8 September 2014
In this matter Jackson J considered, and indeed questioned, the appropriate manner of assessing damages in detinue cases. His Honour further considered the necessity of making a valid demand upon a person in actual possession of the goods in question.
The facts of the matter were relatively simple. Black Diamond Group Pty Ltd (Black Diamond) was a company engaged in the business of hiring demountable accommodation buildings, typically associated with mining operations. Manor of Maluka Pty Ltd (Maluka) was in the business of providing accommodation services at mine sites and, in particular, it operated the Banana Accommodation Village near Banana in Central Queensland. For that purpose Maluka had hired 21 buildings from Black Diamond. The venture, however, was not successful. Maluka fell behind in the rental payments in respect of the demountable buildings it had hired and Black Diamond intimated its intention to recover possession of them. Maluka refused to return the buildings, however, it subsequently went into liquidation. The second defendant, Go Country Group Pty Ltd (GCG), was the owner of the land on which the demountable buildings were located, but it too refused to return the buildings. Black Diamond sought damages against GCG for the wrongful detention of its buildings said to have been about $60,000 per month representing the rate of hire of the buildings as agreed under the agreement with Maluka. In effect the plaintiff relied upon what was said to be a special rule for damages for the tort of detinue, where the plaintiff carries on business of hiring the chattels in question for reward and the defendant makes use of them. It is said that the plaintiff is then entitled to its usual rate of hire for the chattels as the measure of damages.
It was conceded by GCG that, if there were some inappropriate detention of the goods, the plaintiff would be entitled to damages representing the usual rate of hire regardless of whether that loss would be the usual compensatory measure of damages in tort. That approach was derived from the decision in Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd  2 QB 246. Jackson J considered that the approach in that case was not consistent with the decision of the High Court in Butler v Egg and Egg Pulp Marketing Board which was to the effect that damages in tort are compensatory, such that a plaintiff may not recover more than the “sum of money [that] would be required to place it in the same position as it would have been in if the appellants had [not converted the chattels]”. However, his Honour noted that, as the decision in Strand Electric had been followed by Australian intermediate appellate courts, he was bound to follow it.
For the cause of action in detinue to be fully constituted it was necessary that the person entitled to the chattels makes a demand on a possessor and the possessor refuses to return them. After considering whether or not there was a sufficient demand in the present case, it was held that there was or, if the solicitor’s letter requiring the return of the goods was not adequate, the commencement of the proceedings was. See UCPR 375.
However, at the time of the relevant letter of demand, there was a question as to whether or not GCG was in possession of the land on which the buildings were located as the land was subject to an agreement between GCG and Maluka for Maluka to use the land for its venture. Hence, the question for the Court was whether, if Maluka did have possession of the land, does that affect the claim in detinue brought by Black Diamond against GCG? His Honour reasoned that possession of the land – and, therefore, of the demountable buildings – by GCG was essential to the plaintiff’s claim for detinue as possession by a defendant of goods is a necessary element of their detention. In the present case, GCG did not adopt the position that, as it was not in possession of the land and, therefore, the buildings, it could not have been liable for detinue. Instead, even though it did not have possession of the land when the goods were demanded, it asserted a right to prevent Black Diamond from entering onto the land to recover them. In the circumstances of the case his Honour thought that it was not necessary to answer the question of whether or not GCG had relevant possession of the goods when the demand was made.
On the question of the rate of damages, under the Strand Electrical principle the defendant who wrongfully detains the plaintiff’s goods which are ordinarily used for hiring is liable for the usual hiring rates, but only if the defendant, itself, used the goods. The principle cannot apply where the wrongful detainer of the goods does not use them but merely allows them to lie idle: Bunnings Group Ltd v Chep Australia Ltd (2011) 82 NSWLR 420 applied. In the present case, GCG had not deployed the buildings in any way in the course of its business or at all. It followed that the plaintiff’s claim for damages based on the usual rate of hire failed.