Lloyd's Maritime and Commercial Law Quarterly
SIMPLE INTEREST ONLY? AUTONOMOUS UNJUST ENRICHMENT AND THE RELATIONSHIP BETWEEN EQUITY AND THE COMMON LAW
Westdeutsche Landesbank Girozentrale v. Islington LBC
In Westdeutsche Landesbank Girozentrale v. Islington LBC
1 the House of Lords held that no resulting trust arises where a payment is made under a void contract, and that there is no jurisdiction to award compound interest under an action for money had and received. The failure to establish such a jurisdiction demonstrates a continuing strait-jacketing of legal development by the historic division between Equity and the Common Law.
The case concerned an interest rate swap agreement between Westdeutsche Landesbank Girozentrale (“the Bank”) and Islington Council (“the Council”). The Bank paid the Council £2.5 million up-front on 18 June 1987. Such swap agreements were held void by the House of Lords in Hazell v. Hammersmith and Fulham L.B.C.2 as ultra vires the local authorities who had entered them. The Bank claimed restitution of £1,145,525.93, representing the balance of their up-front payment less interest repaid.
1. [1996] 2 W.L.R. 802. See also P. Birks, “Trusts Raised to Reverse Unjust Enrichment: The Westdeutsche Case” [1996] Restitution Law Review 3–26.
2. [1992] 2 A.C. I.
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