Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd

[1968] HCA 60

HIGH COURT OF AUSTRALIA

Barwick C.J., Kitto, Menzies, Windeyer and Owen JJ.

HEALING (SALES) PTY. LTD. v. INGLIS ELECTRIX PTY. LTD.

(1968) 121 CLR 584

11 October 1968

Sale of Goods—Hiring Agreement—Trespass to Land—Damages—Practice

Sale of Goods—Implied warranties—Quiet possession—Wrongful seizure of goods by seller—Remedies of buyer—Breach of warranty of quiet possession—Action for conversion—Measure of damages—Price unpaid—Remedies of seller—Action for price—Defences—Breach of warranty—Option of buyer to bring action—Effect—Sale of Goods Act, 1923-1953 (N.S.W.), ss. 17 (2), 54 (1). Hiring Agreement—Hire of chattels—Covenant by hirer not to encumber rights in respect of goods—Deed of charge—Appointment of receiver—Right to recover possession if breach of covenant by or if execution or distress levied against hirer. Trespass to Land—What constitutes—Entry pursuant to licence to enter—Conduct beyond scope of licence—Assessment of damages—Exemplary damages—Damages already awarded in respect of same event. Damages—General principles—Exemplary damages—Circumstances in &hich an award may be made—Trespass to land—Trespass to goods—Conversion—One event involving wrongful entry and seizure of chattels. Practice—Interest on judgment—Whether recoverable apart from agreement as to damages—Application of statutory provision—Discretion of Court—Action for conversion—Common Law Procedure Act, 1899-1967 (N.S.W.), s. 141 (a).

Decisions

October 11.
The following written judgments were delivered: -
BARWICK C.J. AND MENZIES J. This case raises, apparently for the first time, an important question relating to the assessment of damages for the conversion of goods by taking them and depriving the owner of them permanently. Here the goods taken by the appellant from the respondent were worth $10,320.15 and the sum of $10,350.15 was owing by the respondent as buyer to the appellant as seller for the goods under a contract of sale providing for sixty day terms. At the date of the seizure the sixty days had not expired in respect of any of the goods seized so the respondent was not in default under the contract of sale. In these circumstances the learned trial judge, in assessing compensatory damages for conversion, took the purchase price owing into account and decided that the respondent was entitled to nominal damages only but awarded $3,500 exemplary damages because of the appellant's high-handed action in seizing the goods. The Court of Appeal Division of the Supreme Court increased the award to $13,820.15 by adding to the exemplary damages awarded the value of the goods seized. (at p591)

2. The respondent cannot retain the increased verdict unless, notwithstanding the seizure, it, as buyer of the goods, remained liable to pay the appellant, as the seller of the goods, the agreed price. In the absence of such liability the award of the value of the goods as damages for conversion would be to give the buyer more than compensation for its loss. (at p591)

3. Prima facie the buyer did remain liable for the price, for the seizure did not rescind or determine the contract of sale. That contract continued to exist unmodified by what had occurred. The appellant's case in this Court is, however, that in an action by it against the respondent for the price the respondent could, pursuant to s. 54 of the Sale of Goods Act, 1953 (N.S.W.), set up, in extinction of the price, damages for the seizure of the goods as a breach of the warranty of quiet possession implied in the contract of sale by virtue of s. 17 (2) of the Sale of Goods Act. The first question for decision therefore is whether the seizure was in breach of the warranty that the buyer should have and enjoy quiet possession of the goods, it being common ground that the circumstances of the contract did not exclude the implication of this warranty. (at p591)

4. For the respondent it was argued that the warranty in question does not cover a tortious seizure of goods from a buyer by a seller. This contention we do not accept. The unlawful seizure of goods sold but not paid for and still subject to the contract of sale is, in our opinion, a breach of this warranty in the contract. Such a seizure is a wrongful exertion by the seller of a claim to goods of which possession has been given and in respect of which the seller has warranted that the buyer shall enjoy quiet possession. The language of s. 17 (2) is amply wide enough to protect the buyer against such a seizure and we find nothing in the other provisions of s. 17 to reduce the warranty implied by virtue of s. 17 (2) to exclude a tortious act of the vendor. The consideration that, if it be construed as we would construe it, the buyer would have the choice of suing in tort or in contract seems unimportant. Moreover we do not share the view of Dr. K. C. T. Sutton - The Law of Sale of Goods in Australia and New Zealand (1967) - that s. 17 (2) is no more than an assurance to the buyer against the consequences of a defective title and of any disturbance thereon. So to read the sub-section would be to give it little, if any, operation additional to that of s. 17 (1) and would give no significance to the words "have and" in sub-s. (2). There is no compelling reason for reading down sub-s. (2). The authorities support our construction of the sub-section. Thus in Niblett Ltd. v. Confectioners' Materials Co. Ltd. (1921) 3 KB 387, at p 403 , Atkin L.J. said:

"I think there was also a breach of the implied warranty in sub-s. (2), that the buyer shall have and enjoy quiet possession of the goods. It may be that possession would not be disturbed if the only cause of complaint was that the buyer could not dispose of the goods, and that the warranty is confined to disturbance of possession of the goods delivered under the contract of sale. The warranty so interpreted was broken. The appellants were never allowed to have quiet possession. They had to strip off the labels before they could assume possession of the goods. Probably this warranty resembles the covenant for quiet enjoyment of real property by a vendor who conveys as beneficial owner in being subject to certain limitations, and only purports to protect the purchaser against lawful acts of third persons and against breaches of the contract of sale and tortious acts of the vendor himself. But it is unnecessary to define its scope."

Later in Mason v. Burningham (1949) 2 KB 545, at pp 562, 563 , Greene M.R., speaking of the implied warranty, said:

"The warranty is an implied warranty that the buyer shall have and enjoy quiet possession of the goods. Mr. O'Sullivan at one stage of his argument said that in that sentence there should be implied an exception in the case of disturbance by title paramount ; and, of course, it is familiar learning that in the case of the ordinary covenants for title upon a sale of land the covenant for quiet enjoyment does not extend to cover disturbance by title paramount. . . . I invited Mr. O'Sullivan to refer us to any authority that would justify the insertion into that statutory phrase of an exception in the case of disturbance by title paramount, but he was unable to do so, and, in the absence of some such authority, I ventured to inform him in the course of the argument that I would not be prepared to introduce any such gloss on the language of the statute. He did not refer us to any authority, and, in the absence of any authority, I can only express my opinion that the statute means what it says and is not to have any such gloss put upon it." (at p593)

5. We conclude therefore that, by reason of the appellant's seizure of the respondent's goods, the respondent became entitled to damages for breach of warranty and that, as the seizure did wholly deprive the buyer of the goods, the damages were prima facie the value of the goods seized. The appellant next relies upon s. 54 (1) of the Sale of Goods Act which authorizes the buyer to set up against the seller a breach of warranty in diminution or extinction of the price. This provision recognizes that, notwithstanding a breach of warranty, the contract of sale remains in existence and that, subject to the rights conferred by the sub-section, the full price of the goods is recoverable. The statutory provision does, however, afford the buyer protection against the seller in an action for the price even to the point of its extinction where the damages recoverable for breach of warranty equal or exceed the price. Not, of course, by an automatic extinguishment of the liability to pay the price but by the provision of a means whereby the buyer can ensure that the vendor does not recover the price where the damages for the breach of warranty equal or exceed the price. It seems to us, therefore, that where, as here, the damages recoverable by the buyer for breach of warranty on the part of the seller equals the price, that, in principle, the buyer should not be entitled to damages for conversion on the footing that the seller can still recover the price. The conversion is a breach of warranty of the contract of sale, which may be used by the buyer to extinguish the price payable under the contract of sale. If, therefore, the price and the value of the goods converted coincide - as they do here - there being no further damage, the extinguishment of the price would fully compensate the buyer for the conversion of the goods. It is, of course, true that the buyer is not bound to set up a breach of warranty in extinguishment of the price, Davis v. Hedges (1871) LR 6 QB 687 , but what is of vital importance is that a buyer is entitled so to do and that, therefore, the seller cannot enforce payment of the price. In the assessment of his damages for conversion in breach of warranty the buyer cannot be treated on the footing that he could refrain from exercising the right he has to prevent recovery of the price. If he can avoid its payment he has not lost the amount represented by the price which he has not paid. In principle, therefore, the buyer in this case cannot be said to have lost the value of the goods by reason of the conversion which did, as it were, give as well as take away. The authorities, however, require consideration. (at p594)

6. The respondent relied principally upon Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) , but this decision is distinguishable. Here the conversion was in breach of the very existing contract under which the price was payable, whereas there the amount owing to the defendant was a balance of account for cloth sold and all that appeared was that the made-up clothes seized by the defendant from the plaintiff had been made from cloth bought by the plaintiff from the defendant. Non-payment for the actual cloth from which the seized clothes were made up was not clearly proved. In these circumstances a direction to the jury that in estimating damages for trespass of goods, they must take into account the plaintiff's debt to the defendant was held to be mistaken. The decision was that compliance by the jury with the direction was equivalent to allowing a set off in trespass. Rolfe B. did say however:

"It has been contended that where the party wrongfully retakes his own goods, he thereby debars himself from suing for the price. No authority has been cited which supports that position. It is unnecessary, however, to give any opinion on that point, because here the goods seized were in no respect the same as those which the defendant had supplied to the plaintiff, but were altogether altered in character ; neither did it clearly appear that they were made of cloth which had not been paid for."

