Lipkin Gorman v Karpnale Ltd, [1988] UKHL 12 (6 June 1991)
Citation:Lipkin Gorman v Karpnale Ltd, [1988] UKHL 12 (6 June 1991)
Rule of thumb:Where one person has a gift donated to them, but the donor of the gift was not the legal owner of it, do they have the right to keep this? No, if the owner of the property did not have the legal right to it and they gift this to another person, the original re owner can have the gift returned to them because it is unjustified enrichment for this donee to keep it.
Background facts:
The basic facts were that the partner in the law firm, Mr Cass, went into the Playboy Club and 'spent' the money on gambling. At that particular time gambling was illegal. Crass therefore essentially paid this money as a 'gift' or a 'donation' for these services, which there was no legal obligation on him to do, only a moral one.
Parties argued:
Lipkin Gorman argued that unjustified enrichment applied in this scenario. They argued that this money was wrongly taken from their account and wrongly donated to the club, who legally speaking provided no service to obtain that money thereby giving them no legal right to keep. Karpnale argued that once money is gifted or donated to someone then it becomes theirs with no obligation to return it.
Judgment:
The Court upheld the arguments of Lipkin Gorman and the money had to be returned. Where someone is gifted or donated money, and it turns out the person doing this gifting or donating did not actually have a legal right to do this, then the true owner of the money can get that back from the person who was donated or gifted the money under the principle of unjustified enrichment.
Ratio-decidendi:
’... 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 Templeman.
'club received stolen money by way of gift... the club, being a volunteer... unjustly enriched ... must reimburse', Lord Templeman
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.