Haugesund Kommune & Anor v DEPFA ACS Bank

Haugesund Kommune & Anor v DEPFA ACS Bank

The swap agreements were loans within the meaning of section 50 of the Norwegian Local Government Act; the municipalities lacked capacity to enter into them, rendering the agreements void. Wikborg Rein's advice was negligent as no reasonable Norwegian lawyer could have concluded otherwise based solely on the Ministry's circular. Depfa is entitled to restitution for sums advanced, as the municipalities cannot rely on change of position, having always known repayment was required. Estoppel and negligent misstatement do not apply to create capacity where it is lacking in public law.

Parties
Claimant: Haugesund Kommune; Claimant: Narvik Kommune; Defendant: Depfa ACS Bank; Third Party: Wikborg Rein & Co
Jurisdiction
England and Wales
Judgment Date
04 September 2009
Procedural Posture
Commercial Court Contract/restitution/professional Negligence / Judgment After Expedited Trial
Outcome
Declaratory relief granted to municipalities; judgment for Depfa in restitution; Wikborg Rein liable for negligent advice, quantum to be determined.
Legal Topics
Municipal Capacity, Loans and Swaps, Good Faith in Contract, Restitution for Mistake, Professional Negligence by Legal Advisers, Public Law Limits on Borrowing, Change of Position Defence
Contract Law Restitution Professional Negligence Conflict of Laws Administrative Law Municipal Capacity Loans and Swaps Good Faith in Contract +4 more

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Parties

Haugesund Kommune

Claimant

Narvik Kommune

Claimant

Depfa ACS Bank

Defendant

Wikborg Rein & Co

Third Party

Procedural Posture

Commercial Court Contract/restitution/professional Negligence / Judgment After Expedited Trial

Legal Issues

  1. 1 Whether the swap agreements constituted loans under Norwegian law
  2. 2 Whether the municipalities had capacity to enter into the agreements
  3. 3 Whether Wikborg Rein's advice was negligent

Ratio Decidendi

The swap agreements were loans within the meaning of section 50 of the Norwegian Local Government Act; the municipalities lacked capacity to enter into them, rendering the agreements void. Wikborg Rein's advice was negligent as no reasonable Norwegian lawyer could have concluded otherwise based solely on the Ministry's circular. Depfa is entitled to restitution for sums advanced, as the municipalities cannot rely on change of position, having always known repayment was required. Estoppel and negligent misstatement do not apply to create capacity where it is lacking in public law.

Court Disposition

Declaratory relief granted to municipalities; judgment for Depfa in restitution; Wikborg Rein liable for negligent advice, quantum to be determined.

Orders

  • Declaration that municipalities are not bound by the swap agreements
  • Judgment for Depfa against each municipality for agreed or assessed sums in restitution