When someone is the victim of financial or other types of fraud, there are a variety of legal bases upon which they may bring a claim against the perpetrator. One of these is the tort of conversion.
What Is Conversion?
In Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, the Supreme Court of Canada described the tort of conversion as involving “a wrongful interference with the goods of another.” This includes “taking, using, or destroying” such goods “in a manner inconsistent with the owner’s right of possession.” Theft of property, for example, often falls within this particular tort.
The tort of conversion is one of several torts that protect against interference with property rights. It is sometimes claimed by a plaintiff together with two other torts: detinue and trespass to chattels. Detinue is a cause of action that arises where someone wrongfully refuses to return property. Trespass to chattels involves the wrongful taking or damaging of property that someone else is entitled to possess.
While the torts are somewhat similar, some commentary and case law suggest that conversion involves a more significant dealing with goods than is the case with trespass to chattels (see, for example, Aylmer Meat Packers Inc. v. Ontario). For example, minor damage to goods may ground a claim in trespass to chattels. In contrast, significant damage to goods that interferes with the exercise of ownership rights may justify a claim for conversion.
What Must Be Shown to Establish Conversion?
To successfully claim conversion, a plaintiff must prove that they had a “possessory interest in personal property,” that such property “is identifiable or specific,” and that the defendant intentionally committed a “wrongful act” in relation to that property “that is inconsistent with the plaintiff’s right of possession” (see DaimlerChrysler Canada Inc. v. Associated Bailiffs & Co. Ltd.).
The tort is one of strict liability, meaning that a defendant cannot avoid liability by arguing they committed the wrongful act innocently. They also cannot claim contributory negligence on the part of the plaintiff (see Boma and, more recently, BMW Canada Inc. (Alphera Financial Services Canada) v. Mirzai).
The Ontario Court of Appeal confirmed in Westboro Flooring and Décor Inc. v. Bank of Nova Scotia that, so far as intent is concerned, it is not essential to show the defendant was blameworthy beyond acting in a manner “inconsistent with the owner’s title or possessory right.”
It remains an open legal question in Ontario as to whether the tort can apply where the property in question is intangible, such as information in a book of business (see, for example, Tar Heel Investments Inc. v. H.L. Staebler Company Limited).
Case law also appears to hold that dealing with goods in a manner that is authorized by the rightful owner of the goods does not constitute wrongful interference for the purpose of establishing the tort (see Forstner v. Sandhu).
Calculating Damages for Conversion
In cases involving claims for tortious interference with property (such as conversion), the general principle is that the plaintiff is to be put back in the same position they would have been in if the interference had not occurred.
In relation to conversion in particular, a defendant may be required to pay damages equal to the market value of the converted goods “as of the date of conversion” (see 2105582 Ontario Ltd. (Performance Plus Golf Academy) v. 375445 Ontario Limited (Hydeaway Golf Club)). This is because damages are to be awarded as if the plaintiff were forced to sell the goods due to the conversion. A successful plaintiff may also be able to claim special damages so long as they are not deemed to be too remote (see Forstner).
The diminution in value of goods that arises from a defendant’s wrongdoing may be taken into account when calculating an appropriate award of damages. This is sometimes equal to the difference in market value of the goods before and after the tortious interference. However, courts may also consider the replacement and repair costs of damaged goods when determining an appropriate amount of damages to award.
Classic Car Restoration Costs Awarded in Estate-Related Conversion Case
This was the issue in the recent case of Kew Estate v. Konarski. The case concerned a collection of vintage cars owned by Mr. Kew, who passed away unexpectedly. Mr. Kew’s family sought the defendant’s assistance with safekeeping the vehicles; however, the defendant transferred ownership of them to himself and stripped one of the vehicles, a 1960 Corvette, of parts. The deceased’s estate sought the return of the vehicles, among other remedies.
At issue on appeal was the proper method of calculating damages in relation to the damaged Corvette. The appellant argued that damages for the tort of conversion are to be equal to the market value of the converted goods as of the date of conversion; however, the Court of Appeal noted that, at least insofar as the case before it was concerned, damages were not necessarily to be so restricted.
The Court of Appeal went on to affirm the approach taken by the trial judge, who had considered various factors as part of the assessment of damages and the determination of whether restoration cost should form the basis for a damages award, as opposed to replacement cost. Those factors were:
- The “uniqueness” of the converted property;
- The availability of replacement property;
- The difference between the cost of repairing and the cost of replacement;
- The interest of the plaintiff in having the property repaired; and
- The benefit of having the property restored as compared with the burden on the defendant in having to pay the cost of repair.
For a variety of reasons, including because the Corvette had such significance for the deceased’s family, the Court of Appeal agreed with the trial judge that it was appropriate to base the damages award on the restoration cost of the vehicle, even if doing so might result in some overcompensation to the deceased’s estate.
Contact Campbell Litigation for Dynamic Representation in Fraud & Conversion Matters in Kitchener-Waterloo
If you believe your property has been wrongfully taken, damaged, or dealt with in a way that interferes with your rights, it is essential to seek legal advice promptly.
Campbell Litigation, led by Richard Campbell, can assess whether the tort of conversion (or another property-related claim) applies to your situation and help you pursue the compensation you may be entitled to. Contact us online or call 519-886-1204 to discuss your options and protect your interests.
