Environment Agency v Churngold Recycling Ltd

Conversion protects proprietary rights in tangible goods. It does not enable recovery of copies made and owned by the defendant. Electronic data is intangible and not a chattel, so it falls outside goods covered by the Torts (Interference with Goods) Act 1977. A court cannot extend conversion to such material in the face of binding authority distinguishing tangible property from choses in action. Where statutory powers may have been exceeded, questions about the legality of obtaining the material and the remedies available must be determined in proceedings that properly raise them, not on an appeal confined to conversion.

During a criminal investigation, the Environment Agency entered Churngold’s premises and copied electronic information and more than 700,000 paper documents under section 108 of the Environment Act 1995. Churngold claimed delivery up of the originals and copies in conversion proceedings. The originals were returned, while the copies remained quarantined.

On the assumption that the originals had been unlawfully taken, the Bristol Mercantile Court held that it had power to order delivery up of the copies. The Agency appealed. The central issue before the Court of Appeal was whether conversion extended to defendant-owned copies and intangible electronic data. The court did not determine whether the material was lawfully obtained or constituted records within section 108.

The appeal was allowed on a limited basis. Lord Justice Moses gave the judgment, with Lady Justice Gloster and Lord Justice Vos agreeing.

1. The essential features of conversion are deliberate conduct inconsistent with the rights of the owner, together with an extensive encroachment excluding the owner from use and possession. The principle was summarised from Kuwait Airways Corporation v Iraqi Airways Co (Nos. 4 and 5) [2002] 2 AC 883 [2002] UKHL 19.
2. The copies made by the Agency belonged to the Agency. Churngold had acquired no proprietary rights in them. The Agency’s retention of its own copies therefore could not constitute conduct inconsistent with Churngold’s rights or an encroachment on Churngold’s possession. The judge was not entitled to treat delivery up of the copies as arguable in conversion.
3. Electronic data, unlike the physical medium on which it is stored, is intangible and is not a chattel. Under section 14(1) of the Torts (Interference with Goods) Act 1977, goods comprise chattels personal other than things in action and money. The court followed the approach in OBG v Allan [2007] UKHL 21 [2008] 1 AC 1 and Your Response Limited v Data Team Business Media Limited [2014] EWCA Civ 281. It held that it could not reconsider the established distinction between tangible and intangible property merely because of modern technology.
4. The decision did not resolve the wider question of remedies where the Agency may have acted beyond the powers conferred by section 108 of the Environment Act 1995. Those issues, including whether the material was a record and whether the copies could be retained or used, were not open for determination in proceedings confined to conversion. The court nevertheless cautioned against appearing to sanction statutory powers that had not been conferred.

• Court of Appeal (Civil Division): Allowed the Environment Agency’s appeal on the limited issue of conversion.
• Bristol Mercantile Court: His Honour Judge Havelock-Allan QC, in a judgment dated 2 October 2013, held on the assumption of unlawful seizure that the court could order delivery up of copies and directed that they remain quarantined pending further determination.