(1841) 8 M &W, at pp 578, 579 (151 ER, at p 1169) (at p594)

7. This case is therefore clearly distinguishable both upon the facts and by virtue of the provisions of s. 54 of the Sale of Goods Act which does in terms permit what amounts to a set off of damages against price. Moreover Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) was decided before Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , where it was established that in an action for goods sold and delivered with a warranty it is competent to show how much less the subject matter was worth by reason of a breach of warranty in order to obtain an abatement in price. Section 54 of the Sale of Goods Act carries the law so decided further because thereunder damages for breach of a seller's warranty can be set up against price not only when the breach diminishes the value of the goods - as is specially provided for in s. 17 (3) in the case of breach of warranty of quality - but in the case of any breach of warranty. (at p595)

8. Furthermore Stephens v. Wilkinson (1831) 2 B &Ad 320 (109 ER 1162) , affords a respondent no support on the point now under discussion. There it was held that the tortious retaking of goods sold and delivered does not bring about the rescission of the contract of sale so that a bill given for the price could not be regarded as having been given for a consideration which had wholly failed. (at p595)

9. There are in the books, e.g., Benjamin on Sale, 8th ed. (1950), pp. 951, 952, statements to the effect that the seizure of goods by the seller after delivery is tortious and that the buyer may recover as damages the full value of the goods and the seller cannot set up the unpaid price. Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) is cited as authority. Where, however, the seizure is a breach of warranty of the contract of sale under which the price is payable, provision having been made by s. 54 for the diminution or extinction of the price by means of damages for breach of warranty, it is not a matter of the seller setting up the unpaid price against the full value of the goods ; it is rather that the full value of the goods is no longer the measure of the real damage suffered by the buyer as a result of the conversion : Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) and Butler v. Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 . The principle of Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) is, we think, applicable even after the delivery of the goods to the buyer in a case where the seller's conversion of goods is a breach of warranty of the contract of sale. The distinction between Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) and Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) lies not in the circumstance that in the former case the conversion was of undelivered goods and that in the latter the conversion was of delivered goods but in the circumstances that the attempt made in Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) was simply to set off a debt against damages for trespass. There the question whether the party wrongfully taking his own goods debars himself from recovering the price was not decided one way or the other. Moreover, Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) was not, so far as it appears, a case of the conversion being in breach of the contract of sale. Furthermore, it was still to be established by Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) that damages for breach of warranty in the contract of sale could be set off against the price. It was said in Chinery v. Viall (1860) 5 H &N, at p 294 (157 ER, at p 1195) that "it would be singular if the same act which saved the vendee the price of the sheep should vest in him a right of action for their full value without deducting the price". This statement is applicable to a conversion after delivery as well as to a conversion before delivery if, as is now the law, the conversion after delivery, being in breach of warranty, does give rise to damages which can extinguish the price. (at p596)

10. The Court of Appeal, as we read the judgments of the learned members of the Court, did not have the advantage of the argument addressed to this Court. In the judgments (1967) 69 SR (NSW) 311 there is no reference to the Sale of Goods Act, ss. 17 and 54, and Herron C.J. said (1967) 69 SR (NSW), at p 317 :

"An important and significant test in a vendor and purchaser transaction is whether or not the vendor is entitled to maintain an action against the plaintiff for the price of the goods sold. If he is, the damages are the value of the goods. However, where the same act renders the vendor liable in tort and in contract for non-delivery the plaintiff cannot recover more in an action for tort than he can recover in contract. In the present case the wrongful act of the respondent did not relieve the appellant from payment of the price, the act of the defendant not being a breach of contract. Hence no question arises of the appellant having alternative remedies."

The italics are ours. It is because we regard the conversion as being in breach of the warranty of the contract of sale under which an action for the price would lie that we consider that the damages recoverable for the conversion can go in reduction of the price. (at p596)

11. For the foregoing reasons we consider that the learned trial judge was correct in taking the price of the goods seized into account in assessing damages for trespass or to a conversion of the goods. (at p596)

12. There is, however, a further matter for decision. Macfarlan J. held that the appellant's entries upon the premises of the respondent on 6th June 1963, on the occasion of the seizure of the goods in about twenty shops did not constitute trespass to land. The Court of Appeal held that the entries were trespasses but that they gave the respondent nothing beyond a right to nominal damages. The respondent has argued in this Court that the Full Court was correct in deciding that the entries were trespass but was in error, notwithstanding that no damages were proved, in either not giving exemplary damages for trespass or increasing the exemplary damages awarded for the wrongful seizure of the goods. To understand the difference between the learned trial judge and the Court of Appeal requires a short account of the business relationship between the appellant and the respondent. (at p597)

13. The appellant had supplied the respondent with electrical goods, not only upon contracts of sale as already described, but also upon terms of what was called a display plan under which the goods remained the property of the appellant. The respondent hired the goods for ninety days in order to sell them by retail and undertook that if they were not returned within the ninety days to pay a fixed purchase price within thirty days of the expiration of the hiring. The display plan agreements contained certain provisions including the following :

"2. The dealer agrees that so long as he remains the hirer of the goods : . . . (c) The dealer will not assign or encumber his rights in respect thereof except so far as may be necessary to put the goods into the possession of an approved customer as aforesaid.

. . . 5. If the dealer shall become bankrupt or execute any assignment for the benefit of or compound with creditors or if the dealer is a company and any order or resolution shall be made or passed for the dealer's winding up or if any execution or distress shall be levied against the dealer or if the dealer shall fail to observe or perform or commit any breach of any provision binding on him in respect of the goods then and in any such case it shall be lawful for the company immediately and without notice to the dealer and without prejudice to any other rights it may possess to determine the hiring of the goods and retake possession of the goods and for that purpose to enter upon any premises where the same may be. Upon the termination of the hiring the rights of the dealer shall thereupon cease and determine." (at p597)

14. It was admitted by the respondent for the purposes of the action that on or about 22nd January 1963, a deed of charge between P.I.L. Finance Pty. Ltd. and the respondent was executed by the respondent and "that on 3rd June 1963 Keith Stobo Fleming was appointed receiver and manager of the property of Inglis Electrix under powers contained in the deed of charge". (at p597)

15. It was common ground that on the date of the seizure there were, in every shop from which goods were seized, goods held upon the terms of the display plan and the appellant's contention was that there was no trespass because entry upon the premises was, in these circumstances, authorized by the display plan. Macfarlan J. accepted this argument regarding the appointment of the receiver as the levying of an execution within the meaning of the display plan so that cl. 5 applied and authorized the entries. The Court of Appeal came to a different conclusion. The learned judges were unanimous : (1) that the appointment of the receiver did not amount to an execution within the meaning of cl 5 of the display plan agreements ; and (2) that nevertheless it should be held (Sugerman and Jacobs JJ.A.) or it could be assumed (Herron C.J.) that the appointment of the receiver amounted to an assignment or encumbrance of the present respondent's rights evidencing a breach of cl. 2 of the display plan agreements. Herron C.J. and Jacobs J.A. considered nevertheless that the entries were trespasses because each entry was not only for "the lawful and licensed purpose of removal of the display plan goods but also for the unlawful and unlicensed purpose of removal of the plaintiff's own goods". There was therefore, in the opinion of those learned judges "a trespass to land pro tanto". Sugerman J.A. differed as to this and said (1967) 69 SR (NSW), at p 330 :

"While it is thus clear that a licensee who enters solely for a purpose which exceeds his licence becomes a trespasser upon the land, it is difficult to grasp the notion of a person who at the same time is both a trespasser and not a trespasser which is implicit in the doctrine advanced by Mr. Samuels of trespass pro tanto. As in the present case, a person enters for a purpose which is partly within the licence and partly beyond it and, having entered, he takes goods which are partly within the authority of the licence to take and partly outside it. Either, it appears to me, he is a trespasser because he has exceeded the terms of the licence, that is, a trespasser in toto, or he is not a trespasser at all qua the land, because he was licensed to enter it, but only qua the goods which he has wrongfully taken."

His Honour held, therefore, that the learned trial judge (1967) 69 SR (NSW), at p 331 "was not in error in holding that there were no trespasses to land in the present case and in giving judgment for the defendant on the counts in trespass to land". (at p598)

16. In any event the difference between the learned judges of the Court of Appeal upon the question whether or not the entries were trespasses to land became academic for the majority considered that no damages should be awarded in respect of such trespasses. It was said that nominal damages only should be awarded - but none were - and that there should be no exemplary damages. (at p598)

17. Counsel for the respondent, as has already been indicated, requested this Court to find that the entries were trespasses and to assess additional exemplary damages. (at p599)

18. Were the majority of the Court of Appeal correct in their decision that the entries were trespasses, they were, in our respectful opinion, also correct in deciding that there should be no exemplary damages for such trespasses additional to the $3,500 awarded by the learned trial judge. After all the entries and the wrongful seizure of the respondent's goods were all part of one transaction which the learned trial judge regarded as highly reprehensible and for which he awarded a substantial sum as exemplary damages. However, we agree with Sugerman J.A. that the entries were not trespasses, and do not find it necessary to add to what the learned judge said on the question of so-called trespass pro tanto. The evidential material of breach of cl. 2, supra, is scanty, but as the respondent did have rights under the display plan agreements, e.g., options to purchase the goods covered thereby, and had admitted that a receiver and manager "of the property of Inglis Electrix" was appointed "under powers contained in the deed of charge", when upon the appointment of the receiver the encumbrance upon the respondent's rights in respect of the display plan goods crystallized there was therefore an encumbrance of its rights within the meaning of cl. 2 (e) of the display plan agreement. It was argued, however, that as the respondent had not itself appointed the receiver it did not encumber its rights in respect of the display plan goods. However, the execution of the deed at an earlier date which was capable of a double operation and which, operated at a later date and in accordance with its very terms and intendment operated as a fixed charge, effected an encumbrance at the later date as the act of the encumbrancer. In our opinion, therefore, the appellant was entitled to enter the respondent's shops and those entries did not constitute trespasses to land. (at p599)

