To have and to hold? Conversion and intangible property

Publication Date01 January 2008
Date01 January 2008
DOIhttp://doi.org/10.1111/j.1468-2230.2008.00683.x
AuthorSarah Green
CASES
To have and to hold? Conversion and intangible property
Sarah Green
n
In OBG Ltd vAllan and two other cases [2007] UKHL 21, the House of Lords
considered several tort claims for ¢nancial loss resulting from intentional acts.
This note will focus on ¢rst of these, OBG, and the claim therein for conversion
of intangible property. The defendants were receivers who, acting in good faith,
had assumed control of the claimants’ assets and undertaking. Their purported
appointment as receivers was invalid, however, since it occurred under a nugatory
£oating charge. Consequently, the claimants brought proceedings for trespass and
conversion to their land and chattels, foru nlawful i nterference with their contrac-
tual relations and for the c onversion of their debts and contractual rights.The lat-
ter claim is not a common o ne, nor did it take up a large proportion of the
judgment. This, however, belies the signi¢cance of the matter. In terminating
the contracts of the majority of OBG’s sub-contractors and settling other out-
standing contractual claims, the joint receivers thereby assumed control of nearly
ninety per cent of the claimant’s total assets. Nowadays, a party’s intangible assets
routinely dwarf their tangible counterparts; thus the coherence of the law in this
area is of increasing importance.
The particular facts of this case also demonstrate why such protection needs to
be provided by conversion rather than by the economic torts. The receivers in
OBG had conducted themselves properly and without any intention to cause
the claimants’ loss. They did not use unlawful means nor was any contract brea-
ched or not performed as a result of their actions. The receivers, therefore,
did nothing which the economic tortsseek to remedy. In tort terms, the problem
with the receivers’ behaviour lay not in its nature but in its e¡ect; their actions
were not bad, but they were wrongful, and conversion recognises the nicety of
the distinction.
The question of whether intangibles can be the subject of conversion divided
their Lordships. Lords Ho¡mann,Walker and Brown answered the question in
the negative, whilst Lord Nicholls and Baroness Hale opined that intangibles
should no longer fall outside the ambit of the tort. With the greatest of respect
for the majority,their approach is outdated, and creates unnecessary inconsistency
within the law.
n
Lecturer, University of Birmingham. I am indebted to John Randall QC, lead counsel forthe clai -
mant in OBG, for his invaluable comments on an earlier draft of this note. I am also verygrateful to
both Professor Rob Cryer and an anonymous referee for their constructive advice. All opinions
expressed, and anyerrors which remain, are entirely myown.
r2008 The Author.Journal Compilation r2008 The Modern Law Review Limited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2008) 71(1) 114^131

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