Lord Justice Mummery :
1. The appeal by Commerzbank AG (the Bank) against the decision of Mr David Phillips QC, sitting as a Deputy High Court Judge, raises two issues. The first turns on the construction of two employment contract documents. The second is of more general interest. It concerns the
circumstances in which change of position and disenrichment defeat a claim of unjust enrichment.
2. By the order of the Deputy Judge dated 17 December 2002 the Bank was required to pay to the claimant, Mr Gareth Price-Jones, the sum of £250,000. The Bank had withheld payment of £250,000, to which Mr Price-Jones was entitled, on the ground that by mistake it had already paid him £250,000, to which he was not entitled and which he refused to repay. The Bank was also ordered to pay interest and costs. The Deputy Judge gave permission to appeal.
3. At the age of 30 Mr Price-Jones began working for the Bank as an investment banker from 10 April 2000. He was made redundant on 16 November 2001. During the contract period he received a total of £1m “compensation.” That is the word used in the investment banking world to describe a combined package of salary, guaranteed bonuses and buy-out payments. The package reflected the Bank's view of him as “exceptional.” It was keen to employ him in order to plan and direct its investment strategy for corporate clients involved in, or affected by, the internet.
4. In his claim form dated 7 March 2002 Mr Price-Jones contended that he was entitled to be paid a further sum of £250,000, as a guaranteed bonus due for payment on 31 December 2001. The Bank accepted that he was entitled to a guaranteed bonus in respect of the performance year 2001, but it sought to set off against that sum the £250,000 paid to him by mistake on 15 December 2000.
5. The case turned principally on the construction of the two employment contract documents.
6. The first was the initial written contract in the form of a five page letter dated 18 February 2000 and signed by Mr Price-Jones on 24 February 2000. According to that letter he was to be paid a basic annual salary of £120,000 gross, buy-out payments of £280,000 for loss of entitlement to benefits resulting from his commencing employment with the Bank (£130,000 gross with his first month's salary and £150,000 gross 6 months after he commenced employment, which, at his request, was in fact paid four months early on 23 June 2000) and guaranteed minimum annual bonuses of £250,000 for two years. He was also eligible to participate in the Bank's discretionary bonus scheme.
7. Under the heading “Guaranteed Bonuses” the contractual provision in the letter of 18 February was as follows—
“In respect of the 2000 performance year the Bank confirms that you will receive a minimum bonus award of £250,000 gross, paid no later than 31st December 2000 and in respect of the 2001 performance year the Bank confirms that you will receive a minimum bonus award of £250,000 gross, paid no later than 31st December 2001. You will receive these bonuses unless on the date that each bonus is payable:
you have resigned or given notice to resign from the Bank's employment; or
the Bank has terminated or given notice of the termination of your employment for gross misconduct or for any grounds entitling the Bank to terminate your employment summarily including those set out in Section B Paragraph 17 of the Employee Handbook.”
8. The second document was a letter dated 29 June 2000 in which Mr Price-Jones was informed by the Bank—
“In respect of the 2000 performance year the Bank confirms that you will receive a minimum bonus award of £265,000 gross, paid when the Bank makes its bonus payments, but in any event not later than 31st March 2001. You will not receive this payment if, on the date due:
you have resigned or given notice to resign from the Bank's employment; or
the Bank has terminated or given notice of the termination of your employment for gross misconduct or for any grounds entitling the Bank to terminate your employment summarily including those set out in Section B Paragraph 17 of the Employee Handbook.
All of your other terms and conditions of employment remain unchanged.”
9. As requested, Mr Price-Jones acknowledged receipt of the letter and signified “acceptance of the terms and conditions outlined above” by signing a copy on 5 August 2000 and returning it to the Bank.
10. The Deputy Judge described the background to the letter of 29 June 2000. The Bank was pleased with the initial performance of Mr Price—Jones, whom they regarded as a high-flyer; his particular function was very valuable to the Bank; there was intense competition for investment bankers like Mr Price-Jones with expertise in the telecoms, media and technology sector; remuneration packages were at unprecedented levels; and in June 2000 there were rumours of merger talks between the Bank and Dresdner Bank AG, which created an urgent need to “lock-in” valued staff to prevent them from leaving. Members of the Bank's London research department, in which Mr Price-Jones worked, were informed by Mr Dahlman, the head of the Bank's securities business, in mid—June that the Bank would be issuing staff with guaranteed bonuses, so that they would not be financially disadvantaged in the event of a merger. There were no general or individual discussions between the parties. Letters awarding very large bonuses were sent out to Mr Price-Jones and other staff.
11. The Deputy Judge accepted the evidence of Mr Price-Jones that he had read the letter as awarding him a “lock-in payment” of £265,000 in addition to his existing contractual package. At the trial Mr Price-Jones accepted that the Bank had intended to award him only £15,000 extra bonus and that the £265,000 bonus was to supersede his existing guaranteed bonus of £250,000 for the year 2000.
12. The Bank in fact paid £250,000 to Mr Price-Jones on 15 December 2000, as provided for in the letter of 18 February 2000. At the trial Mr Price-Jones accepted that the Bank had made that
payment by mistake. In March 2001 the Bank paid him the further sum of £265,000 mentioned in the letter of 29 June 2000.
13. The construction issue was simply whether, in respect of the performance year 2000, Mr Price—Jones was entitled to be paid (a) both of the payments in fact received by him from the Bank, totalling £515,000; or (b) only the payment of £265,000 received by him in March 2001.
14. Mr Price-Jones contended that he was contractually entitled to both payments. He refused to comply with the Bank's request on 11 October 2001 for re-payment of £250,000.
15. The Bank contended that Mr Price-Jones was only entitled to the sum of £265,000. It accordingly set off against the £250,000 bonus due for the performance year 2001 the £250,000 overpayment made in December 2000. Mr Price Jones sued the Bank to recover the 2001 guaranteed bonus.
16. The Deputy Judge held that
“… the true meaning of the letter of 29th June 2000 is that the Bank was obliged to pay the sum of £265,000 in addition to the sum of £250,000. It follows that Mr Price-Jones' claim must succeed.”
17. It was strictly unnecessary for the Deputy Judge to decide the Bank's restitutionary claim, but, in case he was wrong on the construction issue, he dealt with mistaken payment and with the defence of change of position. He found that the subjective intentions and beliefs of the parties differed. The Bank intended to replace the existing contractual commitment to Mr Price-Jones by substituting a new guaranteed bonus of £265,000 for the existing guaranteed bonus of £250,000. Mr Price-Jones, however, understood the letter of 29 June to be, and accepted it as, an offer of an additional payment of £265,000 for the performance year 2000. It was common ground that on the issue of construction neither of the parties' subjective beliefs and intentions were admissible. The Deputy Judge went on, however to hold that, if he had been in favour of the Bank on the construction issue, he would have ruled that
“… the Bank was prevented from recovering the mistaken payment of £250,000 by reason of Mr Price Jones' change of position.”
