Kleinwort Benson Ltd v Lincoln City Council
[1999] 2 AC 349
Ratio Decidendi
Money paid under a mistake of law is recoverable in a claim for restitution, just as money paid under a mistake of fact. The old rule barring recovery for mistakes of law was abolished.
Facts
Banks entered into interest rate swap agreements with local authorities. After the agreements were held to be void (following Hazell v Hammersmith), the banks sought to recover money paid under them.
Judgment Summary
The House of Lords (3–2) held that the mistake of law bar should be abolished. Money paid under a mistake of law is recoverable in restitution on the same basis as money paid under a mistake of fact.
Key Quotes
"I can see no good reason for the mistake of law rule to be maintained in our law."
— Lord Goff
Subsequent Treatment
Abolished the mistake of law rule; fundamental to the modern law of unjust enrichment.