Calor Gas Ltd v Homebase Ltd

An owner of goods may prohibit a customer from returning them through a former authorised outlet where the contractual return mechanism requires return to an outlet approved by the owner. A customer’s delivery of the goods contrary to that prohibition breaches the agreement, terminates the bailment and revives the owner’s immediate right to possession.

Subsequent deliberate retention and storage, despite the owner’s prohibition, may constitute conversion because it involves temporary dominion and an overt act of withholding. It may also constitute trespass where the owner has possession or an immediate right to possession. If the claimant has no arguable defence, an interim injunction may be granted without considering the balance of convenience.

Calor supplied liquefied petroleum gas in refillable cylinders owned by it. Customers held the cylinders under Form 167 agreements, which restricted their disposal and required returns to approved Calor outlets.

Homebase’s supply agreement with Calor was terminated. Homebase then continued accepting Calor cylinders from customers, storing them, refunding customers or offering replacement BP cylinders and gas. Calor sought an interim injunction restraining this conduct, alleging conversion and trespass to goods.

The central issues were whether the customer’s delivery of a cylinder to Homebase breached Form 167, whether Homebase’s subsequent handling and storage constituted conversion or trespass, and whether interim relief required consideration of the balance of convenience.

1. Interim injunction granted. Calor had a clear case of wrongful interference with its cylinders. It was unnecessary to decide the alternative claim concerning interference with contractual relations.
2. Condition 5 of Form 167 did not necessarily give Calor an immediate right to possession merely because it could inspect, test or replace cylinders. However, following a breach of the agreement, Calor acquired an immediate and unqualified right to repossess them. A breach of bailment similarly terminates the bailment and revives the bailor’s immediate right to possession: Transcontainer Express Ltd v Custodian Security Ltd [1988] 1 Lloyd’s LR 128.
3. Condition 7 permitted return by reasonable means, but the Court of Appeal’s decision in Calor Gas Ltd v Manchester Bottled Gas (24 July 1984, unreported) established that a customer could not rely on that provision to deliver a cylinder to an outlet which the owner had expressly forbidden to handle it. The customer’s delivery to Homebase was therefore a breach, and the bailment ended.
4. Homebase’s subsequent storage of the cylinders was more than passive keeping. Placing them in a cage, retaining them in its custody and awaiting Calor’s collection amounted to temporary dominion and an overt act of withholding, consistently with Barclays Mercantile Business Finance Ltd v Sibec Ltd [1992] 1 WLR 1253. The earlier decision of Calor Gas Ltd v DIY Motor Caravan Centre Ltd (25 January 1985, unreported) supported the conclusion.
5. Once the bailment ended, Calor had both ownership and the immediate right to possession, enabling it to sue in trespass. It was unnecessary to resolve whether a bailor’s possessory remedies under a bailment at will require gratuitous bailment, an issue discussed in USA and Republic of France v Dollfus Mieg [1952] AC 582.
6. Direct and deliberate interference with goods may be trespass even without damage. Any possible exception for conduct within generally acceptable standards could not assist Homebase, which had deliberately disregarded Calor’s express wishes. Since Homebase had no arguable defence, questions of balance of convenience and adequacy of damages did not arise: Patel v Smith Ltd [1987] 1 WLR 853.