Deluxe Property Holdings Ltd v SCL Construction Ltd & Anor

Deluxe Property Holdings Ltd v SCL Construction Ltd & Anor

SCL holds the VAT refund and accounting credit on trust for Deluxe, either as a Quistclose or constructive trust, and cannot set-off the refund against other debts; SCL is in breach of trust for using the funds for general business purposes.

Parties
Claimant: Deluxe Property Holdings Limited; Defendant: SCL Construction Limited; Defendant: Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
08 December 2020
Procedural Posture
Civil (part 8 Claim) / Judgment After Trial
Outcome
Declaratory relief granted in favour of Deluxe; SCL holds the VAT refund on trust for Deluxe.
Legal Topics
Quistclose Trust, VAT Refund, Constructive Trust, Unjust Enrichment, Set Off, Breach of Trust
Trusts Tax Law Equity Quistclose Trust VAT Refund Constructive Trust Unjust Enrichment Set Off +1 more

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Parties

Deluxe Property Holdings Limited

Claimant

SCL Construction Limited

Defendant

Her Majesty’s Revenue and Customs

Defendant

Procedural Posture

Civil (part 8 Claim) / Judgment After Trial

Legal Issues

  1. 1 Whether SCL holds the VAT refund on trust for Deluxe or only as a debt
  2. 2 Whether a Quistclose or constructive trust arises over the VAT refund
  3. 3 Whether SCL can set-off the VAT refund against other alleged debts

Ratio Decidendi

SCL holds the VAT refund and accounting credit on trust for Deluxe, either as a Quistclose or constructive trust, and cannot set-off the refund against other debts; SCL is in breach of trust for using the funds for general business purposes.

Court Disposition

Declaratory relief granted in favour of Deluxe; SCL holds the VAT refund on trust for Deluxe.

Orders

  • SCL to transfer the balance of the trust property (VAT refund) to Deluxe.
  • Trust to be wound up.