fix ref returns in expression bodied local functions (#42333)

 Fix #42259 caused by use of incorrect binder when checking ref return type.

src/Compilers/CSharp/Portable/Binder/Binder_Statements.cs

@@ -3163,14 +3163,20 @@ private static bool IsValidExpressionBody(SyntaxNode expressionSyntax, BoundExpr
             Binder bodyBinder = this.GetBinder(expressionBody);
             Debug.Assert(bodyBinder != null);
 
-            RefKind refKind = RefKind.None;
+            return bindExpressionBodyAsBlockInternal(expressionBody, bodyBinder, diagnostics);
+
+            // Use static local function to prevent accidentally calling instance methods on `this` instead of `bodyBinder`
+            static BoundBlock bindExpressionBodyAsBlockInternal(ArrowExpressionClauseSyntax expressionBody, Binder bodyBinder, DiagnosticBag diagnostics)
+            {
+                RefKind refKind;
                 ExpressionSyntax expressionSyntax = expressionBody.Expression.CheckAndUnwrapRefExpression(diagnostics, out refKind);
-            BindValueKind requiredValueKind = GetRequiredReturnValueKind(refKind);
+                BindValueKind requiredValueKind = bodyBinder.GetRequiredReturnValueKind(refKind);
                 BoundExpression expression = bodyBinder.BindValue(expressionSyntax, diagnostics, requiredValueKind);
-            expression = ValidateEscape(expression, Binder.ExternalScope, refKind != RefKind.None, diagnostics);
+                expression = bodyBinder.ValidateEscape(expression, Binder.ExternalScope, refKind != RefKind.None, diagnostics);
 
                 return bodyBinder.CreateBlockFromExpression(expressionBody, bodyBinder.GetDeclaredLocalsForScope(expressionBody), refKind, expression, expressionSyntax, diagnostics);
             }
+        }
 
         /// <summary>
         /// Binds a lambda with expression e as either { return e;} or { e; }.

src/Compilers/CSharp/Test/Semantic/Semantics/RefLocalsAndReturnsTests.cs

@@ -313,6 +313,44 @@ class C
                 Diagnostic(ErrorCode.ERR_AssgReadonly, "_ro").WithLocation(15, 47));
         }
 
+        [Fact, WorkItem(42259, "https://github.com/dotnet/roslyn/issues/42259")]
+        public void RefReturnLocalFunction()
+        {
+            var source = @"
+#pragma warning disable CS8321
+class C {
+    static void M(){
+        ref int M1(in int i) => ref i;
+        ref int M2(in int i) { return ref i; }
+        ref readonly int M3(in int i) => ref i;
+        ref readonly int M4(in int i) { return ref i; }
+    }
+}";
+            CreateCompilation(source).VerifyDiagnostics(
+                // (5,37): error CS8333: Cannot return variable 'in int' by writable reference because it is a readonly variable
+                //         ref int M1(in int i) => ref i;
+                Diagnostic(ErrorCode.ERR_RefReturnReadonlyNotField, "i").WithArguments("variable", "in int").WithLocation(5, 37),
+                // (6,43): error CS8333: Cannot return variable 'in int' by writable reference because it is a readonly variable
+                //         ref int M2(in int i) { return ref i; }
+                Diagnostic(ErrorCode.ERR_RefReturnReadonlyNotField, "i").WithArguments("variable", "in int").WithLocation(6, 43)
+            );
+        }
+
+        [Fact, WorkItem(42259, "https://github.com/dotnet/roslyn/issues/42259")]
+        public void RefReadonlyReturnLocalFunction()
+        {
+            var source = @"
+#pragma warning disable CS8321
+class C {
+    ref int M(){
+        throw new System.Exception();
+        ref readonly int M1(in int i) => ref i;
+        ref readonly int M2(in int i) { return ref i; }
+    }
+}";
+            CreateCompilation(source).VerifyDiagnostics();
+        }
+
         [Fact]
         public void ReadonlyFieldRefReassign()
         {