Personal property

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When one has property rights over chattel (personal property), he may bring actions against people who interfere with those rights. These actions are:

  1. Trespass - where there is an interference with the plaintiff's actual possession: Penfolds Wines Pty Ltd v Elliott.[1]
    • Actual possession is necessary.
      • The right to immediate possession can be equated to actual possession - when one has an immediate right to possession, he does not lose his possession, it is continuing: Wilson v Lombank Ltd.[2]
    • Actionable without proof of damage.
    • Remedy is damages.
  2. Conversion - where the owner of goods is deprived from his right to possession, or that right is impaired: Penfolds Wines Pty Ltd v Elliott.[3]
    • Absolute ownership or actual possession is not required, only a right to possession: Penfolds Wines Pty Ltd v Elliott.[4]
    • The mere fact that one physically possesses chattel gives him sufficient property rights to sue anyone in conversion except for someone with a superior title: Jeffries v The Great Western Railway Co.[5]
      • In case of a bailment, a wrongdoer must treat a bailee as the owner of the goods for all purposes irrespective of the rights and obligation as between him and the bailor: The Winkfield.[6]
      • A finder can still sue in conversion. Although he did not have absolute possession, he has a better right than all but the true owner: Armory v Delamirie.[7]
    • Strict liability
    • Remedy is damages or, where damages are inadequate, specific restitution.
  3. Detinue - where a defendant wrongfully retains the goods of the plaintiff following the plaintiff’s lawful demand their return (now merged with conversion).

This article is a topic within the subject Property, Equity and Trusts 1.

Contents

Required Reading

Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 107-121 [2.1-2.28]; 121-126 [2.29-2.37].

Introduction

[8] This chapter considers personal property (ie, chattel) and the remedies available for a wrongful interference with personal property. The three main actions for such interference are:

  1. Trespass.
  2. Conversion.
  3. Detinue.

These actions will be discussed in detail below. In order to understand the explanations and cases below, it is necessary to understand the following concepts:

  • A bailment - a bailment is a transaction where the owner of goods (the 'bailor' ) hands over goods to another (the 'bailee' ) but without passing over the title (rights of ownership).
  • Types of possession: there are three types of possession of goods:
    1. Actual possession (also called 'constructive' possession).
    2. A right to immediate possession.
    3. A future or reversionary right to possession.
  • The jus tertii defence - a claim is barred if there is a third party with superior rights.
    • There is some confusion as to when one can plead jus tertii, because it failed in all of the cases below.
    • Maybe this is because of the principle that jus tertii will not aid a wrongdoer - ie, a trespasser or a person who converts property cannot rely on jus tertii to bar a claim.

Trespass

[9] Trespass is where there is an interference with the plaintiff’s actual possession, such as the wrongful taking of goods.

  • Actual possession means that the goods were physically at the possession of the plaintiff at the time.
    • Wilson v Lombank Ltd suggests that an immediate right to possession constitutes actual possession and thus allows an action in trespass.
  • It is actionable without proof of damage.
  • Examples include damaging or seizing one's bag or pen etc.

The remedies include:

  • Damages.
  • In some cases, the equitable remedy of specific restitution (return of the chattel itself).
  • Self-help is also available (ie, a person is allowed to use reasonable force and retrieve the chattel itself).

Conversion

[10] Conversion occurs where the owner of goods is deprived from his right to possession, or that right is impaired.[11]

  • For examples, a person taking and selling or modifying goods which belong to another (he is thus depriving him from his right to possess the goods).
  • Theft is conversion.

A few important points about conversion:

  • Absolute ownership or actual possession is not required, only a right to possession.[12]
  • The plaintiff has to prove that the defendant was using or "employing the goods as if they were one’s own".[13]
  • Conversion is decided on the basis of strict liability (ie, no proof of fault or intention is required, only that the act has been committed).

The remedies for conversion are as follows:

  • Damages (the market value of goods at the time of conversion plus consequential losses).
  • Where damages are inadequate, specific restitution might be granted.
  • Self help.

Detinue

[14] Detinue is where a defendant wrongfully retains the goods of the plaintiff following the plaintiff’s lawful demand their return (in other words, withholding one's goods).

  • Detinue and conversion may often overlap - detinue is simply conversion but where the owner asked for the chattel back.
  • Detinue has been merged with conversion these days.

