After several excellent years of firm performance, in late 2008, hedge funds managed by two hedge fund manager partners collapsed.  In January 2009, one partner made a gift of more than £3.8 million to a second partner.  The purpose of the gift was not clearly documented and, when the second partner later sued the first partner, the first partner sought to recover the gift from the second partner, claiming that he had made the gift on the mistaken assumption that the second partner was in serious financial trouble.  At trial, the U.K. High Court of Justice, Queen’s Bench Division, Commercial Court evaluated whether the gift was made on the basis of an excusable mistake.  This article summarizes the background of the dispute and the Court’s decision and reasoning.  For discussions of other actions involving disputes among hedge fund firm principals, see “New York Appellate Court Decision Illustrates the Litigation and Publicity Risk Inherent in Sloppy Drafting of Hedge Fund Manager Operating Agreements,” Hedge Fund Law Report, Vol. 6, No. 6 (Feb. 7, 2013); “U.K. High Court of Justice Rules on Whether Software Written by Co-Founder of a Hedge Fund Manager Belongs to the Co-Founder or the Firm,” Hedge Fund Law Report, Vol. 6, No. 22 (May 30, 2013).