Lipkin Gorman v Karpnale Ltd
A recipient of stolen money is liable to repay it as unjust enrichment, unless he can rely on the defence of change of position.
Facts
Mr Cass, a partner in the firm of solicitors Lipkin Gorman, stole money from the firm's client account and gambled it away at the Playboy Club, which was owned by Karpnale. The club had received the money in good faith, and had paid out some of it to Mr Cass as winnings. The firm sued the club to recover the money.
Legal principle
The House of Lords held that the club was liable to repay the money, less the amount it had paid out to Mr Cass as winnings. Lord Goff said that the claim was based on unjust enrichment, because the club had received the firm's money without giving valid consideration, since gaming contracts were then void. He recognised for the first time the defence of change of position, which allows an innocent recipient to resist a claim to the extent that he has changed his position in good faith in reliance on the receipt. The club had changed its position by paying out winnings.
Related cases on tracing and third party liability
- Agip (Africa) Ltd v Jackson [1991] Ch 547
- Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509
- Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476
- Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22
- BCCI (Overseas) Ltd v Akindele [2001] Ch 437
- Bishopsgate Investment Management Ltd v Homan [1995] Ch 211
- Devaynes v Noble (Clayton's Case) (1816) 1 Mer 572
- El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685
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