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Flashcards in Personal Property Remedies Deck (35):
1

Tort (Interference with Goods Act) 1977 s.1

Defines 'wrongful interference' as:
(a) conversion of goods (trover);
(b) trespass to goods;
(c) negligence so far as it results in damage to goods or to an interest in goods;
(d) subject to ss(2), any other tort, so far as it results in damage to goods or an interest in goods

2

s.14

Definition of goods- includes all chattels, personal and other things in action and money (i.e. chooses in possession and documentary intangibles)

3

Finders Keepers- the basis of relative title which serves as the basis of wrongful interference.

An individual who takes possession of a good has a relative title to the property which is good against the whole world, except someone with an indefeasible title to the property.

Civil law is not interested in how the finder comes about the property morally (e.g. he could be a thief), the rule is for the protection of 3rd parties. The finder must obtain property rights through his possession otherwise he cannot pass title to an innocent 3rd party to whom, for example, he sells the good.

Can sue for wrongful interference (in tort)

4

Parker v British Airways (1982) CoA

Operation of relative title (finders keepers)- P sued airline for wrongful interference with good.

Case: Parker was entitled to the value of a bracelet he found in British Airway's lounge and handed into staff. He had instructed them that if the true owner was not found it should be returned to him.

Some months later the airline had sold it for £850. Though the airline had guidelines which said this was the correct course of action, they were not published to users of the lounge.

HELD: Donaldson:
P entitled to value of bracelet. His possessory title was good against anyone except the true owner of the bracelet.

His rights could only be displaced if the airline could show as occupiers of the lounge on their lease, an obvious intention to exercise such control over the lounge and things in it that the bracelet was in their possession before P found it. On the evidence no such attention was clear

5

Costello v Chief Constable of Derbyshire (2001) CoA- Required

Operation of relative title (finders keepers) is not based on principles of morality.

Case: Police confiscate a car from C using their statutory powers on the belief it was stolen. These powers are limited by a time limit, but when limit ended police refuse to return car to C.

C sued police for return of car and damages.

HELD: C entitled to have car returned to him because he had the possessory title to it which could only be defeated by the true owner. It did not matter whether he had obtained this title lawfully or not.

General rules are:
1. The fact of possession of a chattel gives the possessor a possessory title and he is entitled to rely on it without references to the circumstances in which possession was obtained.

2. Where there are competing claims to ownership, titles are relative. The party with the better title, no matter how frail, will succeed.

3. Statutory powers of police temporarily divest all rights to possession for the period of detention, but they do not otherwise affect those rights or vets any permanent entitlement to retain property in the police.

4. s.8 Interference with Torts Act 1997 permits a D in an action for wrongful interference to show that a 3rd party has a better right than C.

(NB: s.8- Competing rights to the goods.
(1)The defendant in an action for wrongful interference shall be entitled to show, in accordance with rules of court, that a third party has a better right than the plaintiff as respects all or any part of the interest claimed by the plaintiff, or in right of which he sues, and any rule of law (sometimes called jus tertii) to the contrary is abolished.)

5. A party cannot assert a right to immediate possession against a D if his possession of the goods would be illegal.

6. Other than illegality, there are no exceptions to the rule requiring property to be restored.

6

(a) conversion of goods- what is it?

A possessor of goods who fails, without justification, to give them up on demand to the owner, commits the tort of conversion.

Does not apply to pure intangibles.

Renders him liable to pay damages to the owner based on the value of the goods, plus any other losses flowing from his wrongful retention.

Damages can be mitigated by the return of the goods.

Cases which are conversion= Parker v British Airways, Costello v CC of Derbyshire

7

Evaluation of conversion

General: English law does not follow the sensible rule of other legal systems which gives the owner of tangible property a single action to recover it. Instead it reaches the same result with a more convoluted procedure.

