Kuwait Airways v Iraqi Airways (Nos 4 & 5) [2002] 2 AC 883

Key Point

  • Detention can amount to conversion if done with the intention to exercise dominion over the goods, in other words, to keep the goods for one’s own use
  • A demand and refusal to deliver up the goods are the usual way of proving an intention to keep goods adverse to the owner, but this is not the only way

Facts

  • During the Iraq invasion of Kuwait, the Iraqi army captured the planes of Kuwait Airways (C) and the Iraqi government directed D (Iraqi Airways) to fly the planes to Iraq
  • C issued a writ claiming delivery 0f the planes with consequential damages for unlawful interference under section 3 Torts (Interference with Goods) Act 1977

Held (House of Lords)

  • The tort of conversion was committed

Lord Nicholls

Three-Pronged Test for Conversion

“Conversion of goods can occur in so many different circumstances that framing a precise definition of universal application is well nigh impossible. In general, the basic features of the tort are threefold.

  1. First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession).
  2. Second, the conduct was deliberate, not accidental.
  3. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods. The contrast is with lesser acts of interference. If these cause damage they may give rise to claims for trespass or in negligence, but they do not constitute conversion.”: [39]

Exclusion from Possession

  • “The flaw in IAC’s argument lies in its failure to appreciate what is meant in this context by ‘depriving’ the owner of possession. This is not to be understood as meaning that the wrongdoer must himself actually take the goods from the possession of the owner. This will often be the case, but not always. It is not so in a case of successive conversions. For the purposes of this tort an owner is equally deprived of possession when he is excluded from possession, or possession is withheld from him by the wrongdoer.”
  • “Whether the owner is excluded from possession may sometimes depend upon whether the wrongdoer exercised dominion over the goods. Then the intention with which acts were done may be material. The ferryman who turned the plaintiff’s horses off the Birkenhead to Liverpool ferry was guilty of conversion if he intended to exercise dominion over them, but not otherwise: see Fouldes v Willoughby (1841) 8 M & W 540.”
  • “Similarly, mere unauthorised retention of another’s goods is not conversion of them. Mere possession of another’s goods without title is not necessarily inconsistent with the rights of the owner. To constitute conversion detention must be adverse to the owner, excluding him from the goods. It must be accompanied by an intention to keep the goods. Whether the existence of this intention can properly be inferred depends on the circumstances of the case. A demand and refusal to deliver up the goods are the usual way of proving an intention to keep goods adverse to the owner, but this is not the only way.”

Current Case

  • “IAC was asserting rights inconsistent with KAC’s rights as owner. This assertion was evidenced in several ways.”
  • “In particular, in September 1990 the board of IAC passed a resolution to the effect that all aircraft belonging to the (dissolved) KAC should be registered in the name of IAC and that a number of ancillary steps should be taken in relation to the aircraft.
  • “In respect of nine aircraft IAC then applied to the Iraqi Directorate of Air Safety for certificates of airworthiness and reregistration in IAC’s name.
  • “IAC effected insurance cover in respect of five aircraft, and a further four after the issue of the writ.”
  • “Six of the aircraft were overpainted in IAC’s livery.”
  • “IAC used one aircraft on internal commercial flights between Baghdad and Basra and for training flights. The two Boeing 767s were flown from Basra to Mosul in mid-November 1990.”

Commentary

  • There used to be a separate tort of detinue dealing with cases of detention under which a clear demand and refusal was required
  • The tort of conversion has expand so as to subsume the tort of detinue