Lipkin Gorman v Karpnale Ltd [1988]
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Lipkin Gorman v Karpnale Ltd [1988] UKHL 12 holds a pivotal place in English law as a foundational unjust enrichment case. In a unanimous decision, the House of Lords established that the basis for an action of money had and received lies in the principle of unjust enrichment. This landmark judgment solidified unjust enrichment as the third pillar in English law of the law of obligations, alongside contract and tort. The House of Lords further emphasised that any award of restitution is subject to a defence of change of position.
The case revolved around Norman Barry Cass, a partner in the solicitors' firm Lipkin Gorman, who misappropriated £220,000 from the firm's Lloyds Bank account for gambling at the Playboy Club, owned by Karpnale Ltd. Cass's gambling activities occurred between March and November 1980, and the club won £154,695 of the stolen money through void gambling contracts. Lipkin Gorman sought the return of the misappropriated funds, initiating legal proceedings against both the club and the bank.
At first instance, the trial judge, Alliot J, found against the club for conversion of a bank draft but dismissed the larger claim for money had and received. The judge also made severe findings against the bank, highlighting deliberate suppression of knowledge by the bank manager regarding Cass's gambling.
The Court of Appeal, comprising May LJ, Parker LJ, and Nicholls LJ, dismissed Lipkin Gorman's claims against the club for money had and received, asserting that the club provided good consideration. Importantly, the judgments on bank liability were not appealed, establishing them as a significant authority on the duty of care owed by a bank to its customer.
The House of Lords unanimously held that £150,960 should be repaid by the club as money had and received. Additionally, the club was held liable for damages of £3,735 for the conversion of a banker’s draft. Lord Templeman emphasised the unjust enrichment of the club and the obligation to reimburse the solicitors. Lord Goff acknowledged the defence of change of position, recognising it for the first time in English law. This defence succeeded as a partial defence, limiting the club's liability to the remaining sum.
The case is considered foundational in English law, establishing unjust enrichment as a crucial principle. The House of Lords' decision transformed the landscape of restitution and unjust enrichment. The Court of Appeal's unchallenged judgments on bank liability set a precedent for the duty of care owed by banks to their customers. The introduction of the defence of change of position marked a significant development in English law, serving as a partial defence in this case and influencing subsequent legal principles.
The case revolved around Norman Barry Cass, a partner in the solicitors' firm Lipkin Gorman, who misappropriated £220,000 from the firm's Lloyds Bank account for gambling at the Playboy Club, owned by Karpnale Ltd. Cass's gambling activities occurred between March and November 1980, and the club won £154,695 of the stolen money through void gambling contracts. Lipkin Gorman sought the return of the misappropriated funds, initiating legal proceedings against both the club and the bank.
At first instance, the trial judge, Alliot J, found against the club for conversion of a bank draft but dismissed the larger claim for money had and received. The judge also made severe findings against the bank, highlighting deliberate suppression of knowledge by the bank manager regarding Cass's gambling.
The Court of Appeal, comprising May LJ, Parker LJ, and Nicholls LJ, dismissed Lipkin Gorman's claims against the club for money had and received, asserting that the club provided good consideration. Importantly, the judgments on bank liability were not appealed, establishing them as a significant authority on the duty of care owed by a bank to its customer.
The House of Lords unanimously held that £150,960 should be repaid by the club as money had and received. Additionally, the club was held liable for damages of £3,735 for the conversion of a banker’s draft. Lord Templeman emphasised the unjust enrichment of the club and the obligation to reimburse the solicitors. Lord Goff acknowledged the defence of change of position, recognising it for the first time in English law. This defence succeeded as a partial defence, limiting the club's liability to the remaining sum.
The case is considered foundational in English law, establishing unjust enrichment as a crucial principle. The House of Lords' decision transformed the landscape of restitution and unjust enrichment. The Court of Appeal's unchallenged judgments on bank liability set a precedent for the duty of care owed by banks to their customers. The introduction of the defence of change of position marked a significant development in English law, serving as a partial defence in this case and influencing subsequent legal principles.
