Conversion
Conversion is an intentional tort committed against goods. It consists of any intentional dealing with the personal property of another in a manner that is inconsistent with the plaintiff's rights of ownership or immediate possession. Conversion is the principal cause of action for misappropriation of personal property in Ontario.
Elements of Conversion
To establish conversion, the plaintiff must prove:
- Right to the goods: The plaintiff must have a proprietary right, or a right to immediate possession, of the goods at the time of the alleged conversion. Both the owner and a person with a possessory title (bailee, pledgee, licensee in possession) can sue in conversion. A person with only a future right to possession cannot sue.
- Intentional act: The defendant must have intentionally dealt with the goods. The intention required is the intention to do the act, not the intention to commit a wrong. An innocent purchaser who buys stolen goods commits conversion even without knowledge that the goods are stolen.
- Dealing inconsistent with plaintiff's rights:The dealing must be inconsistent with the plaintiff's right to the goods — selling, destroying, consuming, retaining against demand, pledging, or substantially altering the goods. A mere touching or temporary use may not suffice; the inconsistency with the plaintiff's superior right must be serious.
- Loss: The plaintiff must prove that the conversion caused loss — typically the value of the goods.
Conversion as a Strict Liability Tort
Conversion is effectively a strict liability tort in respect of the defendant's fault: the defendant's good faith, honest belief, or reasonable mistake is generally not a defence to liability. A bailee who delivers goods to the wrong person, even in honest mistake, commits conversion. A purchaser who acquires stolen goods in good faith without notice that they are stolen commits conversion.
However, the defendant's good faith may be relevant to remedies: courts have discretion to award the return of goods rather than their value, and may take good faith into account in assessing damages where the defendant has already sold the goods.
Types of Acts Constituting Conversion
- Taking: physically taking the goods from the plaintiff or a third party holding them for the plaintiff;
- Destroying: destroying or substantially altering the goods so that they lose their character;
- Selling: selling the goods to a third party;
- Pledging: pledging the goods as security for a debt;
- Using: using the goods in a way seriously inconsistent with the terms on which they were bailed;
- Wrongful delivery: delivering the goods to a person not entitled to receive them;
- Detention: refusing to deliver the goods on a demand by a person entitled to immediate possession.
Detinue
Detinue is the wrongful detention of goods belonging to another. It is a separate cause of action from conversion and has the distinct advantage that it supports an order for the return of the specific goods — not merely an award of their value.
Elements of Detinue
To establish detinue, the plaintiff must prove:
- The plaintiff has a right to immediate possession of the goods;
- The plaintiff demanded the return of the goods;
- The defendant refused to return the goods, or wrongfully detained them.
Detinue is a continuing tort — it persists as long as the defendant wrongfully detains the goods. This distinguishes it from conversion, which is committed at a specific point in time. Where the defendant has destroyed or sold the goods so that return is impossible, the plaintiff must rely on conversion.
Remedies for Detinue
The primary remedy for detinue is an order for return of the goods (specific delivery), alternatively with an option to pay their value. Where the goods have special value to the plaintiff beyond their market price — heirlooms, unique chattels, goods needed for a particular purpose — the court may order specific delivery without the alternative of paying their value. Damages for the wrongful detention (loss of use, consequential losses) are also available.
Defences to Conversion
Jus Tertii
The jus tertii defence — that a third party has a better title to the goods than the plaintiff — was traditionally available in conversion actions. Canadian courts have restricted this defence: a defendant cannot rely on a third party's title unless the defendant is actually acting on behalf of or with the authority of that third party. A mere wrongdoer cannot escape liability by pointing to someone else's superior title.
Bona Fide Purchaser for Value
A bona fide purchaser for value — a person who purchases goods in good faith, for value, and without notice of the seller's defective title — may obtain good title under certain circumstances under the sale of goods legislation. Ontario's Sale of Goods Act, R.S.O. 1990, c. S.1, s.25 provides that where a seller has a voidable (but not void) title to goods and sells them to a buyer in good faith and without notice of the seller's defect, the buyer acquires good title. A sale by a person with no title at all (e.g., a thief) does not pass title regardless of the buyer's good faith.
Consent and Authorization
A defendant who dealt with the goods with the plaintiff's consent, or under the authority of a court order, statute, or lien, does not commit conversion. The extent of the authority limits the defence — a bailee authorized to use goods for a specific purpose commits conversion by using them for a different purpose.
Damages for Conversion
The primary measure of damages for conversion is the market value of the goods at the time and place of conversion. Conversion is treated as a forced sale — the defendant pays the full value and acquires title to the goods. This prevents the plaintiff from recovering both their goods and their value.
Where the goods have appreciated between the date of conversion and the date of trial, courts may award the higher value — particularly where the defendant has retained or sold the goods at a profit.
Consequential damages are available where they are reasonably foreseeable — profits lost because the plaintiff was deprived of use of the goods, additional costs of replacing the goods, and interest on the value from the date of conversion. Aggravated or punitive damages may be available where the conversion was deliberate, high-handed, or accompanied by oppressive conduct.
Practice Points for Ontario Property and Litigation Lawyers
- Assess whether the client has a right to immediate possession at the time of the alleged conversion — a bailee with immediate possessory title can sue even if the true owner could not at that time.
- Where the goods have unique or sentimental value beyond their market price, plead detinue and seek an order for specific return — damages alone will not adequately compensate.
- In commercial disputes involving personal property security interests, check whether the secured creditor's seizure and sale of collateral complied with the Personal Property Security Act — non-compliant enforcement may constitute conversion.
- The two-year limitation period under the Limitations Act, 2002applies to conversion claims; for detinue, the period runs from when the plaintiff demanded return and the defendant refused.
- Where goods have been sold on to a bona fide purchaser, consider whether to sue the original converter (for their market value at conversion) or trace value into the proceeds — the PPSA and trust law may provide additional remedies.