Defences to restitutionary claims

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Defences to restitutionary claims
  • Change of position renders restitution inequitable
  • Defendant expends money/makes payment
  • Causal link
  • Requirement of good faith
  • Knowledge of the defendant
  • Missed opportunity
  • Insolvency claims
  • Passing on the benefit
  • Ministerial Receipt as a defence to a claim in restitution
  • More...

Defences to restitutionary claims

There are a number of defences that should be considered when faced with a restitutionary claim for unjust enrichment. Essentially, these defences are available where it is either impossible to restore the claimant to the original position prior to the enrichment, or it would be unjust to do so. They are:

  1. change of position renders restitution inequitable

  2. ministerial receipt

  3. bona fide purchaser for value

  4. estoppel to defeat a claim of unjust enrichment

  5. impossibility of counter-restitution can defeat a claim for unjust enrichment

  6. loss suffered is passed on

  7. illegality and incapacity of the underlying transaction (public policy)

  8. limitation

Change of position renders restitution inequitable

A defendant may avoid liability if they can show that their position 'has so changed that it would be inequitable in all the circumstances to require them to make restitution' (Lipkin Gorman v Karpnale).

In Westdeutsche Landesbank v Islington, Lord Goff described the defence in these terms:

'Where an innocent defendant’s position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution.'

The aim of the defence appears to be fairly balancing a claimant’s interest in restitution with a defendant’s interest in having certainty that it can make decisions regarding payments, without the potential for those payments subsequently

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