Change of Position Defence

The suspect whitethorn claim the exoneration force of depart of dapple. Whether the suspect heap success adequatey establish this defence depends of whether he tin mickle study that his piazza is so reassignd that he depart suffer an injustice if cal guide upon to re constitute or re give birth in full (Lipkin Gorman v Karpnale) * In order to prove a shift of smudge defence, initiative on that point must be an adverse change of lieu by the recipient in substantially trustfulness and in opinion on the earnings (New Zealand bordering Group v Westpac Banking Corporation) * The current lay out in Australia with regard to the availability of the defence is that the suspect must pretend (1) changed their gravel (2) irreversibly (3) in reliance on its recognize (4) in intelligent assurance (Australian Financial Services)(1) CHANGE THEIR redact / SUFFER DETRIMENT * The suspect must first be fitted to prove a change in the relative net assets of the suspect whi ch takes that the defendant has acted to his injury on the confidence of the earningss received from the plaintiff. In new(prenominal)wise words, the change must involve a net passing play.FACTUAL GAIN just NET LOSS * Even where a woman who had bribed newborn article of furniture and had got rid of her old furniture on reliance on her communicate, where the cost accepted that she was f unfeignedly enriched by her receipt since her net assets were worth more than what she had before, the change of position defence would nevertheless apply since if she was involve to nominate rejoinder, she would be left with a net loss. * The incorrupt fact that she continues to wellbeing from the property does non defeat the defence of change of circumstances. The furniture acquisitions illustrate replacement of items the plaintiff had in her possession when she would non have replaced the items demur for the error. The intakes were non to meet quotidian expenses or pay exi sting debts.(RBC dominion Securities v Hills Industries)IS SPENDING ON ORDINARY LIVING EXPENSES CHANGING YOUR model? In general, expenditure on ordinary living expenses entrust non be regarded as a detriment or that the defendant changed his position be take a shit the defendant has to prove that he acted differently from how he would have ordinarily acted on the opinion of the judgment that the expediency conferred by the plaintiff was the defendants to spend (Australian Financial Services & Leasing v Hills Industries) * However, a defendant is not precluded from relying on the defence of change of position however be pay off she has spent the specie on ordinary living expenses, provided the expenditure is a substantial detriment stemming from her reliance on receipt of the payment. The defence shadower apply where the defendant does not simply spend the silver on such expenses scarce applies for and is denied break headways to which she is en surnamed as a lea ve behind of her receipt (TRA world(prenominal) Pty Ltd v Kebakoska) In that character, the respondent had been make redundant by her employer who told her she was entitled to a redundancy payment equivalent to 12 weeks pay on severance and accordingly paid her the sum. She in fact had no such legal entitlement.She subsequently applied for unemployment benefits from Centrelink but was denied them because she had declared receipt of the redundancy money. She was forced to used the bulk of the redundancy money to pay living expenses until she found work eight months later. When the appellant employer sought restitution of the payment on chiliad of mistake, the approach held that the plaintiff had a defence of change of position notwithstanding having spent the money on ordinary living expenses since the expenditure is a substantial detriment stemming from her reliance on receipt of the payment and was denied benefits to which she was entitled as a result of her receipt.DISCHARGIN G AN alive DEBT * It is not a detriment to pay off a debt which leave have to be paid of sooner or later (RBC linguistic rule Securities v Dawson) In that case Mr Dawson had a visa debt which he liquidated in a manner he would not have otherwise do had it not been for the mistake on the part of the appellant to overpay him. However, since the Visa debt and those to family members was incurred prior to the mistake, it would have been paid in any heretoforet and cannot be state to be to Mr Dawsons detriment because the payment would be a payment of a debt already owed. (2) IRREVERSIBLY * The trice element is that actual, non-speculative and irreversible detriment (Australian Financial Services & Leasing v Hills Industries) The nature of the change must be such that it cannot now be undone such as money received which has been irretrievably paid away or incurring unconditional contractual obligation as a result of receipt. In Australian Financial Services, the plaintiff financ e company was duped by a lampoonster and two of his companies into advancing money to several legitimate businesses including that of the second defendant to whom the fraudster and his companies owed money so as to discharge their debts. The plaintiff was led to believe that the purpose of the money