That circlip would lock the axle shaft into the joint itself and this problem was more than likely caused by whoever replaced the boots. It’s not a matter of disasembling the joint but probably a matter of someone applied too much grunt at some point in the process. Without knowing exactly how they went about the boot procedure it’s impossible to say with certainty how they caused this; only that the probability is very high that they did.
Unfortunately, that’s water under the bridge now and the odds of getting any reimbursement from the first shop would be pretty close to zero.
I agree with OK4450 except that I think you ought to go after the first shop for the cost of repairs at the second. They had a chance to do the right thing, but chose not too. Consider enlisting the aid of a consumer affairs reporter from a local TV station, its cheaper than a lawyer.
The reason I asked about the labor cost was because on most FWD axles today, the outer CV joint is permanently attached to the axle shaft and it cannot be removed. To replace the outer boots, the axle must be removed and the inner CV joint disassembled in order to get to the outer boot. For this reason, the inner boot is usually replaced at the same time and the labor alone runs about $200 per axle.
If the labor was a lot less than this, then that would be due to the mechanic using a “zip boot” which are prone to failure, or the outer CV joint is removable. Looks like the VW has a removable outer joint.