The relevant authorities
64 The appellants referred the Court to a number of passages in relevant texts as well as to a number of authorities. The Court was first referred to Fleming, The Law of Torts (9th ed, 1998) at 73 where the following statement appears:
"A servant who has mere custody of goods on behalf of his master is not treated as being in possession: the master has not only the right to possession but 'constructively' the possession itself. … [Y]et a servant may become a bailee and sue for trespass or conversion, if an intent can be inferred to invest him with exclusive possession , as when the plaintiff was employed at weekly wages to navigate a ship and himself engaged and paid an assistant." (Emphasis added.)
65 According to a footnote, the first of the above propositions drew its authority from the decision of the Appeal Division of the New Brunswick Supreme Court in Richard v Nowlan (1959) 19 DLR (2d) 229. This decision was also referred to by the primary judge at [230] of his judgment.
66 Authority for the second part of the above statement from Fleming was stated (in a footnote) to derive from Moore v Robinson (1831) 2 B & Ald 817; 109 ER 1346. That case related to whether the master of a vessel, who was hired by a canal company on weekly wages, was entitled to maintain an action in trespass, notwithstanding that the trespass had been against the property of the canal company. Reference was made to the case of Pitts v Gaince (1700) 1 Salk 10 where Lord Holt had said that the master of a ship might maintain trespass as might the bailiff of goods. On the other hand it was submitted that the master was but a mere servant with no possessory interest in the vessel in question. The Court held that the master was entrusted with the management of the vessel and its crew, and that the case was therefore indistinguishable from Pitts v Gaince.
67 The footnote in Fleming also refers to the decision of Hill J in The Jupiter (No 3) [1927] P 122. In that case his Lordship (at 131) referred to Moore v Robinson but considered that "at the present day" it was impossible to regard the master of a ship as its bailee. Conditions of modern commerce were quite different than those which applied in 1700 when Pitts v Gaince was decided. After referring to a passage in Pollock and Wright's Essay on Possession in the Common Law, his Lordship said:
"After stating the rule that where an owner delivers a thing to a servant to be by him kept, used, carried or applied in the course of his employment as a servant … the master's possession continues, they add, 'it may be that it will sometimes as against strangers be treated as a possession in cases where the servants charge is to be executed at a distance from the master and where the manner of the execution is necessarily left in a great degree to the discretion of the servant'. In my judgment, Captain LePine never was in possession of the Jupiter nor had he at any time the right to possession. He was a custodian merely."
68 Nevertheless, the appellants relied on the second part of the passage from Fleming and, in particular, that part which I have emphasised. They asserted that their situation was, in terms of the statement from Pollock and Wright cited by Hill J in The Jupiter, one in which "the manner of the execution is necessarily left in a great degree to the discretion of the servant". It was submitted that, by virtue of their control of the corporate owner of the equipment, that owner had necessarily left in the hands of the directors "a great degree of discretion" with respect to the equipment which entitled them to its possession. Alternatively, the appellants became bailees as it could be inferred that the corporate owner intended to invest them with exclusive possession of the equipment.
69 In my opinion, these submissions should be rejected. However, before giving my reasons for this conclusion, it is necessary to refer to some further authorities relied upon by the appellants.
70 The Court was next referred to the current edition of Clerk & Lindsell on Torts (19th ed, 2006) at [17]-[55] (pp 1032-1033) where the following passages appear under the heading "Goods in the Custody of Employees":
"It should be noted, however, that an employee who has custody or charge of goods on behalf of his employer does not as such have possession in the sense now under consideration. The employer has not only the right of possession, but constructively the possession itself: from which it follows that, if the goods are interfered with, the employee cannot sue in conversion.