The remedies include:[15]

  • Delivery up of goods - the return of the chattel.
    • This is the common law version of specific restitution - it means the goods are still yours by right so you are entitled to receive them back.
    • Since this is a common law remedy, one does not have to prove that damages are inadequate to receive delivery up of goods (as is required with the equitable remedy of specific restitution) - it is a standard remedy.
  • Damages (assessed at the date of judgment and not the date of refusal to return).
  • Self help is also available.

For example, in McKeown v Cavalier Yachts,[16]:

  • Facts: a yacht which was promised to the plaintiff was not delivered by the defendant. Meanwhile, the defendant made several improvements to the yacht.
  • Held: granted specific restitution to the plaintiff and compensation to the defendant for the improvements he had made.

A few points about detinue:

  • A plaintiff must have an immediate right to possession in order to succeed in an action for detinue.
  • A future or reversionary right to possession is not sufficient (as a lessor would have).
  • A mere contractual right to possession without actual possession or proprietary interest is not sufficient to maintain detinue.

Cases concerning property torts

Jeffries v The Great Western Railway

An action for conversion is discussed in Jeffries v The Great Western Railway Co:

  • The mere fact that one physically possesses chattel gives him some property rights.
  • These rights mean that he can still bring actions against anyone else trying to dispossess him.
    • Of course, these rights originating from mere physical possession will yield against the actual owner of the chattel in law (person with the title).
    • The law goes further to say that a person who steals goods can still bring actions against subsequent thieves. A title arising from mere possession (and even wrongful possession) is good against the whole world, save someone with a better title.[17]

The Winkfield

Conversion is also discussed in The Winkfield, which deals with whether bailee's are allowed to bring an action in conversion:

  • A wrongdoer must treat a bailee as the owner of the goods for all purposes irrespective of the rights and obligation as between him and the bailor.
    • Possession is absolute and complete title against a wrongdoer.
  • The chattel that has been converted or damaged is deemed to be the chattel of the possessor and of no other, and therefore its loss or deterioration is his loss, and to him, if he demands it, it must be recouped.

There are some strange issues raised by The Winkfield:[18]

  • The bailees here could recover the full value of the chattel from the wrongdoer as if they were the owner, even though (a) their personal loss fell short of the of the full amount recovered, and (b) they were not liable to the bailor for the loss.
    • This is a big exception to the compensatory rule of tort and contract – that the function of damages is merely to restore the party to the original position.
  • It also appears that the wrongdoers, after paying the bailee, would still be liable to an action by the bailor.
    • This was changed in the UK by statute.[19] There, once either bailor or bailee has recovered in full from the third party, the other is debarred from suing the third party.

[20] The rule in Winkfield does not apply where the plaintiff was not in actual possession of goods at the time of the wrong and there exists a legal arrangement between the plaintiff and defendant.

  • Damages in such a case are strictly compensatory. The plaintiff can only recover the true loss sustained, not the full market value.
  • The proper question is always whether the plaintiff is being placed in the position he would have been in had the tort not been committed.

The above was the topic of Butler v The Egg and Pulp Marketing Board:[21]

  • Facts: Egg pulp was a single-desk marketing board. The Marketing Board got property in the eggs as soon as they were laid. Instead of handing the eggs over to the Board to be sold, Butler sold the eggs themselves. In essence, they converted the property (by selling the eggs) of the Egg Board.
    • Prior proceeding: At trial, the Egg Board got the market value of the chattels at the time of conversion. This wasn’t satisfactory, as the Egg Board usually only got nominal profits. This was gross over-compensation to the Egg Board.
  • Held: The High Court overturned the trial decision, giving the Egg Board the difference between the retail price and the price they would have to repatriate to the egg farms.

Others

[22] Another case discussing bailments and conversion is Anderson Group Pty Ltd v Tynan Motors:[23]

  • Facts: the appellant entered into a hire-purchase agreement with a third party company to purchase a car. The appellant subsequently left the car with the respondent to sell, in contravention of the hire-purchase agreement. The car was stolen from the respondent. The appellant sued.
  • The respondent disputed the appellant’s right to sue, as the appellant was in contravention of the hire-purchase agreement with the third party company. Thus, they claimed, only the third-party company had immediate right to possession.
  • Held: As long as the appellant’s breach was not ‘so serious as to amount to a disclaimer of the bailment’, the bailment still stands, giving them immediate right to possession and to sue.
    • The breach in this case of the hire-purchase agreement was not serious enough to amount to a disclaimer. The appellant had title to sue.

