Glenbrook Capital LP v Hamilton (t/a Hamiltons)

Where a defendant’s breach makes it difficult or impossible to establish the claimant’s loss, the court may draw adverse factual inferences, but the resulting assessment must remain realistic and non-punitive. In conversion claims, the usual measure is the chattel’s value at conversion, subject to consequential loss and an appropriate credit for goods later returned. Where goods were acquired for investment and resale, a claimant may recover loss caused by a subsequent fall in value during the period of deprivation. A different approach may be required where goods were acquired for use rather than sale.

The claimant purchased substantial quantities of silver through the defendant, a silver dealer, between 2006 and 2008. The silver remained in the defendant’s custody. After the claimant demanded delivery in April 2011, some silver was delivered, but a substantial quantity remained unaccounted for.

Judgment in default had been entered on 9 November 2012, and the trial concerned the assessment of damages, including what silver had been converted, what had later been delivered, its value, and whether the defendant was entitled to a profit share.

1. The court found that 8,166 troy ounces of silver had been delivered to the claimant through Mr Hore, while 680 ounces had previously been delivered or given away. No further silver, including melted silver bars, had been delivered. The defendant was not entitled to a profit share. His entitlement was limited to reasonable remuneration under the informal contractual arrangement.
2. Applying the principle illustrated by Armory v Delamirie (1722) 1 Strange 505, adverse inferences could be drawn because the defendant had concealed or failed to produce purchase records. The principle was salutary but non-punitive. The court therefore used the purchase price as the best indication of average quality rather than assuming the highest possible quality.
3. The ordinary measure of damages for conversion was the value of the chattel at the date of conversion, together with consequential loss that was not too remote, as stated in General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644. Where goods were returned, the damages required credit for their value when returned, following Solloway v McLaughlin [1938] AC 247.
4. The ordinary rules were not inflexible. Brandeis Goldschmidt & Co Ltd v Western Transport Ltd [1981] QB 64 showed that value-based damages may be inappropriate where goods were acquired as raw material for use rather than for sale.
5. Here the silver had been acquired for investment and resale. The claimant had been deprived of the opportunity to sell at the high April 2011 market price. It was therefore entitled to recover the fall in value of the silver eventually returned in January 2014.
6. The damages were assessed at £406,760.33, subject to the question of interest being dealt with after judgment.

First-instance judgment. Prior procedural steps described in the judgment included default judgment entered by Cooke J on 9 November 2012 and case-management directions approved by Teare J on 24 January 2014.