Westdeutsche Landesbank Girozentrale v Islington LBC [1996]

Westdeutsche Landesbank Girozentrale v Islington LBC [1996]

Westdeutsche Landesbank Girozentrale v Islington LBC [1996] UKHL 12, [1996] AC 669 is a leading English trusts law concerning the circumstances under which a resulting trust arises. The House of Lords ruled that a resulting trust must be intended or must be able to be presumed to have been intended.

The Westdeutsche Landesbank Girozentrale (WestLB) sued Islington LBC (the Council) for the return of £1,145,525, which included compound interest, as money that WestLB had paid under an interest rate swap agreement with the Council. Interest rate swap agreements had been declared by the House of Lords, a few years earlier in Hazell v Hammersmith and Fulham LBC [1992], to be ultra vires and void because they exceeded councils' borrowing powers under the Local Government Act 1972. The Council accepted that it should repay the money it had received under the void contract, but that it should only repay simple interest. Previously, the courts had only allowed awards of compound interest if the claimant could establish a property right.

The House of Lords held that WestLB could only recover its money with simple interest because it only had a personal claim for recovery in a common law action of money but had no proprietary equitable claim under a resulting trust. There was no resulting trust because it was necessary that the Council's conscience had been affected when it received the money, by knowledge that the transaction had been ultra vires and void. Although it was necessary that there would be an intention that the money be held on trust, but this was not possible because nobody knew that the transaction would turn out to be void until the House of Lords' decision in Hazell v Hammersmith and Fulham LBC [1992].

The Court viewed that all resulting trusts depended on intention and were not connected with the law of unjust enrichment. It followed that no trust arose because it is impossible to have such as intention as the transaction was ultra vires and hence void ab initio. Therefore, there was only a personal claim for the money back, so only simple interest, not compound interest, was payable.
Back to blog
UOL Case Bank

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Yale University
Council of Europe
Baker Mckenzie 
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.