Limitation of Actions Consultation - Law Commission

ange of disparate sections: and important aspects of equitable restitution fall
within the tortuous section 21. The reason for all these difficulties is clear. The
law of restitution has only recently been authoritatively recognised 106
and the 1980
Act (and the earlier enactments on which it was based) pre-dates a true
understanding of this area of the law.
13.78 Can one apply our core regime to restitutionary claims? We see no reason why not
and, in terms of effecting a significant simplification of the law, every reason why
one should.
13.79 Applying the core regime, the plaintiff would have an initial limitation period of
three years from the date of discoverability of the cause of action. The plaintiff will
therefore need to know the facts which constitute the unjust enrichment of the
defendant at the plaintiff’s expense. So, for example, where the plaintiff claims
restitution of money paid for a total failure of consideration, he will need to know
that money has been paid to the defendant and that the agreed return has not
been forthcoming. A plaintiff who seeks rescission of an executed contract for
undue influence will need to be aware that, at the time of the contract, he was not
exercising independent judgment before time will start to run. 107
Again, where
money has been paid under a mistake of fact, or has been paid away without the
plaintiff’s knowledge, 108
time will not start to run until the plaintiff knows the true
facts. 109
13.80 A more difficult question is how the discoverability test would apply to restitution
for wrongs as opposed to autonomous unjust enrichment. 110
Does knowledge of
the facts constituting the cause of action mean that the plaintiff needs to know
merely of the wrong (that is of, for example, the tort or breach of trust)? Or does
the plaintiff also need to know of the benefit acquired by the wrongdoer? The
answer to this rests essentially on whether it is the wrong, or the wrong plus the
benefit, that is the cause of action. This appears to be unresolved under the
present law, 111
and it is unnecessary for the purposes of this paper to resolve it.
Our tentative view, however, is that the former answer is to be preferred, so that it
is knowledge of the wrong alone that is relevant. In the context of limitation
106 In Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548.
107 We have considered whether a qualification needs to be made in respect of restitution
grounded on duress, to the effect that time should not start to run until the plaintiff is free
of the pressure. But this raises a more general issue, analogous to ‘disabled plaintiffs’, of
‘terrified plaintiffs’. The law would be rendered too uncertain if plaintiffs were able to
argue that time does not run while they are too frightened to issue proceedings.
108 ‘Absence of knowledge’ or ‘ignorance’ as a ground for restitution includes equitable claims
for ‘knowing receipt and dealing’ that now fall within ss 21 - 22 of the Limitation Act 1980.
See, generally, P. Birks, “Misdirected Funds: Restitution from the Recipient” [1989]
LMCLQ 296; A Burrows, The Law of Restitution (1993), Chapter 4.
109 By s 32 of the 1980 Act, a discoverability test would here already apply to mistake claims.
But under our proposals that discoverability test would be “swallowed up” by our central
starting date. For restitution grounded on a mistake of law, see para 12.68 above.
110 For this distinction, see para 5.4 above.
111 See para 5.19 above.
350