England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 June 2009

Miss Lesley Anderson QC sitting as a Deputy High Court Judge:

1. This judgment follows the trial of the claim and counterclaim. The claim is brought by Tanks and Vessels Industries Limited ("TVI") against Devon Cider Company Limited ("Devon Cider") for delivery up of certain plant and equipment, alternatively damages for conversion, pursuant to section 3 of the Torts (Interference with Goods) Act 1977 ("the 1977 Act").

Factual Background

2. TVI is and was at the material times a supplier and manufacturer of industrial stainless steel tanks and processing equipment, including to the brewery industry. TVI is based near Doncaster. Devon Cider as its name suggests is engaged in the production of cider products together with contract packaging and bottling from premises at Howden Road, Tiverton, Devon ("the Premises").
3. TVI is wholly owned by Anthony Morris who is also its Managing Director. Mr George Smith is the Finance Director. Between 2003 and 2005 the Sales and Marketing Director of TVI was Thomas Thistlethwayte,
4. Devon Cider operates its business using the goodwill and assets acquired by it from a previous company known as The Devon Cider Company Limited ("DCC"). DCC operated the same business (initially from premises at North Tawton in Devon and from 2005-2006 from the Premises) until it entered administration pursuant to Schedule B1 of the Insolvency Act 1986 on 23 July 2007. Mr James McIlwraith is and was the Chairman and a shareholder in DCC and then Devon Cider. Mr McIlwraith had previously been involved in a company called Inches Cider Company Limited.
5. It is common ground that there had been a history of trading between TVI and the various companies operated by Mr McIlwraith. Prior to July 2003, the relationship between TVI and DCC was a simple trading relationship. However, by that date DCC owed TVI approximately £335,000 and the parties carried out a debt for equity swap whereby the debt was converted into 331,600 £1 shares in DCC which were allotted to TVI on 25 July 2003 (see Bundle 4/274). At that time the other shareholders in DCC were Mr McIlwraith, Mr Greg Birchmore and Mr Richard Jackson. As part of this debt for equity swap Mr Morris also became a non-executive director of TVI. Later TVI was also issued with "B" shares.
6. Therefore by the time of the events with which the Court is concerned TVI was both a supplier to and shareholder in DCC and Mr Morris was a director of both companies. The relationship appears to have been a mutually beneficial one in that Mr Morris had significant contacts within the brewing industry.
7. DCC's financial position was not strong. Although its turnover increased substantially from c. £2.2m in the year to 31 March 2004 to c. £6.7m in the year to 31 March 2006 towards the end of that period it was operating below the targets it had budgeted for and there was an urgent need to increase productivity. A proposed acquisition of a company known as Knights fell through in early 2006 and this led DCC to focus on attempting to increase its own production of cider. Mr Morris and Mr Smith told me that as a result of DCC's financial difficulties they began spending longer at DCC's premises. DCC was ultimately unable to resolve these financial difficulties and went into administration on 23 July 2007.
8. The administrators were Anthony Murphy and Leslie Horton of Smith & Williamson Limited ("the Administrators"). As disclosed by the Statement of the Administrators to Creditors dated 7 September 2007, the total estimated deficiency was £8,825,913 (Bundle 5/377 at 394). On the same day the Administrators carried out what has become known as a pre-pack sale of the business and assets of DCC to Devon Cider (then called Hexshelf 7 Limited) (Bundle 5/339). The initial consideration was £3,327,223.91 of which sum £1,033,995 was attributed to equipment and there was provision for £349,000 to be paid by instalments by way of deferred consideration with the final payment to be made on 17 November 2008 (Bundle 5/339 at 350 and 375). On 24 October 2007, DCC moved from administration into creditors' voluntary liquidation and Mr Bramston was appointed as Liquidator ("the Liquidator") (Bundle 4/284).

The relevant statutory provisions

9. It is convenient at this point to refer to the relevant statutory provisions. So far is material, the 1977 Act provides as follows:

"1. Definition of "wrongful interference with goods"

In this Act "wrongful interference", or "wrongful interference with goods means –

(a) conversion of goods (also called trover) …

(d) subject to section 2, any other tort so far as it results in damage to goods or to an interest in goods.

3. Form of judgment when goods are detained

(1) In proceedings for wrongful interference against a person who is in possession or control of the goods relief may be given in accordance with this section, so far as appropriate.

(2) The relief is –

(a) an order for delivery of the goods, and for payment of any consequential damages, or

(b) an order for delivery of the goods, but giving the defendant the alternative of paying damages by reference to the value of the goods, together in either alternative with payment of any consequential damages, or

(c) damages.

(3) Subject to rules of court –

(a) relief shall be given under only one of paragraphs (a), (b) and (c) of subsection (2),

(b) relief under paragraph (a) of subsection (2) is at the discretion of the court, and the claimant may choose between the others.

(4) If it is shown to the satisfaction of the court that an order under subsection 2(a) has not been complied with, the court may –

(a) revoke the order, or the relevant part of it, and

(b) make an order for payment of damages by reference to the value of the goods.

(5) Where an order is made under subsection (2)(b) the defendant may satisfy the order by returning the goods at any time before execution of judgment, but without prejudice to liability to pay any consequential damages.

(6) An order for delivery of the goods under subsection (2)(a) or (b) may impose such conditions as may be determined by the court, or pursuant to rules of court, and in particular, where damages by reference to the value of the goods would not be the whole of the value of the goods, may require an allowance to be made by the claimant to reflect the difference.

5. Extinction of title on satisfaction of claim for damages

(1) Where damages for wrongful interference are, or would fall to be, assessed on the footing that the claimant is being compensated –

(a) for the whole of his interest in the goods, or

(b) for the whole of his interest in the goods subject to a reduction for contributory negligence,

payment of the assessed damages (under all heads), or as the case may be settlement of a claim for damages for the wrong (under all heads), extinguishes the claimant's title to that interest."

10. It is also necessary to refer to certain provisions in the Sale of Goods Act 1979 ("the 1979 Act"):

"1. Contracts to which Act applies

(1) This Act applies to contracts of sale of goods made on or after (but not to those made before) 1 January 1894.

2. Contract of Sale

(1) A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

8. Ascertainment of Price

(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties.

(2) Where the price is not determined as mentioned in subsection (1) above the buyer must pay a reasonable price.

17. Property passes when intended to pass

(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred

(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.

18. Rules for ascertaining intention

Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Rule 1. – Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed.

Rule 5.(2) – Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract.