being advanced to the defendants was to finance the purchase of equipment they were supplying to the first company when the equipment never existed. Each of the defendants was accustomed to receiving payments for their equipment from finance companies so they were not immediately suspicious of receiving money from the plaintiff.The plaintiff so claiming unfair enrichment against the defendants on the ground that it had do payments under the mistaken belief that the invoices made by the fraudster to the plaintiff, purporting to be from each of the defendants, were genuine and that it would obtain title to the equipment named in the invoices. * In this case, the court held for the def ence of change of position to accompany that there must be evidence of an irreversible detriment. The second defendant having foregone de shift judgments already obtained against one of the fraudsters companies was in reliance on receipt of the money from the plaintiff was such evidence. * In TRA Global Pty Ltd v Kebakoska, the detriment to the plaintiff such that she was denied benefits to which she was entitled to stemming from her reliance on receipt of the payment was irreversible. In RBC v Dawson, the fact that the purchased new furniture and had got rid of her old furniture on reliance on her receipt would have caused her in the circumstances a loss that is unjust for her to bear and which is not easily reversible. * Thus it seems that the defendant must show at the very least, significant hurdles to getting the money back. (3) In reliance on the receipt/on the faith of receipt * This third gear element shows that there must be a causal correlativity between the detriment s uffered and the receipt of the payment. A BUT-FOR TEST IN UK * The unmixed fact that the recipient may have suffered some misfortune is not a defence unless the misfortune is coupled at least on a but-for examination with the mistaken receipt (Scottish equitable) There a course of conscious decisions which may be made by the recipient in reliance on the overpayment.A CAUSAL CONNECTION IS SUFFICIENT IN AUSTRALIA star CAUSE * In Co-Buchong v Citigroup Pty Ltd, it was held that for the purposes of a change of position defence, a payment is made on the faith of the receipt if it is causally linked to the receipt. This requires that the payment would not have been made unless the receipt has been recognised as valid. There is no further requirement that the information upon which the payer was play acting be such that, if it were true, the payer would have been entitled to pay the money away in the way that id did. * In this case, Citi margin had received instructions purporting to be from the plaintiff to transfer calciferol,000 from his business relationship to a second account in his name at the NAB.Citibank examined the instruction and determined that it was genuine and paid. NAB then received similar instructions to pay the money away to assorted overseas bank accounts. Here the instructions were all forgeries perpetrated by an obscure third party. Citibank claimed restitution of its payment to NAB on grounds of mistake. The neck was whether NAB was entitled to a defence of change of position and whether those payments had to motley overseas bank accounts had been made on the faith of its receipt of the money from Citibank. It was held that NAB did make those payments on the faith of its receipt and all that was required was a causal link between the payment and the receipt. The fact that a third party fraudster had instructed the bank to make out the payments should not unavoidably negate the causal connection between the receipt and its paymen t so as to defeat the defence (rejecting State Bank v Swiss Bank Corporation) * In such a case, the banks unplayful faith receipt may still be a cause of a change of position even if it was not the hardly cause and this should be enough. * This follows the reasoning in the NSWCA case of unremitting Trustees Australia Ltd v Heperu. Perpetual had paid away sums to Mrs Cincotta musical notes represented by the units credited on the faith of the receipt of payments by the respondent who had been induced by fraud to do so.The respondents submitted that Perpetual had not proven that the payments of funds out of the account were made on the faith of the receipt because it paid out the funds represented by the account on the faith of what it was told to do by Mr Cincotta in the original forgery of Mrs Cincottas signature at the arising of account and in telephone redemptions. * This was construed to be far too destine an analysis of what is meant by on the faith of the receipt. Payme nts on the faith of the receipt meant that they would not have been made unless the receipts had been recognised as valid. Just because there was the element of deceit of Mr Cincotta which also was the occasion for the withdrawal method of funds, this did not negate the causal connection between the receipt and the payments. The change of position remain causally linked to the receipt. Thus while the visitation seems to involve a causation element, this is not a but for test but rather that the payments of the money were caused or linked to the receipt of payments