Butler v Egg and Egg Pulp Marketing Board

[1966] HCA 38

HIGH COURT OF AUSTRALIA

Taylor, Menzies and Owen JJ.

BUTLER v. EGG AND EGG PULP MARKETING BOARD

(1966) 114 CLR 185

2 June 1966

Conversion

Conversion—Damages—Measure—Goods by statute vested on production in marketing board—Right of producer to payment from pool—Sale by producer to third party—Action by marketing board.

Decisions

June 2.
The following written judgments were delivered: -
TAYLOR AND OWEN JJ. The respondent Board brought an action against the appellants claiming damages for the conversion of a quantity of eggs, the property of the Board. The appellants were the "producers" of the eggs and the eggs were a "commodity" within the meaning of the Marketing of Primary Products Act 1958 (Vict.) and, by that Act and proclamations issued under it, the property in the eggs, when they came into existence, was divested from the appellants and vested in and became the absolute property of the Board. The rights and interests of the appellants in the eggs thereupon were converted into claims for payment in accordance with the Act. A Marketing Board set up under the Act is required to sell the commodity in relation to which it is constituted and which is vested in it and the producer of such a commodity is directed, with some exceptions not material in the present case, to deliver the commodity produced by him to the Board and forbidden to sell or deliver it to anyone other than the Board. The Board is required, subject to the provisions of the Act, to pay to each producer of the commodity delivered to and sold by it his proportion of the net proceeds of the sale of all the commodity of the same quality or standard delivered to it during such periods of time as are prescribed and is authorized to deduct from the proceeds of its sales expenditure incurred by it in the course of its administration. The foregoing provisions are to be found in Div. 1 of Pt. 1 of the Act, a division which relates to Marketing Boards generally. Division 2 of Pt. 1 relates specifically to the Egg and Egg Pulp Marketing Board and there is some overlapping of its provisions with those contained in Div. 1 but for the present purposes it is unnecessary to set these out. (at p189)

2. The facts are that the appellants did not deliver the eggs in question to the Board. Instead they sold and delivered them to a person other than the Board and this was the act of conversion which gave rise to the action. In these circumstances the question arose as to the manner in which the damages should be assessed and this came before Little J. in the Supreme Court by way of special case. The Board's contention was that it was entitled to the full value of the eggs converted. The appellants, on the other hand, contended that the Board's loss was represented by the difference between the price for which it would have sold the eggs had they been delivered to it by the appellants and the amount which in that event it would have had to pay to them. (at p190)

3. It is obvious that in a particular case it may be difficult to determine these two amounts with precision but in the present case the parties have been able to agree upon the figures. The sum of 4,000 pounds has been accepted as the value of the eggs and the amount for which they would have been sold by the Board had they been delivered to it and 1,100 pounds has been accepted as being the difference between that amount of 4,000 pounds and the amount which would, in that event, have been paid to the appellants out of what we will call the "pool". (at p190)

4. Little J. upheld the Board's contention and from his decision this appeal is brought. His Honour's reasons began with the proposition that in an action of conversion the general rule is that the plaintiff is entitled to recover the value of the goods converted. There are, he pointed out, exceptions to that general rule, as where the defendant, as between himself and the plaintiff, has an interest in the thing converted. This exception, he thought, had no application to the present case. The appellants had no interest in the eggs. All that they had were claims for payment which were conditioned upon delivery of the eggs to the Board, a delivery which in fact had not been made. For these reasons his Honour applied what he described as the general rule and held that the Board was entitled to recover the full value of the eggs. (at p190)

