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Torts protecting property

Previous: Bailment

Ownership

Before considering how tort law can protect property rights, the concept of ownership should be briefly considered. According to Waverley BC v Fletcher [1996], ownership means having a bundle of rights enforceable against the world, with relative priority of entitlement. It is rarely a contentious issue, according to Yearworth v North Bristol NHS Trust, and cannot be fragmented. As a result, and according to s 136(1) of the Law of Property Act 1925, a debt cannot be owned by way of tenancy in common between multiple people.

History of torts protecting property

Historically, the tort of detinue (detention) was a claim which could be made by a bailor against a bailee for not returned bailed goods. It was expanded to cover claims made against bailee’s transferees, but did not cover damage to goods. Detinue has now been merged with the tort of conversion.

Trespass was (and still is) a tort which protects goods from interference by force. The distinction between forcible and non-forcible interference can be illustrated by the examples given in Reynolds v Clarke: intentionally throwing a log onto a highway to cause damage to a passing car would constitute trespass, whilst merely leaving it on the highway would not. Trespass covers damage inflicted to goods.

Today, there are two key torts which protect property rights: trespass and conversion. Detinue was abolished by the Torts (Interference with Goods) Act 1977. The difference between the two is an intention to permanently deprive, which is required for conversion.

Trespass to goods

Direct interference

Trespass claims require that there has been some direct interference with goods:

  • Kirk v Gregory (1876) – unauthorised removal of jewellery to another room
  • Penfold Wines v Elliot (1946) – unauthorised use of bottles not found as bottles not possessed
  • Transco v United Utilities Water [2005] – unauthorised use of gas valve (turning the wrong one off)
  • Fouldes v Willoughby (1841) – infliction of damage in example given – scratching a coach

Actionable per se

It is the orthodox view of Penfold Wines v Elliot (1946) that trespass claims can be made without proof of damage. However, Lord Denning took a controversial opposing view in Letang v Cooper [1965].

Social function

Where a defendant has the right to interfere with goods, there will be no trespass claim:

  • Reynolds v Met PC [1985] – goods taken during a police raid not trespass as had warrant
  • Columbia Picture Industries v Robinson [1987] – trespass to go beyond warrant and seize too much evidence
  • Lifely v Lifely [2008] – evidence obtained by trespass will be admissible in court if it is credible and would have an important influence on the case

Intentional contact

Trespass requires interference with goods to be direct:

  • Scott v Shepherd (1773) – the passing on of a firework thrown into a market stall did not negate a chain of causation for a trespass claim
  • Weaver v Ward (1607) – ‘utterly without fault’ defence
  • NCB v Evans (1951) – can’t damage a trespassing cable

Trespass vs negligence

According to Learne v Bray (1803), negligent direct contact will be classed as trespass. Williams v Holland (1833) preferred giving claimants the right to elect whether to sue in trespass or negligence. In Letang v Cooper [1965], Lord Denning found that trespass required ‘wilful infliction’. In Transco v United Utilities Water [2005], after granting damages in the tort of negligence, Mr Justice Butterfield was unsure whether deliberate negligent interference (without direct damage) could constitute a claim for trespass, but allowed such a claim nevertheless. There is confusion over the distinction between the two, with Simon Douglas saying that trespass claims are limited to intentional wrongs, such that a negligence claim should not have been found in Transco.

Defences

Good faith is not a defence to trespass claims, as evidenced by Kirk v Gregory (1876), where moving jewellery was doe in good faith. Similarly, in Wilson v Lombank [1964], returning a car to its true owner in good faith still constituted the basis of a trespass claim for a claimant with greater rights than the good father ‘returner’.

Consent can be a defence to trespass claims, as evidenced by Arthur v Anker [1997], where there was implied consent to a car being clamped.

Acting in the execution of a process will constitute a good defence to a trespass claim, as it did in Reynolds v Met PC [1985] and partly in Columbia Picture Houses v Robinson [1987].

Necessity will constitute a good defence, but is a tough threshold to pass. In Hemps v Derby [1958], shooting racing pigeons was not necessary, nor was it in the public interest or necessary in Monsanto v Tilly (1999, New Zealand) to pull up genetically modified crops.

Standing to sue

Possession constitutes the basis for suing in trespass, according to Penfold Wines v Elliot (1946). Possession is to be distinguished from an immediate right to possession. Where there is only ownership and not possession, as in Ward v Macauley (1791), the tort of conversion should be used. Wilson v Lombank [1963] distorted this orthodoxy, allowing a trespass claim where a hire purchase company was not in possession of a bailed car.

