Conversion for wrongful retention

A recent case has restated the basic principles of a claim in conversion for wrongful retention of goods. In Schwarzschild v Harrods Ltd, the court confirmed that for such a claim to arise, there has to be both an unequivocal demand for delivery up and an unequivocal refusal to do so.

The claimant's mother rented a safety deposit box from the defendant to store jewellery. Rental payments ceased in 1983. In 1988, the defendant opened the box and listed the contents but then continued to store the jewellery despite non-payment. In 1994, the box was opened again; a further list of content was made, and some items of jewellery were removed but the remainder was mixed with other jewellery from similar boxes and re-stored. In 1997, the defendant received a letter from the claimant's agent demanding the immediate commencement of the process of returning the jewellery. No response was made. At a meeting between the parties in 1998 the claimant inspected the remaining jewellery. Proceedings for conversion were commenced in 2006.

The defendant applied to strike out the claim as being time barred. The court held that the claimant's agent's letter of 1997 was an unequivocal demand for the return of the jewellery and that the defendant did not need to respond with an unequivocal refusal to start time running. Additionally, the claimant knew, following the meeting in 1998, that some jewellery was missing and therefore a claim in conversion arose at that time. In either event, the 6 year limitation period had expired before issue of proceedings and the claim was time barred.

That decision was overturned on appeal. The court held that there had to be both an unequivocal demand for the return of the goods and an unequivocal refusal to do so for a cause of action to arise in conversion. Until there had been an unequivocal refusal, time did not start to run. Even when the claimant ascertained that some jewellery was missing, that was not sufficient to create a cause of action in conversion. The defendant's actions had not amounted to a deliberate withholding and its failure to respond to the claimant's demands could not, in the circumstances, be deemed to be an unequivocal refusal. Inaction or neglect might in some circumstances be interpreted as an unequivocal response but that would be most unusual. The claim was not therefore time barred.

Comment

An owner of a vehicle who may not have had possession of it for many years still has the right to bring an action for conversion for up to six years after the refusal to deliver up. However, thought needs to be given as to the damages payable which will be measured at the time of the unequivocal refusal to deliver up possession. Conversion can also occur if goods pass through a third parties' hands (e.g. a sale of a vehicle at auction) where there is no need for a demand and refusal.

For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Alexa Highfield on +44 (0)121 213 2396 or Amie Ryalls on +44 (0)121 213 2360

This published article may contain information of general interest about current legal issues, but does not give legal advice.