McKendrick: One of the embarrassments of English law. It is trying to do 3 very different jobs at the same time:
1. Recovery function,
2. Compensation function; and
3. Restitution function

8

Requirements of Conversion

1. Ownership by C

2. Possession, or right to possess, by C

3. Some voluntary act inconsistent with C's ownership by another, e.g.
- disposing of goods by contract or sale (Parker),
- damaging goods,
- detaining goods (Costello

9

Fowler v Hollins (1872)

Strict liability is used to determine whether the voluntary act inconsistent with C's right to ownership has been committed.
i.e. the act must be voluntary, but it is irrelevant whether D knew that the property was that of another.

Case: claim for conversion for bales of hay which D had purchased in good faith was successful.

10

s.2(2)

A bailor can sue a bailee who fails to return the goods in conversion. The bailee will then automatically become liable unless he can show the goods were lost owning to some cause for which he was not responsible.

see also the e.g. in s.3(6)

11

s.3 (further)

Form of judgment where goods are detained (as in Costello)- gives court discretion to order the return of the goods without the option of paying their value.

(1)In proceedings for wrongful interference against a person who is in possession or in control of the goods relief may be given in accordance with this section, so far as appropriate.

(2)The relief is—
(a)an order for delivery of the goods, and for payment of any consequential damages, or
(b)an order for delivery of the goods, but giving the defendant the alternative of paying damages by reference to the value of the goods, together in either alternative with payment of any consequential damages, or
(c)damages.

(3) Relief shall only be given under one of these and is at discretion of court.

(4) If an order under (2) is not complied with the court can order payment of damages by reference to value of goods.

(5) If a 2(b) order is made, D may satisfy it by returning the goods at any time before execution of judgement, but will still have to pay consequential damages.

(6) an order under (2)(a) or (b) may impose such conditions as court determines.

(7) Where allowance is made under s.6 for improvement of the goods and a (2)(a) or (b) order is made, the court may assess the allowance to be made and require, as a condition for delivery, that allowance be made by the C.

12

s.6

Allowances for improvement of the goods

13

s.5

Damages awarded for wrongful interference extinguish C's title to that interest.

14

Blue Sky One v Blue Airways (2009)

s.3 discretion.
Beatson- If something is 'commercially unique' it may be returned, even if the good is not 'physically unique'.

i.e. ordinary articles of commerce, even complex machinery, ships and aircraft may be commercial unique in the sense that buying or otherwise obtaining substitutes would be difficult or so delayed that C's business would be seriously interrupted.

Examples discussed from previous cases:
- Order for delivery of steel made where, as a result of a national steel strike, more steel could not be obtained by C from another source in the short term. There was also a risk that the steel in question would become too hard to work with if it were kept for any long period.

Also- where a D is of doubtful solvency, a specific order for the return of goods may be made, giving C a guaranteed preference over other creditors on insolvency.

15

White v Withers (2009) CoA- further

Distinction between conversion and trespass to goods is that must have ACTUAL possession, not just right to immediate possession, for trespass, but not for conversion.

Case: wife photocopied husband's documents and gave to her solicitor (pre-divorce).

Decision: Direct and immediate interference with husband's possession of documents was found by wife- Trespass.

Requirement of actual possession for trespass to goods-
- however this case suggests things might change. Husband sued Solicitor as well as Wife. CoA had to decide whether to strike out- was it a hopeless case?
- Husband didn't have possession when solicitor took property.
- Not struck out. Suggests that immediate right might be enough soon. Will this develop into a wider cause?
- TRESPASS

16

Trespass to goods?

All unjustified deliberate physical interference with goods in another's possession.

All of the sections above apply just like for conversion, and also SL like conversion.

Wider than conversion, covering moving or damaging goods.

Narrower than conversion, only covering acts done to goods not already in D's possession- e.g. the carrier who delivers goods to a non-owner is guilty of conversion, but not trespass.

17

Requirements of trespass to goods?

1. Possession by C, or right to immediate possession/constructive possession. (NB: does not require ownership by C)

2. Some voluntary act by D inconsistent with C's possession, e.g. removing or damaging goods.

18

Penfolds Wines v Elliot (1946)

Strict liability is used to determine whether the voluntary act inconsistent with C's right to possession has been committed.