18. In particular, he found that, had it not been for the 29th June letter and “his understanding of it”, Mr Price-Jones would have decided in late June 2000 to leave the Bank and seek employment with another investment Bank and that he had a very good chance of obtaining similar employment elsewhere.
19. I am unable to agree with the Deputy Judge's construction of Mr Price-Jones' employment contract documents.
20. There is no dispute about the proper approach of the court to the task of construing the letters of 18 February and 29 June 2000. Obviously the later letter should be read with the earlier letter. The letter of 29 June expressly stipulated that the terms and conditions in the earlier letter remained unchanged, save for the changes made by the later letter. The letters, read together and as a whole, should be given their “ordinary and natural meaning in the context of the agreement, the parties' relationship and all the relevant facts surrounding the transaction so far as known to the parties”: see BCCI v. Ali  1 AC 251 per Lord Bingham of Cornhill at p. 259F, paragraph 8. An objective judgment on those materials must be made by the court. On the issue of construction the subjective states of mind of the parties are excluded from consideration.
21. The aim of construction is to determine from the documents, read, of course, in their factual setting, what the parties agreed. It is not the function of the court to substitute for the agreement of the parties what it thinks would have been the sensible commercial agreement for the parties to have made.
22. The conclusion of the Deputy Judge on construction was that
“26. It is common ground that the purpose of the exercise carried out by the Bank in late June 2000 was to ensure that it retained key personnel. The only construction of the letter of 29th June 2000 that achieves this end is the one contended for by Mr Price-Jones. Accordingly, it is the only construction that produces the commercial result that the Bank was seeking to achieve and is therefore the only construction that is commercially sensible.”
23. Detailed reasons for this conclusion were given by the Deputy Judge in the two preceding paragraphs.
“24. … In my view, the proper construction of the letter of 29th June 2000 is that the Bank was obliged to pay the sum of £265,000 in addition to the sum of £250,000. I have arrived at this construction for the following reasons—
Mr Price Jones had been very highly regarded by the Bank at the time of his employment. Between April and June 2000 he had fulfilled the Bank's expectations and had proved himself to be a specialist in what was then thought to be an important growth area. He was, therefore, a valuable and valued employee.
Mr Dalman's visit to the research department had confirmed what was said in the press comment, namely that the Bank wished to lock in its key employees. That is, in any event, the normal practice in the industry and is therefore only to be expected.
As a valuable and valued employee, Mr Price—Jones was someone who the Bank would wish to lock in.
The construction of the letter of 29th June 2000 advanced by the Bank offered no real added benefit. This, in my view, is a very important point. It gave an additional £15,000 only at the price of deferring by three months payment of the £250,000. That three month period was the one in which the impact of the merger, if it had gone ahead, would be likely to have been felt. Accordingly, it did not amount to any additional lock-in.
Further, the construction advanced by the Bank would not be seen as an incentive to stay but would be seen by an employee in Mr Price-Jones' position as a signal that he was not highly thought of.
Accordingly, the construction advanced by the Bank would have had the opposite effect to that which it would be expected to want to achieve. Faced with an additional £15,000, at a price of deferring by three months payment of £250,000 (which would have constituted a signal that he was not valued) Mr Price-Jones would have been likely to have left.
25. The only construction that achieves the end that the Bank would have wanted to achieve is that contended for by Mr Price-Jones. £265,000 may be a large sum, but it is the only way in which what the Bank did in June 2000 can be seen as constituting an incentive to Mr Price-Jones to stay. I have considered whether the sums that were already payable under the contract represented a sufficient lock-in. I have come to the conclusion that they did not. Mr Price-Jones was in the position of a seller in a seller's market. By that I mean that he was well thought of in the industry at a time when the industry was flourishing. He would therefore be seen as an attractive proposition by the headhunters who operate in this industry. Any potential employer would know, as the Bank had in February 2000, that it would have to offer compensation that would match an employee's existing benefits. Given Mr Price-Jones' position as a seller in a seller's market, the prospects of a potential employer matching Mr Price-Jones' existing package was not unreasonable. Put succinctly—
The Bank thought Mr Price-Jones to be worth the package when it offered it to him in February 2000.
Between then and June 2000 Mr Price—Jones' reputation had not diminished, the area in which he specialised remained in vogue, and the market for investment bankers remained buoyant.
There is no reason to believe that Mr Price-Jones would be seen by a different bank in June 2000 to be worth less than he had been seen to be worth by the Bank and by the others who were clearly interested in him in February 2000.”
24. As Mr Hollander QC, appearing for the Bank, pointed out, there is no reference in the reasons and conclusions of the Deputy Judge to the actual language of either of the letters. The entire discussion centres on the context in which the two letters were written, in particular the merger talks and the need for “lock-in” payments. I agree with Mr Hollander that the Deputy Judge paid insufficient attention to the actual language of the documents. He placed far too much reliance on what, in the surrounding circumstances, would have been the sensible commercial agreement between the parties. In the result he constructed from the context alone a contract that the parties in their respective situations might have made. In doing so he has not construed the language of the two letters in which the terms of the contract were in fact formally expressed. Of course, the context of a contract matters as an aid to construction, but it should not be used to construct a contract which does not properly reflect the language employed in formal contractual documents.
25. When the documents are read together and in context their objective meaning and effect is plain. It is not suggested that there is any problem with the meaning and effect of the initial letter of 19 February 2000. It was, and continues to be, the principal employment contract. As for the letter of 29 June, its ordinary and natural meaning is that the original minimum guaranteed bonus of £250,000 for the performance year 2000 was to be changed by inserting in its place a similarly worded provision but with a new minimum guaranteed bonus figure of £265,000.
26. If the new bonus figure was to be in addition to the initial bonus producing the total annual bonus of £515,000, for which Mr Price-Jones contends, the letter of 29 June would have been very differently structured and worded. The 29 June letter closely tracks the original wording of the material part of February letter relating to guaranteed bonuses. It looks like and reads as a variation of the guaranteed bonus sum mentioned in the earlier letter. The provision for the new sum mentioned in the letter of 29 June 2000 was to be inserted and absorbed into the relevant part of the text of the earlier letter. It replaced in almost identical wording the original term for guaranteed minimum bonus payments, while expressly leaving all other terms and conditions of employment, as set out in the earlier letter, in force and unchanged.
27. The use of the adjective “a minimum” in respect of each bonus sum is significant. It contemplates that there will be only one guaranteed bonus for the performance year 2000. The idea of two “minimum” guaranteed bonus payments for one year does not make sense. The letter of 29 June would have been drafted differently if the agreement was that Mr Price-Jones would receive a minimum guaranteed bonus of £515,000 for one performance year.
