Whelan Kartaway Pty Ltd v G and C Weatherburn Pty Ltd (in liq)

[2002] NSWSC 677

CITATION:	Whelan Kartaway Pty Ltd v G & C Weatherburn Pty Ltd (in liq) & Anor [2002] NSWSC 677
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 10086/02
HEARING DATE(S):	22 July 2002 6 September 2002
JUDGMENT DATE:	27 September 2002
PARTIES :	Whelan Kartaway Pty Ltd G & C Weatherburn Pty Ltd (in liquidation) Robert Glen White
JUDGMENT OF:	Sperling J at 1

COUNSEL :	Mr P R Glissan for the Plaintiff Mr W Thom (Solicitor) for the Second Defendant
SOLICITORS:	Pelosi & Associates Solicitors for the Plaintiff Webb Thom & Associates for the Second Defendant
CATCHWORDS:	Torts - interference with chattels - conversion and detinue - whether complicity in affixing equipment the property of the plaintiff to a truck the property of a third party gave rise to an estoppel by representation, precluding the plaintiff from denying that title to the equipment had passed on the sale of the truck and equipment by the third party to a further party
LEGISLATION CITED:	Sale of Goods Act 1923, s26
CASES CITED:	Clayton v Le Roy [1911] 2 KB 1031 Hilberry v Hatton (1864) 2 H&C 822; 159 ER 341 McCurdy v PMG [1959] NZLR 553 Wilkinson v King (1809) 2 Camp 335; 170 ER 1175
DECISION:	1. Verdict and judgment for the second defendant; 2. Plaintiff to pay the second defendant's costs on a party-and-party basis subject to the following order; 3. Plaintiff's liability for costs to be off-set by the amount of any costs incurred on a party-and-party basis by the plaintiff, as a result of the hearing having not been completed without interruption.

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Sperling J

Friday, 27 September 2002

10086/02 Whelan Kartaway Pty Ltd v G & C Weatherburn Pty Ltd & Anor

Judgment

1 His Honour: The plaintiff in this matter, by its further amended statement of claim filed in court on 22 July 2002, sought the following relief:

1. A Declaration that the plaintiff is the owner of goods known as 1 miniskips Mark II Twin Bin Hoist (Skip Lifter) fitted to the motor vehicle registered number VDR 511 (“the goods”).
2. A declaration that the plaintiff is entitled to immediate possession of the goods.
3. Judgment that the second [sic, for “second defendant”] deliver the goods to the plaintiff at 24-26 Riverside Road Chipping Norton.
4. Leave to the plaintiff to issue a Writ of Specific Delivery of the goods.
4A. Alternatively, judgment that the second defendant pay to the plaintiff the assessed value of the goods and damages for their detention.
5. Such further order as the Court thinks fit.
5A. Interest.
6. Costs

2 The first and second defendants in this matter are, respectively, G & C Weatherburn Pty Ltd (in liquidation) and Mr Robbie White. As the first defendant is in liquidation, the plaintiff proceeds only against the second defendant.

3 At the hearing before me, Mr P R Glissan of counsel appeared for the plaintiff and Mr W Thom, solicitor, of Webb Thom & Associates appeared for the second defendant.

4 Affidavits of the following deponents were read in the plaintiff’s case:

• Wayne Dainty, State Manager of the plaintiff, sworn 22 January, 17 June, and 18 July 2002;
• Justin Restuccia, solicitor in the employ of Pelosi & Associates, solicitors for the plaintiff, sworn 22 February and 17 April 2002;
• Greg Hughes, licensed commercial agent, sworn 24 May 2002;
• Terry Edgerton, National Fleet Maintenance Manager of the plaintiff, sworn 19 July 2002.