19. Reservation of right of disposal

(1) Where there is a contract for a sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled; and in such a case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee or custodier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.

61. Interpretation

"delivery" means voluntary transfer of possession from one person to another".

Plant and Equipment

11. Before dealing with the plant and equipment which is the subject of the present claim and counterclaim, it is necessary to explain that TVI supplied a number of other pieces of plant and equipment to DCC prior to its administration. In 2003, TVI had supplied a small polyethylene terephthlate ("PET") bottling line to DCC and in January 2006, it supplied two stainless steel tanks, 9 fibreglass fermenting vessels and associated equipment. Although physically supplied in January 2006, title to the goods remained with TVI until May 2006 when DCC was able to pay for them using monies advanced pursuant to a finance agreement with Close Asset Finance Limited ("Close") dated 10 May 2006 (B4/180). TVI had also supplied DCC with some processing equipment, namely a de-palletiser and filler at cost price. However, I was told by Mr Morris and Mr Smith and I accept that those were items which had been written off in TVI's books and which it was not able to supply on commercial terms because of a commercial restraint in an agreement in April 2005 for the sale to a third party of the engineering division of its business.
12. The present claim is concerned with two pieces of plant and equipment: first, in October 2004 TVI supplied DCC (then operating from the North Tawton premises) with a robotic palletiser ("the Palletiser") used in the bottling and packaging of bottled cider products. Secondly, in August 2006, TVI supplied six vertical stainless steel fermenting vessels with a capacity of c.130,000 litres complete with steel legs and cooling jackets to DCC ("the Vessels").
13. TVI claims delivery up and/or damages for conversion of the Palletiser and the Vessels which remained at the Premises following the administration of DCC on the basis that it has retained title to the same. Devon Cider disputes the title of TVI in each case. Accordingly, it is necessary to determine the terms on which the Palletiser and the Vessels were supplied by TVI to DCC.
14. The Court heard evidence from four witnesses of fact: Mr Smith, Mr Alan Bassett (who was the acting Finance Director of DCC for the fourteen months between October 2005 and December 2006), Mr Morris and Mr Thistlethwayte for TVI and Mr McIlwraith for Devon Cider.