28. As the Bank mistakenly made an overpayment of £250,000 to Mr Price-Jones on 15 December 2000 it is entitled to restitution of that sum, unless Mr Price-Jones can establish that his position so changed that it is inequitable in all the circumstances to require him to make full restitution to the Bank.
29. In Lipkin Gorman v. Karpnale Ltd  2 AC Lord Goff said that
“… Where an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution … [at p. 579f] ….
At present I do not wish to state the principle any less broadly than this: the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full.[ at p.580f]
30. Lord Goff added that it was not appropriate to “attempt to identify all those actions in restitution to which change of position may be a defence” and that “nothing should be said at this stage to inhibit the development of the defence on a case by case basis, in the usual way.”
31. Since Lord Goff first formulated his great principle there have been other cases and a considerable body of academic writing, this being an area in which legal scholars have been very active and influential in recent years: see the judgments in Philip Collins Limited v. Davis  3 All ER 808; Scottish Equitable v. Derby  3 All ER 818; National Westminster Bank v.
Somer International (UK) Limited  3 WLR 64; Dextra Bank and Trust Co Limited v. Bank of Jamaica  1 All ER (Comm) 193; and Niru Battery Manufacturing Co & anor v. Milestone Trading Limited & ors  EWCA Civ 1446; and the commentaries in Goff & Jones The Law of Restitution (6th ed), Professor Andrew Burrows The Law of Restitution (2nd ed) (2002) and Professor Peter Birks, Unjust Enrichment (2003).
32. The scope of the defence is slowly taking shape. The decided cases steer a cautious course, aiming to avoid the dangers of a diffuse discretion and the restrictions of rigid rules.
33. Applying the current state of the case law to the facts found by the Deputy Judge, I am unable to agree with him that a defence is available to Mr Price-Jones in respect of the mistaken overpayment of £250,000 on 15 December 2000. He has not been disenriched. His position has not so changed as to make it inequitable in all the circumstances for him to repay the full amount of the overpayment
34. The relevant facts found by the Deputy Judge were based on his acceptance of the evidence of Mr Price-Jones, whom he regarded as a reliable witness. He reached two important conclusions on that evidence:
Mr Price—Jones decided “to stay at the Bank as a result of 29th June 2000 letter and his understanding of it.” The letter “caused Mr Price—Jones to change his position.”
If, in late June 2000, Mr Price—Jones had “decided to leave the Bank, he stood a very good chance of obtaining similar employment elsewhere.” Reference was made to his profile in the market and to the buoyant nature of the market in which he was working “in a vogue area.”
35. The Deputy Judge added that a detriment was suffered “notwithstanding the fact that there may have been no actual reduction of his assets.” It was of the kind falling within the broad category envisaged by Lord Goff in Lipkin Gorman. He explained his conclusions by reference to (a) the high opinion that Mr Price-Jones had of himself, which was encouraged by the Bank; (b) the fact that he was working in a key job in a specialist area when the investment banking business was still buoyant; (c) the belief formed by Mr Price-Jones that the 29 June 2000 package “as intended by the Bank” was a disincentive to stay, as £15,000 was in the scheme of things a very small sum and the postponement of £250,000 by three months was a significant detriment, which together “sent a signal” that he was not well regarded by the Bank; and (d) his belief that the merger had changed everything.
“ … As he put it, he had joined in peace time but it was now war. Accordingly, the existing compensation that had appeared generous in February 2000 was no longer so generous in June 2000 when merger talks were in the air. Mr Price-Jones would have been willing to forego the financial benefits of staying with the Bank in exchange for the certainty of employment and career development elsewhere. He expected that the benefits elsewhere would match those that he received from the Bank, but even if they did not he would nevertheless have been willing to accept a slightly lesser sum for the certainty of continued employment.
 Mr Price-Jones' self regard is such that I have no doubt that he believed he would be able to obtain a similar job elsewhere.
I have no hesitation in finding that, if it had not been for 29th June 2000 letter, Mr Price-Jones would have taken steps in late June 2000 to seek employment with another investment Bank.
36. The first point is chronological. The change of position proposed by Mr Price-Jones occurred before the overpayment of £250,000 was received by him on 15 December 2000. In general and in practice a relevant change of position is more likely to occur after receipt of the overpayment. For example, a person receives payment in good faith and then spends it, gives it away, or loses it. Depending on the particular circumstances it can be said that the recipient has, to borrow the expression used by Professor Birks and Professor Burrows, suffered disenrichment, so as to make it inequitable to require restitution.
37. In this case the change of position pleaded by Mr Price-Jones was his decision not to move from the Bank. His decision was made after the letter of 29 June 2000, but before he received the £250,000 in December 2000. He made the decision in the mistaken belief that he would be entitled to receive two guaranteed bonuses totalling £515,000 for the performance year 2000. The additional lock-in payment of £265,000 sent him a signal that he was a valued employee. If, however, he would only be entitled to an additional bonus of £15,000 paid three months later than was originally agreed, that would have sent a signal to him from the Bank that he was not well regarded and so he would not have stayed.
38. In my judgment, the mere reversal of the normal order of events does not affect the availability of the defence. As was held by the Judicial Committee of the Privy Council in the Dextra Bank case at p.204, the question whether it would be inequitable to require restitution can arise in cases of “anticipatory reliance” where a recipient of an overpayment has already changed his position in good faith in the expectation of receiving a future benefit.
39. The second point is whether there was, on the findings of fact made by the Deputy Judge, any relevant disenrichment or change of position on the part of Mr Price-Jones. It was for him to establish that, in all the circumstances, it would be inequitable to require him to make restitution. The obvious cases occur where there has been a reduction in the assets of the recipient of the overpayment. In those cases he must prove that there has been a reduction of assets, although it is unnecessary for him to produce precise financial calculations quantifying the amount of the reduction. Lord Goff did not, however, restrict the scope of the defence to cases in which there has been a reduction of assets. The defence would also be available, in my view, in various employment situations in which the recipient has made a relevant change of position as a result of the mistaken payment to him: for example, by giving up his current job to lead a life of leisure in circumstances where it would be difficult to find another job, or by turning down a firm offer of a better paid job.
40. In my judgment, however, it is not inequitable to require Mr Price-Jones in his circumstances to make restitution to the Bank of the full amount of the overpayment. There has been no disenrichment. He has still got the money. He has not spent it, given it away, or lost it. The fact that, but for his expectation of a very large additional bonus, he would have decided to seek similar employment elsewhere is not sufficiently significant, precise or substantial in extent to be treated as a change of his position, which would make full restitution inequitable. Even though the Deputy Judge found that he had a “very good chance of obtaining similar employment elsewhere”, his decision not to seek such employment falls outside the scope of the defence
41. On the facts of this case the defence runs into difficulties on another front. According to the cases the defence is not available to Mr Price-Jones unless he can show that there is a sufficient “causal link” between the change of position by him and the actual or anticipated payment under a mistake.