5 An affidavit of the second defendant, sworn 3 July 2002, was read in the second defendant’s case.

6 Of these witnesses, Mr Dainty and the second defendant were cross-examined.

The plaintiff’s evidence

7 The plaintiff’s evidence was as follows. Mr Dainty deposed that he had executed an agreement with the first defendant to fit a skip hoist to the back of the first defendant’s truck on 31 May 2001, the hoist to remain the property of the plaintiff. He then authorised the hoist to be fitted onto the truck in accordance with the agreement, and he deposed that he saw the truck with the hoist fitted to it “on numerous occasions” until September 2001.

8 A plate was fitted to the shell of the hoist by screws and glue. It read, “Supplied and serviced by Whelan Kartaway Pty Ltd”.

9 On 6 September 2001, the plaintiff terminated the contract with the first defendant, requesting the return of the hoist (and other ancillary equipment not relevant to this judgment).

10 Mr Dainty further deposed that he inspected the truck on 21 March 2002 and observed that the hoist attached to the vehicle was the same hoist as the one he had seen attached to it previously, apart from the shell or platform, the top bar on the lifting arms, and lights and electrics which were all new. He said he did not observe any plate on the hoist at that time. He added that it had obviously been removed. (That was his inference. He did not say that he saw empty screw holes where a plate had been.) Under cross-examination, Mr Dainty asserted that he was able to recognise the hoist because hoists of that design were peculiar to the plaintiff. He admitted that the hoist he saw could have been a new hoist built copying the plaintiff’s design, but maintained that, even if this were the case, the hoist he saw when he inspected the truck had parts that were not new which had come from a hoist owned by the plaintiff. (The basis for asserting that parts at least had come from the original hoist was not explored or explained.)

11 Mr Dainty also deposed to having three telephone conversations with the second defendant on or about 18 and 25 February and 18 March 2002. He said that, on or about 18 February 2002, he notified the second defendant that the hoist on his truck belonged to the plaintiff. He said that the second defendant admitted purchasing the truck from the first defendant, but maintained that Mr G Weatherburn, manager of the first defendant, had told him that the first defendant owned the hoist.

12 Mr Dainty said that on or about 18 March 2002, he and the second defendant arranged to meet at Wallacia Golf Club on 21 March 2002. The meeting took place; Mr Dainty inspected the truck and asserted that the hoist was “basically” the one belonging to the plaintiff, although some alterations had been made. The second defendant then said that Mr Weatherburn told him that the hoist on the truck was a new one which he had had fitted prior to selling the truck to the second defendant.

13 Mr Dainty deposed that, on or about 25 April 2002, the second defendant telephoned him and told him that the plaintiff’s hoist was in the yard of Dunheved Drop Tanks, Appin Place, Dunheved. Mr Dainty then telephoned Dunheved Drop Tanks and spoke to a person who identified himself as Jason. Jason told Mr Dainty that the hoist was in the yard, but had been vandalised. Jason said that he had built and installed the new hoist for Mr Weatherburn, who still owed him $600 for the work. Jason denied that any of the parts in the new hoist came from the old hoist.

14 Mr Dainty then sent an employee of the plaintiff to the yard of Dunheved Drop Tanks to take photographs of the vandalised hoist. Copies of these photographs were annexed to his affidavit of 18 July 2002. No plate, he said, was visible in the photographs, suggesting, he said, that it had been removed. (That, again, was his inference. The photographs do not show any empty screw holes to my eye, and none were pointed out by counsel.)

15 Mr Justin Restuccia, solicitor employed by Pelosi and Associates, the plaintiff’s solicitors, deposed that on 7 February 2002, he sent a letter to the second defendant advising him that the hoist belonged to the plaintiff. On 18 February, the second defendant telephoned him in relation to this, stating that he paid Mr Weatherburn for the truck and hoist. Mr Restuccia told the second defendant that it was possible that the plaintiff and second defendant would be able to resolve the situation together, but if not, then he was instructed to join the second defendant to the proceedings, which is what happened.

