tort of conversion

Conversion is an unlawful act whereby a person without authority does any act which interferes with the good title in the goods of the owner. The basic elements of the tort of conversion of goods are (1) the defendant's conduct was inconsistent with the rights of the owner or other person entitled to possession of goods; (2) the conduct was deliberate rather than accidental; and (3) the conduct exclude the owner from use and possession of the goods.

The wrongdoer must have actual possession of the goods or an immediate right to possession of the goods. Furthermore the innocent party must have an interest in the property (such as a bailor, mortgage or charge). A person making a claim is not required to show that its is the paramount owner of the property. In this way, businesses which have leased property from other and then have its own title inferred with may have an actionable claim.

Civil Claim, not Criminal

The essence of the tort exists where a person takes the property of another and deals with it as their own, particularly where the goods are damaged, used for their own purposes, diminished in value or sold.  Conversion is a civil wrong rather than criminal offence. Although the same conduct might be considered a criminal offence, conversion is a claim brought in the civil courts to obtain delivery of the goods and/or compensation by way of damages.

The Torts (Interference with Goods) Act 1977 provides that 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 section 3:

1. an order for delivery of the goods, and for payment of any consequential damages, or
2. 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
3. damages.

Actions for Conversion

Actions for conversion are usually prefaced by an unconditional demand on the part of the person with an interest in the property for the delivery of the relevant goods. Although the person in possession of the goods may wish to take time to make enquiries in respect to whether the person making the demand has a proper title to sustain the demand, the goods must be delivered after a reasonable time. In circumstances where the goods are not delivered, the wrongdoer may at law assume the role of an insurer such that it will be liable for any damage or theft of the goods after a reasonable time has elapsed after the demand. This might include damage to the goods, taking possession of them or detaining them.

Conversion may take place in a number of different ways, which include by:

1. taking possession over the goods and with the intention that it control the goods. It is not required to show that the wrongdoer intended to acquire title to the goods. In this way, a person detains goods with lawful reason or who borrows goods in the absence of authority of the person with title to the goods may be liable;
2. taking possession of the goods with the intention of exercising a right of ownership over them. In cases such as these, the goods may be sold and delivered to a third party, however as wrongdoer does not have title to the goods, it becomes liable to the person. This rationale applies whether or not title was conveyed or not, as the wrongdoer did not have title itself to convey the goods, provided each case that the goods were delivered. , or
3. by detaining the goods contrary in the face of an unjustified refusal to deliver up the goods after a demand is made, in circumstances where the innocent party has an immediate right to possession and the demand is made whilst the wrongdoer remains in possession of the goods.

A claim for conversion is also available where the goods have changed form since the wrongdoer unlawfully took possession. For instance, where seeds become trees, or timber converted used to construct a building.

Conversion is a tort of strict liability. In the context of conversion, it is immaterial that the wrongdoer did not know that the goods were owned by another person, that the person was negligent or there was no intention to harm the goods.

Damages for Conversion

Normally the measure of damages is the market value of the goods at the time the claimant was dispossessed of the goods. Damage is recoverable for additional damage consequential to the loss of the goods. The conversion of the goods must have caused the loss claimed. The 'but for' test is applies to exclude loss which does not have a causal connection with the wrongful conduct of the defendant. Accordingly the question is whether the loss would have been suffered without ('but for') the defendant's wrongdoing. If not, the wrongful conduct was a cause of the loss. Where the loss would have arisen in any event, legal liability is usually avoided. it does not follow that simply because this exclusionary threshold test is satisfied, it does not automatically follow that the defendant is legally responsible for the loss.

Causal Connection

The threshold 'but for' test is based on the presence or absence of one particular type of causal connection: whether the wrongful conduct was a necessary condition of the occurrence of the harm or loss. Damages may recoverable from each person through whose hands goods pass in a series of conversions. 'The but for' test calls for a comparison between the owner's position had he retained his goods and his position having been deprived of his goods by the defendant. Loss which the owner would have suffered even if he had retained the goods is not loss 'caused' by the conversion.

Extent of Liability

After the but for test has been applied the Court makes a value judgment to assess the extent of the loss which the defendant ought fairly, reasonably or justly held liable. The inquiry is whether the claimant's harm or loss should be within the scope of the defendant's liability, given the reasons why the law has recognised the cause of action in question.

The law has to set a limit to the causally connected losses for which a defendant is to be held responsible. Losses outside the limit are those which are too remote because the wrongful conduct was not a substantial or proximate cause; because the loss was the product of an intervening cause; or excluded because the claimant failed to mitigate his loss.