42. Mr Price-Jones' case was that, but for his expectation of an additional bonus of £265,000 under the letter of 29 June, he would not have remained at the Bank and would have taken steps to seek employment with another investment bank. A bonus package of the kind intended by the Bank would have sent him a signal that he was not well regarded and so he would not have stayed. In those respects, it was contended, there was sufficient causal link entitling him to succeed in his defence.
43. There was discussion during oral argument about the approach to causation in cases of change of position. In my judgment, it is neither necessary nor desirable to carry across to the issue whether it is inequitable to require restitution and to impose on it all the mass of learning on causation questions generated by the cases on the recoverability of damages for tort. Change of position is based on a principle of justice. It is a broad defence to a claim for restitution, which is itself based on a broad principle of unjust enrichment. In deciding whether the particular circumstances render it inequitable to require the recipient of an overpayment to make full restitution, the need for a sufficient causal link should not be narrowly applied. The important point is that there should be a relevant connection between the change of position and the actual or anticipated payment. As was said by Jonathan Parker J in the Philip Collins case at p. 827 the change of position must in some way be “referable to” the actual or anticipated payment of money by which the recipient is enriched.
44. On the facts of this case there was no relevant connection between Mr Price-Jones's decision to remain at the Bank and payment of the bonus actually promised by the Bank in the letter of 29 June 2000 for the performance year 2000. The true position is that Mr Price-Jones's decision to stay at the Bank was not connected with what the Bank actually promised to pay him. It was based on his erroneous belief, for which the Bank was not responsible, that he would in the future receive two guaranteed bonus payments for the performance year 2000 and on a belief that
the bonus package, as intended by the Bank, would send him a signal that he was not well regarded by the Bank.
45. To sum up, Mr Price-Jones was unjustly enriched. There can be no doubt about that. He received £250,000 to which he was not entitled. The payment was a mistake. He has still got the money. There is no obstacle to repaying it. He has not been disenriched. A just man would recognise that it was unjust to keep it and that he ought to repay it. He would not rely on his decision at the end of June 2000 to remain with the Bank as making it inequitable to repay. That decision did not have a significant, precise or substantial adverse impact on him nor was it connected in a relevant way with the payment actually promised by the Bank at that time. His decision did not stem from the actual payment of the bonus or from the actual promise of payment. It stemmed from his erroneous belief that the Bank was promising to make two very large minimum guaranteed bonus payments for one performance year and that, in the absence of the additional bonus, the Bank would have sent a signal that he was not well regarded. That belief and the circumstances in which he formed it do not make it inequitable to require him to repay the money. I would allow the appeal.
Lord Justice Sedley
46. I agree.
Mr Justice Munby :
47. I agree with my Lord. I add some words of my own only because in one of its aspects this case raises important points of principle in relation to the still developing doctrine of change of position as a defence to a claim in restitution. I am emboldened to do so, in particular, because the very interesting arguments we have heard have tended at times to assume an approach as to how the law in this field should develop which I am not sure is either very helpful or indeed very desirable.
48. I start with a general point. Mr Hollander quite properly took us to Robert Walker LJ's endorsement in Scottish Equitable plc v Derby  EWCA Civ 369,  3 All ER 818, at para , of the point made by Professor Burrows (see now Burrows, The Law of Restitution (ed 2, 2002) p 514) that the defence of change of position should not “disintegrate into a case by case discretionary analysis of the justice of individual facts, far removed from principle”. In a field of law which has benefited more than most from much distinguished academic and other non—judicial writings it would be churlish not to acknowledge the huge debt we all owe to those whom Megarry J once described (Cordell v Second Clanfield Properties Ltd  2 Ch 9 at p 17A) as “fertilisers of thought”. But if I may be permitted to say so, we need to be on our guard against over—refined analysis which may look all very well on the scholar's page but which may seem less convincing when exposed to “the purifying ordeal of skilled argument on the specific facts of a contested case.” I agree entirely with Robert Walker LJ when he said that “the court must proceed on the basis of principle, not sympathy”. But so long as we always keep the fundamental principles in mind this does not entail that we should allow ourselves to be beguiled into over subtle or over complicated attempts to refine or elaborate what is, after all, intended to be a broadly stated concept of practical justice. This is an area, it seems to me, in which technicality and black—letter law are to be avoided.
49. What are the fundamental principles? The starting point is obviously the speech of Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd  2 AC 548. The key passages have already been set out by my Lord but they bear repeating. They need to be read in the context of what Lord Goff had earlier said at p 578D:
“The claim for money had and received is not … founded upon any wrong committed by the club against the solicitors. But it does not … follow that the court has carte blanche to reject the solicitors' claim simply because it thinks it unfair or unjust in the circumstances to grant recovery. The recovery of money in restitution is not, as a general rule, a matter of discretion for the court. A claim to recover money at common law is made as a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle.”
The classic statements of principle follow at pp 579E and 580F:
“why do we feel that it would be unjust to allow restitution in cases such as these? The answer must be that, where an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution … the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full.”
50. Lord Goff prefaced his statement of principle with these important words: “At present I do not wish to state the principle any less broadly than this”. Quite clearly, as it seems to me, Lord Goff saw his statement of principle as sufficiently meeting the standard of adequately defined legal principle.
51. The other important observation by Lord Goff that needs to be kept in mind was his emphatic statement at p 580C:
“I am most anxious that, in recognising this defence to actions of restitution, nothing should be said at this stage to inhibit the development of the defence on a case by case basis, in the usual way.”
Lord Bridge of Harwich said much the same thing at p 558H:
“I agree with my noble and learned friend, Lord Goff of Chieveley, that … in expressly acknowledging the availability of this defence for the first time it would be unwise to attempt to define its scope in abstract terms, but better to allow the law on the subject to develop on a case by case basis.”
52. Some ten years later that same approach still commended itself to the Judicial Committee of the Privy Council. In Dextra Bank & Trust Co Ltd v Bank of Jamaica  1 All ER (Comm) 193 at para  Lord Bingham of Cornhill and Lord Goff of Chieveley referred with approval in their joint judgment to the fact that in Lipkin Gorman the House of Lords:
“appears to have adopted a broad approach based on practical justice, and to have avoided technicality”.
They went on at para  to say that:
“The defence should be regarded as founded on a principle of justice designed to protect the defendant from a claim to restitution in respect of a benefit received by him in circumstances in which it would be inequitable to pursue that claim, or to pursue it in full.”
