Lipkin Gorman v Karpnale Ltd

[1991] 2 AC 548

Case details

Case citations
[1991] 2 AC 548 · [1988] UKHL 12 · [1991] 3 WLR 10
Court
House of Lords
Judgment date
6 June 1991
Source judgment

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Subjects
Restitution Unjust enrichment Gaming law
Keywords
unjust enrichment restitution change of position Gaming Act 1845 s.18 casino chips tracing money had and received holders in due course banker's draft conversion
Outcome
appeal allowed (cross-appeal dismissed)
Judicial consideration

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Summary

The recipient of money stolen by a thief is ordinarily unjustly enriched and must disgorge the money received unless he provided value or can invoke a recognised defence.

The defence of change of position is available to an innocent recipient who, in good faith, so altered his position that it would be inequitable to require full restitution.

A casino's exchange of cash for chips does not constitute valuable consideration where the chips merely facilitate void gaming contracts under Gaming Act 1845 s.18; recovery may be limited to the recipient's net winnings traceable to the stolen funds.

Abstract

The solicitors brought a claim for money had and received against a casino to recover sums stolen by a partner and gambled at the casino. The casino had paid out substantial winnings and retained a net sum agreed to be partly derived from the stolen funds. The courts below were divided on whether the casino gave valuable consideration and whether it could rely on equitable defences. The principal issues before the House were (1) whether the solicitors could recover stolen money paid to an innocent recipient who had allowed the thief to gamble, (2) whether exchange of cash for casino chips or the chance to win amounted to valuable consideration, and (3) whether the defence of change of position could limit restitution. The case also included a cross-appeal concerning a banker's draft indorsed and lost at the casino.

Held

(1) The appeal is allowed; the solicitors are entitled to recover the net sum of stolen money retained by the casino, limited to the amount of the casino's net winnings traceable to the solicitors' funds. (2) The House held that the casino did not give valuable consideration for the stolen money by issuing chips or by offering the chance to win; gaming contracts are void under Gaming Act 1845 s.18 and cannot furnish a defence to restitution. (3) The House recognised the defence of change of position to claims in restitution. The defence is available where the defendant acted in good faith and altered his position such that it would be inequitable to require full repayment. (4) The defence must be assessed case by case. In gambling contexts the proper approach is to limit recovery to the net amount the innocent recipient retains that is traceable to the stolen fund; winnings genuinely paid to the thief reduce the recipient's liability. On the facts recovery was limited to the casino's net retention traceable to the solicitors. (5) As to the banker's draft made payable to the solicitors and indorsed by the thief, the House held that the draft represented the solicitors' money and that the cross-appeal fails; the casino was not a holder in due course. (6) Result: judgment for the solicitors for the sum recoverable (see (1)). (See paras [Lord Goff of Chieveley]; [Lord Templeman]; [Lord Bridge of Harwich]).

Appellate history

  • Court of Appeal: Majority dismissed the solicitors' claim; Nicholls L.J. dissenting. Reported at [1989] 1 W.L.R. 1340.
  • High Court (Alliott J.): Claim largely dismissed at first instance; appeal taken. Reported at [1987] 1 W.L.R. 987.

Key cases cited

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Cases citing this case

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Legislation cited

  • Gaming Act 1845: Section 18