Title Issues of Unjust Enrichment in English Law: The Morality Behind Lipkin Gorman v. Karpnale Etaf Almutawa* Abstract Since the decision in Lipkin Gorman v Karpnale [1991], unjust enrichment scholars have engaged in significant debate about the role that title plays, if any, in an unjust enrichment claim. Shortly after the decision was handed down, Peter Birks attacked the Court’s proprietary analysis and proposed ‘ignorance’ as an alternative unjust factor. Following Birks, a lively debate ensued, which revolved wholly around the impact of title retention by the claimant. The debate has continued to the present day: most recently, Robert Stevens argued against the proprietary analysis in Lipkin Gorman and suggested that the unjust factor should be ‘unauthorised payment of partnership assets’. What is clear is that, despite the longevity of this debate, a number of questions remain unanswered. This paper will argue that looking at the problem through the lens of title retention is causing more confusion. Under this approach, we are not yet able to even answer some simple questions, such as whether a finder or thief can be claimed against in unjust enrichment. The paper takes a fresh look at the proprietary analysis that was doing the work in the decision. It will argue that Lipkin Gorman was not necessarily about title retention or the passing of title. Rather, reference to the solicitors’ property seems to be an expression of the moral idea of ‘belonging’ that had to be explained by proprietary terminologies and common law of tracing. The idea of ‘belonging’ is broader than whether title passed to the defendant. The fact that the solicitors in Lipkin Gorman recovered the money in spite of the Court’s view that title had actually passed to the defendant supports the analysis based on ‘belonging’ which this paper advances. Table of Contents 1. Introduction 2 2. Setting the Scene 2 3. Lipkin Gorman v. Karpnale revisited 5 4. The aftermath 12 5. A general intuitive approach? 17 6. Conclusion 20 1. Introduction Two years before Lord Goff delivered the main speech in Lipkin Gorman v. Karpnale Ltd1 in the House of Lords, when unjust enrichment was recognised as an independent cause of action, he was invited to write a short comment about the future of the law of restitution.2 He said: “In truth, we are still in the position where we are asking ourselves the most fundamental questions about the subject – not only about its constituent principles, and about its form, but also about its relationship with other branches of the law, notably the law of contract and the law of property.”3 Lord Goff sought to answer some fundamental questions about the relationship between unjust enrichment and property in Lipkin Gorman. Although the reasoning in the case has faced a great deal of criticism,4 the case is extremely important: it inspires investigation of the meaning of ownership and title and their location in an unjust enrichment claim. This paper contributes towards this investigation. It will explore two aspects of the relationship between property and unjust enrichment. Firstly, the extent to which ownership may be a basis for unjust enrichment liability. Secondly, the form of ownership that is sufficient to be a basis for unjust enrichment liability. The paper has four sections. Section one will explain the core issue surrounding the relationship between unjust enrichment and property. Section two will revisit the facts and context of Lipkin Gorman. Section three will explore how commentators have read the judgement in Lipkin Gorman. Finally, section four will provide an alternative analysis of Lipkin Gorman. 2. Setting the Scene Suppose I find your property and take it. If you opted to bring a claim against me in conversion, no problem would arise. It is uncontroversial that you can sue the finder of your property in conversion.5 However, whether you could bring a claim against me in unjust enrichment, or, more generally, whether ownership may be a basis for unjust enrichment liability, is unclear for many reasons. Let me discuss the reasons. One general reason for this ambiguity was discussed by Niall Whitty. English law “accidentally overlooked its law of unjust enrichment for several centuries and has just rediscovered it. English lawyers are now busy exploring and developing it.”6 This is true. Judges and scholars only began defining the parameters of unjust enrichment in English law relatively * I am grateful to Robin Hickey and Samantha Magor for their comments. 1 [1991] 2 AC 548. 2 Lord Goff of Chieveley, ‘The Future of the Law of Restitution’ (1989) 12 The Sydney Law Review 1. 3 Ibid, 3. When Lord Goff wrote this comment, Lipkin Gorman had already been through the Court of Appeal. 