Conversion

The measure of damages, and why it matters

The measure is the value of the goods at the date of the conversion, together with any special damage. That has two consequences a student should be able to state.

The plaintiff need not take the goods back. If the defendant offers to return them, the plaintiff may accept, and the damages then cover the depreciation and the loss of use, but the tort has been committed.

A chain of innocent dealers may all be liable. If a thief sells to a dealer who sells to a buyer, each has dealt with the goods inconsistently with the owner's right, and each has converted them. The owner is entitled to one satisfaction only, but he may choose whom to sue.

Defences

Lawful justification, such as sale by a person with authority, a lien, or a statutory power of sale.

Consent of the person entitled.

Jus tertii, that is, a third person's better title, is a defence in limited circumstances only: a bailee cannot ordinarily set up the title of a third person against his bailor.

Limitation, under article 91 of the Schedule to the Limitation Act 1963, three years, running from when the person entitled first learns in whose possession goods lost, stolen, misappropriated or converted are.

A worked example

Imran leaves his laptop with Jaya to be repaired.

One. Jaya lends it to her brother for a week. That is conversion by wrongful user: she has dealt with it as though it were hers.

Two. Jaya returns it to a customer of the same name by mistake. That is conversion by wrongful delivery. Her honesty is no answer.

Three. Jaya sells it to a shop, which sells it to Kamal, who buys in good faith for full value. Jaya, the shop and Kamal have each converted it. Imran may sue any of them for its full value at the date of the conversion, though he can have only one satisfaction.

Four. Kamal, having heard of the claim, offers the laptop back. Imran may take it, and recover the depreciation and the loss of its use in the meantime; the conversion has still occurred.

Five. If Imran wants the laptop itself rather than money, he sues under sections 7 and 8 of the Specific Relief Act 1963 for specific delivery, as chapter [Detinue] explains.

Distinctions that carry marks

What it does NOT mean

It does not require dishonesty. An innocent purchaser converts.

It does not require the defendant to keep the goods. Selling them, destroying them or giving them away are all conversions.

It does not lie for a mere assertion of ownership. There must be an act dealing with the goods.

It does not give the plaintiff two recoveries. He may sue any of a chain of converters, but he is entitled to one satisfaction only.

Quick revision

1. Conversion, formerly trover: a wilful dealing with goods inconsistent with the right of the person entitled, without lawful justification.
2. The plaintiff must have possession or the right to immediate possession.
3. Good faith and absence of any intention to challenge the title are no defence.
4. Forms: taking, detention, wrongful delivery, wrongful disposition, destruction or alteration, and wrongful user.
5. Measure: the value of the goods at the date of the conversion, plus special damage.
6. Every person in a chain who deals with the goods as owner converts them, but the plaintiff gets one satisfaction only.
7. Limitation: three years under article 91 of the Schedule to the Limitation Act 1963.
8. For the thing itself rather than its value, sue under sections 7 and 8 of the Specific Relief Act 1963.

Test yourself

1. Define conversion and state its essentials. Conversion is an act of wilful interference with a chattel, done without lawful justification, by which the person entitled to it is deprived of its use and possession. Its essentials are that the plaintiff had possession or the right to immediate possession of the goods, and that the defendant dealt with them in a manner inconsistent with that right, that is, as though they were his own or in a way denying the plaintiff's title. No intention to challenge the title is required, so honesty and good faith are no defence, and a person who buys stolen goods innocently converts them. The measure of damages is the value of the goods at the date of the conversion, so that the defendant is treated as though he had bought them.

2. In what ways may conversion be committed? By taking the goods with the intention of exercising dominion over them; by detaining them and refusing to deliver them on demand, which is also detinue; by wrongful delivery, as where a bailee hands them to the wrong person; by wrongful disposition, as where they are sold or pledged; by destruction or by such alteration that their identity is lost; and by wrongful user, as where a bailee for safe keeping uses the goods as his own. What is not conversion is a mere assertion of a claim without any act, a refusal made in good faith while the claimant's title is checked within a reasonable time, and a failure to take care of the goods, which is negligence rather than conversion.

3. "An innocent buyer of stolen goods is liable in conversion." Is that just? It is the law, and the reason is that conversion protects title rather than punishing dishonesty. Each person in a chain who deals with goods as owner denies the true owner's right, so the thief, the dealer and the innocent purchaser have each converted them, and the owner may sue whichever he chooses for the full value at the date of the conversion, taking one satisfaction only. The justification is that between two innocent parties the loss should fall on the one who dealt with the goods rather than on the owner who never parted with his title, and that a buyer can protect himself by inquiring into the seller's title while an owner cannot follow his goods around the market. The rule is qualified where a statute protects a purchaser in market overt or in the ordinary course of business, and by the defences of lawful authority and consent.