(ii) Failure of a Contingent Condition
The alternative meaning of basis relates to where the transfer of the benefit to the defendant is subject to a condition involving the existence of an identified state of affairs or occurrence of an event which involves no promised performance by the defendant.[1] [2] [3] Restitution is justified in such a case because the basis for the transfer of the benefit will have failed if the condition is not satisfied.
An example of a contingent condition operating as a basis is Chillingworth v Esche,2 where the claimant agreed, subject to contract, to buy land from the defendant and paid a deposit to the defendant. A contract was drawn up by the defendant, but the claimant refused to sign it and claimed repayment of the deposit. The claim for restitution succeeded because the money had been paid on the condition that a binding contract would be made and, since no contract had been signed, the contingency failed. Consequently the basis for the defendant receiving the money disappeared, it being irrelevant that the failure of the condition was due to the failure of the claimant, rather than the defendant, to sign the contract. Another example is Barnes v Eastenders Cash and Carry plc23 where a receiver had provided services in managing a company’s property on behalf of the Crown Prosecution Service (CPS) for which it had been agreed that the receiver would be remunerated from the assets he was managing, enforced by means of a lien over those assets. The lien was found to be invalid, so the receiver was unable to be paid as originally agreed. It was held that the CPS was liable to make restitution to the receiver in respect of the services provided, with the ground of restitution being failure of basis, namely that he would be remunerated from the company’s assets.
This second interpretation of basis means that a claimant who, for example, gives money to the defendant on condition that he or she marries a particular person, will be able to recover the gift if the defendant does not marry that person.[4] [5] This is also illustrated by Re Ames’ Settlement,25 where a marriage settlement was established whereby the settlor covenanted to pay ?10,000 within one year of the parties’ marriage. Although the marriage did take place it was held to be void ab initio since the husband was incapable of consummating it. Consequently, the basis for the payment had failed totally since the marriage, on which the settlement was conditional, was deemed never to have been made.
- [1] Barnes v Eastenders Cash and Carry plc [2014] UKSC 26, [2015] AC 1, [109] (Lord Toulson).
- [2] [1924] 1 Ch 97. See also Guardian Ocean Cargoes Ltd v Banco de Brazil SA [1991] 2 Lloyd’s LR 68.
- [3] [2014] UKSC 26, [2015] AC 1.
- [4] See also the Law Reform (Miscellaneous Provisions) Act 1970, s 3(2) by virtue of which the gift of anengagement ring is presumed to be an absolute gift, but this presumption may be rebutted by proving that the ringwas given on condition, whether express or implied, that it shall be returned if the marriage does not take place.
- [5] [1946] Ch 217. See also PvP [1916] 2 IR400.