The Palletiser

15. It is common ground that TVI supplied the Palletiser to DCC under the terms of an agreement reached orally between Mr Thistlethwayte of TVI and Mr McIlwraith of DCC. As at July 2004, TVI was in the advanced stage of development of a prototype palletising system which had the particular advantage for DCC of being able both to put bottles onto trays and cases onto pallets. Part of the palletising system comprised a robot which had been purchased by TVI new from a Swedish company known as ABB as long ago as 2000 but in the interim TVI had carried out a considerable amount of research and development work to adapt it for bespoke applications.
16. By mid-2004 DCC expressed an interest in the Palletiser. As appears from an e-mail dated 12 July 2004 from Mr Thistlethwayte to Mr McIlwraith (Bundle 4/289-290), the Palletiser system was to comprise the robotic palletiser itself together with conveyors, tray feeder, stretch wrapper and mesh guard although it is clear from that e-mail that some design work remained to be done to adapt it for DCC's needs. TVI proposed that it would deliver and install and commission the system in consideration of payment by DCC of £45,000 per year payable in 12 monthly instalments of £3,750 for an initial term of 3 years. At the end of the 3 year period, DCC in effect had three options: it was to buy the Palletiser from TVI at an agreed residual value or continue to rent it at a reduced rental figure or, it is to be inferred, return the Palletiser to TVI. Mr Thistlethwayte went on to note that TVI would only be able to decide what the residual value was once it knew the cost of building the machine and that this could be discussed "nearer the time". The target delivery date was stated to be 8 weeks from DCC's go-ahead. The same terms are recorded in an internal Project management document dated 2 August 2004 (Bundle 4/292) but by this time the anticipated dispatch date was noted to be 6 September 2004 and, it is to be inferred and, I find, DCC had by that date given its go-ahead for the project to proceed. In this regard, I accept the submission made by Mr Sims that the go-ahead was probably given on or about 14 July 2004 when the project management sheet appears to have been first generated.
17. Both Mr Thistlethwayte and Mr McIlwraith confirmed that the rental figure of £3,750 per month was not set by reference to the value of the Palletiser (or indeed by reference to any market rent) but was fixed by reference to the labour savings costs of using the Palletiser. Mr McIlwraith's evidence (Bundle 2/90), which I accept, was that the sum represented half of the costs to DCC of running two labour shifts in a sum of around £7000.00.
18. Although the precise date does not appear from the evidence before me it is common ground that the Palletiser was delivered to DCC in September or October 2004. On 12 October 2004, Mr Thistlethwayte wrote to Mr McIlwraith with details of TVI's bank so that DCC could set up a standing order for payment of the rental on the Palletiser. At the end of the letter (4/293) he noted that "We are not in a position to analyse all the costs so therefore we cannot offer a residual value until later. I will contact you in the near future with our thoughts on the matter". Mr Smith's evidence was that prior to October 2004, the Palletiser was reflected in TVI's accounts as work in progress but upon completion it was transferred to fixed assets and this is confirmed by the fixed asset register as at 1 October 2004 which records the Palletiser (including stretchwrapper) as having a net book value of £208,508 (Bundle 4/149).
19. On the administration of DCC, the relevant sale agreement provided that equipment leased by DCC was excluded from the sale (clause 2.3.3 at Bundle 5/349) but TVI agreed with Devon Cider that it could continue the hire of the Palletiser. However, on expiry of the term in October 2007, TVI contends that its retention was wrongful. TVI seeks an order for delivery up of the Palletiser and damages for loss of use from October 2007 to the date when it is delivered up.
20. It is Devon Cider's case that the agreement for the supply of the Palletiser was, in substance if not form, a hire-purchase agreement and that it was always envisaged that the residual payment would be a nominal or, as Mr McIlwraith puts it a "peppercorn" sum. Mr Sims submitted that the supply of the Palletiser was a "win/win" situation which enabled TVI to convert the Palletiser into value and DCC to solve its packaging problems. He relies on this as important context for Mr McIlwraith's evidence that in a telephone conversation shortly after 12 October 2004, it was agreed with Mr Thistlethwayte that the residual value would be £1000.00. This provides the basis for Devon Cider's Counterclaim for a declaration of the residual sum and for an order that delivery up of the Palletiser be dismissed on condition of payment of that residual sum by Devon Cider to TVI. TVI, and in particular Mr Thistlethwayte, dispute that and say that no residual value was ever agreed.
21. I have no hesitation in rejecting Mr McIlthwraith's evidence on this point.
22. First, Mr Thistlethwayte told me and I accept that what was contemplated was that the residual sum would be agreed at a later date, probably at the end of the initial hire period. He and Mr Smith pointed to the fact that as at October 2004 the cost allocated to the project in the internal TVI project notes were only notional sums and it could not be known what further costs would be incurred in relation to the commissioning and maintenance of the Palletiser during the three year term. I accept this account. It seems to me to accord both with the commercial reality (which is that it would be difficult if not impossible to anticipate the residual value of the equipment three years later) and with the scheme set out in the e-mail dated 12 July 2004 and the letter dated 12 October 2004. In this regard, I reject the submissions by Mr Sims that the customisation work carried out by TVI to the Palletiser was not significant and that what was contemplated was a residual value based on cost less the agreed rentals. Contrary to Mr Sims' submission and the note of the evidence prepared by his instructing solicitor on this point, my notes of the evidence confirm that Mr Smith's evidence on this point was that there was to be a discussion at the end of the rental period, that residual value would be based on market value at that time and that TVI would be looking to recover its costs.
23. Secondly, Mr McIlwraith did not make a note or otherwise seek to record what was, on DCC's part, an important agreement whereby it could acquire title to the Palletiser for payment of nominal sum. Even allowing due weight to Mr McIlwraith's evidence that he was off-site in a portacabin and without any papers when he took the call and his evidence (which I accept on this point) that dealings between the parties were at times conducted informally, I find it inconceivable that he would not at some later stage have made some effort to record the agreement.
24. Thirdly, had the conversation taken place, I am in no doubt that Mr Thistlethwayte would have communicated it internally within TVI and, having regard to the previous correspondence, would have recorded it in an e-mail or letter to DCC. His evidence was that he had a clear recollection of this project which was an unusual one because of the bespoke nature of the equipment. Mr Thistlethwayte struck me as being a careful man who gave his evidence in a measured and balanced way. He accepted that the earlier exchange of correspondence had clearly contemplated a further discussion would take place but he was quite firm that in fact no conversation about residual value took place. I accept that evidence.
