Defences - Change of position, passing on, estoppel by Rep bona fide purchaser no notice - Summarised Notes for the Equity and Trusts Law module, LLB, at City, University of London (achieved a 1st class using these) - can of course be used for other universities as well! Should be used with the f...
DEFENCES
Change of position, passing on, estoppel by Rep + bona fide purchaser no notice
CHANGE OF POSITION
Available where D has received property and on faith of receipt of that property, suffered some
change in personal circumstances
‘where an innocent Ds position is so changed that will suffer an injustice to called to repay,
injustice to repay outweighs injustice of denying plaintiff’s restitution’ (Westdeutsch v Islington)
Change of position has grown as part of restitution of unjust enrichment
Where D forgoes an opportunity to take benefit from another source in reliance of payment from
claimant, D is entitled to include such reliance in defence
D required to act in good faith for defence of change of position
Earn interest or saved from bank charges account for it e.g. D got 10k + 10k from interest
*Restitution point: If receives stolen property innocently, so is unjustly enriched, got property in
expense of someone else, change of position defence is where altered their position
Lipkin Gorman v Karpnale [1991]: D casino received money from a solicitor, Cass, who appropriated
that money from a law firm’s client and gambled it away at Ds casino, law firm sought to recover lost
moneys from casino by equitable and common law tracing claims as well as personal liability to
account for participation in breach of trust –
Open nature of defence of change of position: can be very generally applied, just need
expenditure of money balanced with any other detrimental act, against injustice of permitting
claimant to trace their property rights into property in Ds hands
Bad faith as a barrier: if bad faith cannot use
oBarros Mattos v MacDaniels [2004]: change of position unavailable where acted illegally, but if
so minor can be ignored on de minimis principle (so small can be ignored) and thus change of
position available, fraudster stole money from bank, passed it to D, D then distributed money
according to Ds instructions, sought to use change of position against claims of knowing receipt
+ restitution on amount stolen held acted illegally so cannot rely on defence had to account
for entire amount received
Scottish Equitable v Derby [2000]: pensioner received £172k from a pension fund by mistake, issue
could pension fund recover mistaken payment, pensioner sought rely on change of position on
receipt of money, he spent £9k on family home held entitled to keep 9k but rest of 172k he had to
give back, as he spent the 9k in receipt of the money he spent in good faith
Philip Collins v Davis [2000]: overpayments to musician by mistake, sought to retain, employer
proposed recover money by withholding future royalties, musician stated he changed lifestyle in
reliance on receipt of money held musician has burden of proving defence entitled to resist
recovery of half overpayments as he changed lifestyle in reliance of receiving them
Where payment is made mistakenly without any representation D entitled to money and sum is
so large D ought to reasonable have realised was mistake, no defence of change of position
Could affect justice as could be inequitable and unconscionable, thus unjust to allow a recipient of
money paid under a mistake to deny restitution to the payer in terms of unjust enrichment
Whether incurring future liabilities can amount to change of position
Change of position by committing to legal liability which will take effect in the future
Principle authority against change of position in the future – South Tyneside v Svenska
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