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Flexibility of Damages for Conversion and Detinue

Document Cited authorities 10 Cited in Related
Vincent
Published date01 March 2009
Date01 March 2009
Pages102-117
DOI10.3366/E0954889009000309
INTRODUCTION

Hard cases test the virility of principles as well as the creativity of judges. So it was in Civil Design Construction Nig. Ltd v SCOA Nig. Ltd.1

Civil Design Construction Nig. Ltd v SCOA Nig. Ltd [2007] 6 NWLR (Part 1030) 300 (SCN).

recently decided by the Supreme Court of Nigeria. CDC v SCOA is attractive for its refreshing interpretation of the rarely litigated Hire Purchase Act2

The Hire Purchase Act 2004, Cap. H4 (Laws of the Federation of Nigeria 2004).

 and its application of the common law rules for the award of damages for conversion and detinue.3

In England, detinue was abolished by section 2 of the Torts (Interference with Goods) Act 1977, though the Act extends remedies previously associated with detinue to an action for conversion; but the separation of detinue and conversion as distinct causes of action remains relevant for other common law jurisdictions such as Nigeria and Canada. In Lancashire & Yorkshire Ry. Co. v. MacNicoll, 88 L.J. (K.B.) 601 at 606 Atkin J (as he then was) defined conversion as intentionally dealing with goods in a manner inconsistent with the right of the true owner. In Caxton Publishing Co. v. Sutherland Publishing Co. [1938] A.C. 178 at 202 Lord Porter gave a similar definition: ‘conversion consists in an act intentionally done inconsistent with the owner's right, though the doer may not know of or intend to challenge the property or possession of the true owner’. Detinue is the wrongful detention of the claimant's property. According to Diplock L.J. in General & Finance Facilities Ltd. v Cooks Cars (Romford) Ltd. [1963] 1 W.L.R. 644 at 648 an action in detinue ‘is a continuing cause of action which accrues at the date of the wrongful refusal to deliver up the goods and continues until delivery up of the goods or judgment in the action for detinue’.

 On a deeper analysis, however, CDC v SCOA dramatises the sterility of a mechanistic approach to legal principles and the potentially ruinous consequences of such an approach for the victim of a tortfessor. From a comparative perspective, CDC v SCOA raises problems that are common to most common law systems, though these problems are more acutely expressed in legal systems that are characterised by high rates of inflation (as in many developing countries). The problems relate to the proper assessment of damages for conversion and detinue: should the emphasis be on the measure of damages based on the value of the subject matter at a particular point in time4

Tettenborn has already criticised the arbitrariness of this approach: A. Tettenborn, ‘Damages in Conversion – The Exception or the Anomaly?’, 52 Cam. L.J. (1993): 128–147.

 or should the emphasis be on the need to put the claimant to his or her pre-injury position? Another problem is the extent to which delays that come with the engagement of an appellate process should affect the damages already assessed by the trial court? This is an important concern for a successful claimant who maintained his or her victory at the appellate level, especially where inflation threatens to turn that success into a Pyrrhic victory. It is suggested that most of the cases in Nigeria and in England (at least up to the 1970s) largely conflate the measure of damages with the principles of damages; it is also suggested that a trial court's assessment of damages should not be seen by an appellate court as being written in stone. Development of the views above requires a deconstruction of the facts of CDC v SCOA, an examination of the conceptual distinction between principles and rules, and the application of that distinction in the analysis of some of the relevant cases CDC v SCOA – AN OVERVIEW

The complex facts of CDC v SCOA spanned a period of twenty-two years and the counting is still on since the matter was remitted to the trial court for the assessment of damages. Between 1982 and 1984 CDC bought two water rigs on hire-purchase terms and two fully-paid road scrappers from the defendant. The first water rig (registered as LA 2632 WD) was fully paid soon after its purchase and the legal title was transferred to CDC. The second rig (registered as LA 8509 WD) had two instalments outstanding (amounting to one hundred thousand naira – N100, 000) at the time the action was brought. The first rig was bought for N431, 842.00 while the second rig was for N514, 482.00, with N414, 480.00 paid up at the time of the action. The two scrappers cost the plaintiff N319, 806.00. This means that in the early 1980s, the plaintiff paid the defendant a total of N1, 166, 128.00 for the equipments above.

