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Qualifying For Restitution Fo Unjust Enrichment

976 words - 4 pages

Upon fulfillment of the four criteria, namely that the defendant has been unjustly enriched at the claimant’s expense and there are no defenses available for the defendant, a claimant may qualify for restitution of unjust enrichment as established in Banque Financiere de la Cite v Parc (Battersea) Ltd. Change of position is one of the possible defences which may be used in occasions where it would be excessive to allow a claimant to claim restitution at the defendant’s expense. This essay will evaluate the defence of change of position and reinforce the fact that it is largely ineffective in protecting a defendant from hardship.
The purpose of restitution is to prevent unjust enrichment, and to deny the defence of change of position will contradict this fundamental principle and function. The purpose of change of position is to balance out the hardships between the claimant and defendant. For instance, in the landmark case of Lipkin Gorman v Karpnale, it states that, "If the plaintiff pays money to the defendant under a mistake of fact, and the defendant then, acting in good faith, pays the money or part of it to charity, it is unjust to require the defendant to make restitution to the extent that he has so changed his position.’ In such cases, Lord Goff stated change of position is a good defence when performed in good faith. This solidified the status of change of position as an accepted choice of defence.
Change of position is not up to the court’s discretion and there are principles guiding them in their judgments. However, in Lipkin Gorman, Lord Goff stated that the development of change of position should be dealt with on a case to case basis , leading to much uncertainty in the Law of Restitution today. A failure in creating clear and succinct boundaries for change of position will, in the long run, severely constrain its ability in protecting a defendant from hardships.
Terms that govern change of position are vague and inconsistent.
Hardship can be identified as severe suffering, and in order for change of position to be effective in protecting a defendant from such suffering, terms like good faith, unjust and extraordinary have to be explicitly defined and not left as a vague notion of fairness and policy.
Term: Unjust
Change of position ensures that the defendant will not be worse off after having to make restitution. The key word in the quotation from Lipkin Gorman regarding change of position is unjust, and unjust is an ambiguous and subjective term. It is unclear when the court will decide that there is injustice and allows a defendant to rely on change of position. Due to this inconsistency, change of position will be ineffective to a large extent as one is unsure when they will be able to depend on change of position.
Term: good faith
Often, a defendant...

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