The second defendant’s evidence

16 The second defendant’s evidence was as follows. He deposed that, on 31 January 2002, he purchased a truck from Daniel Weatherburn. He searched the “REVS” register to confirm the sum payable on an AGC loan. He paid that out, and paid the balance of the purchase price to Mr Weatherburn. He said that he assumed the AGC loan was in relation to both the truck and the hoist mounted on it.

17 Two weeks later, he received a letter from the plaintiff’s solicitors claiming that the plaintiff owned the hoist. He contacted Garry Weatherburn, Daniel’s father, and asked him about the plaintiff’s claim. He was told that the hoist belonged to Mr Weatherburn. The second defendant deposed that he told this to Justin Restuccia, solicitor employed by the plaintiff’s solicitors.

18 The second defendant deposed that, some time in February, he had a further conversation with Garry Weatherburn, who said that it was “unfair” that he had involved the second defendant in the dispute, and offered to replace the hoist. Accordingly, around 20 February 2002, the second defendant took the truck to Jason Clark (presumably the “Jason” to whom Mr Dainty said he spoke) of Dunheved Drop Tanks for measurements. Some time towards the end of March, the second defendant returned the truck to Dunheved Drop Tanks and had the new hoist fitted. He said that, when he picked up the truck, he saw the old hoist sitting in the yard of Dunheved Drop Tanks. A few days later, he asked Daniel Weatherburn about returning the old hoist to the plaintiff, but Mr Weatherburn said that he wanted the plaintiff to “suffer”. The second defendant deposed that Mr Weatherburn threatened to remove the new hoist if the second defendant did not tell the plaintiff that the hoist was replaced before the truck was sold.

19 The second defendant deposed that he then met Mr Dainty at the Wallacia Golf Club and, when Mr Dainty alleged that the hoist on the truck was the plaintiff’s hoist, told him to contact Jason Clark of Dunheved Drop Tanks for confirmation that the hoist on the truck was a new hoist.

20 Two weeks later, Mr Clark telephoned him and asked him what he was to do with the old hoist. A few days after that Mr Clark again telephoned him and told him that the old hoist was being stripped. The second defendant said that he then telephoned Mr Dainty and told him that the hoist was at Dunheved Drop Tanks. Mr Dainty said he was in Melbourne but would deal with it when he returned to Sydney.

21 In cross-examination, the second defendant said that another reason for his not returning the hoist to the plaintiff was that he had been threatened by Mr Weatherburn, who “said that if I ever thought about giving it back he was going to set fire to the truck and everything, threatened me and me family kind of thing so I just didn't know what to do”.

22 He also said that he told Mr Restuccia that Mr Weatherburn had told him that the hoist was his, although Mr Restuccia did not reproduce that statement in his affidavit of 17 April 2002. When asked why, after the hoist was replaced, he did not contact the plaintiff to advise it of the whereabouts of the old hoist, the second defendant again said:

Because Weatherburn said he would look after that and if I even thought about ringing him [Mr Dainty] he would come and take the truck back and set fire to it, threatening. I just got threats all the time, I've been harassed from everywhere. That is why I'm confused. But the driver that made it, he didn't get paid all his money so he told me, so I rang Wayne [Dainty] straight away and said "Go and get your crane, I know where your crane is".

23 The second defendant maintained his denial that any part of the new hoist belonged to the plaintiff.

The law

24 The tort of detinue involves adverse detention of another’s property. Fleming (John G Fleming, The Law of Torts, 9th ed. (LBC: Sydney, 1998)) describes detinue in the following terms (at 64):

Merely being in possession of another’s goods without his authority is not a tort. … To establish that the detention had become adverse and in defiance of his rights, the claimant must prove that he demanded return of the chattel and that the defendant refused to comply.

(Reference is then made to Clayton v Le Roy [1911] 2 KB 1031 and McCurdy v PMG [1959] NZLR 553.)

25 Prima facie, if the hoist on the second defendant’s truck was indeed the same – or substantially the same – hoist as that fitted by the plaintiff to the truck when it was owned by the first defendant, the second defendant’s refusal to deliver up the hoist to the plaintiff would constitute detinue.