25. Fourthly, it seems to me to be inherently improbable that TVI would have agreed a residual sum of only £1000.00 having regard to the work it had carried out to make the Palletiser fit for DCC's use especially given the agreed fact that the rental payments had not been set by reference to the costs incurred by them, let alone any element of profit. In this regard, I reject the suggestion made by Mr McIlwraith that the trade in equipment between TVI and DCC was generally on anything other than an arm's length basis.
26. Fifthly, it appears that Mr McIlwraith did not communicate the fact of his agreement with anyone within DCC. When, in May 2007, his co-director and shareholder Mr Birchmore instructed Go-Industry (Bundle 7/144) to carry out a valuation of DCC's plant and equipment for the purposes of a proposed financial restructuring he identified the Palletiser as being financed with stage payment agreements from the supplier (Bundle 7/156). No reference was made to it having been agreed with that supplier that there was to be a residual payment whether in a sum of £1000.00 or any sum. As the report itself notes the point was of some significance because the absence of items from the sales package was likely to have an effect on any lender's ability to sell the processing line as an integrated line and hence on realisable value. I am in no doubt that if DCC had been in a position to acquire the Palletiser for a nominal sum such as £1000.00 that would have been known by Mr Birchmore and that information passed on to Go-Industry.
27. Sixthly, as appears from the letter dated 16 August 2007 (Bundle 5/570A) Mr McIlwraith did not communicate the fact that the residual payment had been agreed at £1000.00 to the Administrators. The context for this letter is important. On 9 August 2007, Mr Smith had written on behalf of TVI to the Administrators specifically asserting that the Palletiser had been rented to DCC since 2005 (Bundle 4/152). The Administrators' response, prepared after a discussion with Mr McIlwraith and Mr Birchmore, was that when the rental period expired, ownership of the Palletiser was to pass to DCC. Although I accept that this is consistent Mr McIlwraith's evidence that he believed the agreement was in the nature of a hire-purchase agreement it is difficult to see on what basis Mr McIlwraith could have omitted to mention that it had also been agreed that the residual value was £1000.00.
28. Finally, on 16 November 2007, TVI (acting by Mr Smith) wrote to Devon Cider to ask when TVI could collect the Palletiser. The letter referred to and enclosed a copy of Mr Thistlethwayte's letter dated 12 October 2004 and asked Devon Cider to confirm whether it wished to continue to rent the Palletiser at the same monthly rate or whether it wished to purchase the equipment (Bundle 4/155). No response to that letter was sent by Devon Cider. If there had been an agreement as he contends, it is inconceivable that Mr McIlwraith would not have replied promptly and firmly stating that he had reached an agreement with Mr Thistlethwayte whereby the residual value was fixed at £1000.00. His explanation that he did not reply because the relationship had by then foundered was unconvincing given that it was precisely in such a context that it was important for him to assert the company's position.
29. In conclusion, I am entirely satisfied that there was no agreement whereby DCC was to be permitted to purchase the Palletiser at a residual value of £1000.00.
30. I need to go further however because it is Devon Cider's contention that even if no agreement was reached to fix the residual value at £1000.00, nevertheless it was agreed between TVI and DCC that the latter should have the option to purchase the Palletiser at the residual value and that residual value was understood and agreed to mean the agreed rentals less cost. Devon Cider relies on this argument to make two points: first, it suggests that in the absence of evidence as to TVI's actual costs in connection with the Palletiser, I should find on the balance of probabilities that the costs were nil so that the residual value (being based on agreed rentals of £135,000 less costs) is nil. On this basis, it urges me to find that Devon Cider has complied with the relevant terms of the agreement in relation to the Palletiser. Secondly, Devon Cider argues (by reference to the decision of the Court of Appeal in Wickham Holdings Ltd v Brooke House Motors Ltd [1967] 1 WLR 295 at 299H to 301A) that if the agreement is properly characterised as being one of hire-purchase, TVI's interest is limited to the balance outstanding under the hire-purchase agreement and that for the purpose of assessing any damages for conversion, TVI is not entitled to more than it has lost, namely the residual value payment.
31. This argument fails for a number of reasons. First, for the reasons I have already identified in paragraph 22 of this judgment, I am not satisfied that there was any agreement or understanding that the residual value was to be assessed by reference to actual costs less the agreed rental. Apart from Mr Smith's evidence, in his third witness statement Mr McIlwraith said that if there was any understanding at all it was that a small payment would be made at the end of the hire period (Bundle 7/11-12). His evidence accords in part with the evidence of Mr Thistlethwayte which was that the residual value would be calculated at the end of the hire agreement (Bundle 2/85). Absent such agreement, there is no agreed machinery to fix the price at which the Palletiser was to be acquired. It was not suggested by either party (in my view correctly) that the agreement in relation to the Palletiser was a contract of sale within the meaning of the 1979 Act and there is in my view no room on the basis of the evidence for the implication that what was to be paid was a reasonable sum. Secondly, it seems to me that on its true and proper construction, the agreement reached in October 2004 contemplated further discussions at the end of the hire period with a view to agreeing one of three options (namely a further period of hire, a purchase at residual value or the return of the equipment) and was little more than an agreement to agree. I am satisfied that the agreement is properly characterised as a hire agreement rather than a hire-purchase agreement. Not least, the agreed rental for hire was fixed by reference to perceived savings to DCC and not by reference to any profit element for TVI. However, even if I am wrong on this and it was intended to have the effect of granting to DCC immediately an enforceable option to purchase at the end of the hire period, the resulting contract fails for uncertainty on the grounds that the exercise of the option was dependent on further agreement as to the price (see the analysis and cases referred to in Chitty on Contracts, 30^th edition, volume 1 at paragraphs 2-126 and 2-046). Finally, DCC (and its successor Devon Cider) was required to take some steps to exercise the option to purchase. There is no evidence of any attempt by it to do so on the expiry of the rental period and, specifically, no evidence of any such exercise prior to the demand by TVI that the Palletiser should be delivered up.
32. For all these reasons, I am satisfied that on the expiry of the three year rental period (which was not later than 12 October 2007), Devon Cider, as successor to DCC was obliged if it did not take up the option to purchase the Palletiser or to agree the terms of a new rental agreement, to return the Palletiser to TVI. For the reasons I have identified, Devon Cider did not elect to purchase the Palletiser or agree a new rental agreement. Instead it has retained and continued to use the Palletiser until recently. DCC having the Palletiser in its possession has refused to deliver it up to TVI. I am satisfied that it thereby converted the Palletiser within the meaning of section 1(a) of the 1977 Act.
33. I will return to the question of the appropriate relief after I have made the necessary findings of fact in relation to the Vessels.