19. Having reached the conclusion that the price of the goods payable by the respondent to the appellant was correctly taken into account by the learned trial judge in assessing damages for conversion, the respondent's last point upon this appeal, viz., that it was entitled to interest upon the award of damages, really disappears. We do, however, agree fully with Sugerman J.A. when, in relation to argument that, pursuant to s. 141 (a) of the Common Law Procedure Act, 1899-1967 (N.S.W.), the damages awarded should bear interest, he said (1967) 69 SR (NSW), at p 332 :

"The discretion conferred by the statute has to be exercised according to the requirements of justice in the circumstances of each particular case. In the present case, in my opinion, it would not be just as between the plaintiff and the defendant, to require the defendant to pay to the plaintiff interest on the value of the goods. The plaintiff has not lost anything beyond the value of the goods, and it remains liable to pay the price to the defendant from which it bought them and which it has not paid for them. The purchase price of the goods thus payable to the defendant does not carry interest. It appears to me that it would be unjust to require the defendant to pay interest to the plaintiff, as upon a forced sale of the goods to the defendant, when the plaintiff is not required to pay interest to the defendant in respect of its own earlier purchase of the same goods by which it acquired the title which has enabled it to maintain this present action. Therefore I am of opinion that damages in the nature of interest should not be awarded in this case." (at p600)

20. For the foregoing reasons it is our opinion that the appeal should be allowed and the judgement of Macfarlan J. restored. (at p600)

KITTO J. The plaintiff bought certain goods of the defendant on terms that the property in the goods should pass to the plaintiff upon delivery and payment should be made within sixty days thereafter. The goods were delivered to the plaintiff. Within the sixty days and while the price was still unpaid the defendant entered the plaintiff's premises and wrongfully retook possession of the goods and disposed of them to other persons. The plaintiff sued the defendant for trespass to the goods and for conversion thereof and recovered a verdict upon these counts for $3,500 before a judge sitting under the Commercial Causes Act, 1903-1965 (N.S.W.), without a jury. The amount was awarded purely as exemplary damages, by reason of circumstances of aggravation in the taking of the goods. The judge refused to include in his award any damages for the plaintiff's loss of goods, taking the view that the seizure of them by the defendant relieved the plaintiff of the obligation to pay the price, and therefore, it being agreed that price and the value of the goods were equal in amount, the conversion caused the plaintiff no loss. If it be true that the seizure relieved the plaintiff of the obligation to pay the price his Honour's conclusion was plainly correct, for as is shown by such cases as Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) and Butler v. Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 , the compensatory damages recoverable for a deprivation of goods, whatever be the form of action employed, are only such as will restore to the plaintiff the amount of the net loss caused to him by the wrongful act. But it is equally clear that if the plaintiff still owes the defendant the price of the goods notwithstanding the defendant's retaking of them the plaintiff has lost the value of the goods and is entitled to the amount of the value as damages. (at p601)

2. The view that the retaking of the goods relieved the plaintiff of his liability to pay the price obviously cannot be maintained upon the ground that the retaking worked a rescission ab initio of the contract of sale or was a breach of a condition to which the plaintiff's obligation to pay the price was subject. The defendant seeks to maintain it by pointing to the fact that the retaking was a breach of the warranty of quiet possession which was implied in the contract of sale (see the Sale of Goods Act, 1923 (N.S.W.), s. 17 (2)), and that as such it was capable of being set up by the plaintiff against the defendant in diminution or extinction of the price : ibid. s. 54 (1). But to say this is very different from saying that the conversion had the effect of reducing or extinguishing the price. What s. 54 (1) does (in its application to a breach of warranty of quiet possession) is to give the buyer an option either to maintain an action against the seller for (and therefore to recover in full) the damages caused to him by the breach or to wait until he is sued for the price and then to set up the breach of warranty in diminution or extinction of the price. If he elects to sue the seller for damages, as he may do either in a separate action or by way of cross action when sued for the price, his damages must be measured by the loss directly and naturally resulting in the ordinary course of events from the breach ; for s. 54 (2) so provides. There is nothing in the Act to entitle the seller to set up the price in diminution or extinction of the damages. By allowing the buyer, if he chooses, to defend an action for the price by proving how much less the goods were worth to him by reason of the plaintiff's breach of warranty and to have the verdict lessened on that account, s. 54 (1) merely allows a procedural concession, and one which, as the leading case of Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) clearly shows, the law has come to concede for the sake of convenience. That the breach of warranty does not itself work a reduction or extinguishment of the buyer's liability for the price is necessarily involved in the proposition which s. 54 (1) establishes - indeed takes as its basic assumption - that if the buyer prefers to sue on the cause of action for breach of warranty and recover the full amount of his loss he is free to do so : Davis v. Hedges (1871) LR 6 QB 687, at p 690 ; Bow, McLachlan &Co. Ltd. v. The "Camosun" (1909) AC 597, at pp 610, 611 . (at p601)

3. That is what the buyer in the present case did choose to do. It chose a course which exhausted its option, in the sense that if it recovers a verdict for compensatory damages its cause of action for the breach of warranty will be exhausted and its damages will no longer be capable of being set up against the defendant in diminution or extinction of the price. But the decision of the learned trial judge meant that the plaintiff was not at liberty to exercise its option in this way. It was refused a verdict for compensatory damages and was left with no right to recover its damages save by setting them up in diminution or extinction of the price if and when the defendant should sue for it. This seems to me completely inconsistent with s. 54 and unsustainable. (at p602)

4. In the Supreme Court the Court of Appeal (1968) 69 SR (NSW) 311 reversed the trial judge's decision and held tht the full value of the goods was recoverable as compensatory damages without any deduction by reason of the fact that the purchase price remained unpaid. The Court reached its conclusion, correctly as I think, after consideration of a number of authorities which we are invited to examine. First, there are the two cases to which the trial judge referred as supporting his decision, namely Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) , and Butler v. Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 . These cases illustrate one simple proposition, that the loss which a plaintiff has suffered by a conversion of goods which were not in his possession, and for which he would have had to pay the defendant a sum of money if he were to obtain possession of them, is a loss of no more than the difference between the value of the goods and the sum he would have had to pay ; and therefore in any form of action in respect of the conversion he cannot recover as compensatory damages more than the amount of that difference. That is not a proposition which applies to the present case, for the conversion complained of was a deprivation of a possession which the plaintiff had and was entitled to retain as against all the world, including the defendant, whether paying the price or not. (at p602)

5. The plaintiff owed the price before the conversion and owed it no less thereafter. Even if the defendant had sued for the price and the plaintiff had elected to set up the breach of the covenant for quiet possession the set-off would have been the act of the Court, done upon the footing that the whole price was owing. The expression in s. 54, "in diminution or extinction of the price", means only, of course, "so as to reduce the verdict for the price either to a lower figure or to nil". The point is that not until the moment of verdict in the action for the price would there have been any diminution or extinction. The act of conversion did not itself diminish or extinguish the price. (at p603)

6. Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) is to be contrasted with Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) . A suggestion was made by Denman J. in Johnson v. Lancashire and Yorkshire Railway Co. (1878) 3 CPD 499, at p 507 , that those two cases seemed difficult to reconcile and that perhaps the former should be taken to have overruled the latter. The difference on the facts is that in the former case the plaintiff had only a right to have the goods delivered to him under the contract of sale, the possession being retained meantime by the defendant, whereas in the latter case the goods had been delivered to the plaintiff under the contract. What the Court held in Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) was that because the seller had not delivered the goods to the buyer and had disabled himself from ever delivering them (1860) 5 H &N, at p 294 (157 ER, at p 1195) ,

". . . he could not in any form of action recover the price ; and it would be singular if the same act which saved the vendee the price of the sheep should vest in him a right of action for their full value without deducting the price."

The whole point of the case lay in the interest which the seller had in the goods by reason of being still in possession of them at the time he converted them - that is to say his interest as an unpaid seller, which had necessarily to be allowed for in valuing the loss by the buyer of his interest int eh same goods : see the important discussion of this case in Attack v. Bramwell (1863) 3 B &S 520 (122 ER 196) . Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) provides a clear contrast, for the seller in that case had delivered the goods to the buyer and the conversion was by way of a retaking, so that the interest the buyer lost by the conversion extended to the whole right of possession of the goods untrammelled by his liability to pay the price. The decision was that for that reason his damages could not be reduced on the ground that the price was unpaid. There is no inconsistency between the two decisions, and the present case is covered precisely by Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) , which no one but Denman J. seems ever to have doubted and textwriters have generally approved : see Bullen &Leake, Precedents of Pleadings, 3rd ed. (1868), p. 242 ; Benjamin on Sale, 8th ed. (1950), p. 949 ; Mayne and McGregor on Damages, 12th ed. (1961), p. 609, par. 704, note (30) ; Halsbury's Laws of England, 3rd ed., vol. 38, p. 796, par. 1323, note (s). The Court which decided Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) was a strong one. Lord Abinger C.B. pointed out that the opposite view would allow a party to set off "a debt due in one case against damages in another" - which is precisely what the defendant in the present case seeks to do ; and one may add that the departure from principle that would have been involved in so doing is underlined by Baron Parke's acknowledgment in Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , that the converse process, of setting off damages for a breach of warranty against the price payable, though allowed for convenience, was in truth a deviation from principle. Lord Abinger added an observation (1841) 8 M &W, at p 578 (151 ER, at p 1169) which is much in point in the present case : "The verdict in this case does not at all affect the right of the defendant to recover the whole" (of the price) "due to him from the plaintiff." Baron Alderson emphasized the essential disconnexion between the cause of action for the retaking of the goods and the cause of action for the price by saying that while the jury might consider the whole of the circumstances really belonging to "the case", i.e., the action for taking of the goods, a direction which the trial judge had given that the circumstances included the plaintiff's debt to the defendant was a direction to consider "a circumstance which ought to be excluded" ; "otherwise", he said, "it is equivalent to adding a set-off in trespass". Baron Gurney concurred. Baron Rolfe said that no authority had been cited which supported the contention that a party who wrongfully retakes possession of his own goods (i.e., which he has sold) thereby debars himself from suing for the price. He found it unnecessary to give any opinion on the point ; but the absence of authority upon which he remarked has continued, so far as I can find, to the present day. The truth, as it seems to me, is that the rule of practice now contained in s. 54 (1), enabling a buyer, if he so chooses, to have his claim against the seller for breach of warranty treated as if it were a subject of set off though in principle it is a subject for a separate action (a cross action), provides no logical or legal justification for the proposition that the seller may require his claim against the buyer for unpaid purchase-money to be treated, over the objection of the buyer, as if it had been satisfied by being set off against his liability for breach of warranty. (at p604)