Remedies

Trespass will award damages for damage to goods and and consequential damages resulting. The benefit lost may be recoverable, as it was in Oughton v Seppings (1830) [auction benefit], but if damage is not attributable to the trespassing of the defendant, damages will only be nominal, as they were in Kirk v Gregory (1876). Aggravated damages were available in Columbia Picture Indistries v Robinson [1987].

Conversion

Instead of protecting those in possession from direct interference of property, conversion protects ownership rights from dealings inconsistent with those rights. According to Lancashire and Yorkshire Railway Co v MacNicoll (1918), it requires only a voluntary dealing inconsistent with another’s rights. A defendant need not know of the owner’s rights, and conversion is a strict liability tort.

What can be converted

The rule, from OBG v Allen [2008] is that only choses in possession and cheques can be converted. Lord Nicholls’ attempt at expanding this category to intangibles was in minority. As such, electronic data, in Your Response v Datastream Business Media [2014], cannot be converted.

Dispositions will constitute conversions, according to Consolidated Co v Curtis & Son [1892], if title is actually transferred. Unreasonable aspirations will also constitute conversions. In Folds v Willoughby (1841), the carrying away of horses was reasonable, and so not a conversion, but in Aitken Agencies v Richardson [1967], a joyride did constitute a conversion. Damage causing a substantial alteration or the loss of property will also constitute a conversion:

  • Lancashire and Yorkshire Railway v MacNicoll (1918) – pouring acid into a tank converted the tank where it could not be returned to its original state
  • R (Coleman) v Governor of Weyland Prison [2009] – destroying a phone validly confiscated was a conversion
  • Moorgate Mercantile Credit v Finch [1962] – lending a car bailed on hire-purchase to a smuggler constituted a conversion as it was likely that the hire-purchase company would be deprived of the car

As conversion now accommodates the old tort of detinue, detention of goods will also constitute a conversion:

  • Clayton v Le Roy [1911] – a clear refusal to return will be required before jewellery will be considered converted
  • Schwarzchild v Harrods [2008] – no clear refusal of access to a safety deposit box, so no conversion
  • R (Atapattu) v SSHD [2011] – inferred refusal to return passport conversion
  • Howard Perry & Co v BRB [1980] – refusal to deliver steel to prevent further strikes still a conversion, strict liability, motive irrelevant
  • Kuwait Airways Corp v Iraqi Airways (No 3) [2002] – no easy definition of conversion, but generally conduct inconsistent with rights of owner, deliberate, excluding owner from possession
  • Pendragon Plc v Walon [2005] – Cars stored for rover, no conversion claim by administrator as lien held by Rover, not administrator

Who can be sued?

Anyone who fulfils the broad criteria above may be sued in conversion, however, special rules apply to bailees as a result of Hollins v Fowler (1875). Now, wherever an innocent bailee is only a custodian of goods, he will not be liable in conversion under Hollins v Fowler (1875)’s fictitious bailment rule. Fictionally, if the owner of goods is assumed to be the bailor of goods, a converter a bailee and the bailee a fictional sub-bailee, the sub-bailee will not be liable for merely retaining custody of property already converted. As such, in Stephens v Elwall (1815), a servant was liable for sending his master’s goods to America, but the innocent warehouseman in Hollins v Fowler (1875) was not.

  • RH Willis & Son v British Car Auctions [1978] – auctioneer sold car in back office after reserve not met – auctioneer was protected bailee until sold – would be same result if sold under hammer
  • Marcq v Christie, Manson & Woods [2003] – putting goods up for sale, but not actually selling them did not make an innocent bailee liable in conversion

Where a bailee becomes an involuntary bailee, he will not be liable in conversion. As such, in Elvin & Powell Ltd v Plummer Roddis (1933), a fraudster who convinced a bailee to deliver to him was not liable in conversion. Similarly, in Hiort v Bott (1874), a principal without authority, and not an involuntary bailee, was liable in conversion following the bailee’s delivery at a broker’s request.

Who can sue?

Anyone with an immediate right to possession may sue in conversion, according to Pollock and Wright. This was upheld in The Winkfield [1902], where only a postmaster could claim for the conversion of mail lost on a ship. In turn, he would be required to account to his bailors (those who sent mail with him). TIGA 1977 alters this position, allowing reversionary actions also to be made.

