Defences to restitutionary claims
Produced in partnership with Harris Bor of 20 Essex Street
Defences to restitutionary claims

The following Dispute Resolution guidance note Produced in partnership with Harris Bor of 20 Essex Street provides comprehensive and up to date legal information covering:

  • Defences to restitutionary claims
  • Change of position renders restitution inequitable
  • Ministerial Receipt as a defence to a claim in restitution
  • Bona fide purchaser for value defeats a restitutionary claim
  • Raising an estoppel to defeat a claim of unjust enrichment
  • Impossibility of counter-restitution can defeat a claim for unjust enrichment
  • Claim for unjust enrichment may be defeated if loss suffered is passed on
  • Illegality and incapacity of the underlying transaction may defeat a restitutionary claim (public policy)
  • Limitation and restitution 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.

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 being held to be invalid on account of unjust enrichment. Courts are likely to exercise their discretion having regard to this principle (Scottish Equitable v Derby).

Note that the change of position defence does not apply to 'Woolwich type' claims for restitution. See Practice Note: Restitution