7. Before leaving this part of the appeal I should add that I have not overlooked two submissions that were made in the course of the argument, namely first that the plaintiff has lost only the possession of the goods in question and not the title to them, and secondly that the covenant for quiet possession is to be construed as directed only against lawful acts. As to the first, it is sufficient to say that even if the assumption be made that the strangers to whom the defendant has purported to dispose of the goods have not acquired a valid title to them as against the plaintiff, in the circumstances of this case there seems to be no sound reason for assessing the plaintiff's loss of possession at less than the full value of the goods. As to the second submission I need say only that no relevant distinction suggests itself to me between the warranty of quiet possession in a contract of sale of goods and the familiar covenant for quiet enjoyment in a lease or conveyance of real property, and it seems clear on the authorities that such a covenant protects the covenantee against tortious acts of the covenantor or any person authorized by him : Sanderson v. Mayor of Berwick on Tweed (1884) 13 QBD 547 ; Harrison Ainslie &Co. v. Muncaster (1891) 2 QB 680, at p 684 ; Niblett v. Confectioners' Materials Co. (1921) 3 KB 387, at p 403 . (at p605)

8. For the foregoing reasons I am of opinion that the Court of Appeal was right in allowing the plaintiff compensatory damages for conversion and trespass to goods. In the action the plaintiff claimed also damages for trespass to land and relied upon the following circumstances. The goods referred to in the foregoing discussion were in the possession of the plaintiff, until they were taken by the defendant, in a number of shops in which the plaintiff was carrying on business as a retail seller of electrical appliances. In the shops there were also other goods, including some which belonged to the defendant and were the subject of hiring agreements called display plan agreements. By these agreements the defendant had hired the goods to the plaintiff for ninety days, and that period was still current at the material time. The agreements provided, however, that in certain classes of events it should be lawful for the defendant, immediately and without notice to the plaintiff, to determine the hiring and retake possession of the goods and for that purpose to enter upon any premises where the same might be. According to admissions made at the trial, prior to the acts of the defendant which are complained of as trespasses to land a receiver and manager of the plaintiff's property was appointed under a deed of charge which the plaintiff had given in favour of a third company, and apparently it was this appointment that led the defendant to seize and take both the goods covered by the display plan agreements and the goods which are the subject of the claims for conversion and trespass to goods. The appointment of the receiver and manager, however, was not proved to have been within the classes of events upon the occurrence of which the display plan agreements authorized the defendant to enter the plaintiff's premises. In particular, the appointment was not, in my opinion, a levying of execution or distress against the plaintiff, and since the deed of charge was not made evidence in the case there was no proof, though it may be the fact, that the crystallizing of the charge produced a breach by the plaintiff of any provision of the agreements. But the plaintiff's contention is that assuming the licence to enter which the agreements conferred took effect upon the appointment of the receiver and manager, the defendant was guilty of trespasses on the plaintiff's lands in so far as its servants or agents exceeded the limits of the licence by what they did with respect to goods which were not the subject of display plan agreements. The defendant did not, of course, become a trespasser ab initio by reason of this conduct, for the entry of its servants and agents upon the lands was not under an authority conferred by the general law ; but the contention is that the defendant is guilty of trespasses pro tanto (as it was expressed in argument), that is to say to the extent of the use that they made of the plaintiff's lands otherwise than for the purpose of retaking possession of goods that were subject to display plan agreements. The Court of Appeal so held by a majority and in my opinion rightly. No doubt a person cannot be at the one moment of time both a trespasser and not a trespasser in respect of the same land. The initial entry of the defendant's servants and agents upon each of the relevant parcels of land and the acts they did thereon for the purpose of retaking possession of the goods which were subject to display plan agreements were all authorized (as I am here assuming), but the acts that they did for the purpose of taking possession of other goods were clearly not. Every step that they took on the plaintiff's lands for the latter purpose was an unlicensed step and therefore a trespass. Whether each such step be called a trespass pro tanto or a trespass quoad or just a plain trespass, the fact is that it was an unauthorized interference with the plaintiff's possession, and the plaintiff was entitled to a verdict for some damages in respect of it. (at p606)

9. The Court of Appeal ordered that on each of the counts for trespass to land a verdict be entered for the plaintiff for nominal damages, but did not fix an amount. The defendant's notice of appeal to this Court sought verdicts on these counts for the defendant, but for the reasons indicated I am of opinion that in this respect, as in respect of the quantum of damages for conversion and trespass to goods, the appeal should be dismissed. The plaintiff by a cross appeal sought verdicts for substantial and not merely nominal damages for the trespasses to land, but the short answer is that these trespasses caused no damage to the plaintiff, and as the circumstances of aggravation were fully allowed for in the amount of damages awarded for conversion and trespass to goods the Court of Appeal was right to allow nominal damages only. If it were worth the plaintiff's while to have these damages assessed no doubt the Supreme Court could make appropriate orders ; but with that we need not concern ourselves. (at p607)

10. The plaintiff's cross appeal raised one other contention, namely that the Court of Appeal should have awarded interest on the amount of the verdict for compensatory damages for conversion and trespass to goods ; but as Sugerman J. pointed out in the Court of Appeal, since interest has not been running on the unpaid price of the goods that were converted it would be unjust to use the power conferred by s. 141 (a) of the Common Law Procedure Act, 1899-1965 (N.S.W.), even if it be available to a judge sitting without a jury, to make interest run on any compensatory damages that may be awarded for the loss of them. (at p607)

11. In my opinion both the appeal and the cross appeal should be dismissed with costs. (at p607)

WINDEYER J. The respondent to this appeal was the appellant before the Supreme Court in its Court of Appeal Division. It was the plaintiff in the action. For convenience I shall refer to it as the plaintiff and to the present appellant as the defendant. This makes their respective positions clear throughout. (at p607)

2. I may say at once that in my opinion the appeal and the cross appeal in this case fail and should both be dismissed. In particular I accept, as impressively correct on the main topics discussed, the learned judgment of Sugerman J. I would leave the matter at that were it not for the importance of the case, the care with which it was argued on both sides, and the differing opinions to which the facts give rise. My own view accords generally with what has been written by my brothers Kitto and Owen, whose judgments I have had the benefit of reading. But I am unable to concur in their Honours' view of one aspect of the matter. In all the circumstances I think therefore that I should state fully for myself my reasons for my conclusion. (at p607)

3. The essential facts are simple. The way in which they arose is explained in the judgment of my brother Owen and in the judgments in the Supreme Court. As these relieve me of the need to give a detailed account a summary will suffice. The defendant had sold and delivered certain electrical goods to the plaintiff, a trader in goods of that kind. The price had not been paid. Under the terms of the contract of sale the time for payment had not arrived. But the property in the goods had passed to the plaintiff. The plaintiff was the owner of the goods, and in possession of them. The defendant had no lien or right in them. All that it had was a right to be paid the stipulated price when it should become due and payable. Yet it wrongfully seized the goods, carried them away from the plaintiff's premises, and by selling them converted them to its own use. The seizure occurred in the course of what can best be described as a planned raid by servants of the defendant. The main purpose of this was, it seems, to repossess certain goods of the defendant which were then in the possession of the plaintiff under a "floor-plan". The defendant's action in thus retaking possession of goods of which it was the owner is not in question. This case arises from the unquestionably wrongful act of the defendant in seizing and taking the goods of which the plaintiff was the owner. (at p608)

4. For that the plaintiff had a right of action for damages. Its cause of action could be either for the tort or for breach of the defendant's warranty of quiet possession, of which I shall say more later. The debt for the price was still owing by the plaintiff to the defendant. It would within a short time become due and payable. It was not extinguished by the fact that the plaintiff might assert a right to damages; for the defendant's conduct did not put an end to the sale. In 1866 the Privy Council said that, "There is no case to be found in the books where, after a sale and complete delivery of a chattel, and the price not paid, the vendor's taking the property out of the purchaser's possession has been held to amount to a rescission of the contract" : Page v. Cowasjee Eduljee (1866) LR 1 PC 127, at p 145; 3 Moore NS 499, at p 524 (16 ER 189, at p. 198). . Indeed there were then cases to the contrary to be found in the books, the most noteworthy being Stephens v. Wilkinson (1831) 2 B &Ad 320 (109 ER 1162) and Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) . (at p608)

5. The plaintiff in fact sued in tort, for trespass to goods and for conversion. It is in this action that this appeal comes. Before the action came on for trial the time had arrived when under the contract of sale the price was payable. In arriving at the damages which the plaintiff was entitled to have from the defendant the learned trial judge held that the defendant could no longer claim the price because it had taken back the goods. But when a seller has sold goods, and they have become the property of the buyer, the seller cannot undo this by a tortious act. And the mere fact that a buyer is the seller's debtor cannot limit the damages he is entitled to recover against the seller in tort. It makes no difference in principle, it seems to me, that the price represents the value of the goods in the hands of the buyer. The defendant did not by a counterclaim seek to recover the price of the goods in the action; and, so far as appears, it has not so far sued for the price as a debt due to it. The plaintiff has not alleged that its debt for the price was thereby extinguished. Its case is simply that the damages to which it is entitled are to be measured in this action disregarding its debt to the defendant. The question is whether that proposition is correct. If it be correct, we are not concerned with the consequences which may follow in any proceedings which may occur in the future. (at p609)