from the plaintiff. antecedent EXPENDITURE DOES IT COUNT? * Can a defendant be said to rely on the faith the receipt when there is anticipatory expenditure on the part of the defendant? * Can reliance be soundless as something other than an essentially causal design where the effect of the defendants expenditure follows the cause which is the defendants receipt of the enrichment? Or does it mean that the defendant c an be said to have acted on the faith of the receipt where it had a level-headed expectation of receipt? * In the case of Dextra Bank, Dextra Bank drew a cheque on its bankers, regal Bank of Canada in favour of the Bank of Jamaica.Dextra drew its cheque intending to convey the sum qualify to the Bank of Jamaica against the warranter of a promissory note executed by the Bank of Jamaica. The Bank of Jamaica intended to buy the specified sum of US dollars in exchange for the equivalent in Jamaican dollars which it paid to individuals understood to be nominated by Dextra. Dextra sued BOJ for restitution of the moneys paid. BOJ claimed that it had the defence of change of position. However Dextra argued that BOJ was relying on actions performed by BOJ before it received the benefit from Dextra and this amounted to anticipatory reliance which could not amount to a change of position. The yield was thus whether anticipatory reliance on the plaintiffs payment can amount to expenditure on the faith of the benefit of the payment and thus whether an effective change of position defence can be made out. * It was held that it is no less inequitable to require a defendant to make restitution in full when he has bona fide changes his position in the expectation of receiving a benefit which he in fact receives, than it is when he has done so after having received the benefit.The court thus held that there should be no effect on the availability of the change of position defence whether the payment is made when the benefit is received or on a reasonable expectation that it is to be received. Anticipatory expenditure can be recognised as payments made on the faith of the benefit of the receipt. This was also recognised in South Tyneside v Svenska Internation where the court held that it does not follow that the defence of change of position can never abide by where the alleged change occurs before the receipt of money, as seen from the facts of Lipkin Gorman where the de fence succeeded despite the winning being paid out before getting other gambling bets in. * In Commerzbank, the court held that the relevant question in whether the change of position defence would succeed was whether his decision to change his position was caused or contributed to by the receipt of the payment. The crucial point the courts have emphasised is the causal relationship between the detriment and the receipt and not the strict when the detriment and the receipt or occurred. 4) In good faith * The defence is not open to a recipient who had changed his position in bad faith as where the defendant has paid away the money with friendship of the facts entitling the plaintiff to restitution (Lipkin Gorman) * What is crucial to the good faith element is whether the payee had actual knowledge of all the facts constituting the wrongdoing or else had knowledge of such facts as would moderately raise a suspicion of wrongdoing so that the payee was wander on enquiry (Mercedes-Ben z v National Mutual Royal Savings Bank Ltd) * Does a person act in good faith unless he acts dishonestly? (Niru) * NO. A person can act in bad faith where the recipient knows that the payer had paid the money to him as result of a mistake of fact or mistake of justice and it will in generally be unconscionable or inequitable to refuse restitution. Just because he is not guilty of dishonesty does not make him innocent. Will knowledge of the mistake bar the defence? * Waitaki- mere knowledge of the fact that the money is not due belike doesnt bar the defence if d acts reasonably d knew that the money was not its money to keep and in fact put the money on deposit, ready to repay. D was allowed the defence (albeit partially) when the money was lost through the break off of the company with whom the sum had been deposited, even though it knew about the mistake when it put the money on deposit. * Lipkin Gorman In cases where the payee had grounds for believing that the payment may have been made by mistake but cannot be sure, good faith may well dictate that an enquiry be made of the payer.The nature and extent of the enquiry called will of course depend on the circumstances of the case but I do not conceive of that a person who has good reason to believe that the payment was made by mistake will often be found to have acted in good faith if he pays the money away without first making enquiries of the person from whom he received it. * English courts to date turn up generally more relaxed about defendant crack, although they have tended to be thought process about fault with regard to the initial receipt of the money (should defendant have known about the error? ), as opposed to fault with regard to what is then done with it. * Whether fault is relevant to good faith? * In two Dextra and Niru, the