This is the traditional rule, which seems generally accepted. However, an important caveat must be added. While an employee does not as such possess his employer's goods, the case is different where the employer evinces an intent to make the employee a bailee of those goods in addition. This is likely to be the case where the employee is allowed to use the goods for his own purposes (as with a company car); and possibly in other cases where he is given considerable discretion how to employ them. …
In short, the practical result now seems to be that in most cases the servant will be able to sue. Moreover, it is submitted that this is no bad thing. A plea by a convertor that he has been sued by the wrong claimant is normally an unmeritorious one …"
71 The same authorities are relied upon in the footnote to the above passage as those referred to in the footnotes to the passage from Fleming to which I have referred above. Again, the appellants rely upon the above statements and submit that the corporate owner of the equipment had evinced an intention to make them bailees of the equipment, particularly given the considerable discretion vested in them as directors of the company as to its deployment.
72 Reference was also made to Palmer on Bailment (2nd ed, 1999) where, at 108, the following is stated:
"As a general rule, a servant does not obtain possession of her or his master's chattels. This rule is subject to wide exceptions and it may be questioned whether it retains any practical value."
73 At 103 the learned authors state that for possession to amount to bailment, there must be a high degree of physical control over the chattel in question to the exclusion (at least) of the bailor. At 106 it is stated that this is a question of fact and degree, although the question of control and the distance between the owner and his chattel are clearly relevant factors. The Council relied on the factor of distance as supporting its position, given that, at all material times, the appellants were in Queensland and the equipment in Maroubra, New South Wales. As such, there was a significant distance between the appellants who were claiming to be bailees and the relevant equipment. However, I do not consider that this factor is in any way determinative.
74 The Court was next referred to Pollock and Wright where (at 139) the following passage appears:
"In any view for the language of this decision [ Oliver's case] is a strong authority against holding that a servant's custody is in general sufficient to support an action or prosecution as for a taking of the thing from his possession, even as against a mere wrongdoer; though it may be that it will sometimes as against strangers be treated as a possession in cases where the servant's charge is to be executed at a distance from the master and where the manner of the execution is necessarily left in a great degree to the discretion of the servant."
75 The appellants submitted that this passage could be transposed to the directors of a company who are sole directors and shareholders, as in the present case. They argued that because they controlled the corporate owner of the equipment, they were vested with both an exclusive and complete discretion as to its deployment with the consequence in law that they were to be treated as having the immediate right to possession.
76 On the other hand, the following further passages from Pollock and Wright are of some significance. Thus, at 17, the authors state:
"Possession in law is most easily understood as associated with possession in fact. This is the normal aspect of the right. It exists, broadly speaking, for the benefit of possessors in fact and in good faith, even if we hold the ulterior object is the benefit of those who, as being or claiming through true onus, are really entitled to possess. The law would be much simpler than it is if it were held that actual control or custody invariably gives actual legal possession, whether the custodian exercises control on his own account or is the servant or otherwise on behalf of another. But no system of law, so far as we know, has gone to that length. A manifest intent, not merely to exclude the world at large from interfering with the thing in question, but to do so on one's own account and in one's own name, is required in different degrees both by the Roman law and Common Law."
77 Again, at 18 the authors observe:
"It may be observed however that a servant's custody is often so manifestly exercised not on his own account but on his master's, that it has no colour of apparent ownership. If we regard acts according to their apparent intent and effect, as measured by the common knowledge of mankind, we can hardly say that a groom exercising his master's horse is even in de facto possession of the horse. He is in appearance as much in fact, in fact as much as in law, the master's instrument for exercise the master's power. There is no appearance of acting on his own behalf which could mislead a man of ordinary judgment."
78 Further, at 19:
"It is not merely that things continue in a man's possession though they be out of his immediate control, so long as his active control is, as some say, capable of being reproduced, or, as others say, his relation to them is consistent with the usual dealing of an owner of such things."
79 Under the heading "The Transfer of Possession", the following appears at 58:
"The simplest case is the handing over of a moveable object with intent to transfer ownership or a more limited right, including the right to use or have control of that object. Such a delivery, whether the transaction be gift, sale, or bailment, always transfer possession to the deliveree.
…
On the other hand, a servant in charge of his master's property, or a person having the use of anything by the mere licence of the owner, as a guest has the use of the furniture and plate at an inn, generally has not possession."