News

Wed, 20 Apr 2011

Exclusive Possession and the Tort of Conversion

In Mainline Private Hire Limited v Anthony Nolan [2011] EWCA Civ 189, Mr Nolan was found liable to Mainline for the conversion of a silver seven seater Peugeot 806 taxi. Mr Nolan appealed the decision arguing that the Judge at first instance must have been wrong to find that he had possession of the Peugeot.

In a claim for conversion, the claimant must demonstrate that only he, at the time of the alleged conversion, had actual possession or immediate right to possession of the property in question. This is what Mainline were required to show.

The law says there are two necessary elements to demonstrate legal possession. Firstly, sufficient degree of physical custody and control i.e. factual possession and secondly, an intention to exercise such custody and control for your own benefit i.e. an intention to possess.

In Powell v McFarlane (1977) J Slade said that “factual possession signifies an appropriate degree of control. It must be a single and exclusive possession”.

Mr Nolan owned a taxi business before it was merged with his sister’s company to form Mainline. Mr Nolan’s wife was a director and shareholder of the business. He continued to earn his living by operating the Peugeot as a taxi for hire on behalf of Mainline. Relations between Mr and Mrs Nolan and his sister became strained.

In December 2005, the Peugeot was stolen but later recovered by the police. Unable to drive the vehicle, the Nolan’s decided to put the car in to storage. Mrs Nolan caused Mainline to enter in to a written contract with a storage company.

In the appeal, Mr Nolan submitted that a bailee for reward for an agreed period has both actual possession and immediate right to possession of the property bailed for that period. Accordingly, if there was a person to whom the Peugeot was bailed for a period for reward, Mainline could not also be entitled to possession of it at the same time. Therefore, once the storage contract was executed between Mainline and the storage company, possession passed to the storage company from Mr Nolan. In addition, Mr Nolan argued that there was no evidence that the storage company would have allowed Mr Nolan to remove it.

On the requirement to satisfy the two elements, the Court of Appeal said the judge at first instance had to have regard to the conduct that took place conferring possession not merely the rights conferred by the storage contract.

In dismissing Mr Nolan’s appeal, the Court of Appeal, held that it did not necessarily follow that a bailee for reward would satisfy the elements of possession in conversion. At first instance, the Judge reasoned that the vehicle could have been recalled at any time from the storage company, subject to payment of the storage charges, by any person authorised by Mainline. That included Mr Nolan either directly because it was his assigned taxi or if necessary with the agreement of Mrs Nolan as a director of Mainline. The Judge had correctly held that the storage company did not have exclusive possession.

Furthermore, in satisfying the elements of factual possession, the Judge at first instance did not err in reasoning that this element had been satisfied on account of Mr Nolan’s apparent relationship with the owner of the storage company and in keeping Mainline ignorant of the contract demonstrated a clear intention by Mr Nolan to retain the vehicle for his own purposes.