According to Fenn v Bittleston (1851), where a bailee breaches a contract of bailment (by being declared bankrupt) in a repudiatory manor, a bailor will be deemed to have a right to immediate possession, whether or not he has elected to accept the bailee’s breach. This rule was applied in North Central Wagon & Finance Co v Graham [1950], where a bailee auctioned a bailed car.

Double recovery

Double recovery will not be permitted under the tort of conversion. On the facts of The Winkfield [1902], a bailor’s reversionary claim would be barred once his bailee has recovered on his behalf. Similarly, according to O’Sullivan v Williams [1992], a bailee cannot sue once his bailor has already recovered.

Rights of third parties

The difficult situation in conversion claims arises where a chain of conversions has taken place. In the simple case of Armoury v Delamirie (1722), a jeweller was liable to a chimney sweep as the chimney sweep had relatively greater ownership rights to a ring. The case would have been made more complex if the original owner of the ring also claimed in conversion. Where there are multiple claimants and/or defendants to a conversion claim s 8 of TIGA 1977 abolishes the rule preventing third parties from joining a dispute involving two parties, instead actively encouraging the joining of others in disputes to prevent multiple litigation.

A good example of a more complex dispute is Costello v Chief Constable of Derbyshire [2001]: a thief had stolen a car belonging to its true owner. The police relieved the thief of possession of the car, but as the thief had a better relative title to the car (possession earlier in time) than the police, the police were liable to him in conversion in the absence of the presence of the true owner.

Section 7(2) TIGA 1977 provides for the apportionment of damages between claimants, and s 7(3) for the account of damages between claimants. S 7(4) provides prejudiced claimants with a claim unjust enrichment against others in breach or s 7(3). Finally, once a dispute has been settled, s 5(1) extinguishes claimants’ titles to goods once damages have been paid.

Remedies

Where a conversion claim is successful, in the words of Brinsmead v Harrison (1872), there is a forced judicial sale. This means that the property is effectively deemed sold to the defendant, and the defendant charged accordingly. Surprisingly therefore, there are disputes over how damages should be assessed in conversion claims. In Kuwait Airways v Iraqi Airways [2005], Lord Nicholls and Lord Hoffman were at odds as to whether the objective of conversion compensation is to correct the claimant’s change in position (but for liability), or whether there are no uniform causation requirements. According to General and Finance Facilities v Cooks Cars (Romford) [1963], damages should be assessed at the value of the property converted at the date of conversion and added to any consequential losses.

Appreciation

Where property increases in value (appreciates) following its conversion, that appreciation will not usually be added to damages for conversion unless the claimant would have enjoyed that appreciation:

  • The Playa Larga [1983] – converted sugar, price of sugar appreciated, consequential losses included those for re-obtaining sugar at its higher market price
  • Sachs v Miklos [1949] – no damages for the appreciation in value of furniture after it was disposed of (following notice) by a gratuitous bailee
  • IBL v Coussens [1991] – no damages for the appreciation in value of company car retained by an ex-director as the company would have sold the car immediately, and not enjoyed the appreciation

Depreciation

Similar rules apply to the depreciation in value of converted property: in Brandeis Goldschmidt & Co v Western Transport [1981], the depreciation in the price of converted cooper was not compensable where it would not have been resold by the claimants and so no loss would have been suffered. In Glenbrook Capital LP v Mark Hamilton [2014], the reduction in the price of silver was compensable where the claimant was deprived of the right to sell the silver. BMBB Finance (HK) v Eda Holdings [1991] involved shares sold in error just before significant depreciation. The defendant replaced the shares at the lower value, and damages represented the depreciation. This conclusion could be argued to be unfair, as damages were assessed after the date of conversion in the absence of any evidence that the claimant would have sold the shares as they depreciated.

Hire-purchase

Another exception to the usual rule that damages are assessed at the value of goods is in the context of hire-purchase conversion. Here, according to Wickham Holdings v Brooke House Motors [1967], where a car bailed on hire purchase is converted by the bailee, the bailee’s usual damages will be reduced to reflect the value of instalments already paid to the bailor. This rule was oddly deviated from in Chubb Cash v Crilley & Son [1983], where damages were assessed at the value of a cash register (£178) and did not take account of £950 in unpaid instalments by a debtor (from whom the defendant seized the cash register).

