#10027 - Estoppel - Restitution of Unjust Enrichment

ESTOPPEL

CHANGE OF POSITION AND ESTOPPEL COMPARISON

1. All or nothing

1. Avon CC v Howlett – showed how estoppel can operate only as an all or nothing defence.

2. Lipkin Gorman v Karpnale – showed how change of position, divorced from the rule of evidence strictures of estoppel, can operate in a pro tanto fashion.

2. Burrows view on this

• The pro tanto fashion is more appropriate for UE as it can be geared to the precise extent of the loss of enrichment

• He’s anti-estoppel and hope that change of position will supplant estoppel completely in UE – although he accepts estoppel should not disappear in other areas of law

3. Maddaugh’s view

• As long as estoppel remains it gives the defendant who can satisfy its more stringent requirements an unwarranted complete defence

WHAT IS IT?

1. Explained

• Burrows – the essence of the defence is that D has detrimentally relied on a representation from C that the benefit is his to keep. Where it is established, it is an all or nothing defence – as opposed to change of position which is pro tanto

2. When has it applied?

• It’s only ever been applied in the context of mistaken payment. Otherwise, it would be very rare that C would ever say D can have the benefit to keep

IS A BREACH OF DUTY NECESSARY AS WELL AS A REPRESENTATION?

1. Cases which say yes

• RE Jones v Waring – estoppel defence because there was no breach of duty

2. Cases which say no

• Holt v Markham – estoppel was successfully invoked without any requirement of a breach of duty

3. Burrows provides the answer

• he says the ways these contradictory principles can be reconciled is that there must either be a breach of duty, and hence an inherent representaion, or a collateral representation EXPLAINED

• where there is a duty to pay over the money to D, there is a factual representation inherent in the payment BUT

• where there is no such duty, there must be an express (collateral) representation made to D in order to establish the estoppel

DETRIMENTAL RELIANCE

1. What

• D must have detrimentally relied on the representation (ie. changed his position in reliance on the representation)

2. What does detrimental reliance mean

1. Beatson and Bishop – they identify 3 meanings of this:

1. Conventional reliance – D has spent the money in a way that can’t be recouped

2. Out of pocket reliance – D has spent the money in a way that can’t be recouped AND in a way in which he would not otherwise have done

3. Real reliance – this is out of pocket reliance but where it considers what benefit D got from spending the money. So if he got a car he wouldn’t usually have bought, but which he enjoys subjectively, then it could be said that he has benefitted here and there has been no change of position

3. Which is the best approach?

1. Burrows – out of pocket is the best one. It’s based solely on the idea that D would be worse off pecuniarily by paying back the money than if the representation and payment had not been made to him in the first place

ALL OR NOTHING

1. What?

1. Can estoppel operate as a partial rather than a total defence?

2. Burrows thinks this question will define whether estoppel can continue to exist as a defence

2. Authority

1. Avon CC v Howlett – held that it was a total defence.

2. REASON: If the representation is ‘this 500 is yours’ estoppel prevents the payor denying that the 500 validly belongs to the payee. As the statement is non divisable

3. Slade LJ said this reasoning followed as a matter of principle from the nature of estoppel by representation as a rule of evidence

3. Counter argument 1

1. Burrows - This ‘rule of evidence’ view could be artificially divided into separate internal representations – especially where there are continuing payments like in Avon

4. Counter Argument 2

1. Scottish Equitable v Derby – Robert Walker LJ referred to the ‘novel and ingenious argument’ of junior counsel WHICH WAS

2. If one applies a change of position defence alongside an estoppel defence, the payee cannot establish the detrimental reliance needed for estoppel.

3. MY EXPLANATION OF THIS POINT

• if C gives D 500 with a representation that it’s his, estoppel would mean D can keep the 500 even if he has only spent 200, having detrimentally relied on the representation. It’s thought that it’s unfair that D can keep this extra 300 residue though, which is why people object to estoppel. But that’s what the all or nothing approach facilitates HOWEVER

• If a change of position defence is applied first, it can be said that D has changed his position by 200. Thus, D has not detrimentally relied on the representation with the...