'A mere taking of a chattel may be trespass without infliction of any material damage. The handling of a chattel without authority is trespass. The normal use of a bottle is as a container, and the use of it for this purpose is trespass if, as in this case, it is not authorised by a person in possession or entitled to immediate possession.'

19

Requirements of negligence?

1. Ownership by C
2. Possession (or right to immediate possession) by C
3. Some fault by D- damage or interference with the goods.

20

The Aliakmon (1986)- Further

Brandon: In order to sue in negligence for loss caused by loss or damage to the goods C must have either legal ownership or a possessory title to the goods concerned.

Contractual rights which have been adversely affected by loss or damage of the goods are not enough.

Case: C contracted to buy cargo to be shipped on D's vessel. Due to poor stowage the cargo was damaged.

C brought action against D claiming damages for both negligence and breach of contract.

Decision: The negligence claim failed because under the terms of the purchase contract, though C assumed the risk for damage to the cargo, he was neither the owner or possessor of the cargo, so did not satisfy requirements of negligence (he would have become owner on delivery to him).

21

Reversionary Interest?

Created to protect the position of an owner with the necessary possessory right.

i.e. in conversion must have ownership and possession, in trespass must have possession or right to possess. This remedy does not require these rights.

Allows individual to recover for any actual damage done to his reversionary interest, if he can prove what would otherwise (minus possession/right to possess) be the elements of conversion, trespass or negligence.

Benefits bailors, purchasers where vendor has a lien for unpaid purchase money, a mortgagee.

In a PQ would try the others first and then if cannot establish a possessory right, go for RI.

22

Requirements of RI?

C must prove damage to his interest in the goods (i.e. as needed in conversion, trespass, negligence) without having to prove his possessory right to the goods.

23

Mears v London & South Western (1862)

RI- If goods are destroyed or damaged the owner may sue even if he does not have possession or an immediate right to possess.

The owner of a chattel, such as a barge, which is out on hire for an unexpired term, may maintain an action against a 3rd person for a permanent injury to it.

24

HSBC Rail v Network Rail Infrastructure (2006) CoA

Case: H had leased its railway rolling stock to the lessee for 8 years, during which time H had no possessory right to it.
- Under the lease the lessee assumed all risks of loss, damage or destruction and repair and in the case of total loss it was to pay H the replacement value.

The rolling stock was damaged due to a fault in the track operated by D.
- 2 carriages were written off at £1.4m and the others were repaired for 3.8m.

When repairs were done the lessee paid H. The insurers, in the name of the lessee then sought to recover from D.
- BUT The lessee and D had a contract which limited claims for loss against D to 5m.

The insurers then issued proceedings in H's name against D in negligence on the basis that H as bailor of the carriages could sue for substantial damages and that H's claim would not be met by the contractual limitation clause.

D submitted that H could not sue for damages unless it could show permanent damage to its reversionary interest not just damage to the carriages.

H submitted that as the owner of the carriages it had a right to sue N in tort for negligence since the carriages had suffered permanent damage and that the cost of repair and compensation should be ignored as they had been paid pursuant to the terms of an insurance.

Decision:
(1) A bailor not in possession has a right to sue in respect of actual damage provided it permanently affects his reversionary interest.
-Ignoring the effect of insurance, H had been paid the full value of the carriages that were beyond repair and those carriages that could be had been repaired.
-H was not out of pocket and on ordinary negligence principles had suffered no loss and could make no recovery.

- Where the bailor had not been compensated by repair or replacement of the goods he would have suffered a real loss and would be compensated accordingly.
- But there was no need for compensation if the goods had been repaired or replaced and he had suffered no loss.

(2) There is no authority in support of H's proposition that a goods owner without possession or the immediate right to possession could recover the value of the goods even where he had been compensated by the bailee.

(3) Under the lease agreement the party at risk was G rather than H. It was unrealistic to regard an insurance policy that insured the respective rights and liabilities of G and H as indemnifying H rather than G. The legal significance of what happened against the background of the lease agreement and the insurance policy was that G's liability to H had been discharged. The judge was right that the party which sustained the loss was G and that G had been indemnified by the insurers. H as lessor had suffered no damage to its reversionary interest because G had indemnified it, not because it had been indemnified by insurance.

