(iii) Change of Circumstances
The defendant’s circumstances must have changed in such a way as to make it inequitable to require him or her to make restitution to the claimant. This notion of change of circumstances involves two separate considerations.
The defendant must establish that, but for the receipt of the benefit from the claimant, his or her circumstances would not have changed in the way they did.  This is illustrated by the facts of United Overseas Bank v Jiwani,29 where the defendant, having been paid by the claimant by mistake, used this money to purchase a hotel. One reason the defence of estoppel failed was because the defendant could not show that his circumstances had changed as a result of his belief that the money was properly paid, since, even if the defendant had not received the money from the claimant, he would still have purchased the hotel, borrowing the money if necessary.
Similarly, if the defendant spends money on ordinary living expenses which he or she would have incurred anyway, the defence cannot be established. But the fact that the defendant spent the money on such expenses will not automatically prevent the defence from being established if it can be shown that the defendant would not have incurred this expenditure but for the receipt of the money from the claimant. This was recognized by the Court of Appeal in Avon County Council v Howlett30 where the claimant had substantially overpaid sickness benefits to the defendant teacher as a result of a mistake. The defendant and his wife adjusted their expenditure in the light of this overpayment, for example by purchasing a second-hand car and a new suit, and they put some of the money away in savings. Thus, the overpayment was not spent on any extraordinary items, but was absorbed by small improvements in the defendant’s daily quality of life. This was held to be a sufficient detrimental reliance to establish estoppel, in that the defendant had spent more money than he would otherwise have done had the overpayment not been received.
It must also be shown that the change of circumstances had been to the defendant’s detriment. So, if the defendant received ?1,000 from the claimant by mistake and, in reliance on the claimant’s representation that the money was due, used it to buy shares which he or she would not have purchased but for the receipt of the money, and these shares increased in value, the defence of estoppel will not be open to the defendant, simply because he or she will not have suffered detriment as a result of the purchase. If, however, the defendant’s investment was a bad one, this constitutes a detrimental change of circumstances. Consequently, in Holt v Markham31 the defendant had detrimentally changed his position by investing money which he had received from the claimant in a company which went into liquidation. In Deutsche Bank (London Agency) Ltd v Beriro and Co32 the defendant’s position changed because he paid the money which had been received from the claimant to a third party. This constituted a detrimental change of circumstances because the defendant was unable to recover the money from the third party.
Whilst the defendant’s detrimental change of circumstances will usually arise as a result of an act on the part of the defendant, the change may also arise by virtue of an omission. This is illustrated by Avon CC v Howlett33 where, as a result of being overpaid sickness benefit, the defendant failed to claim social security benefit to which he would otherwise have been entitled. It was recognized that this constituted a detrimental change of circumstances.34 Similarly, in Greenwood v Martins Bank Ltd35 it was accepted that the defendant had detrimentally relied on the claimant’s representation that his wife had not committed a forgery, by virtue of the defendant’s failure to sue the wife in respect of the forgery when it had the opportunity to do so.
(iv) The Justice of the Case
Even where the defendant has detrimentally changed his or her position in reliance on the claimant’s representation, the defence of estoppel may still fail if, as was acknowledged by McKenna J in United Overseas Bank v Jiwani,36 it is not just to require the defendant to make restitution to the claimant. This will be the case where, for example, the defendant was under a duty to inform the claimant of his or her mistake and had failed to do so. This occurred in Larner v LCC,37 where the defendant had failed to inform his employer of changes in his service pay which meant that the employer mistakenly paid him more money than he was entitled to receive. Similarly, the defence will fail if the defendant was a wrongdoer or he or she had made a misrepresentation to the claimant which contributed to the claimant mistakenly transferring the benefit to the defendant.38
-  the defendant had relied. Bant has argued, in The Change of Position Defence, 35, that it should be sufficientthat the representation was a cause of the defendant’s change of position, by analogy with the test of causationfor misrepresentation, see p 187, above, because the defendant’s decision to change his or her position wasinduced by a mistaken belief. Cf the analysis of causation for the defence of change of position, p 682, below.
-   1 WLR 964. 30  1 WLR605.