The Vessels

34. The Vessels were supplied by TVI to DCC in June and July 2006. The background is that the Vessels were originally located at the decommissioned premises of Scottish & Newcastle at the Fountain Brewery in Fountainbridge in Edinburgh. Mr Morris became aware that they were available and, mindful of DCC's pressing need to increase production, telephoned Mr McIlwraith. It is not in dispute that TVI purchased the Vessels from Ainscough Vanguard Limited (which had itself acquired what was left at the site) for £70,500 inclusive of VAT (Bundle 4/281) and arranged and paid for them to be transported to Devon for £29,962.50 inclusive of VAT (Bundle 4/276, 278 and 281). Ainscough Vanguard Limited has confirmed that TVI have acquired title to the Vessels (Bundle 4/280). By 6 July 2006 the Vessels had been delivered and, following some work to enlarge a concrete bund, were erected at the Premises and bolted down.
35. TVI's primary case is that the supply of the Vessels to DCC was on the terms of a contract whereby title in the goods would remain with TVI until payment. Their case is that just as with the previous supply of goods in January 2006 (including the 9 fibreglass fermenting vessels), DCC was to obtain finance (from Close or some other asset finance company) and, upon payment but not before, DCC would acquire title to the Vessels. Mr Robinson submits that viewing the evidence as a whole, there is ample evidence to conclude that the intention of the parties was that title was not intended to pass on delivery of the Vessels to DCC for the purpose of the application of sections 17 and 18 of the 1979 Act. It being common ground that no payment has ever been made, TVI says that title did not ever pass. Devon Cider's case is that there was no express reservation of title and that the supply of the Vessels to DCC was, in substance, development assistance from TVI in its capacity as an interested shareholder.
36. At the invitation of the Court prior to closing submissions, both Counsel were asked to address the Court on whether the agreement for the supply of the Vessels was properly characterised as being a contract for the sale of goods within the meaning of the Sale of Goods Act 1979 ("the 1979 Act"). This led to Mr Robinson making the alternative submission that the agreement for the supply of the Vessels was at all times a bailment and not a contract for sale within the meaning of the 1979 Act. On that basis, he submitted, title did not at any time pass to DCC or Devon Cider.
37. Again it is common ground that the relevant discussions were oral this time principally between Mr Morris and Mr McIlwraith. Mr McIlwraith's case is quite simple. Whilst he accepted that he understood the significance of an attempt to retain title in a general sense, his evidence was that there was simply never any discussion to that effect. He said that his understanding from the first telephone conversation was that the Vessels were being "picked up for a song" and that it was a feature of the relationship between TVI and DCC that Mr Morris would often pick up items and arrange for them to be delivered to DCC's site (Bundle 2/92).
38. Once more the relevant context is instructive. By 2006, DCC was, as already indicated, in considerable financial difficulties. Its previous substantial purchase including the 9 fibreglass vessels had depended on external finance from Close and in respect of which TVI had acted as guarantor. Completion of that finance had taken almost five months from delivery of the goods to payment and title to the goods had been retained by TVI pending completion. It is in this context that Mr Morris told me that it has always been a feature of TVI's dealings with DCC that it would retain or reserve title. He could recall numerous discussions to that effect with Mr McIlwraith to the effect that TVI would retain title and, specifically in relation to the Vessels he told me that they were "not to be theirs until they paid". Mr Morris recalled the conversation with Mr McIlwraith which took place whilst Mr Morris was at the brewery in Edinburgh. He denied that there was any discussion about the Vessels being picked up for a song and said that the discussion was on the basis that they would be supplied for a fair value.
39. I am entirely satisfied that Mr Morris's evidence as to these conversations should be accepted for the following reasons.
40. First, it is inherently improbable that TVI would have been prepared to supply the Vessels on terms whereby title passed immediately to DCC. It had not been prepared to do so in connection with the earlier transaction concerning the supply of the fibreglass vessels in January and I am unable to see any reason why TVI's position would have changed. If anything DCC was in a worse financial position having disclosed substantial losses to March 2006. Although the Vessels were second-hand and of some age, I am entirely satisfied from the evidence I have heard overall (and in particular that given by the experts) that there was a market in second-hand vessels and that the Vessels had a commercial value beyond simply their value as scrap metal.
41. Secondly, that improbability is enhanced when one considers that it is common ground that there was no agreed price for the supply of the Vessels. Mr McIlwraith's evidence on this point was that DCC would sit down from time to time with Mr Smith of TVI and that some agreement would be reached as to what payment should be made to TVI (Bundle 2/93). Devon Cider's case in this regard requires an acceptance that TVI was prepared to allow that title would pass without it acquiring even the right to sue DCC for the price. In view of the circumstances in which TVI had become a shareholder in DCC (namely the issue of shares by way of a swap for debt) it is highly improbable that TVI would have permitted itself to become, in effect, at best an unsecured creditor.
42. Thirdly, as I have already indicated I accept the evidence given on behalf of TVI that, save in respect of the de-palletiser and filler which were incapable of being turned to value by TVI, previous supplies to DCC had been on a commercial basis. I can see no basis for Mr McIlwraith's contention that TVI should have agreed on this occasion to title passing in the absence of payment in full.
43. Fourthly, there is ample evidence that DCC's own officers did not believe that title to the Vessels had passed to it. On 3 November 2006, Edward Symmons provided a report for Lloyds TSB Commercial Finance for commercial lending purposes (Bundle 4/208). As noted at paragraph 2.01 of the Report the principal on-site contact was Mr McIlwraith. Paragraphs 3.01(iv) and 4.01 and 4.05 of the report refer specifically to some of the plant being subject to finance and so excluded from the valuation. The Vessels do not appear as assets for the valuation report. Mr McIlwraith accepted that he would have seen the report at the time but was unable to provide any explanation why he took no steps to correct it despite it being in DCC's obvious interests to ensure that all of the company's unencumbered assets were included for the purposes of the valuation.
44. It is now clear from documents disclosed by DCC's liquidator that Edward Symmons produced a second valuation report dated 14 May 2007 at the instruction of the Administrators (Bundle 6/581 and the relevant schedule is at Bundle 4/189). According to Mr McIlwraith, this report was prepared following discussions with Mr Birchmore. Paragraph 7.01 of this report indicates that major items on hire/rental agreements and those identified as being owned by third parties have been scheduled but not valued and are identified as third party in the schedule annexed at appendix II and separately listed at appendix III. Paragraph 7.05 refers under the general heading "Tanks and Vessels Industries Limited" to the Vessels and notes "We are advised that whilst these items have been supplied they have yet to be invoiced for payment and we have therefore excluded them as we are advised that title still remains with the supplier". The relevant schedule lists the Vessels against "Third Party (Tanks & Vessels)" (Bundle 4/190). Mr McIlwraith pointed to the fact that the schedule contained other assets which were wrongly identified as being the property of either DCC or third parties, for example, the holding tanks (Bundle 4/191), the condenser/chiller (Bundle 4/191) and the carousel filling station (Bundle 4/198). His evidence was that he did not receive a copy of this report but he accepted that it formed the basis of the purchase consideration for the acquisition of DCC's assets and that he would have been aware of it. He said that he did not point out any errors (even those which were adverse to his interest) because his concern was simply whether, overall, Devon Cider was being required to pay a fair price for the assets and business acquired. I am unable to accept this explanation. The relevant "error" in relation to the Vessels is contained not only in the schedule of assets but in the body of the report and the supplier is identified as being TVI. I am entirely satisfied that the proper inference is that Edward Symmons had derived the information in this report from a director within DCC and that the reason that no steps were taken to correct the report in this regard is because the report was accurate. It is wholly inconsistent with Devon Cider's case that title in the Vessels had passed to it in mid-2006.
45. Finally, the Go-Industry valuation dated 10 May 2007 already referred to above in the context of the Palletiser refers in paragraph 3 to eight stainless steel vessels (including the Vessels) being the property of third parties. Once again this is wholly inconsistent with Devon Cider's case. In an e-mail dated 30 May 2007 to Mr Murphy, one of the proposed Administrators, Mr McIlwraith refers to Mr Birchmore and him as "[h]aving given careful consideration to the various valuations that have been undertaken". Despite accepting that he had seen most if not all of these reports at the time, Mr McIlwraith was unable to offer any plausible explanation as to why, if they contained omissions, they were not corrected.
46. Fifthly, Mr Morris's evidence is consistent with the evidence of Mr Smith and Mr Bassett. They both gave evidence that in the numerous discussions they had following the supply of the Vessels Mr Smith made clear that Mr Bassett was not to include the Vessels on DCC's asset register. Mr Bassett confirmed that he did not include the Vessels. Although the asset register itself was not available to the Court Mr McIlwraith fairly accepted that he did not believe that it included the Vessels. I accept this part of his evidence which is consistent with that of Mr Bassett. Mr Smith also gave evidence, which I accept, that the situation with regard to the Vessels was discussed regularly at board meetings of DCC including those which took place on 27 July 2006 and 8 September 2007 and that TVI's representatives made clear that the Vessels remained the property of TVI (Bundle 2/62).
47. Finally, I have had regard to the exclusion of the Vessels for the purposes of valuing DCC's assets for the pre-pack sale to Devon Cider. I am satisfied that Mr McIlwraith had been properly advised as to his responsibilities to DCC's creditors and I reject his suggestion that the Vessels were omitted because he elected to prefer Devon Cider's interests over those of DCC. In my judgment, the obvious explanation is that they were omitted because they were correctly regarded as assets owned by a third party, namely TVI.
48. In short I am entirely satisfied that Mr McIlwraith understood perfectly well that pending a second tranche of finance from Close or another asset finance company and agreement of the price title in the Vessels was not intended to pass to DCC. It does not matter for this purpose that specific or technical language was not used. What is important is that having regard to all of the circumstances of this case and in particular what the parties said and did the evidence is entirely consistent with an intention that title to the Vessels would pass only on payment but not before.
49. In view of these findings, it may not be strictly necessary for me to determine whether the agreement for the supply of the Vessels was a contract of sale within the meaning of the 1979 Act or not. I am entirely satisfied that if it was such a contract of sale, the intention of the parties was that the property in the Vessels was not to pass until payment in full had been made for them. However, in view of the manner in which the point came to be raised by me, I will deal shortly with the point. The evidence of Mr McIlwraith, Mr Morris, Mr Smith and Mr Bassett all points to a conclusion that the price to be paid for the Vessels was left to be agreed upon subsequently between the parties. In those circumstances, whilst it seems to me that there is no room for inferring that the price was to be a reasonable price pursuant to section 8(2) of the 1979 Act it is possible to infer an intention that a reasonable price would be paid if no price was later settled between them. In those circumstances, I am satisfied that Counsels' initial instincts that this was a contract for sale within the meaning of the 1979 Act are correct.
50. Finally in this regard, I should deal with the specific submission by Mr Sims on behalf of Devon Cider that in determining whether title to the Vessels was reserved I should disregard the discussions which took place after delivery of the Vessels between Mr Smith and Mr Bassett or at the board meetings of DCC. His submission in this regard was that if title was deemed to have passed on delivery (for example by the operation of rule 5(2) of section 18 of the 1979 Act), the subsequent conduct of the parties was irrelevant. I am unable to accept that submission. It seems to me that the relevant inquiry is to establish first, whether the parties had any specific intention as to when property in the Vessels was to pass and secondly, if so, what was that intention. For these purposes, section 17(2) of the 1979 Act specifically invites the court to consider not only the terms of the relevant contract but "the conduct of the parties and the circumstances of the case". Only if I am satisfied that there was no such intention does it become necessary to have recourse to the rules or presumptions as to intention in section 18 rules 1 to 5 of the 1979 Act. This seems to me to be the natural meaning of the opening words in section 18 "unless a different intention appears". I am satisfied that for the purpose of identifying whether the parties had any specific intention, I am entitled to have regard to all of the evidence (including evidence as to their subsequent conduct). However, for the avoidance of doubt, I would have reached the same conclusion as to the intentions of the parties even without recourse to that part of the evidence from Mr Smith and Mr Bassett on the basis of my analysis of the evidence at paragraphs 38, 40, 41 and 42 above.
51. TVI acting by its solicitors demanded delivery up of the Vessels by 18 January 2008. I am satisfied that by its failure and refusal to do so Devon Cider converted the Vessels to its own use within the meaning of section 1(a) of the 1977 Act.

