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I have been reading Scottish Equitable v Derby [2001] 3 All ER 818 and NatWest v Somer [2002] 1 All ER 198, and I am troubled by Robert Walker LJ's and Potter LJ's respective comments on the question whether a defendant to a claim in UE can raise a change of position defence where he has not spent anything, but has instead foregone an income-generating opportunity in reliance on his receipt of the benefit from the claimant.

In NatWest v Somer at 215 Potter LJ says 'no':

'the defence of 'change of position' only protects actual reduction of the transferee's assets following receipt. A transferee who, in reliance upon a receipt, foregoes a realistic and quantifiable opportunity to increase his assets is not apparently protected'

But in Scottish Equitable at 827, Robert Walker LJ considers that 'when a person receives a mistaken overpayment there are, even on the narrow view as to the scope of the defence, a variety of conscious decisions which may be made by the recipient in reliance on the overpayment. Some are simply decisions about expenditure of the receipt ... Or [the payee] may make some decision which involves no immediate expenditure, but is nevertheless causally linked to the receipt. Voluntarily giving up his job, at an age when it would not be easy to get new employment, is the most obvious example.'

On the facts of Scottish Equitable, Robert Walker LJ didn't think that Derby could take advantage of this principle, but still his words suggest to me that in principle a defendant is not necessarily debarred from arguing change of position because he has not spent anything, but has instead foregone an ongoing income-generating opportunity - which is what I take a job to be!

Eugene Fung and Lusina Ho do not read Robert Walker LJ's comments on this point as I do ([2001] RLR 58, n 40 and text), and indeed Potter LJ cites their LQR note as authority for his proposition. But still I think that Robert Walker and Potter LJJ are not as one on this point, and personally I prefer Robert Walker LJ.

Charles

____________________________________
Dr Charles Mitchell
Lecturer in Law
School of Law
King's College London
Strand
LONDON WC2R 2LS

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