53. The focus of debate is accordingly to identify whether in the particular case it would in all the circumstances be an “injustice” or “inequitable” to require the overpaid recipient to make restitution of that which the payer is prima facie entitled to recover as of right. That is not, with all respect to those who might suggest otherwise, an exercise in judicial discretion. It is an exercise in judicial evaluation. The judge is required to make a value judgment in the light of all the relevant circumstances. And there is nothing particularly difficult or unusual about this. It is an exercise of a type familiar in many different areas of both law and more particularly equity. The pages of Snell's Equity are replete with examples of situations where the essential question for the court is whether someone's conduct has been, or whether some outcome would be, equitable or inequitable.
54. Now there may be advantage in the courts identifying on a case by case basis matters which are not determinative of the question or identifying on a case by case basis matters which do not have to be established in order to make good the defence of change of position. An important and beneficial application of that approach can be seen in this court's acceptance in the Scottish Equitable case at paras – of the ‘wide’ in preference to the ‘narrow’ version of the defence (as to which see Burrows at pp 513–516). I respectfully agree that the wide version is to be preferred. The consequence is that, as a matter of law, the defence of change of position is not dependent upon proof of some representation by the payer, nor is it dependent upon proof of any detrimental reliance on the part of the payee. There will, no doubt, be certain factual circumstances where absent proof of detrimental reliance it will be unlikely, or perhaps even impossible, for the defence to be made out. But that is a long way from saying, and there is in law no warrant at all for saying, that proof of detrimental reliance is a prerequisite to making good a defence of change of position. Another example of this same approach can be seen in the rejection in the Dextra Bank case at para  of the concept of ‘relative fault’ in this branch of the law. In this context, as the Privy Council pointed out, good faith on the part of the recipient is sufficient.
55. What, though, is much more questionable, however tempting the exercise may seem, is to seek to define, in more qualified or restrictive terms than those used by Lord Goff, the requirements which, so it may be said, have to be established if the defence is to be made good. And there is, if I may say so, particular danger in seeking to elevate into general principles of law
what are in truth no more than the particular factors which, in the particular circumstances of a specific case, have been judicially identified as more or less significant in leading to the conclusion that the defence in that case either is or is not made out.
56. We need, if I may say so, always to bear in mind that, at the end of the day, the simple question that has to be asked in every case, and in the final analysis it is the only potentially determinative question that ever has to be asked, is this: Has the position of the payee so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full? That is the test formulated by Lord Goff in the Lipkin Gorman case and reaffirmed by Lords Bingham and Goff in the Dextra Bank case. There is, in my judgment, no need to gloss or refine it. Indeed any attempt to do so is likely to be not merely unnecessary but fraught with potential difficulty.
57. This takes me to the first of the four specific points that I wish to make. It relates to the question of causation.
58. Our attention was drawn to the statement by Jonathan Parker J in Philip Collins Ltd v Davis  3 All ER 808 at p 827f that “there must be a causal link between the change of position and the overpayment.” And some emphasis was placed on the fact that in the Scottish Equitable case Robert Walker LJ referred no fewer than three times (at paras –) to the need to show a sufficient causal link. I have no particular difficulty with the general principle that some such kind of causal link has to be shown, though I note that there is no reference to any such requirement in Lord Goff's statement of principle. But I should be very concerned to see this translated into a dogmatic legal rule, let alone into a legal analysis of the principles of causation of the kind that already bedevils too many areas of the common law or into a theoretical debate as to what particular test of cause and effect is appropriate or what particular kind of causal link has to be established.
59. For my own part I much prefer the way in which Jonathan Parker J put it in the Philip Collins case when, at p 827h, he said that the “change of position … must, on the evidence, be referable in some way to the payment of [the] money.” This is an approach familiar to any equity lawyer. It is the approach which we see in relation to the maxim that ‘he who comes into equity must come with clean hands’, where what has to be shown is misconduct which has “an immediate and necessary relation to the equity sued for”: see Snell's Equity (ed 30) para 3–15 citing Eyre LCB in Dering v Earl of Winchelsea (1787) 1 Cox Eq 318 at p 319. And it is the approach which we see in the requirement of the doctrine of part performance that the acts of part performance relied upon must be “referable” to the contract sued on: see Snell at para 40–38 referring to the classic statement of principle by Lord Selborne LC in Maddison v Alderson (1883) 8 App Cas 467 at p 479. As my Lord has said (and the phrase captures the same essential concept) the important point is that there should be a relevant connection between the change of position and the actual or anticipated payment.
60. My second point relates to the much debated question of whether an anticipatory change of position can be a good defence to a restitutionary claim. In South Tyneside Metropolitan BC v Svenska International plc  1 All ER 545, Clarke J, following Hobhouse J in Kleinwort Benson Ltd v South Tyneside Metropolitan BC  4 All ER 972, said at p 565e that
“save perhaps in exceptional circumstances, the defence of change of position is in principle confined to changes which take place after receipt of the money … It does not however follow that the defence of change of position can never succeed where the alleged change occurs before the receipt of the money.”
Following on from this, Jonathan Parker J suggested in the Philip Collins case at p 827g that
“whether or not a change of position may be anticipatory, it must … have been made as a consequence of the receipt of, or (it may be) the prospect of receiving, the money sought to be recovered.”
61. Now with all respect this might be thought not to be particularly clear. And Clarke J's reference to “exceptional circumstances” is potentially an invitation to the over—analytical to develop what is surely an entirely unnecessary jurisprudence of what can or cannot be an exceptional circumstance — a jurisprudence which, if allowed to flourish, would likely serve only to distract attention away from the true question identified by Lord Goff.