The Bigger Picture

To bring in the bigger picture, which was missed by the appellate courts in this case, it needs to be said that in the early1980s the Nigerian currency (naira) enjoyed strong performance in the currency market in comparison to the currencies of most industrialised nations. During that period, the naira at the worst of times exchanged at par with the US dollars (N1 = USD1).5

The exchange rates of USD1 to Naira from 1984 when the cause of action arose up to 2005 were as follows: 1984-N0.7672; 1985-N0.8924; 1986-N1.7323; 1987-N3.9691; 1988-N4.5367; 1989-N7.3651; 1990-N8.3469; 1991-N9.9095; 1992-N32.6313; 1994-N21.8861; 1995-N21.8861; 1996-N21.8861; 1997-N21.8861; 1998-N21.8861; 1999-N86.000; 2000-N98.7800; 2001-N110.5045; 2002-N113.9625; 2003-N127.0695; 2004-N136.0823; 2005-N132.8600: Central Bank of Nigeria Statistical Bulletin, Volume 4, No.2 (December, 1993), at 155; Central Bank of Nigeria Statistical Bulletin, Volume 16 (December 2005), at 371–372.

Roughly, this meant that in 1984 when the cause of action arose the value of payments made by the plaintiff for its equipments was, in US terms, up to (at least) USD1, 166, 128.00. Towards the late 1980s Nigeria devalued its currency as part of its economic structural adjustment programmes and since then the naira has continued to plummet. Today, USD1 exchanges for at least N125. This means that in 2007 when the Supreme Court gave its judgment in CDC v SCOA, the naira value of plaintiff's payments had risen (through inflation) to about N145, 766, 000.00. We shall return to this later Detention and Conversion of Plaintiff's Equipments

In 1984 plaintiff sent rig LA 2632 WD (fully- paid) to the defendant for repairs but the defendant detained it. The second rig (LA 8509 WD) was forcefully repossessed by the defendant in May 1984. Although the plaintiff had fully paid for the scrappers it did not take possession of them based on an arrangement with the defendant to use the payments (for the scrappers) as a deposit for some extra rigs that the plaintiff intended to purchase from the defendant. The arrangement did not work out and the plaintiff remained the owner of the scrappers. Without the plaintiff's instruction, the defendant transferred the scrappers to Sokoto Agricultural Development Project (SADP). The plaintiff brought an action for conversion of the scrappers and detinue of the rigs; it also claimed damages based on the assessed market value of the items.

 The Trial and Appellate Judgments

The trial judge, Olorunnimbe J. accepted plaintiff's submission that the transaction was covered by the Hire Purchase Act and that the repossession of the second rig (LA 8509 WD) was wrongful since more than 3/5th of the payments had been made. He also held that the defendant was liable for converting the scrappers. Surprisingly, he held that there was evidence that the plaintiff had voluntarily transferred title in the first rig (LA 2632 WD) to the defendant and, accordingly, he dismissed plaintiff's action on that rig. Olorunnimbe J. ordered that the plaintiff should be paid the sum of N414, 480.00 on the second rig plus loss of profit at the rate of N2000 per day, and that the plaintiff should be refunded the sum it paid on the scrappers. Alternatively, he ordered an inquiry into the current value of the equipments and payment of the ascertained amounts to the plaintiff. More interestingly, the learned trial judge observed that the ‘value of the two rigs would be N3, 300, 000.00 and N3, 150, 000.00 respectively’.6

Judgement of the Ikeja High Court, Lagos, Nigeria, delivered on 24 April 1992 (Olorunnimbe J.) – on file with the authors.

Although this amount was based on the evidence given a few years before the judgment in 1992, it throws the much needed light on the changing value of the naira (due to inflation) which a case of this sort ought to recognise. It simply means that the N846, 322.00 paid by the plaintiff for the two rigs between 1982 and 1984 became N6, 450,000.00 in 1992, after an interval of ten years

Both parties appealed to the Court of Appeal which delivered its judgment in 2001.7

SCOA v CDC [2001] 9 NWLR 752 (CA).

The Court of Appeal set aside the trial court's ruling on rig LA 2632 WD and held that there was no credible evidence that it had been transferred to the defendant. Consequently, the defendant was liable in damages for detaining the rig. On the second rig (LA 8509 WD), the Court of Appeal held that the transaction was governed by the common law (not the Hire Purchase Act) and that the defendant was entitled to repossess it for the outstanding instalments. It affirmed the judgment of the trial court on the scrappers but held that the plaintiff was only entitled to a refund of the original purchase price. On the assessment of damages for rig LA 2632 WD the Court of Appeal held that the plaintiff was entitled to damages for loss of profit (N2000 per day for 260 days only) and to the ‘sum of N3, 300,000. 00 as the market value of the rig at the date of judgment of the lower court’.8

Ibid., at 772.

 Notice that the Court of Appeal thought that the plaintiff was only entitled to the assessed value of the rig in 1992 (if not 1989 when evidence on the value was given) even when the suit had taken nine years to complete its journey to the Court of Appeal and the value of naira had further depreciated. In...

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