ON APPEAL FROM THE MANCHESTER COUNTY COURT
HIS HONOUR JUDGE ARMITAGE QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE SEDLEY
LADY JUSTICE ARDEN
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Mr James Barnard (instructed by Berg Legal) for the Respondent
Hearing date : 15 February 2011
Crown Copyright ©
Lady Justice Arden :
This is an appeal from the order dated 18 May 2009 of HHJ Armitage QC sitting in the Manchester County Court following a trial on liability. By virtue of that order, so far as relevant, the appellant, Mr Anthony Nolan, was found liable for the conversion of a silver seven-seater Peugeot 806 taxi (registration number SJ52 YLL) and in breach of an agreement recorded in a compromise agreement. The essence of the dispute therefore before the judge was: who had "possession" of the Peugeot at the material time? The main plank in Mr Nolan's case is that the judge must have been wrong to hold that he had possession of the Peugeot. As will appear below, the Peugeot, which was already some four years old at the date of the events in issue, is now probably worthless. It has for about the last five years lain in an un-drivable state in a garage in central Manchester. However, Mainline claims about £80,000 in respect of the lost profits due to Mr Nolan's failure to redeliver it to Mainline in 2006.
Meaning of "possession"
"…there are two elements necessary for legal possession: (1) a sufficient degree of physical custody and control ("factual possession"); (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit ("intention to possess"). What is crucial is to understand that, without the requisite intention, in law there can be no possession. … But there is no doubt in my judgment that there are two separate elements in legal possession."
"(3) Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession…"
"It is not fanciful to consider whether, once the compromise was reached, Mr Nolan decided to keep the vehicle because he thought – then – that it was agreed, or because he wanted to keep it despite the compromise and share sale. It seems to me that he could not expect to keep it openly in the long term because he was not the registered keeper, may have had no document of title and would have found it difficult or impossible to re-tax and insure without Mainline's consent. But, in late 2005 and even early 2006, he might have thought that if he kept physical control over the car his sister might allow him to keep it – whether out of affection or as not being worth disputing over. If so, it turns out that he was wrong. In any event Mr Nolan's decisions must be considered in the light of his assessment that although both he and his wife compromised the petition in November 2005 he did not regard his clean break with the claimant as having occurred until the deal was done, that is when the money was paid. He said that the agreement for him to use the Peugeot stood until that time and that between the compromise and payment he had understood that Mrs Glover might be trying to avoid the compromise. He said that it was agreed that he should use the bus until everything was signed off." (judgment, paragraph 96)
"…[Mr Nolan] … has agreed that he will within 24 hours of a written request to deliver up to [Mrs Glover] (as agent for [Mainline]) any assets of [Mainline], which he might have in his possession."
The judge's judgment
"137. In my judgment the evidence shows, at least on the balance of probabilities –
a. That the defendant was in possession of the Peugeot until it was taken from him, probably on the 2nd December 2005.
b. That the defendant regained possession on the 6th January 2006, because he was directly concerned and interested in taking physical control and did so, albeit jointly with his wife, then a director of Mainline. The original intention had been to take the Peugeot home, that is to say where it usually was, when not in use.
c. That the defendant remained in possession despite placing the Peugeot in the physical custody of Mr Coulter at Sherborne Street and Mrs Nolan's agreement that his firm, Mercedes of Interest should become a bailee for reward. Mrs Nolan confirmed that the choice of recovery and storage facility had been Mr Nolan's. In the circumstances the general intention to possess the vehicle had not changed. Circumstances merely dictated a change of storage place, no different from the situation where an owner gives physical custody of a vehicle for routine servicing. Intention, control and possession are retained, subject to lien. At that point, anyone authorised by Mainline could have paid the charge and taken the vehicle. That included the defendant, either directly because it was his assigned taxi, or if necessary with the agreement of Mrs Nolan as director.
d. That the defendant remained in possession until, at the very least, he directly or through his wife, informed the claimant about the location of the vehicle and that it was held to their order. In my judgment that was not done in January 2006 and the defendant's deliberate failure to answer reasonable requests demonstrates an intention to exercise control which, coupled with his relationship with Mr Coulter, was exercisable, to the exclusion of the claimant.
e. That the defendant was in breach of agreement from the time when the agreement was made followed by a demand in writing identifying the Peugeot.
f. Having regard to the definition proposed by Mr Budworth, not challenged by Mr Chaisty QC, the same findings lead me to the conclusion that at latest by first post-compromise demand, the defendant converted the Peugeot.
138. I am not asked to and do not find that the conduct was fraudulent. I do not find that the Mercedes of Interest contract was a sham in the sense that it is not what it purports to be. I am satisfied that it was a device intended to be enforced against the claimant, but not against the defendant. I do find that the defendant engaged in a deliberate course of conduct intended to and having the twin consequences of retaining possession on and after 6th January 2006 and excluding the claimant from use and possession of the Peugeot. The evidence adduced by and for him has been directed at attempting to avoid the consequences of that conduct."
"I do find that the defendant engaged in a deliberate course of conduct intended to and having the twin consequences of retaining possession on and after 6th January 2006 and excluding the claimant from use and possession of the Peugeot."
Disposal of this appeal
Lord Justice Sedley:
Sir Nicholas Wall P: