Hazell v Hammersmith and Fulham London Borough Council: HL 1991

Swap deals outwith Council powers

The authority entered into interest rate swap deals to protect itself against adverse money market movements. They began to lose substantial amounts when interest rates rose, and the district auditor sought a declaration that the contracts were void, there being no express power in the relevant legislation.
Held: The arrangements formed no proper part of a local authority’s statutory functions, and were therefore ultra vires, and not binding on the authority. They were not ancillary to any statutory obligation, nor were they entered into in order to support any borrowing. Section 111(1) embodies the principles relating to the powers of a company as set out in Great Eastern Railway.
The word ‘functions’ in this context ’embraces all the duties and powers of a local authority; the sum total of the activities Parliament has entrusted to it. Those activities are its functions.’
Lord Templeman said: ‘The authorities deal with widely different statutory functions but establish the general proposition that when a power is claimed to be incidental, the provisions of the statute which confer and limit functions must be considered and construed . . .The authorities also show that a power is not incidental merely because it is convenient or desirable or profitable . . ‘


Lord Templeman


[1992] 2 AC 1, [1991] 2 WLR 372, [1991] 1 All ER 545


Local Government Act 1963 1, Local Government Act 1972 111, Local Government Finance Act 1982 19


England and Wales


AppliedAttorney-General v Mersey Railway Co HL 1906
The power to make by-laws encompasses not only a company’s principle activity, but also all incidental and ancillary activities. The incidental power cannot be used to expand the company’s activities, in this case by extending its business by . .
OverruledBilbie v Lumley and Others 28-Jun-1802
Contract Not Set Aside for Mistake as to Law
An underwriter paid a claim under a policy which he was entitled in law to repudiate for non-disclosure. Although he knew the relevant facts, he was not aware of their legal significance. He claimed back the money he had paid.
Held: A contract . .
Appeal from – ApprovedHazell v Hammersmith and Fulham London Borough Council CA 2-Jan-1990
The authority entered into interest rate swap agreements, whose validity was challenged. The court considered what were the functions of a local authority within the Act. ‘We agree with the Divisional Court that in [section 111(1)] the word . .
CitedUniversity of Wollongong v Merwally 22-Nov-1984
(High Court of Australia) Deane J said: ‘A parliament may legislate that, for the purposes of the law which it controls, past facts or past laws are to be deemed and treated as having been different to what they were. It cannot however objectively . .
At first instanceHazell v Hammersmith and Fulham London Borough Council QBD 1990
The issue before the courts was whether, in the absence of any express power authorising the Council to do so, the Council was within its power under s 111(1) of the Local Government Act 1972 to enter into certain swap transactions;
‘The fact . .
CitedTrustees of the Harbour of Dundee v D and J Nicol HL 10-Dec-1914
The pursuers challenged an initiative by the defenders which allegedly harmed their local steamer excursion business. The House was asked whether steamers acquired by a statutory body of harbour trustees who maintained a service of steamers for . .

Cited by:

CitedDeutsche Morgan Grenfell Group Plc v The Commissioners of Inland Revenue, HM Attorney General ChD 18-Jul-2003
The taxpayer sought to bring an action for restitution by the revenue of sums paid under a mistake of law. Under the Metallgesellschaft decision, rights of election for recovery of overpaid tax applied only between UK resident companies.
Held: . .
AppliedWestdeutsche Landesbank Girozentrale v Islington London Borough Council HL 22-May-1996
Simple interest only on rate swap damages
The bank had paid money to the local authority under a contract which turned out to be ultra vires and void. The question was whether, in addition to ordering the repayment of the money to the bank on unjust enrichment principles, the court could . .
CitedKleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .
CitedBrennan v Bolt Burdon and Others, London Borough of Islington, Leigh Day and Co CA 29-Jul-2004
The claimant sought damages for injury alleged to have been suffered as tenant of a house after being subjected to carbon monoxide poisoning, and also from her former solicitors for their delay in her claim. The effective question was whether the . .
CitedAkumah v London Borough of Hackney HL 3-Mar-2005
The authority set up a parking scheme for an estate of house of which it was the landlord. Those not displaying parking permits were to be clamped. The appellant complained that the regulations had been imposed by council resolution, not be the . .
CitedAttorney General v British Museum ChD 27-May-2005
The trustees brought a claim against the Attorney-General seeking clarification of their duties and powers to return objects which were part of the collection in law, but where a moral duty might exist to return it to a former owner. Here drawings . .
CitedRoberts v Parole Board HL 7-Jul-2005
Balancing Rights of Prisoner and Society
The appellant had been convicted of the murder of three police officers in 1966. His tariff of thirty years had now long expired. He complained that material put before the Parole Board reviewing has case had not been disclosed to him.
Held: . .
CitedLooe Fuels Ltd., Regina (on the Application of) v Looe Harbour Commissioners Admn 27-Apr-2007
The claimants sought judicial review of a decision of the defendant harbour masters themselves to install and sell from the harbour all fule for use by boats using it, saying that they had no power to operate such an enterprise.
Held: Whilst . .
CitedHeald and Others v London Borough of Brent CA 20-Aug-2009
The court considered whether it was lawful for a local authority to outsource the decision making on homelessness reviews. The appellants said that it could not be contracted out, and that the agent employed lacked the necessary independence and was . .
CitedHaugesund Kommune and Another v Depfa Acs Bank CA 27-May-2010
. .
CitedNational Secular Society and Another, Regina (on The Application of) v Bideford Town Council Admn 10-Feb-2012
The claimant challenged the placing of a prayer on the agenda of the respondent’s meetings.
Held: The claim succeeded. The placing of such elements on the Agenda was outside the powers given to the Council, and the action was ultra vires: . .
CitedNational Aids Trust v National Health Service Commissioning Board (NHS England) Admn 2-Aug-2016
NHS to make drug available
The claimant charity said that drugs (PrEP) prophylactic for AIDS / HIV should be made available by the defendant and through the NHS. The respndent said that the responsibility for preventative medicine for sexual health lay with local authorities. . .
CitedJJ Management Consulting Llp and Others v Revenue and Customs CA 22-Jun-2020
HMRC has power to conduct informal investigation
The taxpayer, resident here, but with substantial oversea business interests, challenged the conduct of an informal investigation of his businesses under the 2005 Act, saying that HMRC, as a creature of statute, are only permitted to do that which . .
CitedAustin, Regina (on The Application of) v Parole Board for England and Wales Admn 17-Jan-2022
Parole Board Publication Scheme Unduly Complicated
This claim for judicial review raises important issues about the lawfulness of the Parole Board’s policy and practice in relation to the provision of a summary of a Parole Board decision to victims and victims’ families and the media. The protocol . .
CitedOWD Ltd (T/A Birmingham Cash and Carry) and Another v Revenue and Customs SC 19-Jun-2019
The wholesalers sought approval from the respondent for the wholesale supply of duty-paid alcohol. Approval was refused, but the parties sought a means of allowing a temporary approval pending determination by the FTT. The two questions considered . .
Lists of cited by and citing cases may be incomplete.

Local Government, Financial Services

Updated: 08 April 2022; Ref: scu.185823