The liquidator brought an action to determine the others' rights, given that technically, if the contracts for deposits were void, the depositors had no straight forward personal claim.

Viscount Haldane LC held the power of the building society had to be limited to its proper objects, so the banking business was ultra vires.

Applying the principle of Re Hallett's Estate[1] that the assets remaining after payment of the outside creditors must be taken to represent in part moneys which the depositors could follow, as having been invalidly borrowed, and in part moneys which the society could follow, as having been wrongfully employed by its agents in the banking business, and (subject to any application by any individual depositor or shareholder with a view to tracing his own money into any particular asset, and to the costs of the liquidation) ought to be distributed pari passu between the depositors and the unadvanced shareholders according to the amounts respectively credited to them in the books of the society at the commencement of the winding-up.

The effect of the decision in Westdeutsche on Sinclair v Brougham was considered at some length by the Court of Appeal in Haugesund Kommune v DEPFA ACS Bank [2010] EWCA Civ 579.

[2] However the editors of Hayton & Mitchell[3] say this case might nonetheless have been rightly decided, "depending on whether the ultra vires depositors' claim to recover their money on the ground of failure of consideration was founded on the assertion that the building society had failed to repay their money, or on the assertion that their contracts with the building society had been void from the beginning."