26 By contrast, the tort of conversion involves unauthorised transfer or disposal of another’s goods. Fleming says (at 66):

As a general rule, both transferor and transferee are joint wrongdoers, since the giving and taking are but different facets of the same unlawful disposition. This means that even a bona fide purchaser becomes a convertor as soon as he takes delivery, without any prior demand and refusal…

(Reference is then made to Wilkinson v King (1809) 2 Camp 335; 170 ER 1175 and Hilberry v Hatton (1864) 2 H&C 822; 159 ER 341.).

27 It is no answer for a defendant sued for conversion to say that he was unaware of the true ownership of the goods. Sutton (KCT Sutton, Sales and Consumer Law (4th Ed.), (LBC: Sydney, 1995)) says (at 430):

It is a fundamental rule of the law of personal property that no one can give what he or she does not have. Nemo dat quod non habet. No one can transfer to another a better title than he or she has, and consequently a person who has no title at all can transfer none and the fact that the purchaser pays value in good faith is irrelevant.

28 Conformably, s 26(1) of the Sale of Goods Act 1923 provides as follows:

26 Sale by person not the owner
(1) Subject to the provisions of this Act, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by the owner's conduct precluded from denying the seller's authority to sell.

29 The remedy for conversion is damages; the remedy for detinue is delivery up of the goods, with entitlement to sue for damages in the alternate. According to the amended statement of claim, the plaintiff sues in detinue, but the case has been conducted on the basis that the second defendant is sued in detinue and conversion. In the present case, if the plaintiff succeeds on either basis, it makes no difference to the amount of damages whether it succeeds in detinue or in conversion.

30 The reservation in s 26(1) of the Sale of Goods Act 1923 relates to estoppel by conduct which potentially applies as much to a claim in detinue as to a claim in conversion. In either case, the question is whether the plaintiff is estopped from asserting its title against the defendant in the events that have occurred.

31 A good summary of the law of estoppel by conduct in relation to the on-sale of a motor vehicle is provided in Benjamin’s Sale of Goods, 4th ed, at para 7-006. The principles stated there are well settled and the authorities cited need not be recorded here.

Estoppel by representation . Where the true owner of goods, by words or conduct, voluntarily represents or permits it to be represented that another person is the owner of the goods, any sale of the goods by that person is as valid against the true owner as if the seller were actually the owner thereof, with respect to anyone buying the goods in reliance on the representation. Although the representation may be by words or conduct, it must be clear and unequivocal. It is therefore well established that the mere parting with possession of goods is not conduct which estops the true owner from setting up his title. Parting with possession alone is not a representation of ownership, even if the person receiving the goods has the authority of the true owner to deliver them to third parties. If the rule were otherwise, any bailor would be estopped from denying his bailee’s right to sell the goods, and there would be no necessity at all for the Factors Acts. There must be something more. The true owner must have so acted as to mislead the buyer into the belief that the seller was entitled to sell the goods. Delivery of possession of the goods is therefore neither a necessary nor a sufficient condition to raise such an estoppel. In the case of a motor vehicle, delivery to another of possession of the vehicle together with a vehicle registration document does not constitute a representation that the bailee has authority to sell the vehicle. Nor does the fact that the true owner has negotiated a cash settlement with a person who has wrongfully dealt with the goods in respect of that person’s liability in conversion estop him from claiming damages for conversion against a subsequent purchaser of the goods.

32 No specific authority was cited in argument establishing whether affixing equipment to a motor vehicle is or may be sufficient to ground estoppel by conduct in relation to ownership of the equipment.

The facts

33 It is common ground that, when the first defendant sold the truck and hoist to the second defendant on 31 January 2002, the hoist was in fact the property of the plaintiff; and that the plaintiff asserted its claim by the solicitor’s letter written to the second defendant on 7 February 2002.