Relief

52. Section 3(3)(a) of the 1977 Act makes clear that relief shall be given under only one of paragraphs (a), (b) and (c) of subsection (2). Any order for delivery-up under paragraph (a) of subsection (2) is at the discretion of the court. TVI as claimant is otherwise entitled to choose between paragraphs (b) and (c) of the subsection. Through its Counsel, TVI has made clear its preference for an order for delivery up under paragraph (a) and otherwise for an order under paragraph (b). Mr Robinson relies on three specific matters in support of his case that the court should order delivery up to TVI: first, he refers to the period of time which has elapsed since the relevant conversion; secondly, he relies on what he submits is evidence of financial difficulties on the part of Devon Cider and thirdly, he submits that TVI view an order for delivery up of the Palletiser and the Vessels as being worth more than their equivalent as a monetary award.
53. The evidence given at trial as to Devon Cider's financial position was that first, it remains indebted to DCC in respect of part of the deferred consideration due under the sale and purchase agreement dated 23 July 2007. Mr McIlwraith told me that Devon Cider disputed the final amount to be paid and had challenged what it thought were excessive fees on the part of Liquidator. Although he accepted that Devon Cider was indebted to DCC, he said that Devon Cider was seeking to rely in negotiations with the Liquidator on an informal set-off in respect of monies owed by DCC to Devon Commercial Property Limited, a related company in respect of unpaid rent. Secondly, Mr McIlwraith accepted that Devon Cider had been in arrears with payments to HMRC in respect of VAT but his evidence was that the arrears had been cleared and payment terms agreed. Thirdly, Mr McIlwraith accepted that Devon Cider had not filed its accounts but he explained that the company had obtained permission to file them late. He said that Devon Cider had made a modest profit in its first twelve months of trade to February 2009 and only a small loss on the period to the end of March 2009.
54. Mr Sims' position was that there were no legitimate grounds for the court to be concerned as to Devon Cider's financial position but that in any event, TVI was adequately protected because both as a matter of common law and under the 1977 Act because an order for damages did not divest TVI of title in its goods unless and until the judgment was satisfied. He referred me to the decision in Ellis v John Stenning and Son [1932] 2 Ch. 81 at 97. He submitted that TVI's stance was designed to cause maximum damage to Devon Cider. He pointed to the fact that the Palletiser and the Vessels were physically entrenched in Devon Cider's operational infrastructure and to the practical and logistical difficulties involved in their removal.
55. I refer to the useful summary at paragraph 17-84 of Clerk & Lindsell on Torts (19^th edition). The learned authors note that orders under section 3(2)(a) of the 1977 Act for the specific delivery of goods in the possession or control of the defendant, without allowing him the alternative of paying their value as damages, are likely to be infrequently sought and made. I was also referred to the decision of the Court of Appeal in Whiteley Limited v Hilt [1918] 2 K.B. 809 and to the observation of Swinfen Eady M.R at 809 that "the power vested in the Court to order the delivery up of a particular chattel is discretionary, and ought not to be exercised when the chattel is an ordinary article of commerce and of no special value or interest, and not alleged to be of any special value to the plaintiff, and where damages would fully compensate".
56. The Vessels and the Palletiser are ordinary articles of commerce. I am satisfied that the Court ought not therefore to exercise its discretion to order delivery up under paragraph (a) of section 3(2) of the 1977 Act. However, I am equally clear that it is right to give effect to TVI's choice as between paragraphs (b) and (c) and to order delivery up of the Vessels and the Palletiser but giving Devon Cider the alternative of paying damages by reference to the value of the goods.

Measure of damages

57. As to the correct measure of damages, the position was authoritatively stated by Lord Nicholls in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19 at [67]:

"The aim of the law, in respect of the wrongful interference with goods, is to provide a just remedy. Despite its proprietary base, this tort does not stand apart and command awards of damages measured by some special and artificial standard of its own. The fundamental object of an award of damages in respect of this tort, as with all wrongs, is to award just compensation for loss suffered. Normally ("prima facie") the measure of damages is the market value of the goods at the time the defendant expropriated them. This is the general rule, because generally this measure represents the amount of the basic loss suffered by the plaintiff owner. He has been dispossessed of his goods by the defendant. Depending on the circumstances some other measure, yielding a higher or lower amount, may be appropriate. The plaintiff may have suffered additional damage consequential on the loss of his goods. Or the goods may have been returned."

