(ii) Restitution for Wrongs

Lord Goff in Lipkin Gorman specifically recognized that the defence was not open to a wrongdoer,^[1] which might indicate that the defence is not available to any claim grounded on restitution for wrongs. But the defence should not automatically be denied to the defendant just because he or she committed a wrong, because the unlawfulness of wrongs varies a great deal.^[2] The defence should be denied only where the defendant’s wrongdoing can be treated as equivalent to acting in bad faith. Clearly, therefore, if the defendant is a thief or is a fiduciary who has accepted a bribe, the defence should be denied to him or her, particularly because such a wrongdoer was acting in bad faith. But on the other hand a confidant who unwittingly betrayed a confidence should not be treated as having acted in bad faith.^[3] But what about a fiduciary who has profited from his or her breach of duty? Presumably the defence should not be available to such a wrongdoer who is liable to account for profits made from breach of duty, because of the high standards expected of them.^{[4] [5] [6] [7]} It would be inequitable for fiduciaries to rely on the defence, both because of the nature of their wrong and also because they can be considered to have acted in bad faith.

• [1] Lipkin Gorman (a firm) v Karpnale [1991] 2 AC 548, 580.
• [2] See p 693, above. 226 See p 514, above. 227 See p 488, above. 228 See p 560, above.
• [3] 229 [1948] Ch 465, 548 . 230 [1996] 1 WLR 328 . 231 See p 656, above.
• [4] 232 Foskett v McKeown [2001] 1 AC 102, 129.
• [5] 233 P Millett, ‘Proprietary Restitution’ in S Degeling and J Edelman (eds), Equity in Commercial Law
• [6] (Sydney: Lawbook Co, 2005), 315 and 325.
• [7] 234 Papamichael v National Westminster Bank [2003] 1 Lloyd’s Rep 341, 376 (Judge Chambers QC);