Supreme Court
Action No. 189 of 1981
4th March, 1983.
Alcantara, J.

Mr. Glenn D. Godfrey, for the Plaintiff.
Mr. Denys Barrow, for the Defendant.

Tort - Conversion - General rule governing the right to bring an action for conversion or wrongful trespass to goods - Whether actual ownership of goods required for action to be successful or mere possession or the immediate right to possess suffices - Forest Produce - Mahogany and hardwood logs - Rules 19 and 20 of the Forest Rules - Effect of Rules 19 and 20 on ownership of logs for which no royalty has been paid to the Crown.

J U D G M E N T

What I have to decide in this case is which of two innocent purchasers is going to suffer a loss because of the double dealing of a third person. The third person is one Egbert Flowers, who on the evidence adduced before me does not come out as an honest person. Flowers, at the relevant time, had a Government concession to cut, remove or collect forest produce in the Duck Run Area, Cayo District. He was also a contractor and was indebted to the Plaintiff, Stephen Stedman, in a sum of money for services rendered, including the hire of equipment. In order to liquidate his debt with the Plaintiff, he offered to sell mahogany and other hardwood logs to the Plaintiff in lieu of payment. A contract was entered in writing. This has been made an Exhibit. So at the expense of the Plaintiff about 24,000 feet of mahogany and 24,000 feet of hardwoods in logs were felled, hauled and stockpiled in a barquedier in Duck Run. The operation took place in the months of August and September, 1980. After stockpiling, no steps were taken to have the logs measured and stamped, as required by law; nor was royalty paid. This was a duty which the third person had to perform, not the Plaintiff. The Plaintiff, because of bad weather, decided to delay having the logs sawmilled and went to the States. He returned in December, 1980, and found that there was not a single log. All he found was sawdust. This is the Plaintiff's account, which I accept.

What happened to the logs, or to some of them was this. The third person, Egbert Flowers, during the absence of the Plaintiff, sold a quantity of these same logs to the Defendant, Harold Kratzer. The Defendant has given evidence of his transaction with Egbert Flowers, which I accept, and has also produced a receipt showing that he purchased an amount of logs. As a finding of fact, I find that he only bought the quantity of logs he says, to wit 15,000 feet of mahogany and 10,000 feet of hardwood and not the 29,561 feet of mahogany and 24,431 feet of hardwood which the Plaintiff alleges in his Statement of Claim nor the 50,000 feet of mahogany and 20,000 feet of hardwood alleged in the endorsement of the Writ. What happened to the balance we do not know. On this occasion, however, the logs were duly stamped and measured by the forest officer, and I find that royalty was paid as required by law. The logs were then sawmilled and sold by the Defendant.

There is no doubt that either or both of the parties to this Action could have sued, and still can, the third person to recover any loss suffered by his double dealing, but this Court has no information as to the whereabouts of Mr. Flowers or whether he is still in the lumber business. Neither has this Court any information whether any of the parties has tried to make Mr. Flowers accountable for his misdeeds.

The general principles of the law of conversion applicable to this case can be found in Clerk and Lindsell on Torts 3rd Edition. At paragraph 945 you will find this passage: -

"The general rule is that the right to bring an action for conversion or wrongful trespass of goods belong to the person who can prove that he had, at the time of conversion or detention, either actual possession or the immediate right to possess. It is not necessary to prove a title of absolute ownership, and indeed the owner may not sue unless he either possesses or has immediate right to possess."

And at paragraph 946:

"A right of possession even without actual possession, may therefore be considered as sufficient property in goods to maintain an action, subject to a jus tertii proved by the Defendant."

And further at paragraph 968:

"If the Plaintiff makes out a good prima face title by possession or otherwise, the Defendant must in the first place impeach that title by showing there is a better right in someone else. That better right may be in himself or in some person under whose authority he is acting, or under whom he claims, and in such a case he clearly has a good defence, for a man cannot be guilty of trespass or conversion in respect of goods to the possession of which he is entitled. But the title which he opposes to that of the Plaintiff may be in some stranger who makes no claim on his own behalf, and of this it by no means follow that he should be allowed to avail himself."

With reference to the law as stated in paragraph 968, Counsel for the Defendant has drawn my attention to note (g) of page 152 in Vol. 39 of Atkins Court Forms 2nd Edition. It reads: -

"Where the Plaintiff was in possession of the goods at the time of the acts complained of, the Defendant cannot set up as a defence a title in some person unless he claims under him ……….. Where, however, the Defendant is not a bailee and the Plaintiff was not in possession of the goods at the time of the alleged conversion, the Defendant is entitled to set up the rights of a third person, even though he makes no claim under him. (Butler v Hobson (1838) 4 Bing N.C. 290; Leake v Loveday (1842) 4 Man & G. 972)"

Before I proceed with the law, I have to make a finding of fact. The Defence argues first, that the Plaintiff was never in possession of the logs and secondly, that if he was he lost possession at some stage prior to the alleged conversion.

On the evidence, I am satisfied that the logs were in the possession of the Plaintiff by the time they were stockpiled in the barquedier and that at no time did he relinquish or abandon possession. Possession was passed to him by Egbert Flowers.

The Defence's second line of attack is a very attractive one. They say that in the Statement of Claim the Plaintiff is claiming as owner, not as possessor. Whatever the evidence adduced, he is bound by his pleadings and must consequently prove his title as owner. That he cannot do because of the provisions of Rule 19 of the Forest Rules, Chapter 115 which states-

"All forest produce cut or taken under a licence shall remain the property of the Crown until the royalties or fees due thereon have been paid. No such produce shall be charged, hypothecated, mortgaged, sold, ceded or assigned until the royalties or fees due thereon have been paid."

