“House of Lords clarifies restitution law for ultra vires local authority contracts”
Islington London Borough Council entered into interest rate swap agreements with Westdeutsche Landesbank, which were later held to be ultra vires and void. The bank sought to recover money paid under these void agreements and claimed proprietary rights through a resulting trust.
Whether the bank could recover money paid under ultra vires swap agreements, and whether it had proprietary rights through a resulting trust in the money paid.
The bank was entitled to personal restitutionary remedy for money paid under the void contract, but had no proprietary claim through resulting trust as it never had equitable interest in the money.
This case fundamentally reformed English restitution law and clarified when resulting trusts arise, establishing key principles for recovery of payments made under void contracts and the relationship between personal and proprietary remedies.
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OSCOLA Citation
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL)
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