25

MCC Proceeds v Lehman Brothers (1998)

The owner only of an equitable interest in goods may not assert his interest against a purchaser of the legal title to the goods.

A person was only entitled to sue in conversion if he had actual possession or the immediate legal right to possession of the goods at the time of the conversion (this would also apply to trespass and negligence where the proprietary interest was only equitable).

Case: Accordingly, where a nominee agreement had created a trust of shares for the benefit of the plaintiff company, and the defendant was a bona fide purchaser for value of the legal estate in the shares from the trustee, without notice of any breach of trust or of any claim by the plaintiff, the plaintiff could not maintain an action in conversion against the defendant.

26

Commercial significance of RI?

Significant where a 3rd party interferes with goods that were at the time hired out to a user, or were subject to a finance lease or lease-purchase or conditional sale agreement.

In these cases it is likely that the owner will have neither possession or an immediate right to it and therefore a RI action will be the only means of suing the 3rd party interferer.

27

s.8 Torts (IWG) Act 1977- required

(1) Allows a D in an action for wrongful interference to show that a 3rd party has a better right than the C as respects all or part of the interest claimed by C.

(2) Where this is raised the court may:
(a) require C to give particulars of his title;
(b) require C to identify any person who, to his knowledge, has or claims any interest in the goods;
(c) authorise D to apply for directions as to whether any person should be joined with a view of establishing his better interest than C's, or has a claim a result of which D will be doubly liable;

Was discussed, but did not apply, in Costello- Leightman: The 3rd party must be identified and the purpose of the section is to have any issue of time resolved once and for all in the proceedings.

28

Remedies for choses in action and other intangibles?

Cannot be converted, used in trespass or negligence actions.

29

OBG v Allen (2007) HOL- further

Case: Receiver appointed by a creditor of OBG but due to a technicality in his appointment he had no right to interfere in the company's property. This was unknown to anyone.

Receiver, acting in good faith, proceeded to sell the co's land and equipment (tangible) and dealt with the co's debts and other contractual liabilities (intangible), basically giving up the co's right to make profit from them by performing them.
- in terminating the contracts of the majority of OBG's sub-contractors and setting other contractual claims the receivers assumed control of nearly 90% of OBG's total assets (e.g. 90% of their assets were intangible).

Decision: The remedies for interference with choses in possession are not available for choses in action, so there could be no claim in conversion for the intangibles in this case.

Why? Hoffman:
1. Parliament did not intend it
- Conversion is SL. It would be too drastic a reshaping of the law to impose SL for pure economic loss on those who acted in good faith for choses in action.
- Parliament has legislated with regard to choses in possession, e.g. IA s.23(4), but has not for choses in action because it thought it necessary because it did not occur to them that conversion could occur for choses in action.

2. Law is wary of imposing liability for pure economic loss (intangible loss).
- Economic torts require intent to procure a breach of contract or cause loss unlawfully.
- 'it would be extraordinary to extend conversion to impose SL for pure economic loss of those who acted in good faith.

3. Documentary intangibles are an anomaly created by judges to solve the issue that existed- that when a person who wrongfully secures payment which is due to another he could not be sued by the true creditor for the money he had received, not the introduction of conversion as a remedy for choses in action generally.

30

Hale dissent in OBG v Allen

1. The relevant question should be 'is what has been usurped property?', not 'is there a proprietary remedy'.
- Once something is recognised as property, there should be a proprietary remedy for wrongful interference with it.

2. There is no reason why the law cannot be extended. In the 17/18th centuries when new forms of choses in action could be assigned conversion was developed to accommodate them (documentary intangibles)

3. The use of documentary intangibles is not principled. Both too wide and too narrow.
- Too wide= there can be a document evidencing a purely personal (i.e. contractual) right, so it should not attract a proprietary remedy.
- Too narrow= there are many debts that can now be assigned, attached, form part of an insolvent estate and enjoy all the other characteristics of property, but which are not represented by a document.