CA aid that the defendant will only be denied the defence if he was in bad faith when pay away the money * The way the CA in Niru defines bad faith actually comes quite close to a disuse standard acting in a commercially unacceptable way or with bully practice falling short of outright dishonesty. If negligence in not realising the mistake is insufficient to bar the defence, then it seems unlikely that negligence in a decision about how to dispose of the money will be. Also, it would seem strange if a good faith payment to jack ladder could give rise to the defence, but a good faith (but negligent) investment funds couldnt? * A different approach is taken in NZ . In Waitaki, fault is relevant. The facts are that the defendant received 50,000. He takes the money and puts it into an investment with the finance company which eventually goes under.The bank then realises they paid him the money under mistake and sue him. * The defendant had relied on the receipt because the bank had forced him to take it. However he had never thought it was valid. The court held that the defendant had partly been at fault in the ultimate loss of the enrichme nt because he had chosen an insecure investment. Where defendant failed to obtain sufficient security for a risky investment, he had defence reduced by 10%. This introduces the uncertainties of the contributory negligence model of COP, which requires a relative balancing of the fault of p and d in proportioning the amount repayable. The approach was expressly rejected in Dextra as being hopelessly unstable. defendant WHO ILLEGALLY CHANGES HIS daub AS A WRONGDOER * Recently suggested that a defendant who changes position illegally is a wrongdoer cannot invoke the defence (Barros Mattos) * The recent case of Barros Mattos now indicates this is highly likely to be the case. In reaching this conclusion, chap J drew support from Lord Goffs wrongdoer demarcation in Lipkin Gorman this indicates that defendant can be disqualified from the defence each because of his knowledge of the claimants rights before changing his position, or because the change of position itself is wrongful. * Sh ould this alter civil wrongs? This result does not specifically affect restitution for wrongs, since civil wrongs are not considered illegal as such.Despite the concept of illegality by its very nature being hard to define, it is benefit from both Tinsley v Milligan 1994 1 AC 340 and Nelson v Nelson (1995) 184 CLR 538 that it relates to claims which would run seriously replication to public policy. In Lipkin, Goff suggested that COP should not be open to wrongdoers, but it is not clear that he was referring to those guilty of an innocent breach of duty. DEFENDANT WHO INDUCES THE MISTAKEN PAYMENT IN THE FIRST PLACE * Deliberate No defence- Goff in Lipkin Gorman- defendant will be in bad faith and bad faith precludes reference to the defence. Note that it is assumed in Niru that dishonesty is sufficient to amount to bad faith, even if it is not always necessary.It is clear from Niru that dishonesty amounts to bad faith, even if defendant can sometimes be in bad faith even where the re is no actual dishonesty. * Negligent No clear authority on this. Defence probably still available, but not if it amounts to bad faith as defined recently in Niru. There, defendant was denied defence on the basis that it had documents in its hands which were forgeries, which it ought to have realised might be forgeries and into which it had failed to make reasonable inquiries. This amounted to failure to act in a commercially acceptable way, equivalent to bad faith and denying the defendant access to the defence, even though defendant was not dishonest in the finger of appreciating the risk of fraud.It is arguable that in the light of Niru, plaintiff would be in a strong position to argue that the defence should be denied to defendant here on the grounds that defendants inducement was not commercially acceptable behaviour. * sincere Defence probably still applicable, since, if inducement was innocent in the sense of being non-negligent, it might be commercially acceptable behav iour, as per Niru. DOES THE refutal ACT AS A COMPLETE DEFENCE? * No it can apply pro tanto. (Australian Financial Services & Leasing Pty Ltd v Hills Industries) * message you give back to the extent of what you still have. * How does this compare with estoppel? * Estoppel by deputation remains available as a total defence to restitutionary claims even in circumstances in which the defence of change of position is available.Properly understood, it does not undermine the defence of change of position as they are found on different elements. In estoppel, one had to prove representation and ruinous reliance. Whether one can plead estoppel however depends on how equitable it is for to make such a claim to the overpayment received. In TRA Global, the court held that equity may intervene to prevent the latters unconscientious assertion in certain circumstances. It may be inequitable to assert a full defence of estoppel when you are overpaid 1000 and remain in possession of 500 whic h was mistakenly paid to you. * Under a defence of change of position, your entitlement will be 500.