CHANGE OF POSITION

(A) RECOGNITION OF THE DEFENCE

Although the notion of a defence of change of position^[1] has existed in some limited embryonic form for some time,^[2] its existence had been in doubt, since a number of cases had specifically rejected such a defence in English law.⁹¹ The defence was, however, expressly recognized by the House of Lords in Lipkin Gorman.⁹² It was widely defined by Lord Goff as being ‘available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full’.⁹³ This harks back to the principle expounded by Lord Mansfield in Moses v Macferlan⁹⁴ to justify the recognition of defences to a restitutionary claim, namely that the defendant ‘may defend himself by everything which shows that the plaintiff ex aequo et bono is not entitled to the whole of the demand, or to any part of it’. Where the defendant’s position has changed after receipt of a benefit it is only fair that this should be taken into account in determining whether and to what extent the defendant should make restitution to the claimant.

Despite this clear recognition of the defence its ambit was left uncertain because the House of Lords declined to elaborate on the details of the defence, preferring that this should be determined on a case by case basis.⁹⁵ A number of cases, decided since Lipkin Gorman, have elaborated on the ambit of the defence. The laws of certain Commonwealth countries where the defence has been recognized can also be considered to determine how the defence should be defined.⁹⁶ But there are still a number of fundamental questions which remain unresolved. One of the most important is whether the defence applies to all restitutionary claims. Lord Goff in Lipkin Gorman said that it was not appropriate in that case ‘to identify all those actions in restitution to which change of position may be a defence’.⁹⁷ The rationale for and application of the defence has proved to be an important catalyst for the extensive debate amongst restitution scholars as to the function and structure of the law of restitution. This is an area where the often sterile debate about classification really matters.⁹⁸ A further vital question concerns the identification of the rationale of the defence, for until that is clearly recognized it will be impossible to determine its appropriate ambit.⁹⁹ It will also be necessary to examine how the change of position defence relates to the other restitutionary defences which are triggered by changes in the defendant’s circumstances.¹⁰⁰

The recognition of the defence is of vital importance to the development of the law of restitution. For, by recognizing that changes in the defendant’s position after he or she has received a benefit is relevant to the success of the restitutionary claim, it is possible to adopt a wider interpretation of the underlying cause of action, particularly the grounds of restitution for purposes of the action founded on the reversal of the defendant’s unjust

Robert GoffJ explained the operation of the proviso tos1 (2) and (3) of the Law Reform (Frustrated Contracts) Act 1943 as founded on the principle of change of position. See p 359, above.

• 91 See, in particular, Baylis v Bishop of London [1913] 1 Ch 127, where it was held that, save for the agent’s defence, which was anyway inapplicable on the facts because the principal was undisclosed, there was no general defence in English law where the defendant had transferred the benefit which had been received from the claimant. See also Ministry of Health v Simpson [1951] AC 251, 276 (Lord Simonds) and Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 1 WLR 912, 935 (Dillon LJ).
• 92 [1991] 2 AC 548, 558 (Lord Bridge), 568 (Lord Ackner), 578 (Lord Goff).
• 93 Ibid, 580. ⁹⁴ (1760) 2 Burr 1005, 1010; 97 ER 676, 679.
• 95 Lipkin Gorman (a firm) vKarpnaleLtd [1991] 2 AC 548, 558 (Lord Bridge) and 579 (Lord Goff).
• 96 See, in particular, the decision of the Supreme Court of Canada in Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1, 13 and the decisions of the High Court of Australia in David SecuritiesPtyLtd v Commonwealth Bank ofAustralia (1992) 175 CLR 353, 385 and Australia FinancialServices Ltd and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14. The defence has also been recognized in New Zealand by the New Zealand (Judicature) Act 1908, s 94B, as inserted bys 2of the Judicature Amendment Act 1958.
• 97 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548, 580. This is examined at p 695, below.
• 98 See p 17, above. ⁹⁹ See p 680, below. ¹⁰⁰ See p 698, below.

enrichment.^[3] The recognition of the defence will make it easier for the claimant to establish a restitutionary claim, because the interests of the defendant can be better protected by considering whether it is just for the defendant to make restitution in the light of any change in his or her position.

• [1] For general analysis of this defence see Bant, The Change of Position Defence.
• [2] See, in particular, Larner v LCC [1949] 2 KB 683, 688 (Denning LJ); Spiers and Pond Ltd v Finsbury MPC(1956) 1 Ryde’s Rating Cases 219; and Barclays Bank Ltd v WJ Simms, Son and Cooke (Southern) Ltd [1980]QB 677, 695 (Robert Goff J). In BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 800 and 804,
• [3] See Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548, 581 (Lord Goff).