Mainline Private Hire Ltd v Nolan

The Court of Appeal dismissed the appellant's challenge to findings that he was liable for conversion and breach of a compromise agreement because he retained possession of a Peugeot taxi after its recovery. The court applied the two-element test for possession: factual (exclusive custody and control) and intention to possess, as explained in J A Pye (Oxford) Ltd v Graham and Powell v McFarlane. Although a storage contract stated that Mercedes of Interest was bailee for reward, the judge found on the facts that exclusive possession and the requisite intention remained with the appellant until Mainline was informed of the vehicle's location. The judge's factual findings that the appellant and the storage operator cooperated to exclude Mainline, that Mainline was unaware of the vehicle's whereabouts and that the appellant had motive, provided an adequate foundation for the conclusion that conversion occurred after the post-compromise written demand.

This appeal arises from a Manchester County Court trial in which HHJ Armitage QC found Mr Nolan liable for conversion of a Peugeot 806 owned by Mainline and in breach of a compromise agreement reached between family shareholders. The vehicle had been stolen and recovered; it was subsequently moved into storage at premises run by "Mercedes of Interest" under a written storage contract signed by Mrs Nolan as a director of Mainline. Mainline alleged non-delivery of the vehicle after a written demand and sued for delivery up or damages and conversion.

(i) Nature of the claim: Mainline sought delivery up of the vehicle or damages for breach of the compromise agreement and conversion. The appellant denied possession after recovery, relying on the storage contract which, it was argued, vested possession in the storage operator.

(ii) Issues framed by the court: The principal issue was who had legal possession of the Peugeot at the material time. Legal possession required (a) factual possession (exclusive custody and control) and (b) an intention to possess for oneself. Subsidiary issues included the genuineness of the storage contract, the factual matrix of communications (or lack of them) with Mainline, and whether the judge's factual findings were open on the evidence.

(iii) Reasoning and disposition: The Court of Appeal reviewed the trial judge's detailed factual findings: that Mainline did not know of the vehicle's recovery or location when it occurred; that there were business links between Mr Nolan and the storage operator; that the appellant and his wife did not communicate the recovery to Mainline; that new number plates were fitted and that the appellant had possible motive to retain control. The judge held the storage contract to be genuine but nevertheless found that exclusive possession and an intention to possess remained with the appellant because the storage arrangement was operated in practice so as to exclude Mainline. The court held that possession depends on the facts and not solely on documentation: a storage contract may not, by itself, determine who has possession if, on the facts, exclusivity and intention rest elsewhere. The appeal was dismissed, the judge's findings being within the permissible range and providing an adequate foundation for the conclusion that conversion occurred after the written demand.

The court noted the relatively small material value of the vehicle and urged the parties to consider proportional resolution of remaining issues, particularly any claim for damages.

This is an appeal from Manchester County Court (HHJ Armitage QC). The Court of Appeal dismissed the appeal and the respondent's notice. The court held that legal possession requires both factual possession (exclusive custody and control) and an intention to possess. Although a storage contract was executed, the judge was entitled on the facts to conclude that the appellant retained possession and intended to exclude Mainline until it was informed, and that conversion therefore occurred after the post-compromise written demand.

Appeal to the Court of Appeal from an order of HHJ Armitage QC at Manchester County Court dated 18 May 2009 (trial on liability). Neutral citation for this Court of Appeal judgment: [2011] EWCA Civ 189.