Detinue was and the bailee's title to possession was discussed in City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd:[24]

  • Facts: the seller (defendant; appellant) reached an agreement with the buyer (plaintiff; respondent), whereby the buyer would get a brand new vehicle in exchange for trading in his old truck and 1250p under a hire-purchase agreement. Whilst the hire-purchase agreement was ongoing (installments), the old truck broke down. The seller retook possession of the new truck from the buyer against its will. The buyer gave the seller the 1250p owing and demanded possession of the new vehicle. This was refused. The seller was asked to return the new truck.
  • Held: The buyer was held to have an exclusive possessory right to the truck, which could not be terminated except if he defaulted. This title of the buyer could found an action in detinue against the seller.

Where a bailor reaches an out-of-court settlement with a third-party wrongdoer, the bailee is precluded from claiming against the third-party wrongdoer. The bailee has to look to the bailor for satisfaction.[25]

Wilson v Lombank Ltd

An actions for trespass was discussed in Wilson v Lombank Ltd:

  • The right to immediate possession can be equated to actual possession - when one has an immediate right to possession, he does not lose his possession, it is continuing.

Wilson was a controversial case: in support of the ratio mentioned above, the Court quotes USA & France v Dollfus[26] where it was held that where the bailor can at any moment demand return of the object bailed, he still has possession.

  • However, in the very next sentence, Lord Porter (judge in Dolfus) confines this statement to cases of 'gratuitous bailment' .
  • The bailment from the plaintiff to Haven Garage was not gratuitous – it is called a ‘bailment for reward’.
  • Was Wilson then wrongfully decided?

Armory v Delamirie

The rights of a finder of an object were discussed in Armory v Delamirie:[27]

  • Facts: the Plaintiff found an expensive jewel and went to the Defendant (a jeweler) to have it valued. The Defendant (his apprentice actually) took out the stones from the jewel and refused to give them back.
  • Held: A finder can still sue in conversion. Although he did not have absolute possession, he had a better right than all but the true owner.
    • The Defendant was ordered to give back the stones, or else he has to pay the price of a stone of the highest value that will fit the jewel.

End

This is the end of this topic. Click here to go back to the main subject page for Property, Equity and Trusts 1.

References

Property Textbook refers to Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008.

Equity Textbook refers to Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012.

  1. (1946) 74 CLR 204.
  2. (1963) 1 All ER 740.
  3. (1946) 74 CLR 204.
  4. (1946) 74 CLR 204.
  5. 119 ER 680.
  6. (1900-3) All ER Rep 346.
  7. (1722) 93 ER 664.
  8. Property Textbook, p. 109 [2.3]
  9. Property Textbook, p. 109 [2.4]
  10. Property Textbook, p. 109 [2.5]
  11. "An intention to do that which would deprive the “true owner” of his immediate right to possession or to impair it may be said to form the essential ground of the tort": Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204
  12. Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204
  13. Flowfill Packaging Machines v Fytore Pty Ltd (1993) Aust Tort Reports 81-244.
  14. Property Textbook, pp. 109-10 [2.6-2.7]
  15. Gaba Formwork Contracts Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175, 178B.
  16. (1988) 13 NSWLR
  17. Costello v Chief Constable of Derbyshire [2001] 1 WLR 1437 and reaffirmed in R v McKiernan [2003] 2 Qd R 424
  18. Property Textbook, pp. 117-8 [2.21-2.24]
  19. Torts (Interference with Goods) Act 1977 (UK), s 8(1).
  20. Property Textbook, pp. 120-1 [2.27]
  21. (1966) 114 CLR 185
  22. Property Textbook, pp. 118-21 [2.24-2.28]
  23. [2006] NSWCA 22 (‘Tynan’)
  24. (1961) 106 CLR 477 (‘City Motors’)
  25. O’Sullivan v Williams [1992] 3 All ER 385
  26. [1952] 1 All ER 572
  27. (1722) 93 ER 664
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