6. The answer to the question is to be sought in the law relating to the sale of goods. That is for present purposes to be found in the Sale of Goods Act, 1923-1953 (N.S.W.). That Act is "an Act to codify and amend the law relating to the Sale of Goods". It is for the most part a copy of the Sale of Goods Act, 1893 of the United Kingdom (which I shall call the Act of 1893). The provisions of the New South Wales statute which bear upon this case are derived directly and in terms from the Act of 1893. They are thus professedly a codification of common law rules. Yet we were invited to consider numerous cases decided in England long before 1893, and to notice not only their facts but also to take the precise words, phrases and sentences of the judgments as definitive statements of law. I have some misgivings about this. It was of the Act of 1893 that Cozens-Hardy M.R. said:

"I rather deprecate the citation of earlier decisions. . . . The object and intent of the statute . . . was, no doubt, simply to codify the unwritten law applicable to the sale of goods, but in so far as there is an express statutory enactment, that alone must be looked at and must govern the rights of the parties, even though the section may to some extent have

altered the prior common law" : Bristol Tramways, &.,

Carriage Co. Ltd. v. Fiat Motors, Ltd. (1910) 2 KB 831, at p 836 .

Alongside this I put Lord Esher's statement in Abbott &Co. v. Wolsey (1895) 2 QB 97, at pp 99, 100 :

"Cases have been cited which were decided before the passing of the Sale of Goods Act, 1893. It may be that the decisions on the subject were not quite consistent; but, assuming that to be so, it is now immaterial, for the legislature have undertaken to determine which of the decisions was correct. The statute was passed to declare the law. We are bound by it, and can look to nothing else." (at p610)

7. Nevertheless we must recognize that courts frequently do look to nineteenth century decisions before 1893 as guides to the interpretation of the statute. The justification for doing this is, I think, twofold. First, it is possible to find in judgments the origin of the words of particular provisions of the statute, and thus illustrations of its operation. Secondly, we cannot in the seeking of its meaning ignore the common law on which it was founded. Sir Mackenzie Chalmers, its distinguished draftsman, expressed this, happily and wisely I venture to say, when he said: "Our common law is rich in the exposition of principles, and these expositions lose none of their value now that the law is codified. A rule can never be appreciated apart from the reasons on which it is founded" : Introduction to the first (1894) edition of Chalmers on the Sale of Goods Act. I propose therefore, following what seem to me good examples to examine the provisions of the Act alongside the decisions of earlier date. In doing so I shall refer to the numbers of the sections of the New South Wales Act, sometimes adding for convenience the numbers of the provisions in the same terms in the Act of 1893 whence they were derived. (at p610)

8. In the argument for the appellant, the defendant, great weight was put on those provisions of the Act headed "Remedies of the Buyer" which deal with remedies for a breach of warranty. It is convenient to set out the relevant parts. (at p610)

9. Section 54 (1) of the New South Wales Act (in terms the same as s. 53 (1) of the Act of 1893) is as follows:

"Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods, but he may - (a) set up against the seller the breach of warranty in diminution or extinction of the price; or

(b) maintain an action against the seller for damages for the breach of warranty." (at p610)

10. This rule is generally taken to have been derived from, and to reproduce in effect, the judgment of Parke B. in Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) . Perhaps its words reflect even more closely a passage from the judgment of Littledale J. in Poulton v. Lattimore (1829) 9 B &C 259, at p 265 (109 ER 96, at pp 98-99) :

"I am of opinion, that where goods are warranted, the vendee is entitled, although he do not return them to the vendor, or give notice of their defective quality, to bring an action for breach of the warranty ; or if an action be brought against him by the vendor for the price, to prove the breach of the warranty, either in diminution of damages, or in answer to the action, if the goods be of no value." (at p611)

11. The conduct of the defendant in taking the goods out of the possession of the plaintiff was a breach of the warranty implied by the Act that the buyer of goods shall "have and enjoy quiet possession of the goods" : see s. 17 (2) (s. 12 (2) of the Act of 1893). The tort for which the plaintiff sued was thus also a breach of this warranty. This, it was argued for the defendant, means that it could have been set up by the plaintiff against the price. From this it was said that the price being unpaid the amount of it should be taken into account in measuring the damages recoverable by the plaintiff for conversion. The proposition demands a consideration of both s. 54 (1) and s. 17 (2). They are both concerned with warranties. I shall consider them in turn. (at p611)

12. The Sale of Goods Act has stood the test of time since 1893. That is not to say that it has put its subject matter beyond debate. It has in fact produced its own crop of decisions. Its main provisions have been adopted in Australia - in New South Wales not until 1923. Some parts of it, in particular the provisions about conditions and warranties, still give rise to difficulties. The distinction between conditions and warranties, its terminology and its effect in particular cases have produced an enormous body of commentary in textbooks and articles, as may be seen by the numerous references in two learned articles : "Conditions, Warranties and Descriptions of Quality in Sale of Goods" by Mr. S.J. Stoljar, Modern Law Review, vol. 15, pp. 425-445 ; vol. 16, pp. 174-197 ; "Warranty, Condition and Fundamental Term" by Mr. F.M.B. Reynolds, Law Quarterly Review, vol. 79, pp. 534-555. I have read only a part of this mass of literature and of the case law referred to in it. In what I have read I have not discovered any recent judicial decision or any relevant academic pronouncement dealing with facts precisely similar to those of this case. We must, I think, decide it upon the words of the Act with such aid as it is legitimate to seek in earlier decisions. But before leaving the contributions of academic commentators, I may mention the article on "Codification of the Law of Contract" by Professor A.L. Diamond published in the July 1968 number of the Modern Law Review, vol. 31, pp. 361-385. I refer to it for two reasons. First, because it draws attention to the partial repeal of s. 11 (1) (c) of the 1893 Act by s. 4 of the Misrepresentation Act, 1967 of the United Kingdom. That section had embodied what the learned author of the article calls "a principle the application of which has anguished the academics ". It is now buried for the United Kingdom, but is still well alive in New South Wales, where s. 16 (3) of the Act is in the same words as was s. 11 (1) (c) in the Act of 1893. And whatever anguish it may cause for academics, we must apply it ; and I think it has indirectly a bearing on this case. (at p612)

13. My second reason for referring to Professor Diamond's article is for his reminder that what Chalmers sought to do was "to codify the existing, but still developing, law. What started as the germ of a judicial idea, which might have been distinguished or overruled, became statute law, binding on all courts including the House of Lords". Chalmers stated what he took to be the effect of the case law ruling at the time. (at p612)

14. The nineteenth century was a time when the common law of sales and warranties was indeed still in a stage of development. The phrase "the germ of a judicial idea" in the article I have quoted calls to mind that Sellers L.J. in Hanak v. Green (1958) 2 QB 9, at p 29 , said of Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , that it "reveals the germ of the law's development". That case in 1841 can be taken as the starting point for understanding the statutory provisions about warranties which are relevant in this case. But it is still necessary, especially if it be truly the start of a new doctrine in the common law, which I take to be the sense in which it can be called germinal, that it be seen against its immediate common law background : and to this I turn. (at p612)

15. From the fourteenth century until late in the eighteenth an action for the breach of a warranty given on a sale was in the nature of an action for misrepresentation and deceit. This was involved in an allegation that a defendant warrantizando vendidit : see Holdsworth, History of English Law, vol. 8, pp. 69, 70 ; Spencer Bower, Actionable Misrepresentation, 2nd ed., pp. 392-394. The turning point to the modern view that the cause of action was in contract, not in tort, is usually said to have been in 1778 in Stuart v. Wilkins (1778) 1 Dougl 18 (99 ER 15) . This was firmly established in Williamson v. Allison (1802) 2 East 446 (102 ER 439) , where Lord Ellenborough C.J. remarked (1802) 1 Dougl, at p 451 (102 ER, at p 441) :

"The ancient method of declaring was in tort on the warranty broken, and that was just going out of general practice when the case of Stuart v. Wilkins (1778) 1 Dougl 18 (99 ER 15) was discussed, because it was found more convenient to declare in assumpsit for the sake of adding the money counts. So general was the former method, that declarations in that form were familiar in every arrangement of precedents in tort. And the more modern practice of declaring in assumpsit in these cases has not prevailed generally above forty years."

