| Lipkin Gorman v Karpnale Ltd | |
|---|---|
| Court | House of Lords |
| Date decided | June 6 1991 |
| Citation(s) | [1991] 2 AC 548; [1992] 4 All ER 331; [1991] 3 WLR 10; [1988] UKHL 12 |
| Transcript(s) | Full text from Bailii |
| Judge(s) sitting | Lord Bridge of Harwich, Lord Templeman, Lord Griffiths, Lord Ackner and Lord Goff of Chieveley |
| Case history | |
| Prior action(s) | [1989] 1 WLR 1340 |
Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 is a foundational English unjust enrichment case. The House of Lords unanimously established that the basis of an action for money had and received is the principle of unjust enrichment, and that an award of restitution is subject to a defence of change of position. This secured unjust enrichment English law as the third pillar of the law of obligations, along with contract and tort.
Contents |
Norman Barry Cass was a partner in a solicitors' firm called Lipkin Gorman. He was an authorised signatory at the firm’s Lloyds Bank account. He took out £220,000 and used it for gambling at the Playboy Club, 45 Park Lane, London which was owned by Karpnale Ltd. Between March and November 1980, the club won £154,695 of the stolen money (the rest paid back to Mr Cass in ‘winnings’). Mr Cass fled to Israel, but was brought back and sentenced to three years prison for theft in 1984.
Lipkin Gorman sued the club for return of the stolen money. At the time, gambling contracts were contrary to public policy, and therefore void under s.18, Gaming Act 1845.
The judge (Alliot J) and the Court of Appeal (May LJ and Parker LJ, Nicholls LJ dissenting), dismissed Lipkin Gorman's claims.
The House of Lords held that £150,960 should be repaid as money had and received, and the club was also liable for damages of £3,735 to the solicitors for conversion of a banker’s draft that had been used once for gambling, rather than cash.
Lord Templeman said, the money could be recovered
‘if they can show that in the circumstances the club was unjustly enriched at the expense of the solicitors… The club received stolen money by way of gift from the thief; the club, being a volunteer, has been unjustly enriched at the expense of the solicitors from whom the money had been stolen and the club must reimburse the solicitors.’
Lord Goff said that the change of position defence was debated but
‘the consensus being to the effect that such a defence should be recognised in English law. I myself am under no doubt that this is right.’
As a result, the defence of change of position was recognized for the first time in English law and it succeeded as a partial defence here. Because the winnings have been paid out to Cass, the club has effectively changed its position and its liability is limited to the remaining sum of £150,960.