58. I have already indicated that I reject Mr Sims' characterisation of the agreement in relation to the supply of the Palletiser as being in the nature of a hire-purchase agreement. In those circumstances, I also reject his submission that damages for conversion of the Palletiser fall to be assessed by reference to the balance outstanding at the end of the initial period of its hire. In my view, the principles in Wickham Holdings Ltd v Brooke House Motors Ltd [1967] 1 W.L.R. 295 at 300H to 301A and VFS Financial Services (UK) Limited v Euro Auctions (UK) Ltd and others [200] EWHC 1492 (QB) at [96] – [104] and [108] have no application to the present facts. In the case of the Palletiser, as with the Vessels, damages are to be assessed by reference to their respective market value as at the date they were appropriated by Devon Cider. It is common ground that the relevant date in relation to the Palletiser is September 2007 and in regard to the Vessels, 18 January 2008. Absent any other evidence market vale is the value for which TVI could have disposed of the goods at those dates – see Acatos v Burns (1878) LR 3 Ex. D. 282 at 288.
59. I heard evidence from two experts in the valuation and sales of machinery and equipment: A. Ian Willows FRICS of Moody Asset Valuers & Auctioneers for TVI and Peter R. Dodson MRICS of GoIndustry (UK) Limited. Both experts did their best to assist the Court and, in the end, the ground between them in their written reports dated 5 May 2009 and 29 May 2009 respectively was considerably narrowed by the time of their joint report which was provided to me on the second day of the trial.
60. In the case of the Palletiser, it was common ground between the experts that its market value on an ex situ basis (as set out by Mr Dodson at paragraph 7.6 of his report by reference to the International Valuation Standards Committee and the Royal Institute of Chartered Surveyors Practice Statement PS3.2) as at September 2007 was £12,000.00. However, Mr Willows pointed to the restrictive nature of the ex situ basis which generally relates to value for loan security purposes and could be considered a forced-sale basis. His view was that if the Palletiser was displayed as part of a working line, the hypothetical prospective purchaser would be likely to pay more than if it was displayed not working or broken in to its constituent parts. His evidence was that its value to such a purchaser could be up to £25,000.00. Mr Dodson accepted that the Palletiser might fetch that sum but only if there was significant competition amongst end-users and that it might be difficult to generate such competition within the assumed 120-day disposal period. He pointed to difficulties generally in selling robots. I am satisfied that Mr Dodson is correct and that it would not be right to reflect in my assessment of market value a mere hope of more favourable sale conditions. I find that the market value of the Palletiser as at September 2007 was £12,000.00.
61. Turning to the Vessels, it is common ground that these are to be valued on an ex situ basis. Mr Willows values the Vessels at £120,000.00. Mr Dodson placed their value in a range between £48,000.00 and £72,000.00. In determining market value of the Vessels I have had regard to the following matters. First, the Vessels had been sold on 6 June 2006 for £70,500.00 including VAT and the costs of transport and delivery was £29,962.50. Secondly, I heard and saw evidence in the photographs annexed to the report of Mr Willows that the Vessels were of some age and that the paint on their jackets and legs was peeling. Although this would not affect the functionality of the Vessels, I accept Mr Dodson's evidence in this regard that it would be likely to reflect on their value. Thirdly, against this, he accepted that the Vessels are highly accessible and that this is a major influence on a purchaser. Fourthly, I have had regard to Mr Willows' reference to a sale of six other vessels from Youngs Brewery in London in 2007. These vessels were smaller having capacity of only c. 40 000 litres and more saleable and achieved £10,500.00 each. Fifthly, Mr Dodson gave comparable evidence of a sale in September 2008 by Carlsberg of six larger vessels with capacity of c. 191 000 litres. Three vessels were sold to a subsidiary and three sold into Serbia. Applied pro rata to a vessel with the capacity of 130 000 litres, the sale price was £21,289.00 and £17,290.00 respectively but, as Mr Dodson stressed, the vessels were of exceptional provenance, appearance and quality. Sixthly, I have had regard to the evidence of Mr Dodson (at paragraph 9.13 of his report) that it would be open to a purchaser to purchase new GRP (a form of plastic) tanks for £15,000.00 to £20,000.00. Mr Willows has valued the Vessels at £20,000 each. Given that a sale by Carlsberg to a purchaser in Serbia of higher quality tanks achieved only c. £17,000.00 on a pro rata basis, I am unable to accept Mr Willows' evidence in this regard. In my view, having regard to all of these factors, Mr Dodson is correct to value the Vessels at £12,000.00 each. I find that the market value of the Vessels as at 18 January 2008 was £72,000.00.

Consequential damages

62. In the case of the Palletiser only, TVI also seeks to claim damages for loss of use between the date of its conversion and the date of delivery up and/or payment of damages. It is not in dispute between the experts that the estimated monthly market rent of the Palletiser as at September 2007 was £722.00 per month. It is also common ground that, subject to the loss not being too remote, it is open to the court to award consequential damages when making an order under section 3(2)(b) of the 1977 Act. The short point of dispute is that Mr Sims submits on behalf of Devon Cider that it is wrong in principle to award consequential damages for loss of use because upon payment by his client of damages assessed by reference to the market value of the Palletiser as at the date of conversion, TVI's title is extinguished. Accordingly, from that date TVI is not to be treated as the owner of the Palletiser and so has suffered no loss of use. He accepts however that such a user claim would be a valid one if the court ordered delivery up and he also accepted that in principle TVI would be entitled to interest on those damages.
63. Mr Robinson directed me to paragraphs 68 and 87 of the speech of Lord Nicholls in the Kuwait Airways case. Lord Nicholls observed:

"Sometimes, when the goods or their equivalent are returned, the owner suffers no financial loss. But the wrongdoer may well have benefited from his temporary use of the owner's goods. It would not be right that he should be able to keep this benefit. The court may order him to pay damages assessed by reference to the value of the benefit he derived from his wrongdoing. I considered this principle in Attorney General v Blake [2001] 1 AC 268, 278-280. In an appropriate case the court may award damages on this "user principle" in addition to compensation for loss suffered. For instance, if the goods are returned damaged, the court may award damages assessed by reference to the benefit obtained by the wrongdoer as well as the cost of repair".