There are some interesting observations on the same matter in the judgment of Lawrence J. in the same case. He said that he had himself, even since Stuart v. Wilkins (1778) 1 Dougl 18 (99 ER 15) "drawn a hundred declarations on the same subject in tort" (1802) 2 East, at p 452 (102 ER, at p 441) . And traces of the earlier rule lingered. As late as 1869, in the thirteenth edition of Selwyn's Nisi Prius, vol. 1, pp. 565-580, the subject of warranty is dealt with in the chapter on Deceit. The learned author of that work observed that the form of a declaration on a warranty in Sch. B to the Common Law Procedure Act, 1852 - which still appears in the Schedule to the New South Wales Common Law Procedure Act, 1899-1957 - is "in accordance with the old and correct form of declaring, warrantizando vendidit". Although the count was in the Schedule placed amongst counts of contracts it was a reminder of the old action in tort ; and not guilty could be pleaded to it : see Bullen &Leake, Precedents of Pleadings, 3rd ed. (1868). (at p613)

16. It is not surprising that in the early nineteenth century, although a breach of warranty had come to be actionable in contract, there was still a strong opinion that a buyer of goods sued by the seller for the price must bring a cross action if he wished to set up a breach of warranty. It is to be remembered that when in those days a cross action was spoken of, what was meant was a separate action, not a defence by way of cross action or counterclaim as we understand it today. A set off of a liquidated claim could be pleaded in an action for a debt under the statutes of set off : 2 Geo. II c. 22 and 8 Geo. II c. 24. But a claim for unliquidated damages could not be set up as a defence. In New South Wales this was permitted in 1857 : Common Law Procedure Act, 1857, s. 17 (now s. 79 of the Act of 1899 enlarged in its operation by r. 10 of O.XXX of the Supreme Court Rules). From the terms of the statute this defence got the curious name of a set off by way of cross action. It is a counterclaim like that which in England is the creature of the Judicature Act, 1873, s. 24 (now s. 39 (1) (a) of the Act of 1925, 15 &16 Geo. V c. 49). (at p613)

17. With these matters in mind I return to s. 54. Baron Parke's judgment in Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , shews clearly that the practice which the statute now manifests and establishes had, in 1841, only fairly recently gained a place in the common law. It was allowed by the courts, because "attended with much practical convenience". A buyer sued for the price of a chattel was "permitted to shew that the chattel by reason of the non-compliance with the warranty . . . (was) diminished in value". This course was allowed by the courts as an alternative to the older practice whereby the buyer brought an independent cross action. Now he might "simply defend himself by shewing how much less the subject matter of the action was worth, by reason of the breach of contract". (at p614)

18. This rule was introduced into the law at about the same time as another and related question was becoming settled. Could the buyer of a specific chattel under an express warranty when he found the warranty to be untrue return the article to the seller and claim a refund of the price he had paid ? Must he return, or offer to return, the article if he would bring an action for breach of the warranty ? Most of the numerous cases in the reports in which these questions were considered arose as a result of warranties that horses were sound, free from vice, etc. Fielder v. Starkin (1788) 1 H Bl 17 (126 ER 11) , is an early illustration. Some of the cases turn upon nice distinctions of fact: but the law became more or less settled by the decision in Street v. Blay (1831) 2 B &Ad 456 (109 ER 1212) . That case is noteworthy for another reason. A passage in Lord Tenterden's judgment anticipates Parke B. in Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , in recognizing that a breach of warranty might be set up as a defence in an action for the price due upon a sale "on the principle, as it should seem", his Lordship said, "of avoiding circuity of action ; and there is no hardship in such a defence being allowed, as the plaintiff ought to be prepared to prove a compliance with his warranty, which is part of the consideration for the specific price agreed by the defendant is to be paid" (1831) 2 B &Ad, at pp 462,463 (109 ER, at p 1214) . "Circuity of action" was a phrase which had a special and technical meaning from the time of the Termes de la Ley: see Bullen &Leake, Precedents of Pleadings, 3rd ed. (1868), p. 558. The learned editor of Williams' Saunders Reports in his note (5th ed. (1845), vol. 2, p. 150 b) carefully said of Lord Tenterden's use of the phrase in the passage I have quoted :

"But it is not to be inferred from this expression that a defendant, who exercises the option of setting up, in mitigation of damages, a counterclaim for breach of warranty or contract, according to the modern practice . . . , is in the same situation as if he had brought a cross action, and consequently, that he cannot, after judgment in one action, bring another. For the rule simply is, that it is competent for the defendant to defend himself by shewing how much less the subject matter of the action was worth, by reason of the breach of contract, and not that he may set off, by a proceeding in the nature of a cross action, the amount of damages which he has sustained by breach of the contract."

For this Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) , which is thus echoed, is cited. The reference there to the defendant's option is significant ; and the effect of the earlier decisions was made quite clear in Davis v. Hedges (1871) LR 6 QB 687 . A buyer sued for the price was not bound to set up a breach of warranty as a defence. He might do so, and if he did he would be "concluded to the extent to which he obtained, or was capable of obtaining, a reduction". But he need not thus defend the seller's claim. Instead he could himself sue the seller for all the damages he had suffered by the breach of warranty. (at p615)

19. Before the Common Law Procedure Acts, an action by a seller for the price of goods sold would have been brought either in debt or in indebitatus assumpsit. Afterwards, and until today in New South Wales, the declaration would be by a common indebitatus count, for goods sold and delivered or for goods bargained and sold. A claim by the buyer for breach of warranty would ordinarily be for unliquidated damages. To allow the buyer when sued for the price to set up the breach of warranty thus amounts to answering a claim for a debt by a set off of damages. Thus it can be said that the procedure, which began, as Parke B. said, as a rule of convenience, involves a departure from principle. But I would hesitate so to describe it. It occurred towards the end of the period when the principles of the law concerning warranties on the sale of goods were still in the making in the courts of common law in England. In an action by a seller for the price of goods sold, the buyer could, under a plea of never indebted, raise the defence that the goods were not as warranted: Bullen &Leake, Precedents of Pleadings, 3rd ed. (1868), p. 463; Moreland Metal Co. Ltd. v. Cowlishaw (1919) 19 SR (NSW) 231 . The reason behind this was that, as expressed in the passage I quoted above from Street v. Blay (1831) 2 B &Ad, at pp 462, 463 (109 ER, at p 1214) , the plaintiff ought not to recover the price unless he could establish that the goods were as warranted: and see Cousins v. Paddon (1835) 2 Cr M &R 547 (150 ER 234) ; Dawson v. Collis (1851) 10 CB 523 (138 ER 208) . (at p615)

20. This then was the state of the common law when in 1893 the Sale of Goods Act was passed to codify it. The logic of it seems to me irrefutable. If a thing sold be not as warranted, but inferior, then, if the contract stands - and in the case of the sale of specific goods accepted by the buyer it does stand - the price should be reduced ; for the buyer has not had for the price he promised to pay a thing having the qualities and character of the thing the seller promised to sell. Section 54 (1) of the New South Wales Act (s. 53 (1) of the Act of 1893) seems to me to do no more than reflect the common law as stated in the judgments in the cases to which I have referred. Of course if on its true construction the section goes further, then effect must be given to it. It is said that it does go further, and that a breach of the warranty of quiet possession under s. 17 (2) could be set up by the defendant in an action for the price. At this point I turn therefore to s. 17 (2) (which is s. 12 (2) of the Act of 1893). (at p616)

21. Section 17 (1) provides that there is an implied condition on the part of the seller that he has a right to sell the goods. Section 17 (2) creates the warranty of quiet possession and enjoyment. The two provisions are related. The second can be read as ancillary to the first. As to the first it is arguable that it was not a doctrine of early common law. It is true that Blackstone said there was on a sale of goods an implied warranty of title: Commentaries, II, p. 452. He was not using the word "warranty" in the sense the statute gives it; and the references he gives do not really support his statement as a general proposition: see Tomlin's Law Dictionary (1835) under "warranty"; Williston on Contracts, 3rd ed., vol. 8, ss. 975, 976. But, whatever the position in early law, it was established in Eichholz v. Bannister (1864) 17 CB (NS) 708 (144 ER 284) , after a very learned and instructive argument which is fully reported, that ordinarily the seller of goods impliedly warrants that he has a title to them. (at p616)

22. As to s. 17 (2) - I have not come upon any precise statement supporting it as a doctrine of common law, except, somewhat surprisingly, in an early case in New South Wales, Fitzgerald v. Luck (1839) 1 Legge 118, at p 122 , where Dowling C.J. in the course of a judgment dealing mainly with another question said: "It is an implication of law, and of common sense, that if A sells to B for valuable consideration, A guarantees that B shall have undisturbed possession of the thing bought." In the result I think that s. 17 read as a whole does not match any explicit statement in the common law; and that seems to accord with views expressed by the editors of some editions of Benjamin on Sale. (at p617)

23. It has been suggested that s. 17 (2) is founded upon an analogy with covenants for quiet enjoyment in sales of land. Apparently on the basis of this, it was argued that it would be broken only if there were a disturbance of possession by a stranger to the contract of sale who claimed a lawful right to the goods by virtue of a better title than the seller - in other words a lawful act. But, whatever the origin of the statutory provision, I do not think that its words are to be construed by analogies supposedly to be found in convenants for quiet enjoyment of land. These, whether express or implied, are ordinarily in different terms from it. Lord Greene, in Mason v. Burningham (1949) 2 KB 545, at pp 562, 563 , said that he saw no reason for importing into the statute any gloss or exception derived from the covenant for quiet enjoyment of land. We should, I think, agree. I realize that the application, scope and operation of s. 17 (2) may, in some circumstances, still be debatable, especially in relation to disturbance by title paramount. In Niblett v. Confectioners' Materials Co. (1921) 3 KB 387, at p 403 Atkin L.J. said that "probably this warranty resembles the covenant for quiet enjoyment of real property by a vendor . . . and only purports to protect the purchaser against lawful acts of third persons and against breaches of the contract of sale and tortious acts of the vendor himself". But Bankes and Scrutton L.JJ. in the same case were more cautious. Whatever limits there may be to the statutory warranty of quiet possession upon a sale of goods, there can be no doubt that it protects the buyer against a tortious disturbance by the seller with possession of goods sold and delivered to the buyer. The actions of the defendant in forcibly carrying away the goods it had sold were thus a clear breach of its warranty that the plaintiff should have and enjoy quiet possession of the (at p617)