62. Clarke J's decision was criticised in Goff & Jones, The Law of Restitution (ed 5, 1998) pp 822–824, criticisms repeated in the following edition (ed 6, 2002) para 40–004. By then, the Privy Council had decided the Dextra Bank case. Lord Bingham and Lord Goff in their joint judgment said this:
“ The response by the BOJ to Dextra's argument has been that it is no less inequitable to require a defendant to make restitution in full when he has bona fide changed 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 that benefit. Of course, in all these cases the defendant will ex hypothesi have received the benefit, because the context is an action by the plaintiff seeking restitution in respect of that benefit. For those who support the distinction, however, their reply appears to be that, whereas change of position on the faith of an actual receipt should be protected because of the importance of upholding the security of receipts, the same is not true of a change of position in reliance on an expected payment, which does not merit protection beyond that conferred by the law of contract (including promissory estoppel). Their Lordships confess that they find that reply unconvincing. Here what is in issue is the justice or injustice of enforcing a restitutionary claim in respect of a benefit conferred. In that context, it is difficult to see what relevant distinction can be drawn between (1) a case in which the defendant expends on some extraordinary expenditure all or part of a sum of money which he has received from the plaintiff, and (2) one in which the defendant incurs such expenditure in the expectation that he will receive the sum of money from the plaintiff, which he does in fact receive. Since ex hypothesi the defendant will in fact have received the expected payment, there is no question of the defendant using the defence of change of position to enforce, directly or indirectly, a claim to that money. It is surely no abuse of language to say, in the second case as in the first, that the defendant has incurred the expenditure in reliance on the plaintiff's payment or, as is sometimes said, on the faith of the payment. It is true that, in the second case, the defendant relied on the payment being made to him in the future (as well as relying on such payment, when made, being a valid payment); but, provided that his change of position was in good faith, it should provide, pro tanto at least, a good defence because it would be inequitable to require the defendant to make restitution, or to make restitution in full. In particular it does not, in their Lordships' opinion, assist to rationalise the defence of change of position as concerned to protect security of receipts and then to derive from that rationalisation a limitation on the defence. The defence should be regarded as founded on a principle of justice designed to protect the defendant from a claim to restitution in respect of a benefit received by him in circumstances in which it would be inequitable to pursue that claim, or to pursue it in full. In any event, since (as previously stated) the context of a restitutionary action requires that the expected payment has in any event been received by the defendant, giving effect to ‘anticipatory reliance’ in that context will indeed operate to protect the security of an actual receipt.”
63. Mr Hollander sought to explain — in truth he sought to explain away — the decision in the Dextra Bank case on the basis that the anticipatory change of position and the subsequent receipt were so close together in point of time that they could really be treated as part and parcel of one transaction. He sought to persuade us that no anticipatory change of position could be relied on unless it formed part of the res gestae. This, with all respect to him, will not do. It is not what the Privy Council said: it is in fact, as it seems to me, quite inconsistent with the emphatic rejection by Lords Bingham and Goff of the distinction with which they were pressed. It is contrary to principle. It is the kind of rule which may sound all very good in theory but which in reality sits most uncomfortably with a principle which seeks to distinguish what is equitable from what is inequitable. And it is, if I may be permitted to say so, a good example of the impermissible attempt to use the facts of a leading case to control the principles expounded by the judges in deciding the case. There is here no legal rule or principle of the kind for which Mr Hollander contends. The only point is that expressed by the learned editors of Goff & Jones at para 40–005:
“in Dextra Bank, the defendants had been enriched soon after they had changed their position. The facts led to the conclusion that BOJ had relied on the fact that the Dextra cheque, when cleared, would reimburse it. The burden of establishing the defence will become much greater if the evidence does not suggest a link with the anticipatory payment and the subsequent receipt of a payment, particularly if the receipts are received sometime after the anticipatory change of position. But in each case it will be a question of fact for the court to determine.”
Precisely so: there is no point of legal principle here, it is a question of fact.
64. Commenting on the decision in the Dextra Bank case the editors of Goff & Jones predicted at para 40–005 that “English courts will now follow the advice of the Privy Council, rather than the first instance decisions, … and will hold that anticipatory change of position is a good defence to a restitutionary claim.” We should follow that invitation. In my judgment this court should now take the opportunity to say, clearly and unequivocally, that an anticipatory change of position is in principle a perfectly good defence to a restitutionary claim. Whether or not an anticipatory change is actually a good defence will, of course, depend upon the facts of the particular case.
65. My third point arises out of Mr Hollander's submission that there can be no change of position sufficient to found the defence in the absence of either financial detriment or, at the least, some detriment measurable in financial — by which I understood Mr Hollander really to mean pecuniary — terms. Perhaps not surprisingly, because in my judgment the point is completely unsound as a matter of principle, Mr Hollander was unable to point to any authority supportive of his submission. The passages in Burrows to which he directed our attention do not bear the weight of the argument any more than does the passage in Lord Goff's speech in the Lipkin Gorman case at p 580H to which he also directed our attention.
66. In the Scottish Equitable case, Robert Walker LJ at para  gave as “the most obvious example” of the kind of decision made by a payee which, even though it involves no immediate expenditure, will nonetheless give rise to the defence of change of position, the voluntary giving up of a job at an age when it would not be easy to get new employment. Now if that decision can, as in appropriate circumstances it plainly can, give rise to the defence of change of position, why should not a decision for example to divorce? Can it really make any difference that in the first case it is possible to calculate the pecuniary cost to the payee of his decision to abandon his employment (that, after all, being the kind of exercise conducted in personal injury and fatal accident cases every day of the week) whilst in the second case it may not be possible to measure in pecuniary terms the cost to the payee of his decision to divorce? Surely not. It is, in my judgment, a distinction without a difference. It is, as it seems to me, a distinction which lacks any justification when tested by reference to the “broad approach based on practical justice” enshrined in Lord Goff's formulation of the principle. And it is, moreover, a distinction which is hardly consonant with the approach of equity in other more or less analogous situations.
67. Consider, for example, the kinds of detriment which have been held to give rise to a proprietary estoppel (see Snell at para 39–14). Or consider, for example, Sutton v Sutton  Ch 184, where a husband and his wife agreed that in consideration, inter alia, of the wife consenting to the husband divorcing her under section 1(2)(d) of the Matrimonial Causes Act 1973 (two years' separation and consent), he would transfer the matrimonial home to her. A decree absolute was made on the husband's petition but he refused to carry out his part of the bargain. It was held (at p 193C) that the wife's consenting to the divorce as agreed was an act of part performance, being an act referable to the contract. As the judge put it, “her consent to the petition was in itself, in the circumstances, tied to the contract about the house”. The judge went on to say (at p 193F) that the husband “stood by and let her perform that part of her bargain irretrievably, and that raised an equity” in her favour.
68. Thus the approach of equity. But consider the facts which I recently had to consider, albeit in a wholly different legal context, in X v X (Y and Z intervening)  1 FLR 508: an agreement under which the quid pro quo for the payment of a sum of money was a husband's agreement not to defend his wife's petition for divorce grounded on his behaviour (even though he believed that he had grounds for divorcing her for adultery) and his agreement also to give her a Jewish religious divorce — a get. Now if, as Robert Walker LJ tells us, giving up a job is capable of giving rise to the defence of change of position, then why should not the husband's actions in X v X equally be capable of giving rise to such a defence? And why should it make any difference that it is quite impossible to put any pecuniary value on what the husband did? For, as I remarked in X v X at paras –:
“ … A number of the factors in play are simply unquantifiable on any objective basis. How is a secular judge to evaluate the combination of the get and a decree based on the husband's conduct rather than the wife's adultery for a family apparently exercised by the possible religious and social ramifications? How am I to put a price on the cost to the husband of a divorce obtained by his wife against him on the ground of his behaviour rather than a divorce obtained by him on the ground of her adultery? …
 There are no means by which a secular judge, who may himself be an adherent of the same or a different faith or of no faith at all, can evaluate, let alone attribute some pecuniary value to, something as personal and of such religious significance as a get.”