34 I find that the second defendant believed that the truck and the hoist belonged to Mr Weatherburn when he purchased the unit. I make that finding on the basis of the second defendant’s evidence that he assumed the AGC loan related to the hoist as well as to the truck, and by inference from what a reasonable person in the second defendant’s position would assume when a truck with hoist affixed was offered for sale as a unit.

35 The second defendant says that the plaintiff’s hoist was replaced with a new hoist in March 2002. That is disputed.

36 It is then common ground that the second defendant met Mr Dainty at the Wallacia Golf Club where Mr Dainty inspected the truck and hoist on 21 March 2002.

37 Mr Dainty says that the hoist he inspected on 21 March 2002 was the original hoist belonging to the plaintiff or substantially so, some parts having been replaced. I am sure that Mr Dainty has given honest evidence in that regard, and that he believes the hoist he inspected was the plaintiff’s hoist. But he is mistaken. On the evidence, he could only go by the design. That could have been copied. The second defendant says that is what was done. I have no reason to disbelieve the second defendant in that regard. His account of events is plausible and I accept it.

38 Accordingly, I find that, when the second defendant purchased the truck and hoist from the first defendant he believed, erroneously, that the whole unit belonged to the first defendant; that he became aware of the plaintiff’s claim shortly after; and that, in the circumstances he described, he was then complicit in having the hoist replaced with a new one and in abandoning the original hoist at the fabricator’s yard.

39 The value of the original hoist is agreed at $9,250. It has since been vandalised. The implication is that it has no value.

40 As presented in final submissions, the plaintiff’s claim was for $9,250 plus interest, as damages for detinue, or alternatively, for conversion; plus costs from the date of joinder of the second defendant, 19 May 2002.

41 Conversion was not pleaded, but – properly – there was no objection to the plaintiff putting its claim on that alternative legal basis.

Conclusion

42 The second defendant was in possession of the plaintiff’s hoist when a demand was made for its return. Furthermore, the second defendant parted with possession of the plaintiff’s hoist, abandoning it at the premises of Dunheved Drop Tanks. That was an unauthorised disposal of the plaintiff’s goods. Prima facie, a liability for damages for detinue and for conversion is made out.

43 The plaintiff’s claim fails, however, because, in the events that occurred, it is estopped by conduct from asserting ownership as against the second defendant. The reasons for that follow.

44 By its complicity in affixing the hoist to the vehicle, the plaintiff represented to any potential purchaser of the vehicle that the hoist was owned by whoever owned the vehicle. That is what any reasonable person would assume. It was what the second defendant assumed.

45 The plate affixed to the hoist, if it was prominent enough to be noticed by a prospective purchaser, fortified that representation rather than detracting from it. That the hoist had been “supplied” and was “serviced” by the plaintiff conveyed that the hoist had been sold to a customer, not that it remained the property of the supplier.

46 Reliance on the representation is made out (as I have said earlier) by the plaintiff having assumed that the hoist as well as the truck belonged to Mr Weatherburn. The assumption arose from the mere fact that the equipment was affixed to the vehicle so as to constitute a single working unit. That was a reasonable assumption. It was the assumption one would expect.

47 Reliance was to the second defendant’s detriment, in that he paid for the truck and hoist but did not receive title to the hoist.

48 There must, therefore, be a verdict and judgment for the second defendant with costs.

49 The costs recoverable by the second defendant should be off-set by any additional costs incurred by the plaintiff as a result of the break in the hearing. That is because the point on which the second defendant has succeeded could have been raised and argued at the initial hearing, whereas it was raised and argued after the initial hearing had concluded with judgment reserved.

Orders

1. Verdict and judgment for the second defendant.

2. Plaintiff to pay the second defendant’s costs on a party-and-party basis subject to the following order.

3. Plaintiff’s liability for costs to be off-set by the amount of any costs incurred on a party-and-party basis by the plaintiff, as a result of the hearing having not been completed without interruption.

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Last Modified: 09/30/2002