The problem is, of course, that the money was Cass's
"where a banker's cheque payable to a third party or bearer is obtained by a partner from a bank which has received the authority of the partnership to pay the partner in question who has, however, unknown to the bank, acted beyond the authority of his partners in so operating the account, the legal property in the banker's cheque thereupon vests in the partner. The same must a fortiori be true when it is not such a banker's cheque but cash which is drawn by the partner in question."
-Lord Goff

The firm did have some form of proprietary interest in the money (Professor Birks says it was a power) but Lord Goff is not very clear as to what it was: " a right akin to ratification"??

Since Cass was gambling with money to which he had legal title, I don't myself see why a tib could not claim back the money as being paid out under a transaction at an undervalue. I don't think that the fact that the firm had some form of proprietary interest in the money alters this. If the asset which the tib seeks to recover had been mortgaged to a third party recovery would have been still possible by the tib.

Was the money paid by Cass as a gift? If it was the transaction was at an undervalue. I have never been at all happy with the House of Lords description of the gambling as executed gifts. I suspect that most punters would be surprised to learn that they are making gifts to Ladbrokes when they put a pony on the 4.30 at Uttoxeter. Charitable donation is the last thing they intend. I don't think that it logically follows that because the property was not transferred by reason of a valid contract that it must have been by way of gift. Valid gifts are non-returnable and I suspect that that was all that Lord Goff meant.

In any event, assuming that gambling is a transaction at an undervalue, either because it is a gift or, possibly more accurately, for no consideration, what is the position? The claim of the trustee in bankruptcy is, in my view, a claim in unjust enrichment. Any claim would be personal as the money did not traceably survive in the hands of the Playboy club. The problem is much the same as if Cass had paid away the money he stole by mistake. Some people have argued (L Smith (1991) OJLS 481, 483) that unjust enrichment is a zero sum game. If correct it should follow from this that no claim in unjust enrichment other than Lipkin Gorman's could succeed. I cannot prove it but I do not think that this is right. I don't think that it should matter that more than one person has a claim in ue against the same defendant for the same sum. It is a bit like conversion. If A has, as against B, an immediate right to possess goods which B has converted it will not avail B to argue that C actually has a better right to possess than A.

In any event, I do not think that the ranking of claims is very difficult in this case. If the money had not been squandered, the TIB could not have resisted the solicitor's (proprietary) claim to the return of the money. The TIB cannot be in any better position because the bankrupt is not only a thief but also an inveterate gambler. The easiest way of reaching the desired result (no recovery for TIB) is the wide discretion given to the court in the making of orders under s 339 ("such order as it thinks fit").

(Sorry for writing so much.)
R