As I wrote in an earlier Blog, “Hard Cases Make Bad Law”. The expression means that when a Court yields to the temptation to twist the Law in favour of a person with whom it feels sympathy – someone whose circumstances are a Hard Case – but in truth the Law does not support their claim, then the result will be Bad Law. It means, that the Law should be applied pure and simple – and with no regard to any unfortunate hardship of the particular case.
In my earlier blog I was pleased to see the Court follow the maxim. But today I see a case which I think may be Bad Law, where the Court has in my opinion bent to please claimants for whom it feels sorry.
The case of CLP Holding Company v Singh & Kaur deals with liability pay to pay VAT.
The facts are simple – the Contract for Commercial Premises in England was in the form used by most Lawyers in England and said that the price was £130,000.00.
In the small print of the Contract was the usual wording which said that “All Sums Made Payable By The Contract Are Exclusive Of Value Added Tax”
This was a property which was within the VAT regime. Accordingly the clear and obvious meaning of the Contract was that the Purchasers should pay £130,000 for a property to the Seller and a further sum of £22,750 [17.5% in 2006] to the Tax Man.
The Purchasers’ claim was that being unsophisticated shopkeepers they had no knowledge of any liability to pay VAT, and so should not have to pay it. In my opinion this should have nothing to do with it. Admittedly, they had already paid the £130,000.00 before moving in and the Sellers had muddied the water by saying that nothing further was payable TO THEM on formal completion. But Still.
After various Court cases and decisions going one way then the other on Appeal the present result has been in favour of the Buyers for whom the Judge has sympathy [identifying this as a “Hard Case”] – the law report says, in the words of the Judge “the Defendants are individuals and whilst I recognise that the property comprises Commercial Premises there has never been any suggestion that the Defendants were aware or had any reason to suppose that the transaction might be subject to a VAT charge”.
Really? So presumably if it had been the Sellers who were ignorant, the case would go the other way? Perhaps the trick to winning Court disputes is to prove that you are more ignorant than your opponent – Is this the new Law?
Leaving aside the fact that one would have thought that circumstances and knowledge of the Purchasers was nothing to do with the case, what about the fact that the Purchase price was clearly written in the Contract and that later in the small print of the Contract, were written the words that “all sums made payable by the Contract are exclusive of Value Added Tax”.
The Judge have dealt with that little problem by saying that “General or Standard conditions in Contracts are overruled by Special Conditions” – and that because the price of £130,000.00 was written in the Contract therefore that price was a Special Condition so that the statement of “The price is £130,000.00” has overruled the General Condition that the sum to be paid is exclusive of value added tax.
This surprising interpretation would seem to mean that a written statement of the purchase price will always overrule the general condition that “all sums made payable by the Contract are exclusive of value added tax”.
If that be the case I fail to see the significance of writing that general condition into the Contract as other than a waste of ink.
I do wonder whether this rather surprising result will be applied in favour of any future such case where the Purchasers are professional business men. [Let me Guess – urr no, thought not] So now we have a two tier system of one law for the sophisticated and another for the ignorant or careless – this is the Bad Law resulting from the Hard Case.
Of course all the worry and fuss, wasted time and wasted cost of the Court cases would have been avoided if only the Sellers had written in the contract that the purchase price was “£130,000 .00 plus VAT.”
Certainly this is the message which Conveyancing Lawyers will pick up from the Case – Do not rely upon the General Conditions of your Contracts – spell it out once and spell it out again. The Law has “dumbed down” and if your contract cannot be understood by the feckless, you will be the loser.
I usually finish my blogs by saying that the law is of such complexity that an Expert should always be consulted. But if you take any guidance from this case, perhaps it is – stay away from Experts who know the Law and will explain it to you, or you will have to pay your VAT!
Be that as it may, I am, as ever, here in Leeds and ready to provide my Notarial Services – Do please contact me whenever I can assist you. I am at http://www.atkinsonnotary.com and +44 (0)113 816 0116 and firstname.lastname@example.org