Lightly beat the egg and add the milk.
Place the flour in a wide bowl or dish and season with salt and pepper.
Place the crumbs into a wide bowl or dish and mix in the pesto, It may become lumpy, but keep mixing until you have an even texture.
Dust the cutlets with the flour, keeping the bone clean.
Then one at a time, moisten them with the egg and milk wash, again keeping the bone clean.
Allow the egg wash to slightly drain off and crumb them with the pesto bread crumb mix.
Place in the fridge if you are preparing ahead of time, or move right onto the next step.
Over medium-high heat, brown the cutlets in a little butter mixed with extra virgin olive oil and transfer to the oven for 5-10 minutes, depending on whether you want them well done or medium-rare.
Meanwhile, warm the caponata and serve together once the lamb is done.
I recommend a medium bodied red such as a Shiraz to go with this dish.