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(B) INCAPACITY OF THE DEFENDANT

Where it is the defendant who is incapacitated this may be relevant to restitutionary claims in two different ways.

(i) Defendant’s Incapacity as a Defence

The incapacity of the defendant has sometimes been considered to operate as a defence to the claim for restitution. Whether incapacity does indeed operate as a general defence to restitutionary claims is considered in Chapter 28.

(ii) Defendant’s Incapacity as a Ground of Restitution

The defendant’s incapacity may exceptionally itself constitute a ground of restitution to enable the claimant to obtain restitution from the defendant,[1] but it seems that this will only occur where policy demands that the incapacitated defendant should not retain the benefit. This will be the case where, for example, the defendant is a public authority which lacked capacity to receive money from the claimant.[2] In other cases, such as where the defendant was suffering from a mental disorder or was a minor, the defendant’s incapacity should not constitute a ground of restitution.[3] This is because the claimant’s intention to benefit the defendant cannot be considered to have been vitiated simply because the defendant was mentally disordered or a minor and the policy of protecting such people does not require them to make restitution to the claimant. Similarly, where the claimant sought restitution from a company in respect of goods delivered or services rendered pursuant to a contract which was ultra vires the company, the fact that the defendant lacked capacity could not constitute a ground of restitution for the restitutionary claim.[4] In such cases where policy does not demand restitution, the claimant can still obtain restitution from the incapacitated defendant, but only if one of the other grounds of restitution is applicable. For example, the claimant may have transferred a benefit to the defendant who was a minor and who has refused to pay for the benefit. Since the contract is unenforceable, the claimant cannot sue the defendant on it, but the claimant might be able to obtain restitution on the ground of total failure of basis.[5]

  • [1] See E O’Dell, ‘Incapacity’ in PBH Birks and FD Rose (eds), Lessons of the Swaps Litigation (Oxford:Mansfield Press, 2000), ch 5. See also National Bank of Egypt International Ltd v Oman Housing Bank SAOC[2002] EWHC 1760 (Comm), [2003] 1 All ER (Comm) 246, where the claimant lent money to a bank incircumstances where the bank lacked the capacity to borrow the money, and it was recognized that theclaimant could recover it.
  • [2] As was recognized by the House of Lords in Woolwich Equitable Building Society v IRC [1993] AC 70,examined in Chapter 15.
  • [3] Though where the claimant transfers property to a minor, the court has a discretion to enable the claimantto recover that property or its substitute if it considers it to be just to do so. See the Minors’ Contracts Act 1987,s 3(1), examined at p 730, below.
  • [4] Re Jon Beauforte (London) Ltd [1953] Ch 131. Today the claimant would be able to sue the defendantcompany on the contract even though it was ultra vires: Companies Act 2006, s 40.
  • [5] See Chapter 13.
 
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