First as to the pleadings. There is no doubt that the parties are bound by their pleadings. There is the relevant part of paragraph 1 of the Statement of Claim:

"The Plaintiff is and was at all times the owner and entitled to possession of ...."

I have come to the conclusion that having pleaded the case thus the Plaintiff must prove more than that he was just in possession. He must also prove title and entitlement to immediate possession. This case highlights the necessity of precise and accurate pleadings. The Plaintiff has undertaken a heavier burden than was necessary on the evidence which has come out in Court.

The next question is, can the Plaintiff, in view of Rule 19 of the Forest Rules, prove ownership and entitlement to possession? The answer is not easy. However, my considered view is that the purposes of Rule 19 is to ensure that royalty is paid and not to restrain trade. Ownership remains in the Crown until the royalty is paid but that does not prevent the right to 'ownership' and right to immediate possession passing from one party to the other. Rule 20 of the Forest Rules is of interest. It reads: -

"The Conversator or a senior forest officer or any other forest officer specially authorized in that behalf by either the Conservator or a senior officer may take possession of any forest produce for or in respect of which any money is due and payable to the Crown."

Is it not the correct interpretation of Rules 19 and 20 that whereas the ownership of, say, a mahogany tree which is felled down remains in the Crown until royalty is paid, the possession of it is not in the Crown, but in the person who has legally cut it or his assignee. The Crown can recover possession only by a positive act. If my conclusion is correct then there is nothing to prevent the Plaintiff from having acquired from Egbert Flowers all the rights he had over the logs, i.e. the right to ownership subject to payment of royalty and the right to immediate possession. He became the owner, in a limited sense, of the logs. To perfect his ownership royalty had to be paid. He had what is known as the void or defective title. One thing is certain. Egbert Flowers had nothing after his transaction with the Plaintiff.

I am of the opinion that what the Plaintiff acquired is sufficient for the Plaintiff to maintain this Action as pleaded. I refer myself to the last sentence of paragraph 945 quoted above which states: -

"It is not necessary to prove a title of absolute ownership, and indeed the owner may not sue unless he either possesses or has immediate right to possess."

The legal authority for this proposition is to be found in the judgment of Mr. Justice McNair in the case of Bute (Marquess) v Barclays Bank Ltd. (1955) 1 QB 202 at p. 211 where he said:

"As to the first ground, the short answer, in any judgment, is that, in order to claim in conversion, it is not necessary for the Plaintiff to establish that he is the true owner of the property alleged to have been converted. It is sufficient if he can prove that at the time of the alleged conversion he was entitled to immediate possession."

Counsel for the Plaintiff has drawn my attention to the doctrine of perfecting title or feeding a previously defective title as expounded in the case of Whitehorn Brothers v Davidson (1911) 1 KB 475 and subsequently approved in Butterworth v Kingsway Motors Ltd (1954) 2 AER 694 contending that at the moment that Egbert Flowers paid the royalties the title of the Plaintiff was perfected notwithstanding the provisions of Rule 19 of the Forest Rules. It is a very ingenious argument, but I am prepared to say that it also applies to this case.

So on either view I find that the Plaintiff had a title to entitle him to sue, whether as owner or person entitled to immediate possession. In fact, he was in actual possession.

Reverting now to the principle that a Defendant can set up the rights of a third person, even if not claiming under him, when the Plaintiff is not in possession, it is significant that Butler v Hobson is not quoted in Clerk & Lindsell and that Leake v Loveday is doubted. Similarly, in Salmond on Torts 16th Edition, where Butler v Hobson is not listed and you are referred to the Modern Law Review for the academic controversy arising out of the decision of Leake v Loveday. However, both authorities appear in Halsbury's Laws of England 3rd Edition Vol. 38 at paragraph 1332 for the proposition that "if the Plaintiff was not in possession of the goods at that time, the Defendant is entitled to set up the right of a third person."

Mr. Justice Hinchcliffee in Wilson v Lombank Ltd. (1963) 1 AER 74 when confronted with the following quotation from Salmond in Torts-

"(2) If, however, the Plaintiff was not in actual possession he relies upon his right to possession, he must recover on the strength of his title, and proof of a jus tertii will destroy the only thing upon which he relies."

He had this to say at p. 742

"Counsel for the Defendants agrees that there is no other authority that he has been able to find for this proposition."

and this notwithstanding that Leake v Loveday had been brought to his attention. In his opinion, the quotation from Salmond was not a binding authority and rejected it. I am of the same opinion. Consequently, the Plaintiff is entitled to succeed. At the very minimum, the Plaintiff was entitled to immediate possession.

I have been referred by Counsel for the Defendant to the Sale of Goods Ordinance and to the Factories Ordinance. I will dispose of the arguments on them briefly by saying they do not apply. The Defence as pleaded is jus tertii simpliciter and not that the Defendant was a bona fide purchaser without notice (although such is the case). The Defence is also bound by its pleadings. See page 1023 of Bullen & Leake 12th Edition for the following extract:

"If the Defendant desires to rely on any such defence of any positive case, he must expressly plead the facts relied on to avoid any question of surprise."

Finally, the question of damages. The Plaintiff claims $56,948.10. This is not only based on a wrong appreciation of the number of logs involved in the conversion by the Defendant but also on a wrong appreciation of their value in the barquedier. I have found for the Defendant on the number of logs involved. I also find for him as to the value to be given. I accept his evidence of $400 per thousand feet of mahogany and between $250 and $350 per thousand feet of hardwood. I will assess the hardwood at $300 for the purposes of damages.

15,000 feet at $400 = $6,000
10,000 feet at $300 = $3,000

Judgment for the Plaintiff in the sum of $9,000 and costs.

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