Other quantum points

  • Morison v London Country and Westminster Bank [1914] – the value of an intangible represented by a document, and not the value of only the document, is compensable
  • Kuwait Airways v Iraqi Airways [2005] – remote damages will be limited by reasonable foreseeability in honest conversion cases, and by direct consequence in dishonest conversion cases; innocent conversion may be a defence (not explored)
  • Uzinterimpex JSC v Standard Bank [2008] – mitigation will be accounted for, reducing damages accordingly – an offer to sell cotton should have been accepted

Benefits received by defendants

Where a defendant has received financial benefits as a result of a conversion (for example, if he sells on converted property), Lamine v Dorrell (1701) allows a claimant to elect between a conversion and a restitutionary claim. United Australia v Barclays Bank [1914] allows a claimant to change their mind up until the point of recovery, as double recovery will not be permitted.

Where a defendant has used converted property for his benefit, a claimant will be entitled to the use value of the property:

  • Strand Electric & Engineering Co v Brisfords Entertainments [1952] – claimant entitled to return of switchboards and the use value of the switchboards as if rented out from the claimant, irrespective of whether the claimant would have otherwise rented them out. Lord Denning said use value award, Lord Romer relied on estoppel for the same outcome
  • Tank and Vessels Industries v Devon Cider [2009] – later return of hired property – option to either pay the use value or total value of the property (brewing machinery)
  • Hillesden Securities v Ryjack [1983] – use value (£13,500) greater than property value (£7,500) of car, but use value claim still successful
  • Kuwait Airways v Iraqi Airways [2005] – use value claims not limited to property available for hire

There is also the possibility of profits being awarded where defendants have profited from converted property:

  • Strand Electric & Engineering Co v Brisfords Entertainments [1952] – possibility of profit damages discussed
  • Olwell v Nye Nissen Co (1946, USA) – egg washing machine profits included in damages where would otherwise had to purchase labour
  • Devenish Nutrition v Sanofi-Aventis SA [2008] – exceptional profits possibility

Improvements

Under s 6(1) TIGA 1977, where a person believing that he has good title to property improves that property, if it turns out that the property was stolen, he is entitled to an account of the value of the improvement. Anyone purchasing in good faith from the ‘improver’ will not be held liable for the improvement value, but if that purchaser then sues the improver (for total failure of consideration), he will be unable to remover the improvement value from the improver.

  • Munro v Wilmott [1949] – £85 was spent on improving the value of property; £85 was available in damages (not £100) on account.
  • Greenwood v Bennett [1973] – B bailed a car to S to be repaired. S damaged the car, sold in to H (who improved it), who in turn sold it to a finance company. B succeeded against H, the car being returned to B, who sold it. On appeal, B was ordered to pay H the amount spent on improving the car, a sum which would normally have reduced any damages payable.

Recovery

According to General Finance v Cooks Cars [1963], where possible, a claimant may claim to have converted property surrendered to him, or claim damages instead. The claimant may also give the defendant a choice. These remedies have been maintained by TIGA 1977, s 3, but surrender, also known as ‘delivery up’, is now quite rare. Delivery up will not always be available:

  • Cohen v Roche [1927] – although unique furniture would usually command a remedy of delivery up, the claimant was a merchant, who sought only financial benefit, rendering delivery up unavailable
  • Howard Perry & Co v BRB [1980] – delivery up ordered
  • Garcia v De Aldama [2002] – delivery up appropriate for unique manuscript
  • Blue Sky One Ltd v Mahain Air [2009] – delivery up ordered for an aircraft – complex machinery, not unique, but very rare

A claimant is entitled to peaceably re-take converted goods without court proceedings. This is known as recapturing goods (or recaption). In Blake v Higgins (1861), a defendant was entitled to recapture a rabbit poached from him. According to Uzinterimpex JSC v Standard Chartered Bank [2008], recaption may be required as part of mitigation.

Bona fide purchasers

According to Rowland v Divall [1923], where a bona fide purchaser purchases a converted car, and then returns it to its true owner, the purchaser’s vendor may be sued for total failure of consideration. Damages will not be limited by the car’s use value.

Limitation

According to s 2 of the Limitation Act 1980, conversion claims must be made within 6 years of the conversion. Under s 3, this period runs from the first conversion where there are any successive conversions of the goods in question. Any previous rights will then be extinguished. Finally, under s 4, conversions by way of theft will not start the limitation period: the limitation period will start from the date of the first innocent conversion (i.e. from where the goods were purchased from the thief).

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