The claimant entered into a hire purchase agreement with the second defendant for the acquisition of three dump trucks. The second defendant went into administration and the trucks went into possession of the fourth defendant which then purported to sell them. Two of the trucks were sold at auction in Germany conducted by the third defendant. The third truck was not traced. The claimant obtained summary judgment against the third and fourth defendants for conversion. The issue was the quantum of damages payable.
The court held that the object of an award of damages for conversion was to compensate the claimant for the loss suffered as a result of the conversion. The appropriate award was a question of fact in each case. The starting point may be the market value of the goods at the date of conversion. However, the interest of a finance company in goods let on hire purchase consisted only in being paid sums due under the relevant hire purchase agreement. Damages fell to be assessed having regard to the economic realities of the case. Here, the value of the claimant’s interest was the difference between the total sum payable under the hire purchase agreement, had it run its full course and the option to purchase had been exercised, and the sums in fact paid under the agreement.
Any further compensation would have been a windfall for the claimant and more than it had bargained for when it originally entered into the agreement.
VFS Financial Services (UK) Ltd v (1) Euro Auctions (UK) Ltd, (2) Hennelly’s Utilities Ltd (in administration), (3) Euro Auctions GMBH, (4) Hennellys Ltd