69. As counsel submitted in that case, and I agreed, “the husband has wholly fulfilled his side of the bargain and … it would be grotesquely unfair if the wife were able now to walk away with the two things she desired whilst wholly avoiding her obligations under the agreement.” True it is that the legal context in which I there had to consider the matter was wholly different from that with which we are here concerned, but surely it would be just as grotesquely unfair not to allow a husband to rely on such conduct were the question to arise in the context of an asserted defence of change of position.
70. I do not believe that anything I am saying is in any way inconsistent with anything Robert Walker LJ said in the Scottish Equitable case. But equally there is, in my judgment, no support to be found in that case for Mr Hollander's submissions. The point in Scottish Equitable at the end of the day was simply this: that if the circumstances do not otherwise justify a defence of change of position it makes no difference that the demand for repayment will come as a bitter disappointment, or even as a devastating blow, to the payee.
71. My fourth and final point arises out of the assertions by Fung & Ho, Change of Position and Estoppel (2001) 117 LQR 14 at p 17 that:
“… the defence of change of position only protects actual reduction of the recipient's wealth. A recipient who acts upon a receipt (and representation) to forego a foreseeable and quantifiable opportunity to improve his wealth would not be protected … change of position seeks to undo the overpayment — and nothing more — by measuring the precise extent of the defendant's surviving enrichment …”
That appears in what is in fact a case—note commenting on the decision at first instance in the Scottish Equitable case and thus ante—dates not merely the decision of this court in the Scottish Equitable case but also the decision of the Privy Council in the Dextra Bank case.
72. This article was mentioned in passing by Potter LJ giving the main judgment of this court in National Westminster Bank plc v Somer International (UK) Ltd  EWCA Civ 970,  QB 1286. At para  he said:
“… as pointed out by Fung and Ho … “change of position” only protects actual reduction of the transferee's assets following receipt.”
It is to be noted that this observation, which I do not read as being any part of the ratio decidendi of the case, was made in the context not of a discussion of the defence of change of position but rather of a defence based on estoppel by representation. Moreover, as the editors of Goff & Jones
bleakly comment at para 40–013, “The Lord Justice cites no authority for that statement, and we know of none.” In my judgment, and with all respect both to Potter LJ and to the learned authors he was citing, there is no authority for any of these propositions, and the assertions by Hung & Fo which I have quoted are not an accurate statement of the law.
73. So much for principle and law. I turn to the facts of the present case.
74. As set out in his witness statement the defendant's case is that he had expected to receive a substantial ‘lock-in’, that he stayed with the Bank through what he calls “a period of extreme uncertainty” because of his lock-in, and that had he been offered only an additional £15,000 “I would not have shouldered that risk. I would have assumed that I was not a valued employee and I would have taken the opportunity to find alternative employment at a time when other employers in the market were still hiring. The current downturn has meant that most employers in the market are not now hiring”.
75. The Deputy Judge accepted the defendant's evidence which, as set out by the judge in paragraphs  and  of his judgment, came to this:
The defendant was pleased to receive the letter of 29 June 2000, which he read as meaning that he had been awarded a lock-in payment of an additional £265,000. He was pleased not only because he was to receive an extra £265,000 but also because this was a ‘signal’ that he was a valued employee.
If such a lock-in had not been offered the defendant would have decided to look for employment elsewhere, even though this would have meant him losing the £250,000 guaranteed bonus payable in December 2000 and the £250,000 guaranteed bonus payable in December 2001 and also having to repay the £150,000 buy-out payment that, although due on 15 October 2000, had been paid early on 23 June 2000.
If he had understood the letter of 29 June 2000 as meaning that he was to receive only an additional £15,000, he would have treated it as being intended by the Bank to be a disincentive to stay because (a) £15,000 was in the scheme of things a very small sum, (b) the postponement of payment of £250,000 by three months was a significant detriment and (c) together these two features would have “sent a signal that he was not well regarded by the Bank.”
The defendant would have been willing to forego the financial benefits of staying with the Bank in exchange for the certainty of employment and career development elsewhere, and would have been prepared to accept “slightly lesser” remuneration elsewhere for the certainty of continued employment.
76. The Judge accordingly held that:
The defendant decided to stay at the Bank as a result of the 29 June 2000 letter and his understanding of it.
If it had not been for that letter the defendant would have taken steps in late June 2000 to seek employment elsewhere.
If he had done so, the defendant stood a very good chance of obtaining similar employment elsewhere.
Accordingly, the letter of 29 June 2000 caused the defendant to change his position, as a result of which he has suffered a detriment.
77. In opening his attack on the Deputy Judge's reasoning, Mr Hollander rightly draws attention to the chronology and to the narrow and limited basis upon which the defendant — necessarily in the light of his own evidence — has to seek to found his defence. My Lord has set out the facts in some detail. All I need do here is to recall that the crucial letter was dated 29 June 2000, that it was counter-signed by the defendant on 5 August 2000, that the payment of £250,000 was made on 15 December 2000 and that the additional payment of £265,000 was made on 23 March 2001. The defendant's change of position, according to his evidence, and accepted by the Deputy Judge, occurred in late June 2000, that is, long before either payment was made. And as Mr Hollander points out, although the defendant had earlier sought to mount a case based on change of position as a result of receipt of the additional money (namely, that he had used it to repay his mortgage) that case was abandoned at trial. As Mr Hollander puts it, what caused the defendant to change his position was not the receipt of the money but the ‘signal’ which the letter gave him.
78. It follows, says Mr Hollander, and I agree, that properly understood the defendant's case comes down to this: By definition the issue only arises on the premise that the court has accepted — as in fact it has — that the letter of 29 June 2000 should be interpreted in the manner submitted by the Bank. It follows that the defendant's case is — has to be — that he changed his position based on his mistaken interpretation of the letter. But, says Mr Hollander, that mistaken interpretation was neither shared by nor, more importantly, in any way contributed to by the Bank. It is at this point that, in the particular circumstances of this case, it is important to remember that at the relevant date the Bank had not even made the erroneous payment. So all the Bank had done at the crucial point at which the defendant changed his position was to send him the letter.
