Aziz v Lim

Conversion requires deliberate dealing with goods inconsistently with another person’s rights, conduct which excludes that person from use and possession, and an intention sufficient to establish the necessary interference. Mere unauthorised possession or retention is insufficient. Where a defendant’s account of authority is rejected, dealing with another’s jewellery by replacing it with replicas and selling the originals constitutes conversion. Damages may be assessed separately where the value or recovery of the goods remains uncertain. Assessment may be stayed pending related foreign proceedings where necessary to avoid prejudicing recovery.

The claimant brought two claims in conversion concerning a valuable diamond bracelet and two diamonds. She alleged that the defendant, formerly her employee, took and sold the items without authority. The defendant contended that the claimant had authorised the sales and instructed her to use the proceeds to discharge gambling debts.

The defendant did not attend the trial. The court permitted the trial to proceed in her absence under CPR 39.3 (1). The principal issues were whether the defendant had converted the diamonds and bracelet, and what remedy should follow if liability was established.

1. The trial could fairly proceed in the defendant’s absence. The court considered the claimant’s evidence and the defendant’s written evidence, while recognising that the defendant had not attended to give oral evidence or face cross-examination.

2. The tort of conversion requires deliberate dealing with a chattel inconsistently with the rights of the owner or person entitled to possession, conduct which excludes that person from use and possession. The court adopted the formulation stated in Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 & 5) [2002] 2 A.C. 883. Mere unauthorised retention or possession is not necessarily conversion.

3. On the evidence, the defendant’s account that the claimant authorised the transactions was not credible. The claimant’s evidence was supported by other witnesses, documentary material, the defendant’s inconsistent accounts, her police statements and the recorded conversation with Mr Ja’afar. The defendant had dishonestly obtained the diamonds, replaced them with replicas and sold the originals. Each element of conversion was established.

4. The same reasoning applied to the Diamond Bracelet. The defendant had no authority to take or sell it and had wrongfully converted it. The claim for the bracelet therefore succeeded.

5. The claimant was entitled to damages of US$5.545 million for the bracelet, which had been sold and could not be recovered. The damages for the diamonds required assessment because their value and the outcome of the Swiss recovery proceedings remained unresolved. Assessment of those damages was to be stayed pending determination of the Swiss proceedings, while preserving the claimant’s ability to recover losses incurred in pursuing the diamonds.

6. The claim succeeded in full. The court reserved consideration of the precise form of order.