(E) ABSENCE OF BASIS

Absence of basis has been the ground of restitution which has been of particular importance in the context of restitution from public authorities, most notably the interest rate swaps cases. Indeed, it was this ground which was relied on by both the trial judge and the Court of Appeal to justify the award of restitution at common law in Westdeutsche Landesbank Girozentrale v Islington LBC.⁵⁴ It was held that there was no basis for the claimant’s payments to the defendant because the swaps transactions were null and void. Since ultra vires payments to public authorities are void payments, it follows that absence of basis is a potentially important ground of restitution in respect of the recovery of such payments from public authorities.^{[1] [2]} It might be considered that absence of basis should only be applicable where the claimant has paid money to a public authority pursuant to a contract, where the claimant expects to receive a benefit in return for the payment, and not where the claimant pays tax or duty to the public authority. But there is no reason why absence of basis cannot be applicable to the recovery of such ultra vires payments. This is because the claimant will have paid the authority in the belief that the payment will have discharged his or her liability to the authority. This is the anticipated basis for the payment. But if the money was not due, it follows that there is no liability which can be discharged and so the basis for the payment will have failed by operation of law. Such an argument was recognized by Lord Mansfield in Campbell v Hall,⁵⁶ where the claimant recovered duties which he had paid on sugar exported from Grenada on the ground that the duty had been unlawfully demanded because it had never been authorized by Parliament. The duty was recoverable specifically because it had been paid without consideration being provided.^[3]

• [1] (Oxford: Hart Publishing, 2013), 108, considers this to be a preferable explanation of why restitution should begranted against public authorities, because it is a private law ground of restitution.
• [2] (1774) 1 Cowp 204, 98 ER 1245.
• [3] See also Dew v Parsons (1819) B and Ald 562,106 ER471 and Queens of the River Steamship Co Ltd v TheConservators of the River Thames (1899) 15 TLR 474.