Lloyd's Maritime and Commercial Law Quarterly
CONVERSION OF CONTRACTUAL RIGHTS
Amy Goymour *
Traditionally understood, the tort of conversion is the principal means whereby English law protects the ownership of chattels
1
Over the years, documentary intangibles, such as cheques, have entered conversion’s protective ambit. Recently a minority in the House of Lords in OBG Ltd v. Allan2
suggested that the tort should be further extended to encompass ‘pure ’, non-documentary contractual rights. This article argues that such a development would be unprincipled and is unnecessary.
A. THE CURRENT SCOPE OF CONVERSION AND THE CASE FOR ITS EXTENSION
Conversion is a tort of strict liability which currently operates to protect against unauthorised interferences with legal possessory title to tangible goods. As Lord Nicholls of Birkenhead explained in Kuwait Airways Corp v. Iraqi Airways Co (Nos 4 & 5),3 conversion has three basic features:
“First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession). Second, the conduct was deliberate, not accidental. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods.”
A defendant who commits conversion must pay damages measured by reference to either the claimant’s loss or the defendant’s gain.4 If the defendant retains the chattel, there is the further possibility that the court may order its “delivery up” to the claimant instead.
Being a tort of strict liability, conversion lies against someone who has innocently dealt with another’s property. Thus understood, the tort—even in relation to normal chattels —has an extensive reach, which can sometimes lead to harsh results. For example,
* University Lecturer in Law, University of Cambridge; Hopkins-Parry Fellow, Downing College. A version of this article was presented at the 8th Biennial Property Law Conference held in Oxford, March 2010, and appears in the conference proceedings: S Bright (ed), Modern Studies in Property Law, vol 6 (Oxford, 2011). I am grateful to Susan Bright and Richard Hart for agreeing to its publication in a slightly modified form here. Many thanks also to Stephen Watterson, Graham Virgo and two anonymous referees for their enormously helpful comments on an earlier draft; all errors are, of course, my own.
1. Kuwait Airways Corpv. Iraqi Airways Co (Nos 4 & 5) [2002] UKHL 19; [2002] 2 AC 883, [77].
2. OBG Ltd v. Allan [2007] UKHL 21; [2008] 1 AC 1.
3. [2002] UKHL 19; [2002] 2 AC 883, [39].
4. Ibid, [87]. Note that the historic measure of damages for conversion was the chattel’s market value. As Lord Nicholls explains in Kuwait Airways, the market value should today be regarded merely as a convenient starting point for measuring the damages award.
LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY
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