5. If this be correct, it would mean that the appellants would have to pay to the Board, by way of damages, the amount which the Board would have received had the eggs been delivered to and sold by it. The amount so paid would become part of the Board's funds and as such would be available to meet a proportion of its costs and to provide payments to other producers who were entitled to share in the "pool" but the appellants would not be entitled to receive any such payments since the eggs had not been delivered by them to the Board. It would follow that the Board would be in a better position financially than would have been the case had the appellants complied with the Act since it would have received the full value of the eggs, would have incurred no expense in handling and disposing of them and be under no obligation to make any payment for them. But such a result would not accord with the general principle upon which compensatory damages are assessed, whether in actions of contract or of tort. That principle is that the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed: Livingstone v. Rawyards Coal Co. (1880) 5 App Cas 25, at p 39 . And this principle is as much applicable to actions of conversion as it is to the case of other actionable wrongs. In most cases of conversion it is, of course, obvious that its application will result in the injured plaintiff recovering the full value of the property converted since that will usually represent the loss that he has sustained by the defendant's wrongful act. Hence the statement which appears so often in the books that the general rule is that the plaintiff in an action of conversion is entitled to recover the full value of the goods converted, but this statement should not be allowed to obscure the broad principle that damages are awarded by way of compensation. If the present case had been one in which the appellants had agreed to sell and deliver the eggs to the Board under a contract which had passed the property in them to the Board and, in breach of their contractual obligation, had failed to deliver the eggs and instead had converted them to their own use, the Board would not have been entitled to recover the full value of the eggs. Its loss would have been represented by the difference between that value and the price which it had agreed to pay and which it would have had to pay had the vendors carried out their contract: Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) . Here there was no such contract. The case is one of compulsory acquisition. It is true that the appellants, by their wrongful act, put it out of their power to make delivery with the result that the Board came under no obligation to pay them but, to adapt the words of Bramwell B. in Chinery v. Viall (1860) 5 H &N, at p 294 (157 ER, at p 1195) , it would be singular if the same act which saved the Board the price of the eggs should vest in it a right of action for their full value without deducting the price. The Board's loss must, in our opinion, be determined by considering what sum of money would be required to place it in the same position as it would have been in if the appellants had performed their statutory obligation. Had they done so, the Board would, on the figures agreed upon by the parties, have realized 4,000 pounds by selling the eggs and out of that sum would have had to pay the appellants 2,900 pounds. Its loss resulting from the appellants' tortious act is therefore 1,100 pounds. (at p192)

6. For these reasons we would allow the appeal. In these circumstances the parties agree that we should set aside the order of the Supreme Court and in lieu thereof make an order in terms of the memorandum signed by counsel. (at p192)

MENZIES J. In my opinion this appeal should be allowed, notwithstanding that I am satisfied that in the circumstances the appellants are not entitled to any payment from the respondent for the eggs which they produced, which became the property of the respondent by vesting, and which they subsequently converted by sale to The Victoria Ltd. The only right to payment in respect of vested eggs is "payment in accordance with this Act" (Marketing of Primary Products Act 1958 (Vict.)), see s. 17, and nothing has occurred to give rise to any obligation on the part of the respondent to make any payment for the converted eggs. (at p192)

2. The order appealed against would, however, entitle the respondent to damages for conversion considerably in excess of its actual loss for, had the eggs which were converted been delivered to it by the producers, the Marketing of Primary Products Act would have created an obligation upon the respondent to make substantial payments to the appellants and presumably to incur other expenses in relation to the eggs. (at p192)

3. Damages should, I think, be assessed not on the basis of the value of the eggs at the time of the conversion but upon the actual loss sustained by the respondent because the appellants converted the respondent's eggs instead of delivering them in accordance with the Act. (at p192)

4. There is no hard and fast rule that the value of the goods at the time of a conversion is always the measure of the damages to be assessed for the conversion. Often the application of such a rule would produce an obviously unjust result - for example, if goods converted by a defendant had since been recovered by the plaintiff-owner. The true rule is, I think, that stated by Bramwell B. in Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) , viz. that the plaintiff is entitled to recover no more than the real damage he has sustained. Not only is the principle of that case applicable here, but the facts of the case afford an instructive application of the principle. Punishment for non-compliance with the Act is within the realm of the criminal, not the civil, law. (at p192)

5. It having been agreed that, if the appeal were to be allowed, the damages to which the respondent is entitled are $1,283.33 as against the appellant company and $916.67 as against the other appellants, I would allow the appeal and direct that damages in those sums should be entered for the plaintiff in the action. (at p193)

Orders

Appeal allowed. Order of Supreme Court set aside and in lieu thereof order that Question 1 in the special case be answered as follows:

The damages are to be assessed as the value of the said eggs at the date of the conversions by the appellants less the sums which the respondent would have paid to the appellants if the appellants had delivered the said eggs to the respondent upon the dates when the appellants converted the said eggs,

it being unnecessary to answer the second question therein and that judgment be entered for the respondent (plaintiff) against the appellant (defendant) company in the sum of $1,283.33 and against the other appellants (defendants) in the sum of $916.67 with costs to be taxed (including costs of pleadings) save and except the costs of the special case herein and that the respondent pay to the appellants their costs of the special case.

The respondent to pay the appellants' costs of the appeal.