(i) The Annuity Cases
In a number of cases in the late eighteenth and early nineteenth centuries restitutionary claims were brought in respect of annuities. The grant of an annuity was a common method of borrowing money whereby the borrower, in return for a sum of money from the lender, agreed to pay an annuity to the lender during the lender’s lifetime in lieu of interest and the return of the loan. The Annuity Acts of 1777 and 1813 were passed to regulate the granting of annuities and required compliance with certain formalities, such as registration of the annuity. Failure to comply with these formalities resulted in the contract being treated as null and void. The importance of this in the present context is that it was recognized in a number of cases that restitution of the money under the void annuity contracts was possible even though payments had been made by both parties.
Some commentators have explained these cases on the ground of total failure of basis or mistake. But this is not convincing. If there was a failure of basis it was partial, since payments had been received by the lender, and if there was a mistake it was one of law, and English law was clear that, subject to exceptions none of which were applicable in these annuity cases, neither partial failure of basis nor mistake of law were grounds of restitution at the time. So some other explanation for restitution needs to be identified. The most appropriate explanation is that of absence of basis. Since the annuities were null and void the basis for the lender’s payment never could be obtained, as a matter of law.
-  See, for example, Hicks v Hicks (1802) 3 East 16, 102 ER 502.
-  PBH Birks, ‘No Consideration: Restitution after Void Contracts’ (1993) 23 Univ WALR 195, 214; ASBurrows, ‘Swaps and the Friction Between Common Law and Equity’  RLR 15, 18.
-  See Westdeutsche Landesbank Girozentrale v Islington LBC  4 All ER 890, 930 (Hobhouse J).