Lloyd's Maritime and Commercial Law Quarterly
Change of position: the developing law
Charles Mitchell *
Change of position is the principal defence to claims in unjust enrichment, but its existence was not definitively recognized in English law until 1991. In recent cases, important principles governing the defence have been established, and questions relating to its future development have been brought into sharper focus. The article discusses some of these issues, specifically: (i) the kinds of detriment which count as a change of position for the purposes of the defence; (ii) the nature of the causal link which must exist between the detriment suffered by a defendant and his enrichment at a claimant’s expense; and (iii) the types of conduct which disqualify a defendant from relying on the defence
.
I. INTRODUCTION
Change of position was not definitively recognized as a defence to claims in unjust enrichment in English law until the House of Lords’ well-known decision in Lipkin Gorman (a firm)
v. Karpnale Ltd
.1
In his leading speech, Lord Goff of Chieveley deliberately chose not to lay down a set of detailed rules about the defence, as he thought it more appropriate for the courts to work these out on a case-by-case basis, after hearing argument on such aspects of the defence as might emerge in the course of litigation.2
This process is now well under way. In recent cases, important principles have been established, and questions relating to the future direction of the defence have been brought into sharper focus. This article will review some of these developments, and will consider the courts’ treatment of the following questions: what kinds of detriment count as a change of position for the purposes of the defence; what causal link must exist between the detriment suffered by a defendant and his enrichment at a claimant’s expense; and what types of conduct disqualify a defendant from raising the defence? Of course, there are other questions which can also be asked in connection with the defence, but many of these have been well discussed elsewhere.3
It is intended to focus here on recent cases, and on aspects of older cases which have not previously received the attention which they deserve in the academic literature.
* Professor of Law, King’s College London. This is the modified text of a lecture to the Commercial Bar Association in November 2004.
1. [1991] 2 AC 548.
2. Ibid
, 580. See too Lord Bridge’s comments at 558.
3. In addition to textbook accounts of the subject, see: R. Nolan, ‘‘Change of Position’’, ch 6 of P. Birks (ed) Laundering and Tracing
(Clarendon Press: Oxford, 1995) 135; P. Birks, ‘‘Change of Position: The Nature of the Defence and Its Relationship to Other Restitutionary Defences’’, ch 3 of M. McInnes (ed), Restitution: Developments in Unjust Enrichment
(LBC Information Services: Sydney, 1996) 49; P. Birks, ‘‘Change of Position and Surviving Enrichment’’, ch 2 of W. Swadling (ed), The Limits of Restitutionary Claims: A Comparative Analysis
(BIICL: London, 1997) 36; M. Jewell,‘‘The Boundaries of Change of Position —A Comparative Study ’’ [2000 ] RLR 1; E. Bant and P Creighton, ‘‘Mistake of Fact and Change of Position: Sound Advice from the Privy Council?’’ (2002) 2 OUCLJ 271; A. Burrows, ‘‘Change of Position: The View from England’’ (2003) 36 Loyola of Los Angeles LR 803; P Birks, ‘‘Restitution’’ [2003 ] All ER Ann Rev 354, [22.46 ]–[22.56 ]; H. Liu, ‘‘Changing the Shape of Change of Position’’ (2004) 15 KCLJ 301.
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