IBL Ltd v Coussens [1991] 2 All ER 133

Facts

  • IBL Ltd entered into a contract with Coussens for the purchase of equipment.
  • Coussens failed to deliver the goods as agreed.
  • IBL Ltd alleged conversion, claiming that Coussens’ actions resulted in significant financial losses, including lost profits and mitigation expenses.
  • The trial court awarded IBL Ltd damages for both the value of the goods and consequential losses resulting from the conversion.
  • Coussens appealed, arguing that the consequential losses were too remote and not directly caused by the conversion.
  • The matter proceeded to the Court of Appeal to determine the recoverability of such losses.

Issues

  1. Whether consequential losses arising from conversion are recoverable under English law.
  2. Whether the losses claimed by IBL Ltd flowed directly from the act of conversion or were too remote.
  3. What legal test should govern the recoverability of consequential damages in conversion cases.

Decision

  • The Court of Appeal upheld the trial court’s award for both the value of the goods and the consequential losses.
  • The court held that consequential losses may be recoverable if they flow directly from the act of conversion.
  • The key requirement is a direct causal link between the conversion and the losses incurred; remoteness and foreseeability are not the applicable tests.
  • Lost profits and mitigation expenses in this case were found to be directly attributable to Coussens’ failure to deliver the goods.

Legal Principles

  • The primary measure of damages in conversion is the value of the goods at the time of the wrongful act.
  • Consequential losses are recoverable if they are directly caused by the conversion.
  • The governing test for recoverability is direct causation, not reasonable foreseeability as in contract law.
  • Claimants must demonstrate a clear causal link between the act of conversion and the additional losses claimed.

Conclusion

The Court of Appeal confirmed that in conversion cases, damages may extend beyond the value of the goods to include consequential losses that flow directly from the wrongful act. This principle clarifies the scope of recoverable losses in commercial disputes involving conversion and emphasizes the importance of causation in such claims.

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