Schwarzschild v Harrods Ltd

Statutory conversion under section 2(2) of the Torts (Interference with Goods) Act 1977, where a bailee has allowed goods to be lost or destroyed, retains the essential character of detinue. A claimant must establish both a demand for delivery and an unequivocal refusal. Mere inaction or neglect will rarely suffice unless it amounts to an unequivocal response. On a summary judgment application, the court must ask whether the claimant has a real, rather than fanciful, prospect of resisting the limitation defence. Contested evidence and uncertain factual inferences should not ordinarily be resolved summarily where they are material to whether the cause of action arose.

The claimant alleged that Harrods was liable in statutory conversion for jewellery inherited by her and held in a safe deposit box. The jewellery had been removed from the box, inspected and later mixed with other property. Proceedings were issued in September 2006.

Master Yoxall granted Harrods summary judgment on the basis that the claim was time-barred. The claimant appealed, contending that no unequivocal demand and refusal had been established, and that disputed evidence concerning later events could not properly be resolved summarily. The central issues were when the statutory conversion cause of action arose and whether limitation was clearly established.

1. Appeal allowed. The order granting summary judgment was set aside.
2. Section 2(2) of the Torts (Interference with Goods) Act 1977 abolished the technical distinction which had previously excluded conversion where a bailee allowed goods to be lost or destroyed. Nevertheless, the statutory tort corresponds in substance to the former tort of detinue in the circumstances relied upon. It therefore requires a demand for return of the goods and an unequivocal refusal.
3. The requirement of an unequivocal response protects the owner from limitation beginning to run without a sufficiently definite act of withholding. Inaction or neglect may in some circumstances be unequivocal, but that will be uncommon. The claimant’s letter of 13 December 1997 was at least equivocal because it invited discussion of a proposed procedure and did not identify the property with sufficient specificity.
4. The Master had no proper basis for concluding that a limitation defence was bound to succeed. The evidence concerning the 1998 meeting was disputed, its privilege status was unresolved, and knowledge that goods might have gone missing did not itself establish the pleaded cause of action. The alleged 1994 taking by Mr or Mrs Al Fayed likewise involved disputed and insufficiently investigated matters and should not have determined the limitation issue.
5. Under CPR Part 24, the relevant question was whether the claimant had a real, as opposed to fanciful, prospect of resisting the limitation defence on the evidence then available. She did. The arguments under sections 3 and 4 of the Limitation Act 1980 therefore made no difference to the result.

• High Court (Queen’s Bench Division): allowed the claimant’s appeal from Master Yoxall’s summary judgment and set aside the order.
• Master Yoxall: granted Harrods summary judgment after concluding that the claim was time-barred; no citation for that decision was stated in the judgment.