Interservefm Ltd v Omnisure Property Management Ltd

An agreement is implied from conduct only where it is an obvious or necessary implication. Accounts may evidence an earlier agreement, but cannot themselves create one retrospectively. Where a company transfers tax losses to a subsidiary so that the group can obtain an immediate tax benefit, the circumstances do not ordinarily imply an obligation for the subsidiary to pay that benefit to the parent. Restitution is unavailable where the benefit was obtained by the claimant’s group and the defendant was not enriched at the claimant’s expense.

The claimant transferred joint-venture tax losses to the defendant, then its wholly-owned subsidiary, enabling the defendant to obtain a tax saving of £368,164. The defendant’s accounts recorded consortium relief as a creditor item, but distinguished it from sums owed to the claimant. When the claimant later sold the defendant, the inter-company debts settled on completion excluded that amount.

The claimant sought permission to amend its claim to allege an implied contractual obligation to repay the tax saving, alternatively restitution for transfer under a mistake of fact. The defendant applied to strike out the proposed claim or obtain summary judgment. The central issue was whether either claim had a real prospect of success.

1. Disposition. Permission to amend was refused. The defendant was entitled to summary judgment because the proposed amended claim had no real prospect of success.
2. Implied contract. An agreement implied from conduct must be an obvious or necessary implication. The transfer of the losses and their use by the defendant could not, without more, establish the alleged obligation. The claimant’s group obtained the full immediate benefit, while the claimant itself could not use the losses. There was therefore no apparent reason, and no necessity, to imply an obligation requiring the defendant to pay the benefit to the claimant.
3. Accounts. The accounts could at most evidence an agreement made when the losses were transferred; they could not create such an agreement. Their distinction between consortium relief and amounts owed to the claimant pointed against the alleged debt. The exclusion of the sum from the inter-company debts discharged on the sale, and the absence of any demand for payment, reinforced that conclusion.
4. Restitution. The restitutionary claim could not succeed. It attempted to create a contractual obligation through a claim which assumed that no contract existed. The tax benefit was available to the claimant only through its group, and that benefit had been received. The defendant was not enriched at the claimant’s expense, unjustly or otherwise.