(i) Invalid Statutory Provisions

Where money is paid to a public authority pursuant to an invalid statutory provision it follows that the money is not lawfully due to the public authority and so it will be characterized as ultra vires.[1]

(ii) Unauthorized Transactions

Payment to a public authority will also be characterized as ultra vires if it is made pursuant to a transaction in which the public authority was not authorized to participate. The best illustration of this type of ultra vires payment arises from the interest rate swaps litigation, where financial institutions paid money to local authorities pursuant to interest rate swaps transactions which the House of Lords held they lacked the capacity to enter.28 In these cases, however, the fact that the defendant was a public authority did not prove significant to the claim for restitution, even though the reason why the transactions were void was because the financial institutions had made the contracts with public authorities, who lacked the capacity to speculate with taxpayers’ money by entering into such transactions.

  • [1] 28 Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1.
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