Of course it's just a tree.  What does it look like ?
RDG online
Restitution Discussion Group Archives

front page

What's new?

Another tree!

Archive front page
















Another tree!

<== Previous message       Back to index       Next message ==>
Elise Bant
Thu, 19 Jul 2007 11:04:04 +0100


I agree with James. I would add that it seems to have been assumed that the Government was an 'innocent' recipient and, on that basis, the change of position defence should be open. But there are two further, related issues, both of which raise a possible policy bar to the defence. The first is that the Government obtained the benefit in breach of statute. On the unjust enrichment claim, that breach is incidental to the action and so might be thought to be irrelevant to the application of the defence (the Government is only an 'incidental' wrongdoer and so the bar alluded to by Lord Goff in Lipkin Gorman should not apply.). The second is that one of the pleaded grounds for restitution - namely that the benefit was conferred pursuant to an unlawful demand - may not be the kind of claim to which the defence automatically applies. In both cases, I think it would be necessary to consider whether permitting the change of position defence would undermine the policy of the statute in question.


Elise Bant


On 7/19/07, James Edelman wrote:

Dear Neil and others

I think the difference between Lords Hope, Nicholls and Walker (on the one hand) and Lords Mance and Scott (on the other) is that the former recognize two different measures of benefit. It is particularly clear, especially from paragraphs [32], [117] and [178]-[180] that each of the former recognizes that the free use of an asset (here, money) obtained unjustly from another is a benefit which is quite distinct from the actual profits derived from that use. The latter measure (an account of profits, or disgorgement) is a familiar measure when courts want to strip profits from a fiduciary or in cases of deliberately committed wrongdoing, such as breach of confidence. In my view such profit stripping is appropriate only in cases where deterrence is needed (including for prophylactic or general deterrent purposes). These three Lords are recognizing that the free use of an asset obtained unjustly is a separate measure of benefit. Unlike actual profits (which might be far greater, or far less, than the cost of use, and which may depend on pure chance), this restitutionary measure is derived ‘at the expense of’ the claimant [179].

Although the free use of an asset (something which, in commerce, everyone has to pay for) is an enrichment, difficulties can arise. For instance, how should the market value of the benefit be measured? There is no single market value for the use of money. Different people will pay different rates to borrow money. The majority fix upon the rate at which the Government would have had to pay to borrow the money. That is the objective value of the money to a person in the defendant’s position.

The biggest concern, ventilated at the hearing of the case, was the situation where the defendant obtains the free use of money but does not employ the money productively. Either puts it under her pillow or in a current account. Different labels are suggested: ‘equitable defence’, ‘subjective devaluation’. What seems to be common to a majority is that this is (1) a matter for the defendant to prove; (2) it is not truly ‘subjective’ in the sense that it does not depend on the defendant’s particular, idiosyncratic values (the defendant’s personal opinions about the value of money are irrelevant); (3) it will not always be available (for instance, if the defendant knew that he or she was the recipient of a mistaken payment). In my view, the elements of this defence that the Lords are describing are identical to the test for change of position. A defendant that has the valuable benefit of the free use of money but, in good faith, dissipates the time value of that use by not employing the money productively, has changed her position just as a defendant who fails to seek more profitable employment elsewhere following a mistaken payment (Commerzbank AG v Price Jones). Lord Nicholls seems to notice this point, but leaves it open at [119].

<== Previous message       Back to index       Next message ==>

" These messages are all © their authors. Nothing in them constitutes legal advice, to anyone, on any topic, least of all Restitution. Be warned that very few propositions in Restitution command universal agreement, and certainly not this one. Have a nice day! "

Webspace provided by UCC   »
For editorial policy, see here.
For the unedited archive, see here.
The archive editor is Steve Hedley.
only search restitution site

 Contact the webmaster !