64. He also relied on the decision of the Court of Appeal in Strand Electric and Engineering Co Ld v Brisford Entertainments Ld [1952] 2 QB 246 at 253-254 and at 256-257 for the propositions that where a wrongdoer has made use of goods for his own purposes then he must pay a reasonable hire for them even though the owner has in fact suffered no loss and that, for this purpose, it is not open to the wrongdoer to argue that the owner of the goods might not have been able to find an alternative hirer and to the approval of that authority by the authors of McGregor on Damages (17^th ed) at 33-064. Next, he drew my attention to the passage in the judgment of His Honour Judge Seymour QC in the VFS Financial Services decision at [113-114] to the effect that Lord Nicholls in Kuwait Airways had in mind that in the assessment of damages for conversion, account should be taken of any benefits derived by the tortfeasor from the goods converted, as well as the value of the goods themselves. The example given in VFS was use of the goods for the tortfeasor's own benefit or hiring out the goods and thus obtaining an income from them. Finally, he referred to the fact that in the Kuwait Airways decision itself, when the matter was referred back to the judge at first instance on the outstanding issues of quantum, one head of recoverable loss was in respect of user damages in respect of four of the aircraft prior to their destruction.
65. In this regard, I remind myself that damages for conversion are generally assessed as at the date of the conversion and that I have adopted this principle in this case. As noted in Clerk & Lindsell at paragraph 17-89, at common law a distinction was drawn between conversion and detinue. In detinue the value of the goods was assessed at the date of the judgment, when their return would have been ordered. In conversion, damages were generally assessed at the time of the conversion. Strand Electric was a case of detinue and in accordance with the principles then applicable, damages were assessed by reference to their market value at the time of judgment. Whilst it is correct that, as noted by the authors of McGregor on Damages at [33-064], there are some hints that Denning LJ would have reached the same decision even in a case of conversion (see his observations at 255) he is there postulating a fresh act of conversion (on his example, a disposal of the goods by the wrongdoer). Strand is not in my view good authority for the wider proposition that consequential damages for loss of use in a case such as this can be awarded in addition to damages based on the market value of the goods as at the date of the conversion. Further, in my view, it is by no means clear that Lord Nicholls in Kuwait Airways had this precise point in mind. At paragraph 87, Lord Nicholls was directing himself to the situation "where the goods or their equivalent are returned" (my emphasis). I do not think that his Lordship intended to include within the phrase "or their equivalent" an alternative award of damages under paragraph (b) of section 3(2) of the 1977 Act. Read in context it is clear that the phrase is intended to refer instead to the type of situation in Solloway v McLaughlin [2938] AC 247 (referred to in paragraph 88 of the judgment) where the wrongdoer had converted shares but had purchased and returned equivalent shares to the claimant.
66. Against this, it seems that the learned authors of both Clerk & Lindsell (at [17-107 fn 85]) and McGregor (at [33-063 fn 24 and [33-064]) both contemplate that a claimant may be compensated for loss going beyond the market value of the goods. It seems to me that following the important decisions in Attorney General v Blake and Kuwait Airways it is necessary to look for the solution in the principles underlying restitutionary damages. In my judgment, this is a case where Devon Cider has benefited from its use of the Palletiser and it would not be right for it to be able to keep this benefit. Thus, if Devon Cider elects to deliver up the Palletiser now it must also pay consequential damages in respect of its use of the Palletiser from the date of conversion (which I will take for this purpose to be 13 October 2007) to the date of this judgment at a rate of £722.00 per calendar month (a period of 20 months). I assess those damages at £14,440.00.
67. It seems to me that Mr Sims' objection to the claim for damages for loss of use slightly misses the point which is not whether an award of damages has the effect of extinguishing TVI's title to the Palletiser. It will but only retrospectively in accordance with section 5 of the 1977 Act. The real issue is whether it is correct in principle to award loss of user damages as well as damages based on the market value of the Palletiser as at the date of conversion. Given that I have assessed the market value of the Palletiser as at the date of conversion, it is in my view not just to require that Devon Cider should also have to pay the same consequential damages if it elects to pay damages. It seems to me that whilst loss of user damages are available in principle, it would be wrong to award damages based on loss of user together with damages assessed by reference to the market value at the date of the original conversion. It may have been proper to award consequential damages based on loss of user in conjunction with an award for damages for market value if the date for assessing market value was taken to be the date of judgment rather than the date of the conversion. However, I heard no evidence as to that value. TVI will, on payment of such damages, be compensated by reference to the market value of the Palletiser as at the earlier date. Although it might be said that it has been deprived of the opportunity in the meantime to go into the market to purchase a substitute and to derive rental income from the same, it seems to me that there was simply no evidence to support such a case. In any event, in such a case, its consequential loss would be for loss of use of the money used to buy the substitute. Devon Cider, rather than it, has had the benefit of the use of the Palletiser between the date of conversion and the date of judgment without making any payment for the same. In my judgment, TVI's loss is properly reflected in this case by an order that they receive interest at a commercial rate on the sum which reflects the market value of the Palletiser at the date of conversion.

Interest

68. TVI is entitled to interest on the damages in respect of Palletiser from 12 October 2007 and in respect of the Vessels from 18 January 2008 to the date of judgment. It is appropriate that such interest should be at a commercial rate. I indicated that I would hear Counsel as to the appropriate rate of interest unless the parties were able to agree the amount prior to the handing down of this judgment. They were unable to agree but having regard to the submissions they made I am satisfied that the appropriate rate is 5.5% in the case of both the Palletiser and the Vessels being the 1% over the average base rate for the Yorkshire Bank plc over the period October 2007 to March 2009.

Conclusion

69. Mr Robinson for TVI submitted that, in the event of any order for delivery up being made it was appropriate to order delivery up within four weeks. Mr Sims did not disagree. It seems to me to be in the interests of both parties to achieve certainty as to the consequences of this order as soon as possible.
70. Accordingly, subject to any matters which the parties may wish to raise as to the form of the order, the order I make under paragraph (b) of section 3(2) of the 1977 Act is that:

(i) TVI is entitled to an order for delivery up of the Palletiser together with consequential damages in a sum of £14,440.00 by no later than 4pm on Tuesday 14 July 2009 but Devon Cider is entitled in the alternative to pay by that date damages in a sum of £12,000.00 together with interest at a rate pf 5.5%;

(ii) TVI is entitled to an order for delivery up of the Vessels by no later than 4pm on Tuesday 14 July 2009 but Devon Cider is entitled in the alternative to pay by that date damages in a sum of £72,000.00 together with interest on those damages a rate of 5.5%.

71. For the avoidance of doubt, the effect of section 5 of the 1977 Act is that TVI's title to the Palletiser and the Vessels will not be extinguished until payment of the assessed damages.
72. I have heard Counsel on the question of costs and a short supplemental judgment will be handed down. The parties have agreed that any application for permission to appeal by Devon Cider is to be made in writing by 4pm on Friday 19 June 2009 with any observations in response by TVI by 4pm on Monday 22 June 2009.