Defense of Change of Position

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* The defendant may claim the defence of change of position. * Whether the defendant can successfully establish this defence depends of whether he can prove that his position is so changed that he will suffer an injustice if called upon to repay or repay in full (Lipkin Gorman v Karpnale) * In order to prove a change of position defence, first there must be an adverse change of position by the recipient in good faith and in reliance on the payment (New Zealand Banking Group v Westpac Banking Corporation) * The current position in Australia with regard to the availability of the defence is that the defendant must have (1) changed their position (2) irreversibly (3) in reliance on its receipt (4) in good faith (Australian Financial Services)(1) CHANGE THEIR POSITION / SUFFER DETRIMENT * The defendant must first be able to prove a change in the relative net assets of the defendant which shows that the defendant has acted to his detriment on the faith of the payments received from the plaintiff. In other words, the change must involve a net loss.FACTUAL GAIN BUT NET LOSS * Even where a woman who had purchased new furniture and had got rid of her old furniture on reliance on her receipt, where the court accepted that she was factually 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 required to make restitution, she would be left with a net loss. * The mere fact that she continues to benefit from the money does not defeat the defence of change of circumstances. The furniture acquisitions represent replacement of items the plaintiff had in her possession when she would not have replaced the items except for the error. The expenditures were not to meet ordinary expenses or pay existing debts. (RBC Dominion Securities v Hills Industries)IS SPENDING ON ORDINARY LIVING EXPENSES CHANGING YOUR POSITION? * In general, expenditure on ordinary living expenses will not be regarded as a detriment or that the defendant changed his position because the defendant has to prove that he acted differently from how he would have ordinarily acted on the faith of the belief that the benefit conferred by the plaintiff was the defendant’s to spend (Australian Financial Services & Leasing v Hills Industries) * However, a defendant is not precluded from relying on the defence of change of position merely because she has spent the money on ordinary living expenses, provided the expenditure is a substantial detriment stemming from her reliance on receipt of the payment. The defence can apply where the defendant does not simply spend the money on such expenses but applies for and is denied benefits to which she is entitled as a result of her receipt (TRA Global Pty Ltd v Kebakoska) In that case, the respondent had been made 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 grounds of mistake, the court held that the plaintiff had a defence of change of position despite 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. DISCHARGING AN EXISTING DEBT * It is not a detriment to pay off a debt which will have to be paid of sooner or later (RBC Dominion Securities v Dawson) In that case Mr Dawson had a Visa debt which he liquidated in a manner he...
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