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(C) THE CONDITIONS FOR ESTABLISHING THE CHANGE OF POSITION DEFENCE

The operation of the defence is founded on two fundamental principles.

  • (1) There must be a causative link between the receipt of the benefit by the defendant and his or her change of position, so that, but for the receipt of the benefit,[1] the defendant’s position would not have changed.
  • (2) The defendant’s position must have changed in circumstances which make it inequitable for him or her to make restitution to the claimant. Specific principles can be identified to assist in the determination of what is equitable for these purposes.

Both these principles underlie the defence because it is only where the defendant’s position has changed by virtue of the receipt of the enrichment, and where it is just for the defendant to rely on the defence, that it is possible to conclude that the defendant’s interest in the security of his or her receipt should prevail over the interest of the claimant in obtaining restitution.

  • [1] Test Claimants in the FII Group Litigation v HMRC (No 2) [2014] EWHC 4302 (Ch), [343] (Henderson J).
 
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