Conversion (in the context of a tort)

Conversion, in the context of tort law, refers to another situation when a person exercises dominion over goods which is a violation of the legal rights of the party who has a right to immediate possession of those goods (i.e. expropriation). Conversion is an intentional tort and involves one party taking away the other party’s property by using it, or by altering the property in a way that is inconsistent with the rights of the owner. The remedy of conversion is damages, which are assessed at the time of the conversion.

Nature of conversion

In Australia, the nature and elements of the tort of conversion were stated by the High Court in Penfolds Wine Pty Ltd v Elliott (1946) 74 CLR 204.

Latham CJ referred to the nature conversion as “the unauthorised assumption of the powers of the true owner” whilst Dixon J held that “the essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel”.

More recently, in Banks v Ferrari & Ors [2000] NSWSC 874, Dowd J held that “conversion essentially consists of a positive wrongly act of dealing with goods in a manner which is inconsistent with the rights of the owner. This must be coupled with the intention of denying the owner’s rights or asserting a right that is inconsistent with them”.

Remedy

Damages is the primary remedy for the tort of conversion. Taylor and Owen JJ in Butler v Egg Pulp Marketing Board (1966) stated that “the general principle upon which compensatory damages are assessed, whether in actions of contract or of tort… is that the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been… [had] the tort… not been committed… this principle is as much applicable to actions of conversion as it is to the case of other actionable wrongs”.