TANKS AND VESSELS INDUSTRIES LTD V DEVON CIDER CO LTD

[2009] EWHC 1360 (Ch), High Court of Justice, Chancery Division, Miss Lesley Anderson QC, Deputy Judge of the High Court, 17 June 2009

Sale of Goods – Expiry of lease agreement – Whether agreement for hire or hire-purchase – Whether retention of goods upon expiry constituted tort of conversion –Tort (Interference with Goods) Act 1977, section 3 – Sale of Goods Act 1979

The claimant, TVI, was a supplier of equipment for the brewery industry. It brought a claim for delivery up of certain equipment, alternatively damages for conversion, pursuant to section 3 of the Torts (Interference with Goods) Act 1977 ("the 1977 Act"). The defendant, Devon Cider, had bought its assets from a cidermaking company previously operating out of the same premises, which had gone into administration in July 2007 and in which TVI had come to acquire a stake as a result of debt owed by that company to TVI. The owner and MD of TVI was also a non-executive director of that company. TVI had leased a so-called palletiser to the predecessor company and on the administration had agreed that the lease could continue. The sale of equipment by the administrators to Devon Cider had expressly excluded equipment leased by the earlier company. The lease had subsequently expired in October 2007. In these proceedings, TVI sought an order for delivery up of the palletiser, which it argued was wrongfully retained, and damages for loss of use. Devon Cider argued that the palletiser had not been leased but had been the subject of a hire-purchase agreement. It brought a counterclaim for declaration of the residual sum to pay under that agreement. In dispute were also some vessels acquired by TVI and delivered to Devon Cider’s predecessor, and to which TVI argued it still had title. Miss Lesley Anderson QC held that, on the evidence, the palletiser had been the subject of a hire agreement rather than a hire-purchase agreement. At the end of that hire agreement, Devon Cider had been obliged to deliver it up and not doing so constituted conversion under the 1977 Act. As for the vessels, it was proven that TVI had retained title to the vessels. TVI was entitled to delivery up and damages of the equipment, or in the option of Devon Cider damages in lieu.