International Factors Ltd v Rodriguez
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUCKLEY,SIR DAVID CAIRNS,LORD JUSTICE BRIDGE |
| Judgment Date | 09 May 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0509-4 |
| Docket Number | 1975 I No. 9135 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 May 1978 |
[1978] EWCA Civ J0509-4
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Division
(Mr. John Newey Q.C. Sitting as a Deputy Judge of the Queen's Bench. Division)
Lord Justice Buckley
Lord Justice Bridge
and
Sir David Cairns
MR. A. STEINFELD (instructed by Messrs. Raymond Dobson & Co., Solicitors, Chichester) appeared on behalf of the Defendant (Appellant).
MR. NELL BUTTER Q.C. and MR. G.D. CONLIN (instructed by Messrs, Sydney, Pearlman & Greene, Solicitors, London WC2A 3XJ) appeared on behalf of the Plaintiffs (Respondents).
I have asked Sir David Cairns to deliver the first judgment in this case.
This is an appeal from a judgment of Mr. John Newey Q.C, sitting as a Deputy Judge of the Queen's Bench Division; he gave judgment for the plaintiffs in the action for the sum of £11,370.69 plus interest, a total of something over £14,000.
There are two issues on the appeal, both of them issues of law. The defendants adduced no evidence at the trial and the learned judge found all the facts to be as deposed to by the plaintiffs' witnesses.
The defendant was a director of a company called Sound Components Limited, now in liquidation; I shall refer to it simply as "the company". Its business was the manufacture of loudspeakers and other components for hi-fi equipment. The defendant was also a guarantor of the company's bank account.
On 7th April 1973 an agreement under seal was entered into between the plaintiffs and the company. The plaintiffs carry on the business of discounting debts, and the agreement was in a standard form of what is called a factoring agreement. By it the plaintiffs agreed to purchase from the company all the book debts of the company and the company agreed to sell them to the plaintiffs for the sum of 98½% of the full amount of the debts. The detailed machinery is of course set out in the agreement. It was contended in the court below that that machinery had not been complied with, but that argument has not been pursued in this court.
The machinery involved that in order to ensure that the plaintiffs received the amount of the debts, all the company's invoices were to be endorsed with a statement indicating that the debtflowing from the invoice was assigned to the plaintiffs, and then the practice was for the company in the case of each debt to execute an assignment to the plaintiffs and to give express notice to every debtor as soon as the assignment had been completed. There was an express provision in the agreement that if any debtor paid the company by cheque the company was to hand over that cheque immediately to the plaintiffs.
In June and July of 1974, four cheques were sent by debtors to the company, the total amount of the four cheques being the sum which I have mentioned, £11,370.69. Those payments were made in purported discharge of debts for goods supplied, but it is now accepted that those were debts which had been assign to the plaintiffs and the learned judge found that all the machinery laid down in the agreement had been duly complied with. As I have already indicated, there is now no issue about that. But what happened was that instead of the cheques being handed straight to the plaintiffs as they should have been, they were all paid into the company's bank account and, as the learned judge found and as is now no longer in issue, this was done on the instructions of the defendant himself, who was largely responsible for the running of the company, which at that time was in considerable financial difficulties, and he knew perfectly well that what he was doing was contrary to the agreement with the plaintiffs.
That this was a breach of contract by the company is obvious. it is also obvious that a cause of action in contract would not lie by the plaintiffs against the defendant, who as an individual was not a party to the contract. The learned judge however found that a cause of action in tort, in conversion, was established against the defendant, and he based his judgment on threepropositions: first, that a director is liable for torts committed by him in connection with the affairs of a company; he cited as authority for that proposition the case of Performing Right Society v. Ciryl Theatrical Syndicate, (1924) 1 King's Bench, page 1, and Fairline Shipping Co. v. Adamson, (1975) 1 King's Bench,180. It is not now in dispute that the learned judge was right up to that point.
Mr. Steinfeld, on behalf of the defendant in this court, has interpreted the learned judge's judgment as meaning that the tort was primarily a tort of the company and that the defendant became liable as the person who was instrumental in committing the tort on behalf of the company. I do not so read the judgment; I read it as meaning that the defendant himself was here the primary tortfeasor, and the fact that he was acting on behalf of the company is no defence to him.
There now come two propositions which are challenged. The first is that the learned judge held that payment of the cheques into the company's bank account was a conversion of the cheque. The second is that having so found and having held that the defendant was liable for that conversion, he went on to hold that the measure of damages was the face value of the cheques.
As to whether this was a conversion, counsel for the defendant says that the plaintiffs here had no more than a contractual right to receive these cheques; they had no proprietary right so as to enable them to sue in conversion. On the issue of damages, Mr. Steinfeld's proposition is that in this case, because the debts had been assigned, because notice of the assignment had been given to the debtors, their payment of the debts to the company did not discharge them from liability; that accordingly the plaintiffs arein a position to recover the full amount of those debts from the original debtors and that their damages should be limited to any trouble, inconvenience and expense to which they might be put in recovering the debts from the debtors and, no doubt, to any amount that proved to be irrecoverable if it so happened that any of the debtors were not able to pay.
I do not find it necessary to go any further into the provisions of the agreement of 7th April 1973t except to refer to one vital clause; that is the clause numbered 11 (e), which provides as follows: "If any payment in respect of an assigned debt is paid direct to the Supplier" - the Supplier being the company - "then the Supplier shall hold the same in trust for the Factor" - the Factor being the plaintiffs. "The Supplier shall in that event immediately after receipt of any such payment hand to the Factor the identical cash cheque or bill of exchange and if it be necessary for such cheque or bill of exchange to be endorsed to the Factor to...
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MCC Proceeds Inc. v Lehman Brothers International (Europe)
... ... in goods could sue for conversion if he had an immediate right to possession: see Healey v HealeyELR([1915] 1 KB 938) and International Factors v RodriguezELR ([1979] 1 QB 351). 2 The bona fide purchaser of a chattel was liable in conversion, unless he could rely on a relevant statutory ... That view of the scope of Healey v Healey affected the force of the decision of the Court of Appeal in International Factors Ltd v Rodriguez on which counsel for the plaintiffs relied. There (at p 357G) Sir David Cairns, with whose ex tempore judgment Lord Justice Bridge had agreed (at ... ...
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...Steamship Enterprises of Panama Inc., Liverpool (Owners) v Ousel (Owners) and Others. The Liverpool (No.2) [1963] P 64, International Factors Ltd v Rodriguez [1979] 1 QB 351, London & South of England Building Society v Stone [1983] 1 WLR 1242, Standard Chartered Bank v Pakistan National Sh......
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...to a line of authorities including Steamship Enterprises of Panama Inc, Liverpool v Ousel (The Liverpool) (No 2) [1963] P 64, International Factors Ltd v Rodriguez [1979] 1 QB 351, London and South of England Building Society v Stone [1983] 1 WLR 1242, Standard Chartered Bank v Pakistan Na......
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...is insufficient to found a right to sue in conversion: see Jarvis v Williams[1955] 1 WLR 71 and International Factors Ltd v Rodriguez[1979] QB 351 at 357. However, a bailor’s right to possession of the goods is sufficient to maintain an action in conversion: see East West Corpn v DKBS AF 19......