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Robert Stevens has alerted me to Gertsch v Atsas, 1 Oct 99, NSW SC, <http://www.austlii.edu.au/ au/cases/nsw/supreme_ct/ 1999/898.html> It is a Diplock-type case of a claim against two innocent recipients from an estate. They took legacies under a will later found to be forged. Not all on the RDG will agree with the reasoning.

Foster AJ held that the defence of change of position was applicable both to personal and proprietary claims:

"22 It is plain, in my view, that it is reasonable to regard "proprietary" claims, at least in respect of moneys provided, in breach of trust, to a defendant who is, relevantly, an innocent volunteer as being comprehended within claims relating to "unjust enrichment" and as being susceptible to defences appropriate to such claims. In particular, the defence of "change of position" on the part of the defendant may be raised."

Liability "as a constructive trustee" was rejected against both, due to an absence of the required fault. Perhaps the most interesting part is the application of the defence of change of position to a defendant who used much of the money received to pay off the mortgage on her house.

"92 Quite plainly, the defence of change of position, as presently developed in the cases, does not admit of precise formulation. I find it of little assistance to focus upon individual statements in the judgments to the exclusion of the broad overarching concept that restitution will be ordered, in whole or in part, only where the defendant has been unjustly enriched by the amount received. Conversely, restitution is not to be ordered where the circumstances would render it unjust to do so. Clearly the circumstances must always be looked at as a whole. To say that, for instance, it is no defence that the moneys have been merely expended is to fail, in my opinion, to distinguish between two situations: one, where the defendant, notwithstanding the expenditure, can repay the amount expended from other funds at his or her disposal, and the other, where the defendant has no access to other funds and the requirement to repay would occasion great financial hardship, even penury or perhaps bankruptcy. Similarly the requirement that a defendant should have acted to his or her detriment on the faith of the receipt will not always be easy to apply. Is the concept restricted to financial disadvantage or is it of wider import? Even if restricted to financial matters, how is it to be determined? Is the concept a broad one, or should the Court undertake the production of a form of profit and loss account detailing advantages and disadvantages to the defendant accruing from the receipt and use of the money? One matter does, however, appear to be tolerably clear on the authorities. The defence does not apply in respect of such moneys as have been expended on ordinary living expenses. Such expenditure would not, by its very nature, involve any relevant change of position. In many cases, of course, where the moneys in question have been mixed with other funds of the recipient, it will be difficult to determine whether any part of the money received has been used in the defraying of ordinary living expenses as it has merely augmented the pool of financial resources available to the recipient, from which both ordinary and extraordinary expenditures are made. However, in the present case, because of the careful and candid analysis which has been made by Ms Hamilton, this problem has been reduced."

She got $100,000, used $70,000 for the debt, and accounted for the rest in a general way, claiming she spent more day to day than she would otherwise have done (more take away meals etc). As to the $30,000 the judge took the view that 12.5% was ordinary living expenses and so she was liable for $3,750. As to the $70,000:

"98 However, as a direct result of receipt of the legacy, she forsook the exercise of her earning capacity. By 1994 when the first indication of some doubts as to the validity of the legacy surfaced and, certainly, by 1996 when the claim for restitution was made, she had, in my view, foregone in earnings, an amount considerably in excess of the amount of the legacy, which by the end of 1992 she had fully expended. As against this, she had, of course, qualified for the receipt of the pensions and grants paid to her as an unemployed student. The evidence does not permit of any precise calculations. However, doing the best that I can, I have formed the view that, had she not received the legacy and, consequently, remained in employment rather than pursuing a university course, she would have, in all probability, paid off a large part of the relatively small mortgage that remained after she had made the financial adjustments referred to during Mr Gertsch's lifetime. I think it reasonable to find that the mortgage debt would have been reduced to $10,000 by the time that restitution was claimed. I consider that this sum reasonably represents the amount of her unjust enrichment from the use of the legacy moneys for the payment of the mortgage debt. Although the receipt of the legacy has resulted in her absence from the ordinary work force for a lengthy period, I do not consider that any further adjustment is called for. She has been enabled to obtain a University degree which, at least in the long term, would provide her with reasonable remuneration."

Total liability: $13,750. A liberal application of the defence by any standard. Similarly for the other defendant who had received $300,000:

"140 It is clear that he quite frequently took friends out to dinner as his guests. Also, he dined out, himself, far more often than he had previously, as he says, "up to four times per week." He also hired boats for fishing trips, sometimes at a cost of $250 per day, which was far beyond his previous means. He also spent money on week-ends away "once or twice per month" at an expenditure of approximately $150 per trip. Mr Fidirikkos estimated that he "regularly spent in the region of $200 to $400 per week on meals and entertainment." He also made gifts to his family which would otherwise have been beyond his means. Whilst accepting that it is possible that, over the two year period, he may well have spent more on such items, I consider it reasonable to accept that he expended from the legacy moneys an amount of $40,000 over and above what he would ordinarily have spent.

141 Mr Fidirikkos, finally claimed he spent money on his daughters' weddings well in excess of what he would have been able to spend had he not received the legacy. These amounts are claimed in Schedule G. There is a difficulty as to possible overlapping between amounts claimed in respect of weddings in Annexure A. Additionally, of course, it must be accepted that Mr Fidirikkos would have pushed his previous restricted means to their limit to provide his daughters with weddings, which he would have regarded as suitable. A considerable sum of money is claimed in Schedule G. I think it reasonable to allow no more than the amount of $12,750 in order to allow for the factors that I have mentioned.

142 In the result I am satisfied by the evidence that in relation to the amount of $300,000 received by Mr Fidirikkos he has relevantly changed his position through the expenditure of $240,000."