3) Conversion

Conversion is the most recent of the three main torts providing protection against the intentional interference with chattels. Nevertheless, it has proved to be an expansionary and flexible concept that now encompasses many situations that, at an earlier time, were the predominant preserve of trespass to chattels or detinue. There are three central elements to the tort of conversion. First, it protects persons who are in possession of chattels or who have a right to the immediate possession of chattels. Second, it is restricted to the intentional interference and dealing with chattels. Conversion is not, for example, available for the negligent damage or destruction of chattels. Third, an act of conversion is one that so seriously interferes with the plaintiff's rights to the chattel that the defendant may, in fairness, be required to pay its full value. [Note 138: J.G. Fleming, The Law of Torts, 9th ed. (Sydney: LBC Information Services, 1998) at 60-61.] The payment of damages equivalent to the full value of the chattel is said to effect a forced judicial sale of the chattel to the defendant. This explains why orders for the return of the chattel are not made in a conversion action. The defendant is treated as if he had bought the chattel and he can keep it.

The concept of a forced sale is also the safest guide in the multitude of marginal cases where a determination must be made if the interference with a chattel is sufficiently serious to be a conversion. A good rule of thumb is to consider the degree of interference with the chattel and assess whether or not it is fair and reasonable that the defendant be forced to pay the full market value for it.

Chattels may be converted in a number of ways. The most frequent form of conversion is probably the taking of chattels in the course of criminal activity such as break and entry, shoplifting, and car theft. For obvious reasons, criminal taking rarely gives rise to tort litigation. The intentional destruction of a chattel is also clearly a conversion. The unauthorized disposition of another's chattel by way of sale or pledge is a conversion. The intentional disposition of chattels is made at one's peril. Mistake is no defence to conversion. Consequently, both an innocent seller of stolen goods and the innocent purchaser to whom they are transferred are both liable in conversion. There are some exceptions to this rule, the most important of which include some commercial situations where a non-owner of goods is empowered to transfer a good title to an innocent purchaser. [Note 139: The most common examples are the doctrines of apparent authority and apparent ownership, sale or pledge by a mercantile agent under the Factors legislation, and the power of sellers and buyers in possession to pass good title under Sale of Goods legislation.] Nevertheless, the transferor remains liable in conversion. Certain ministerial dealings with goods by those who are not principals to a transaction affecting rights in the goods are also protected. For example, persons packing, storing, or carrying goods for another in ignorance of that person's lack of title and with no knowledge that they are participating in a transaction involving the unauthorized transfer of title to the goods are not liable in conversion. [Note 140: Hollins v. Fowler (1875), L.R. 7 H.L. 757 (H.L.).] An involuntary bailee who surrenders a chattel to a non-owner is also protected from liability in conversion if reasonable care is taken and an honest belief is held that the transferee is the true owner. A great deal of difficulty is encountered in deciding if the temporary taking, movement, or use of a chattel is a conversion. All the surrounding circumstances must be considered, including the duration of the interference, the kind of interference, the purpose of the interference, and the amount of damage inflicted. The most useful test is whether or not the interference is sufficiently serious to warrant a forced sale of the chattel to the defendant. The classic case on this point is Fouldes v. Willoughby. [Note 141: (1841), 8 M. & W. 540, 151 E.R. 1153 (Ex. Ct.).] In that case, the plaintiff and two of his horses boarded the defendant's ferry. Before it departed, a dispute arose and the defendant asked the plaintiff to remove himself and his horses from the ferry. When the plaintiff refused, the defendant led the horses off the ferry and turned them loose. The Court held that the defendant was not liable in conversion. The interference with the plaintiff's rights was not of sufficient seriousness to require the defendant to pay for the horses. At most there had been a trespass to chattels. A similar issue arises where another person's umbrella is used to run an errand in the rain, where a motor vehicle that is blocking an entrance is pushed out of the way, or where a person reads another's newspaper or uses a neighbour's tools or sports equipment. If the interference is of short duration and the chattel is returned unharmed, it is unlikely to be held to be a conversion.

Conversion may also be committed by refusing to comply with a request to return a chattel to its rightful owner. It is in this situation that conversion intrudes on the traditional domain of detinue. However, in conversion, unlike detinue, a single cause of action arises when the defendant refuses to return the chattel, damages are calculated at the time of the conversion, and the only remedy is an award of damages. The plaintiff may choose the more advantageous action. There are also some situations, such as where a bailee has negligently lost the chattel, where the owner has no claim in conversion and must sue in detinue or negligence.

There is some debate about the assessment of damages in conversion and detinue. The theory behind each tort leads to a different date of assessment of the market value of the chattel. The act of conversion obliges the defendant to pay for the chattel. Consequently, when the act of conversion occurs, the plaintiff must mitigate his loss by promptly replacing it. Damages are assessed, therefore, at the time of the conversion or, at the latest, when the plaintiff is aware of the conversion. Detinue is a continuing wrong and the cause of action may be defeated by a return of the chattel at any time before judgment. Damages are thus assessed at the date of the trial. This disparity in valuation dates has led to the guideline that detinue is the tort of choice on a rising market and conversion is preferable on a falling market. There has been some support for bridging the gap by awarding in conversion any increase in the value of the goods as consequential damages or by awarding the plaintiff the highest value of the converted goods between the time of conversion and the trial. This would lessen the evil of having remedies dependent on procedural technicalities, and it would assist plaintiffs who cannot afford to replace chattels at the time of the conversion.