DEFENCES ARISING FROM CHANGES IN THE DEFENDANT’S CIRCUMSTANCES
Sometimes the defendant’s circumstances will change to such an extent after he or she has obtained a benefit that it is no longer just for the defendant to make full restitution of the benefit received. In such cases the defendant may be able to rely on one of three defences to defeat or circumscribe the restitutionary claim, namely estoppel, payment by an agent to his or her principal, and change of position. The availability of each defence will depend on the reason why the defendant’s circumstances have changed.
ESTOPPEL BY REPRESENTATION
Estoppel is a defence which is not confined in its application to restitutionary claims, but it has had a particularly important role in this context.[1]1n the light of the recognition of the defence of change of position, however, the role of estoppel as a general defence to restitutionary claims has become less important, although it cannot yet be considered to be irrelevant. Essentially the estoppel defence will be applicable where the defendant detrimentally changes his or her position in reliance on a representation made by the claimant that a benefit was validly received. Where estoppel is established the restitutionary claim will usually be barred completely.[2] This is because estoppel is a rule of evidence which determines the rights ofthe parties according to the facts as represented by them in order to protect the autonomy of the defendant who has relied on the represen- tation.[3] The effect of the defence is to prevent the claimant from asserting the true situation where he or she has led the defendant to think that the situation is different,[4] and so respects the defendant’s autonomy in detrimentally relying on the claimant’s representation.[5]
Although the defence of estoppel is potentially applicable to all three types of restitutionary claim, it is particularly relevant to claims founded on the reversal of the defendant’s unjust enrichment and especially where the ground of restitution is mistake, simply because it is in this context that there is greater opportunity for the claimant to make a representation to the defendant that the enrichment was validly received. In fact, all of the reported cases concerning the application of estoppel to restitutionary claims relate to the recovery of mistaken payments. But there is no reason why the defence cannot apply where the claim is founded on other grounds of restitution and concerns other types of enrichment.
- [1] See generally E Bant, The Change of Position Defence (Oxford: Hart Publishing, 2009), ch 2.
- [2] See TRA Global Pty Ltd v Kebakoska [2011] VSC 480 (Victoria).
- [3] See J Hudson, ‘Estoppel by Representation as a Defence to Unjust Enrichment—The Vine Has NotWithered Yet’ [2014] RLR 19.
- [4] Estoppel might, consequently, be characterized as a denial, since its effect is for the defendant to deny thatan element of the cause of action has been established so that there is no liability. Since, however, the burden ofproving estoppel is borne by the defendant, it is preferably characterized as a defence to the claim.
- [5] RB Grantham and CEF Rickett, ‘A Normative Account of Defences to Restitutionary Liability’ (2008) CLJ92, 109.