4. So it does not matter that using proprietary remedies for pure intangible goods is not entirely principled.

5. It is not surprising that the law has not yet taken the logical step of applying the same principle to pure intangibles, because it is much more difficult to deprive someone of his rights of action than of his coat or wallet, but it is no greater step for the law to do this.
- it makes no sense in this case that D should be strictly liable for what he lost on tangible assets but not what he lost on intangible assets.

31

Nichols dissent in OBG v Allen

1. The distinction between tangibles and intangibles 'lacks any rhyme or reason'.

2. Conversion was founded on a fiction- the idea that C possessed goods, casually lost them and D found them, and D did not return them but instead 'converted ' them his own use. D was not permitted to deny the losing and finding, even though this is not how, in reality, the situation would arise.

2. Based on this fiction the view was that, because intangibles could not be lost and found, they could not be converted.

3. The expansion of commerce which increased dealings with intangibles meant conversion was expanded to documentary intangibles- another legal fiction. So conversion is in fact allowed for intangibles.

4. As a mature legal system, English law has outgrown the need for legal fictions, which are unprincipled and conceal what is going on.

5. Rationally the dividing line cannot be a piece of paper.., especially today when info is increasingly stored and communicated and transactions effected by electronic means.

6. The court should offer the remedy of conversion based on the common characteristic of tangible and intangible rights- contractual rights. There is no principled reason for distinguishing between tangible and intangible contractual rights.

7. Parliament cannot be taken to have precluded the courts from developing conversion if this becomes necessary to achieve justice, so would hold that the receiver committed conversion.

32

Green- Conversion and Intangible Property

1. The facts of Allen demonstrate the need for protection in conversion of intangible goods, rather than protection by the economic torts.
- The receivers had conducted intangible property without intention to cause C loss, in a lawful way and without breaching any contract. Means there is nothing that economic torts can remedy.
- Their actions were not bad, but wrongful. Conversion recognises this with its SL.

2. The approach of the majority in Allen in outdated and created unnecessary inconsistency within the law.

3. The essence of conversion is property interests. There is nothing to tie it exclusively to a particular subject matter.

4. Possession is an evolutionary phenomenon. While it historically accommodated only relationships between people and things this is due to circumstances, not design. In the past there was no need for a sophisticated understanding of property because things were the only thing it needed to encompass.

5. Possession has 2 dimensions
i. the manual- direct or indirect physical control over a thing;
ii. the cognitive- a C's awareness of the thing's existence and form and his active intention to exclude others from it.
- to decide whether a thing can be possessed (and therefore converted) it would be better to ask whether it exhibits both of these indica, rather to rely on the tangible/intangible dichotomy.

6. There are 2 determinants of things which can be subject to manual control and things which can't.
i. exclusivity (amenable to exclusive custody); and
ii. exhaustivity (can be exhausted to deprive C substantially of its value).
- This is precisely what the documentary exception recognises. It is a means of identifying exclusivity and exhaustibility.

33

Armstrong DLW v Winnington Networks (2013)

Proprietary restitutionary claims may be brought where a D receives intangible property belonging to C, even though conversion claims are not available (as Hoffman said in Allen).

Case: EUA is a proprietary EU permit allowing the holder to emit 1 tonne of CO2, which is otherwise illegal. Can be bought and sold. Due to 3rd party fraud many of C's EUAs were transferring from their account to the 3rd's and sold on to purchasers, who may have knowingly turned a blind eye to this.

Decision: Morris- No reason why a C does not have a personal claim at law to vindicate his proprietary right for a chose in action. Authority does not preclude this.

The fact such a claim cannot exist in conversion is because it is a SL tort with no room for defences of good faith purchasers. This is not the case with a proprietary restitutionary claim.

If legal title remains with C, he may bring a claim in PR.

34

Negligence as a remedy for wrongful interference of choses in action?

Unlikely to be used. C will not be able to point to any physical damage, so would have to prove his case was an exceptional one where a duty of faith arose for pure economic loss.

35

Recovery as a remedy for wrongful interference of choses in action?

Cannot be used. For recovery there must be a C who is entitled to possess and a D who is in possession.