Was the Compromise Agreement ultra vires?
If a public body makes a decision which is outside the scope of its powers, the decision will be ultra vires and therefore void. In this case, the Trust had a statutory power to enter into contracts and to “make arrangements for providing pensions, allowances or gratuities”, including by way of compensation for loss of employment. There was no absolute or specific limitation on the amount of compensation that the Trust could pay. However, the Trust asserted that the compensation payment was unreasonable in the Wednesbury sense, namely that in exercising its powers in this way the Trust had agreed to a payment which no reasonable Trust properly exercising its statutory powers could have offered. The Trust cited the following factors in support of its argument that the level of the severance payment was unreasonable. • The payment for loss of office was unreasonably generous. • It exceeded the maximum liabilities that the Trust would have been exposed to from potential statutory claims b