79. As a matter of law the letter of 29 June 2000 means what it would have conveyed to a reasonable person in the defendant's position having all the background knowledge that would reasonably have been available to the defendant and the Bank in the situation which they were then in. And, judged by that standard, I agree with my Lord that the letter means not what the defendant believed but rather what, as the Deputy Judge found, the Bank believed and intended it to mean. So the mistaken interpretation which is thus the very foundation of the defendant's case was not in any way shared or contributed to by the Bank. And as Mr Hollander points out, if the defendant had asked the Bank what its letter meant (which of course he never did) he would no doubt have been told that it meant £265,000 in total, for this, as the Deputy Judge found, is what the Bank believed and intended. Moreover, as Mr Hollander also points out, if the defendant had contacted the Bank he would have discovered that he had completely misread the position and that, far from the letter being a signal that he was not valued by his employers, he was in fact, as the Deputy Judge found, seen by the Bank as a valuable and valued employee. Furthermore, it necessarily follows that the defendant's mistaken belief is not that which would have been held by a reasonable person in his position.
80. In these circumstances, says Mr Hollander, the defendant's case on change of position amounts to no more than a decision by him not to seek to change his job based on his own mistaken interpretation of the effect of the letter. But, says Mr Hollander, the law does not permit those who rely upon mistaken interpretations of contracts to use their own error as a legal defence. For otherwise the defendant is being allowed to profit from his own error, nothing more and nothing less. On that simple point, says Mr Hollander, the defendant's case breaks down.
81. The Deputy Judge held that in these circumstances it would be inequitable to require the defendant to make restitution. With all respect to the Judge, as also to Mr Englehart's valiant attempts to persuade us that the Judge was correct, I profoundly disagree. Where is the justice, where is the equity, in allowing the defendant to retain, to the Bank's detriment, the fruits of what is simply his own mistake — and a mistake which, as I have said, was in no way caused or contributed to by the Bank? What is there in any way inequitable or unjust in the Bank seeking to recover its own money — and, as Lord Goff has pointed out, seeking to do so as a matter of right — when the only matter that can be prayed in aid in resisting that claim is the defendant's own mistake, a mistake which, to repeat, was not in any way caused or contributed to by the Bank and which, moreover, had nothing to do with anything either done or not done by the Bank? In my judgment, equity and justice are quite plainly in these circumstances on the side not of the defendant but rather of the Bank.
82. Mr Englehart says that Mr Hollander's argument is based on a fallacy, namely that the objective interpretation by the reasonable man which is used to answer the question as to what the letter means as a matter of construction has a part to play in assessing the merits of a defence of change of position to a restitution claim. With all respect to him I cannot accept Mr Englehart's submission. Why on earth, in an appropriate case, should Mr Hollander's point not have a part to play in assessing where the balance of justice and equity lies? And why on earth is this not precisely the kind of case where the point has a part — and, as it seems to me, a significant part — to play in striking the balance? Mr Englehart further submits that Mr Hollander's approach is ruled out by the Privy Council's express condemnation in the Dextra Bank case of the concept of relative fault. I do not agree. I accept, as I have already said, that relative fault has no role to play in this branch of the law. But this does not mean that the court is required to blind itself to the fact, if fact it be, that someone seeking to make good the defence of change of position has only himself to blame for his predicament, having acted on a view which is not merely erroneous but which, moreover, fails to meet the standard of the reasonable man.
83. Mr Englehart submits that the inquiry here is simply whether or not the defendant bona fide believed that he was entitled to money he anticipated receiving and whether he changed his position in that belief. That, with respect to Mr Englehart, is not the relevant question. The question is whether or not it is inequitable to deny the defendant a defence based on change of position when his decision to change his position was not in any way caused or contributed to by anything done or not done by the Bank but, on the contrary, was based entirely on his own erroneous understanding of what the Bank's letter meant. I can see nothing inequitable in denying the defendant such a defence. On the contrary, it would in my judgment be inequitable in the circumstances of this case to deny the Bank the right to recover its money.
84. I have not ignored the fact — and fact it is — that the Bank also made mistakes when it made the payments to the defendant on 15 December 2000 and 23 March 2001. The errors were thus not all on one side. But the Bank's errors, egregious though they may have been, are largely irrelevant for present purposes. For, as I have said, they long post-dated and therefore cannot have been operating on the defendant's mind at the time when, on his case, he changed his position.
85. Mr Hollander put forward various other arguments as to why, as he would have it, the defendant could not rely upon the defence of change of position. Those arguments were, in the final analysis, based upon propositions of law which, for the reasons I have already set out, I cannot accept. I say no more about his arguments. I should, however, make clear my agreement with Mr Englehart's submission that there is no material difference in substance in this kind of case between voluntarily giving up a job (the situation postulated by Robert Walker LJ in the Scottish Equitable case) and voluntarily choosing to stay in a job (what the defendant did here). Either may, in appropriate circumstances, suffice to found a defence of change of position; in other circumstances, neither may suffice. It all depends on the facts.
86. There is one final point. When I prepared this judgment I was not aware of the decision of this court in Niru Battery Manufacturing Co and anor v Milestone Trading Ltd and ors  EWCA Civ 1446, the judgments in which were handed down on 23 October 2003. As I read them there is nothing in those judgments which is in any way inconsistent with the views I have expressed. On the contrary, Clarke LJ made clear (see para ) that:
“the essential question is whether on the facts of a particular case it would in all the circumstances be inequitable or unconscionable, and thus unjust, to allow the recipient of money paid under a mistake of fact to deny restitution to the payer.”
Likewise my Lord, Lord Justice Sedley, emphasised more than once (see paras , , ) that the test is that of inequitability. I respectfully agree. Indeed that is, as it happens, precisely the view to which I had independently come. And I agree also with what my Lord said in para :
“… courts … are not tied to a single rigid standard in deciding whether a defence of change of position succeeds. They are to decide whether it is equitable to uphold the defence. Since the doctrine of restitution is centrally concerned with the distribution of loss among parties whose rights are not met by some stronger doctrine of law, one is by definition looking for the least unjust solution to a residual problem.”
Order: 1. The appellant's appeal be allowed and the judgment of the Deputy Judge herein dated 17 December 2002 be set aside; 2. Judgment be entered for the appellant on the respondent's claim and on the appellant's counterclaim, and on the appellant's counterclaim, there be a declaration that the appellant is entitled to set off its claim against the respondent for unjust enrichment (by reason of the appellant's payment of £250,000 to the respondent on or about 31 December 2000) against the respondent's claim for £250,000 by way of a guaranteed bonus for the year 2001. 3. The respondent's do repay to the appellant the sum of £250,000 and £19,232087 paid to the respondent pursuant to paragraph 1 of the judgment of the Deputy Judge, together in each case with interest at bank base rate plus 1% from 27 January 2003 to the date hereof calculator in the aggregate sum of £10, 276.94 4. The respondent do repay to the appellant the sum of £40,000 paid to the respondent in respect of the claimant's costs of the claim and counterclaim, together with intrest at bank base rate plus 1% from 26 September to the date hereof calculated in the sum of £285.48 5. The respondents do pay the appellant's costs here and below of the claim and counterclaim, such costs to be the subject of a detailed assessment if not agreed. a Certificate for two counsel.