24. The question which then arises is whether the warranty under s. 17 (2) is one of those to which s. 54 (1) of the Act (s. 53 (1) of the 1893 Act) applies. That section no doubt applies to warranties arising out of the implied conditions of quality and fitness under s. 19 (s. 14 of the 1893 Act); and also I assume to warranties arising from the implied conditions of sales by sample under s. 20 (s. 15) and of sales by description: s. 18 (s.13). Those are all cases in which pursuant to s. 16 (3) (which is the much discussed s. 11 (1) (c) of the Act of 1893) a breach of a condition is treated as a breach of warranty. In all of them the goods for which the buyer must pay are defective or inferior to the goods the seller had promised him. This in logic, and having regard to the common law before the statute, is an obvious justification for a reduction in the price which the seller may recover. The first alternative under s. 54 (1) is understandably applicable to a case of that kind. It fits well the expression in Davis v. Hedges (1871) LR 6 QB, at pp 690-691 , of giving a "right to redress for the diminution in value". It allows for what the Privy Council has called a "breach of contract resulting in a diminution of value of the article"; and comprehends any damages which might be treated as "an abatement" of the price: Bow, McLachlan &Co. v. The "Camosun" (1909) AC 597, at pp 610, 613 . Any defect in the character or quality or quantity of the goods delivered or in the performance of the contract, as for example a late delivery, goes directly to the amount of the price because it makes the goods less valuable to the buyer at the date he received them than if the related warranties had been performed. (at p618)

25. But I do not think that a breach of the warranty of quiet possession is of the same kind. It could arise long after the delivery of the goods to the buyer. It causes harm to the buyer: but it does not affect the intrinsic value to him of the goods themselves in the same way as do defects arising from the breach of other warranties. It does not bear upon the price in the way which is illustrated by the common law cases on which the verbiage of s. 54 (1) is based. For these reasons it seems to me that a buyer if sued for the price could not set up the breach of the warranty of quiet enjoyment to diminish or extinguish the debt for it does not have that effect. He could maintain a separate action against the seller for damages. In New South Wales he could raise this today by way of a cross action. But it would not be an answer to the debt, but an independent claim. For that reason, if for no other, I would consider that the defendant's argument based on s. 54 (1) fails. I realize that in saying this I part company from the other members of the Court. However, there are other grounds on which I think that the defendant in this case cannot get any comfort from the provisions of s. 54 (1). (at p618)

26. The plaintiff did not seek to set up the breach of warranty as an answer to a claim by the defendant for the price. It was not sued for the price. And, as Herring C.J. pointed out in the case of Newman v. Cook (1963) VR 659, at p 662 :

"It is only when a purchaser is sued for the price that he can set up the breach of warranty in diminution thereof under the section, which provides him not with a sword but merely with a shield."

What the plaintiff did was to take a sword. It sued the seller for trespass to goods and conversion. It might have framed its action as for a breach of the warranty of quiet possession. It preferred to sue in tort. The measure of compensatory damages would probably be the same. But I need not consider whether that is so or not. In tort the buyer could claim and was awarded a sum by way of exemplary damages. This must be regarded as an addition to whatever sum it be entitled to by way of compensatory damages. As I have said, the tort of the defendant did not of itself absolve the buyer from its liability for the price or preclude the seller from asserting its correlative right to be paid. The one thing might balance the other if they were thrown into the balance in an action. But they were not. A counter-attack may be an effective means of defence; but the mere ability to make a counter-attack does not defeat an attack. (at p619)

27. In the United States the law concerning remedies for breach of warranty now differs from that in the Sale of Goods Act. It is stated and discussed in Williston on Sales, revised ed. (1948), vol. 3, s. 603 et seq. But at one period the development of the law in many jurisdictions in America ran parallel with developments in England. In particular it was held that a buyer might set up a breach of warranty in answer to an action by the seller. This conclusion was firmly reached in America at about the same time as it was firmly enunciated in England in Mondel v. Steel (1841) 8 M &W 858 (151 ER 1288) . In both countries it was recognized then as a change in practice. In both it was justified on grounds of convenience and as avoiding circuity of action. It thus became established that, as the Supreme Court of the United States put it in the course of expounding "the modern doctrine" in Withers v. Greene (1849) 9 How 213, at p 227; 18 US 104, at p 111 (13 Law Ed 833) , " it is the duty of the jury to graduate the plaintiff's recovery by the injury which the defendant has sustained . . . ". The opinion of the Court in that case, delivered by Daniel J., is noteworthy not only for its citation of authority but for its concurrence with English statements of the common law. There are many later cases in the United States. Their general effect seems to be reflected in, in some cases to be the result of, s.69 of the Uniform Sales Act. This differs materially from s. 53 of the Act of 1893; but it resembles it in one respect. The buyer can set up against the seller a breach of warranty "by way of recoupment in diminution or extinction of the price"; or he can bring an action against the seller for damages for breach of warranty. The significance of the resemblance at this point is that a breach of warranty does not automatically reduce or extinguish the liability for the price. The buyer must set it up. In America this course, which among others is open to him if he keeps the goods, is described as recoupment. "Under the doctrine of recoupment", says Professor Williston, "the theory is that the defendant is not bound to perform the contract on his part, but he has received something of value for which he ought to pay." This is contrasted with the right to damages by way of counterclaim. "Under the statutes of counterclaim the defendant does not seek to avoid his obligation under the contract but seeks to enforce the plaintiff's obligation and to deduct his liability for breach of that obligation from the amount due from himself." : Williston on Sales, revised ed. (1948), vol. 3, s. 605, p. 334. This may not, for the purposes of our law, express the theory behind on the one hand setting up a breach of warranty in answer to a seller's claim and on the other a claim by the buyer for damages for breach of warranty. But, whatever be the background theory of the doctrine, it is the common law of England which we and America have inherited which is in the background. And, as I understand the principles of the Sale of Goods Act, a breach of warranty does not by the terms of that Act or by the common law on which it is based, of itself determine the buyer's liability for price of goods sold and delivered to him and accepted by him. (at p620)

28. So far as the question depends upon common law decisions before 1893, I agree in my brother Kitto's observations about them. The observations in Gillard v. Brittan (1841) 8 M &W 575 (151 ER 1168) , are in point, and Chinery v. Viall (1860) 5 H &N 288 (157 ER 1192) , does not compel a contrary conclusion. The comparison and reconciliation of the two cases in Benjamin on Sale, 8th ed. (1950), p. 949, accords with the view expressed by Kitto J. (at p620)

29. I do not think that the decision in Butler v. Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 , on which the defendant placed some reliance, has any direct application in this case. The appellants in that case were poultry farmers. Eggs laid by their hens became by statute the property of the Board as soon as they were laid. The appellants had an obligation to deliver them to the Board. If they had done so, they would have become entitled to share in the proceeds realized by the Board from selling those eggs and other eggs. If they failed to deliver them they were not entitled to any payment for them from the Board. They in fact did not deliver them to the Board, but sold them elsewhere. They thus became liable to the Board in damages for conversion. It was held by this Court that, in assessing the damages the Board had suffered by that conversion, a deduction must be made for the amount the Board would have had to pay if the eggs had been delivered to it. To disregard this in assessing the Board's damages would mean that, as Taylor and Owen JJ. said (1966) 114 CLR, at pp 190, 191 ,

". . . 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."

That shews at once how far removed that case is from this. (at p621)

30. I do not wish to add anything to what has been said in the judgments of other members of the Court for dismissing the cross appeal. (at p621)

31. I would therefore, as I have already said, dismiss both the appeal and the cross appeal. (at p621)

OWEN J. The appellant before us was the defendant in an action brought by the plaintiff to recover damages for trespass to land and trespass to and conversion of its goods in the following circumstances. (at p621)

2. At all material times the plaintiff carried on business as a retailer of electrical appliances in a number of shops in and around Sydney and the defendant was a manufacturer of electrical appliances which it supplied to the plaintiff. Some of the appliances were delivered by the defendant to the plaintiff under what were called display plan agreements under which the plaintiff became the hirer of the goods from the defendant for a period of ninety days at a nominal rental with an option of purchase. They provided (inter alia) that the plaintiff would not part with the possession of the goods except to a customer approved by the defendant and that if the goods were not returned by the plaintiff to the defendant within ninety days the plaintiff would pay the defendant the price thereof. By cl. 2 (e) of the agreements the plaintiff agreed not to "assign or encumber his rights in respect" of the goods except so far as might be necessary to put them into the possession of an approved customer and, by cl. 5, it was provided (inter alia) that,

". . . if any execution or distress shall be levied against the dealer or if the dealer shall fail to observe or perform or commit any breach of any provision binding on him in respect of the goods then and in any such case it shall be lawful for the company immediately and without notice to the dealer . . . to determine the hiring of the goods and retake possession of the goods and for that purpose to enter upon any premises where the same may be. . . ."

