Abandonment and the Tort of Conversion

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Abandonment and the Tort of Conversion

November 19, 2019 Tortious Claims 0

What happens if you are deprived of being able to enjoy the use of your goods/ properties by another person? Can you sue them? The short answer is yes. You can actually sue them on the basis that they have converted your goods/ properties. However, there are rules to be complied with before you can sue the other person. This is where the legal principle of the tort of conversion kicks in.

What is conversion?

A conversion is an act where a person who does not have any powers to deal with your property deprives you of enjoying the use of your property. 

For example, you enter into a Sale and Purchase agreement with Ali for the sale of your farmland. Once Ali obtained the farm, he decided to sell off all the equipment (that was not part of the sale process) that is situated on the farm knowingly/ unknowingly to Ah Meng. When you want to take the equipment away, you realize that all your equipment has been sold by Ali to Ah Meng. This is where the tort of conversion kicks in- you can sue and claim for damages from Ali for the loss of the equipment on the farmland.

However, this is not a simple process. Let us dive into the recent court case of OSK Trustee Berhad and Sunway Reit Management Sdn Bhd v Metroplex Holdings Sdn Bhd to find out more about the tort of conversion.

What can amounts to conversion

In the case, the court noted that there are three possible scenarios whereby conversion can occur (using the example above):

  1. Where Ali wrongfully disposes your farm equipment;
  2. Where Ali detains the farm equipment and refused to return them to you even after you requested him to do so; or
  3. Where Ali deals with the farm equipment in a way that is inconsistent with your rights in order to deny you from asserting your rights over the farm equipment.

What happens if the requirements above are satisfied?

Does this mean that you immediately sue Ali? The court says no. The court held that only a person who has the immediate right to possess the goods/ properties, as compared to a person who has a title to the goods/ properties, can sue for conversion. As absurd as it sounds, the court pointed out that the tort of conversion was created with the sole intention of protecting the person who has actual rights to possess the goods/ properties, and not the person who has title to it.

Therefore, if you have leased your farm equipment to Mutu (before the SPA took place) and Mutu sub-leased it to Abu, only Mutu can sue for the conversion of the farm equipment because legally speaking, Mutu is the person who has an immediate right to possess the farm equipment, not you. 

You must also be able to identify the farm equipment that was converted by Ali. The logic behind this, as pointed out by the court, is simple- without ascertaining the farm equipment with precision, Ali cannot be ordered return them to you and Ali cannot be asked to pay damages to you as you might just list a whole list of imaginary farm equipment that you do not have just to make Ali’s life hell. This is to ensure that only genuine claim is allowed.

Lastly, the court also held that if you have abandoned the farm equipment, you cannot later turn around and sue Ali for conversion

What is abandonment?

Abandonment occurs when an owner surrenders/ relinquishes/ disclaims their goods/ property without the intention of reclaiming it. For example, you might have accidentally displaced a piece of farm equipment and could not locate it.  After searching for it to no avail, you decided to give up on looking for it. One day, Ali found it and claim it as his own. Can you sue him for conversion/ can Ali claim that you have abandoned the farm equipment?

Relying on the example given above, the court held that Ali needs to satisfy the court that you have totally abandoned the farm equipment altogether. This is determined on a case to case basis i.e. looking at you could have done to mitigate your loss. 

For example, if you know that Ali is holding your equipment, yet you do nothing for 4 years, you cannot then turn up 4 years later to claim for damages on the basis that Ali has been holding your goods for the past 4 years, all while you had the opportunity and time to claim from Ali 4 years ago

In conclusion, while you can sue someone for converting your goods, your claim on the will not be entertained if you cannot satisfy the requirements above.


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