- Change of position and proving irreversibility (Atkinson & Mummery v Varma)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: This was an appeal by joint liquidators. Their claims, against the innocent recipient of funds stolen from the company, had been dismissed at trial by Insolvency and Companies Court (ICC) Judge Prentis. The appeal challenged the judge’s conclusions on unjust enrichment and change of position. Mr Justice Michael Green made important observations about the application of the change of position defence. He concluded that, where unwinding the change of position will not be easy, a defendant to an unjust enrichment claim need not need pursue litigation against a third party to prove irrecoverability. Further, in conducting the balancing exercise inherent in the change of position defence, the position of defrauded creditors does not, in principle, outweigh the innocent defendant who has irreversibly lost the enrichment. He upheld the judge’s conclusions on change of position and dismissed the appeal. Written by Oliver Hyams, barrister at Gatehouse Chambers.
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