In addition to goods supplied by the defendant to the plaintiff under the display plan agreements, other appliances were sold and delivered by the defendant to the plaintiff on sixty days' credit and at the time when the trespasses to land and the trespasses to and the conversion of the goods were said to have occurred there were substantial quantities of both classes of goods in the plaintiff's shops. (at p622)

3. Prior to the trial admissions were made that in January 1963 the plaintiff had executed a deed of charge in favour of a finance company and that on 3rd June 1963 that company, pursuant to powers contained in the deed, had appointed a receiver and manager "of the property" of the plaintiff. It was not disputed that the interest of the plaintiff in the goods then in its possession under the display plan agreements was part of its "property" within the meaning of that admission. On 6th June 1963, following upon the appointment of the receiver and manager, a number of men employed by the defendant entered the plaintiff's shops and there seized and took away not only the appliances supplied under the display plan agreements but also a quantity of other appliances which had been sold and delivered to the plaintiff on sixty days' credit. At the time these were seized, the property in them had passed to the plaintiff but the period of credit had not expired and payment for them had therefore not been made. It was agreed that their value was $10,320.15, that being the amount which the plaintiff had agreed to pay the defendant for them on the expiry of the period of credit. Having taken the goods away the defendant proceeded to sell them and retained the proceeds. (at p622)

4. At the conclusion of the evidence, counsel for the defendant admitted that his client had committed trespass to the plaintiff's goods and had converted them to its own use and one of the questions that then arose was as to the amount of damages to be awarded. (at p622)

5. Macfarlan J., before whom the action was heard, took the view that the circumstances of the case were such that exemplary damages in the sum of $3,500 should be awarded for the trespasses to and the conversion of the goods. He was of opinion, however, that the plaintiff could not also recover the value of the goods by way of compensatory damages because he considered that the defendant's wrongful seizure of them had relieved the plaintiff of its obligation to pay the price. His Honour held that in these circumstances the plaintiff was entitled to nominal damages only in addition to the award of exemplary damages but he did not fix any nominal sum and, in the result, he entered a verdict and judgment for the plaintiff for $3,500 on the counts for the conversion of and trespass to goods. (at p623)

6. On the claims for trespass to land the learned judge found for the defendant. He took the view that the appointment of the receiver was a levying of execution against the plaintiff within the meaning of cl. 5 of the display plan agreements and that the defendant had thereupon become lawfully entitled to enter the plaintiff's premises in order to repossess itself of the goods the subject of those agreements. It was true that, as his Honour found, the defendant, having entered lawfully, had abused its licence to enter in that it had seized goods which it had no right to touch as well as goods which it had a right to repossess. But that fact, his Honour held, did not make the entry a trespass ab initio. He rejected also a claim by the plaintiff for damages in the nature of interest upon the amount awarded upon the claim for trespass to and conversion of goods, a claim which was based upon s. 141 (a) of the Common Law Procedure Act which enables damages in the nature of interest to be awarded "over and above the value of the goods at the time of conversion in actions of trover or trespass concerning goods". He took this course because he was of opinion that interest could be awarded only on compensatory damages and these, as he held, were only nominal. (at p623)

7. On appeal by the plaintiff and a cross appeal by the defendant to the Court of Appeal all their Honours were of opinion that the plaintiff was entitled to have the award of damages for trespass to and conversion of its goods increased by $10,320.15, representing the agreed value of the goods. On the claims for trespass to land, their Honours disagreed with the learned trial judge that the appointment of a receiver and manager constituted a levying of execution within cl. 5 of the display plan agreements but were of opinion that the effect of that appointment made, as it was, pursuant to the deed of charge executed by the plaintiff amounted to an encumbering by the plaintiff of his rights in respect of the display plan goods and that it had therefore committed a breach of cl. 2 (e) of the display plan agreements and that the defendant was for this reason entitled to enter the plaintiff's premises and take possession of the display plan goods. Herron C.J. and Jacobs J. were also of opinion that the plaintiff was entitled to a verdict on the claims for trespass to land but was entitled to nominal damages only since Macfarlan J., in awarding exemplary damages for the trespass to and conversion of the plaintiff's goods, had taken into consideration all the circumstances including those surrounding the entry upon the plaintiff's premises. Sugerman J. considered that the entry by the defendant into the plaintiff's premises was lawful and not rendered unlawful ab initio by the fact that, having entered, the defendant had wrongfully seized goods other than those which it had a right to seize. All their Honours rejected the claim for interest. (at p624)

8. In the result, therefore, the Court of Appeal held that the plaintiff was entitled to recover $13,820.15 in all for the trespass to and conversion of the plaintiff's goods and to nominal damages on the claims for trespass to land but that the case was not one in which damages by way of interest should be allowed. (at p624)

9. Before this Court the substantial point argued was whether the plaintiff was, on its claim for trespass to and conversion of its goods, entitled to have the value of those goods included in the damages awarded, as the Court of Appeal had held, or whether, as Macfarlan J. had held, it was entitled only to nominal damages in addition to the exemplary damages which had been awarded. If the value of the goods could not be recovered, it was not suggested that damages by way of interest should be awarded under s. 141 of the Common Law Procedure Act. As to the claims for trespass to land, while some discussion took place as to whether the entry upon the land was or was not lawful, it was made clear that the question was regarded by the parties as being of significance only if the case was one in which exemplary damages should be awarded for the trespasses to land. If no such damages are recoverable the parties, as I understand it, are content to allow the decision of the Court of Appeal to stand. For the reasons which that Court gave and with which, with respect, I agree, I think it plain that, assuming the defendant to have been guilty of trespasses to the plaintiff's premises, no award of exemplary damages should be made since, as Herron C.J. said, "the time and mode" of entry were taken into account by Macfarlan J. in awarding exemplary damages for the trespasses to and the conversion of the plaintiff's goods. In these circumstances I think it unnecessary to consider whether or not the claim that the defendant had trespassed upon the plaintiff's land was established. (at p625)

10. I turn then to the question whether the plaintiff was entitled to have the value of its goods which the defendant had wrongfully seized and converted to its own use included in the damages awarded on the claims for trespass to and conversion of its goods. (at p625)

11. It was not suggested by either party that the defendant's tortious acts had operated to put an end to the contracts of sale and it was rightly conceded by the defendant that if the plaintiff, notwithstanding the seizure and conversion of its goods, remained liable to pay the defendant the price for them, their value could be recovered by way of damages. For the defendant, however, it was submitted that notwithstanding the fact that the contracts remained on foot, the effect of ss. 17 (2) and 54 (1) of the Sale of Goods Act was, in the circumstances of the case, to extinguish the price payable by the plaintiff for the goods since it was agreed that the amount of that price was equivalent to the value of the goods. If so, then the plaintiff could not recover the value of the goods by way of damages. (at p625)

12. It is necessary then to examine the relevant terms of these two sections in order to determine whether, in the circumstances of the present case, the plaintiff, if sued for the price, would be entitled to rely upon s. 54 (1) (a) of the Act in answer to that claim. (at p625)

13. Section 17 (2) provides that :

"In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is - (2) an implied warranty that the buyer shall have and enjoy quiet possession of the goods."

And, by s. 54 (1),

"Where there is a breach of warranty by the seller . . . the buyer is not by reason only of such breach of warranty entitled to reject the goods, but he may - (a) set up against the seller the breach of warranty in diminution or extinction of the price ; or

(b) maintain an action against the seller for damages for the breach of warranty."

By s. 54 (4), the fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered damage in excess of the amount of that price. (at p625)

14. In the course of the argument before us it was suggested that ss. 17 (2) and 54 (1) could not in any event apply to the present case because, so it was said, the implied warranty of quiet possession for which s. 17 (2) provides is no more than an indemnity by the seller against interference with the buyer's possession by a third party claiming under title paramount and the warranty is not breached if the seller tortiously or in breach of contract interferes with the buyer's possession. I do not agree that this is so. I can see no reason why the words of the sub-section should be limited in the way suggested and the proposition is opposed to what was said by Atkin L.J. in Niblett v. Confectioners' Materials Co. (1921) 3 KB 387, at p 403 , that "Probably this warranty . . . only purports to protect the purchaser against lawful acts of third persons" - and no doubt his Lordship was there referring to the acts of third persons claiming by title paramount - "and against breaches of the contract of sale and tortious acts of the vendor himself". I have no doubt, therefore, that the defendant by its wrongful seizure and disposal of the plaintiff's goods committed breaches of the warranties of quiet possession implied by s. 17 (2) in the contracts of sale. (at p626)

15. The next step then must be to examine the terms of s. 54 (1) and apply them to the facts of this case. The sub-section, as it seems to me, clearly provides that if the seller of goods commits a breach of his warranty of quiet possession, the buyer has an option to take one or other of two alternative courses. On the one hand, he may, if sued for the price, set up against the seller the breach of warranty in diminution or extinction of that price and, if the damage resulting from the breach of warranty exceeds the amount of the price, he may maintain an action to recover the amount of that excess by way of damages. On the other hand, he may take the alternative course for which s. 54 (1) (b) provides and sue for damages for the breach of warranty. If he adopts the second of these alternatives, he will recover whatever damage he has suffered and will remain liable for the price but, except to the extent which s. 54 (4) allows, he cannot pursue both the remedies for which the section provides. They are, as the learned editor of Benjamin on Sale, 8th ed. (1950), said, at p. 991, "not cumulative but alternative". (at p626)

16. The position in this case is a somewhat curious one. It is the buyer, the plaintiff, which is claiming that it is still liable to pay the price and that it is for that reason entitled to recover the value of the goods as part of its damages, and it is the seller, the defendant, which is insisting that it would be unable to recover the price if it brought an action against the plaintiff for it. In the events that have happened I am of opinion that the plaintiff's contention must succeed. The defendant's seizure and conversion of the plaintiff's goods was a breach of the warranty for quiet enjoyment. The plaintiff thereupon became entitled to sue in conversion or, if it had thought fit, it could have framed its action in contract and sued to recover damages for breach of warranty. It chose to sue in conversion but it could not, of course, by suing in tort recover more by way of compensatory damages than could have been recovered had it sued for breach of contract. In each case those damages would be measured by the extent of its loss. The plaintiff here took what is, in substance, the course for which s. 54 (1) (b) provides and, having done so, it remains liable to pay the price. It is therefore entitled to recover in the present action compensatory damages representing the value of the goods. If at some future time the defendant sues it for the price, the plaintiff will not, by virtue of s. 54 (1) (a), be entitled to set up in diminution or extinction of that price the damages it recovers in this action. Whether it would be able to plead by way of set off to an action for the price that it had recovered judgment in the present action against the defendant, which judgment had not been satisfied, is not a matter which arises here and I express no opinion on the point. (at p627)

17. For these reasons I am of opinion that the Court of Appeal was right in deciding that the plaintiff was entitled to recover the value of the goods by way of compensatory damages. (at p627)

18. As to the claim that interest should be awarded under s. 141 of the Common Law Procedure Act I can see no good reason for differing from the decision of the Court of Appeal on the point. (at p627)

19. I would therefore dismiss the appeal and the cross appeal. (at p627)

Orders

Appeal and cross appeal dismissed with costs.