Lipkin Gorman v Karpnale Ltd
Encyclopedia
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
.
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.
Lord Templeman said, the money could be recovered
Lord Goff said that the change of position defence was debated but
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.
Unjust enrichment
Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing.Definition:...
, and that an award of restitution
Restitution
The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court...
is subject to a defence of change of position
Change of position
Change of position is a defence to a claim in unjust enrichment, or for restitution. Ordinarily, someone who has been unjustly enriched at the expense of another is strictly liable to disgorge his gains...
. This secured unjust enrichment English law
English law
English law is the legal system of England and Wales, and is the basis of common law legal systems used in most Commonwealth countries and the United States except Louisiana...
as the third pillar of the law of obligations
Law of obligations
The law of obligations is one of the component private law elements of the civil system of law. It includes contract law, delict law, quasi-contract law, and quasi-delict law...
, along with contract
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
and tort
English tort law
English tort law concerns civil wrongs, as distinguished from criminal wrongs, in the law of England and Wales. Some wrongs are the concern of the state, and so the police can enforce the law on the wrongdoers in court – in a criminal case...
.
Facts
Norman Barry Cass was a partner in a solicitors' firm called Lipkin Gorman. He was an authorised signatory at the firm’s Lloyds BankLloyds Bank
Lloyds Bank Plc was a British retail bank which operated in England and Wales from 1765 until its merger into Lloyds TSB in 1995; it remains a registered company but is currently dormant. It expanded during the nineteenth and twentieth centuries and took over a number of smaller banking companies...
account. He took out £220,000 and used it for gambling at the Playboy Club
Playboy Club
The Playboy Club initially was a chain of nightclubs and resorts owned and operated by Playboy Enterprises. The first club opened at 116 E. Walton Street in downtown Chicago, Illinois, United States, on February 29, 1960. Each club generally featured a Living Room, a Playmate Bar, a Dining Room...
, 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
Gaming Act 1845
The Gaming Act 1845 was an Act of the Parliament of the United Kingdom. The Act's principal provision was to deem a wager unenforceable as a legal contract. The Act received Royal Assent on August 8, 1845...
.
The judge (Alliot J) and the Court of Appeal (May LJ and Parker LJ, Nicholls LJ dissenting), dismissed Lipkin Gorman's claims.
Judgment
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.