel[2005] ECR I-8477 , paragraph 17).”
“If the answer to question 1 is in the negative, does the EU law principle of effectiveness require a Member State to disapply national law restrictions (such as ss 78 and 80 of the 1994 Act) on any domestic claims or remedies that would otherwise be available to the taxable person to vindicate the EU law right established in the Court of Justice of the European Union's answer to the first three questions, or is it sufficient that the national court disapplies such restrictions only in respect of one of these domestic claims or remedies?”
“32. According to the referring court, application of s 78 of the 1994 Act has the effect of excluding two actions provided for by common law, namely the Woolwich claim and the restitution action based on an error of law. In essence, the referring court asks whether, if it is found that s 78 and s 80 of the 1994 Act are contrary to EU law, a failure to apply the restriction contained therein in relation to the Woolwich claim in the main proceedings could lead to payment of interest which is compatible with EU law or whether the restriction contained in s 78 and s 80 of the 1994 Act should be disapplied in respect of all the claims or remedies under common law. 33. As is apparent from consistent case law, when faced with a rule of law that is incompatible with directly applicable EU law, the national court is required to disapply that national rule, it being understood that that obligation does not restrict the power of the competent national courts to apply, amongst the various procedures of the internal legal order, those which are appropriate to safeguard the individual rights conferred by EU law (see in particular, to that effect, Van Gemert-Derks v Bestuur van de Nieuwe Industriële Bedrijfsvereniging (Case C-337/91 )[1993] ECR I-5435 , para 33; Ministero delle Finanze v IN CO GE '90 Srl (Cases C-10/97 and C-22/97)[1998] ECR I-6307 , para 21; and Filipiak v Dyrektor Izby Skarbowej w Poznaniu (Case C-314/08 ) [2010] All ER (EC) 168,[2009] ECR I-11049 , para 83).”
“21 After the claimant has adduced evidence of the objective value of the benefit which the defendant received, the burden of proof falls upon the defendant to prove that he did not subjectively value the benefit at all, or that he valued it at less than the market price: Goff & Jones, para 4-08; Virgo, pp 64, 66-67. That principle was established by the majority of the House of Lords in Sempra Metals[2008] AC 561 : see para 48, per Lord Hope of Craighead, para 116, per Lord Nicholls of Birkenhead and para 180, per Lord Walker of Gestingthorpe. The minority took a different view, namely that it was for the claimant to establish the actual benefit obtained by the defendant: see especially per Lord Mance, at paras 231-232, and Lord Scott of Foscote, at para 147. As I see it, the difference between them is really no more than a different approach to the burden of proof. In each case the question is what was the value to the defendant.”
“26 The only real difference may be this. We agree that in the case where services have been rendered which, viewed objectively, confer a benefit on the defendant, but a benefit which the defendant did not and does not want and would not have paid for, as in the examples of Pollock CB's cleaned shoes or Professor Virgo's cleaned windows (Virgo, p 67), the claimant is not entitled to payment for the services because failure to pay would not unjustly enrich the defendant. The question is whether, in such circumstances, where there was no free acceptance of the services before or at the time they are rendered, but the defendant has accepted that he has received some benefit but not that the value of the benefit is as much as its market value, the defendant's figure should be accepted. In my opinion it should be open to the court so to conclude on the basis, on the one hand there would be unjust enrichment if the defendant paid nothing but, on the other hand, that it would not be just to award more than the benefit conferred on the defendant so calculated. Such an approach seems to me to respect the principle of freedom of choice or autonomy and to meet the case where the defendant sees the value of the benefit but would not have ordered the services save perhaps at a substantial discount to the market rate. I see no reason why a court should not take into account a defendant's subjective opinion of the value of the claimant's services in order to reduce the value of them to him, provided of course that the court is satisfied that it is his genuine opinion. If Lord Reed JSC's approach would produce a choice between a nil award and an award of the market value of the services, I would respectfully disagree. I prefer a nuanced approach, which seems to me to be more consistent with principle. However, given Lord Reed JSC's conclusions in para 138 of his judgment, there may be little, if anything, between us, especially since we both recognise the importance of respect for the defendant's autonomy or freedom of choice. It is not necessary to reach a final conclusion on these questions on the facts of this case. I certainly agree with Lord Reed JSC that the expression “subjective devaluation” is somewhat misleading.”
“People have different means and spending priorities, and they value benefits differently according to their personal tastes. Consequently, as Lord Nicholls said in Sempra, 'a benefit is not always worth its market value to a particular defendant', and 'when it is not it may be unjust to treat the defendant as having received a benefit possessing the value it has to others'. The common law 'places a premium on the right to choose how to spend one's money' [see Peel v Ontario[1992] 3 SCR 762 , para 25, per McLachlin J], and this right might be unfairly compromised if a defendant were forced to make restitution of the market value of a benefit which he would only have bought for himself at a lower price, or which he would not have bought at all. To avoid this, the court may therefore assess the value of the benefit by reference to the defendant's personal value system rather than the market.”