4 Many commentators have criticised the reasoning in Lipkin Gorman, and particularly the arguments of Lord Goff. For some views see, Peter Birks, ‘The English recognition of unjust enrichment’ (1991) Lloyd’s Maritime and Commercial Law Quarterly 743; Lionel Smith, ‘Simplifying Claims to Traceable Proceeds’ (2009) 125 Law Quarterly Review 338; and Robert Stevens, ‘The unjust enrichment disaster’ (2018) 134 Law Quarterly Review 547. 5 Robin Hickey, Property and The Law of Finders (Hart Publishing 2010) 97. In the same way, the finder can sue any subsequent converter on the basis of the finder’s possession. 6 Niall Whitty, ‘Rationality, nationality and the taxonomy of unjustified enrichment’ in David Johnston and Reinhard Zimmermann (eds), Unjustified Enrichment: Key Issues in Comparative Perspective (CUP 2004) 658. 2 recently. This process began with the publication of The Law of Restitution by Goff and Jones.7 Then in 1985, Peter Birks published his book on the law of restitution.8 But it was only in 1991 that unjust enrichment was unequivocally recognised as an independent body of law in Lipkin Gorman v. Karpnale.9 But what we view today as an independent body of law has a longer history.10 Commentators,11 as well as cases,12 have shaped modern English law of unjust enrichment. And because the law is still developing, we are still investigating its scope and borderlines. For example, we are still considering what role, if any, a claimant’s ownership plays in an unjust enrichment claim, and whether unjust enrichment has one unified cause of action or whether its causes of actions are separate.13 The second reason why there is doubt about whether ownership can be a basis for unjust enrichment liability is that cases supporting this are rare.14 Though it is beyond the scope of this paper, this rarity is worth investigating. Anyone who suggests that this is because conversion is the orthodox claim should explain why that is. Is it a matter of historical custom or logic? Indeed, it is not just that cases supporting this view are rare. It is also controversial whether these cases should be interpreted as early unjust enrichment cases at all. One reason is that English law deals with rights and causes of actions, but this is a relatively recent phenomenon. Between the 13th and 19th centuries English law was arranged around forms of action.15 They were abolished in the 19th century.16 To see why this is a problem, we must first understand what forms of action are: “Let it be granted that one man has been wronged by another; the first thing that he or his advisers have to consider is what form of action he shall bring. It is not enough that in some way or another he should compel his adversary to appear in court and should then state in the words that naturally occur to him the facts on which he relies and the remedy to which he thinks himself entitled. No, English law knows a certain number of forms of action, each with its own uncouth name, a writ of right, an assize of 7 Robert Goff and Gareth Jones, The Law of Restitution (Sweet & Maxwell 1966). 8 Peter Birks, An Introduction to the Law of Restitution (OUP 1985). 9 [1991] 2 AC 548. 10 See, generally, John Baker, Introduction to English Legal History (5th edn, OUP 2019). 11 See William Evans, Essays on the Action for Money Had and Received, on the Law of Insurances, and on the Law of Bills of Exchange (Merritt & Wright 1802); James Ames, ‘The History of Assumpsit’ (1888) 2 Harvard Law Review 1; William Holdsworth, ‘Unjustifiable Enrichment’ (1939) 55 Law Quarterly Review 37; Wolfgang Friedmann, ‘The Principle of Unjust Enrichment in English Law’ (1938) 16 Canadian Var Review 243; and Harold Guttridge and René David, ‘The Doctrine of Unjustified Enrichment’ (1934) 5 The Cambridge Law Journal 204. 12 See particularly Lord Mansfield’s speeches in Moses v. MacFarlane (1760) 97 ER 676 and Clarke v. Shee and Johnson (1774) 98 ER 1041. 13 See Lionel Smith, ‘Restitution: A New Start?’ in Peter Devonshire and Rohan Havelock (eds), The Impact of Equity and Restitution in Commerce (Hart Publishing 2018). Smith’s approach is to divide the causes of actions of unjust enrichment into “big” and “small”. The interference with pre-property rights fall within the former category which Smith does not seem to support. For a reply to Lionel’s new approach, see Andrew Burrows, ‘In Defence of Unjust Enrichment’ (2019) 78 Cambridge University Press 521. 14 Arguably, these cases include Clarke v. Shee and Johnson (1774) 98 ER 1041; Bristow v. Eastman (1794) 170 ER 317; Holiday v. Sigil (1862) 172 ER 81 and Moffat v. Kazana [1969] 2 QB 152. 15 Baker (n 10) Ch. 4. 16 Common Law Procedure Act 1852. 3 novel disseisin or of mort d'ancestor, a writ of entry sur disseisin in the per and cui, a writ of besaiel, of quare impedit, an action of covenant, debt, detinue, replevin, trespass, assumpsit, ejectment, case.