Conversion and Detinue - Caution!

Summary

Any demand for the return of goods ought be given serious consideration. Continued use of someone else's goods without intention to "convert" may be conversion, and refusal to deliver up the goods may be detinue. Poor record keeping and ignorance are no excuse. Refusing audits to ascertain ownership will not be looked upon favourably by a Court.

For financiers, this decision is important when enforcing security, as third parties may hold converted stock.

Facts

In Chep v Bunnings [2010] NSWSC 301 (7 May 2010), the plaintiffs ("Chep") hired out pallets under a system whereby a hirer would take a quantity of Chep branded pallets on hire, use them, and either return the same quantity (not necessarily the same pallets) to Chep, or pass them onto another hirer who would accept responsibility for hire fees. Where hirers delivered goods on Chep pallets to non-hirers, hirers remained liable for hire fees.