Consequential loss
22 Detinue remains a separate tort from that of conversion. The action for detinue focuses on the continued wrongful detention of goods whereas in the action for conversion the injurious act is the original taking of the goods - see Banks v Ferrari [2000] NSWSC 874 at [62].
23 In detinue the usual remedy is the return of the chattel or the market value of the chattel at the time of the trial, see Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 at 178B. Further, consequential losses are recoverable in detinue, where the loss flows from the unlawful detention of the goods and the loss is not too remote, see Macrocom Pty Ltd v City West Centre Pty Ltd [2003] NSWSC 898 at [45] applying the decision of the Victorian Court of Appeal in National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252. The classic example of consequential loss flowing from the unlawful detention of goods is that in Bodley v Reynolds (1846) 115 ER 1066 where a carpenter was entitled to damages for loss of trade occasioned by the conversion of his tools of trade.
24 Mr Gallagher submitted that in the present case the damages awarded by Order 5 are not akin to the usual consequential losses awarded that flow from the unlawful detention of the chattel, such as the loss of opportunity to earn profits from a profit-earning chattel, the loss of use of non profit-earning chattels, or the cost of hiring a substitute during the period of wrongful detention.
25 Mr Gallagher further submitted that the essence of Order 5 is compensatory damages for "defective workmanship" arising from a breach of contract or a breach of duty by the plaintiffs, neither of which have been pleaded against them. The unlawful detention of the vehicle can only be said to have commenced from 28 days after the 11 March 2004 demand for the return of the motor vehicle, by which time all of the work done to the motor vehicle had been completed by Gallagher.
26 It cannot then be said that the alleged consequential loss even occurred during the period of the unlawful detention, because any and all work done to the motor vehicle occurred when the motor vehicle was in the lawful possession of the plaintiffs. According to Gallagher nothing in the law of detinue would render this period prior to the refusal to return the goods a period of unlawful possession and further the alleged consequential damage does not flow from the commission of the tort and is too remote from the plaintiffs' unlawful conduct.
27 Consequential damages in detinue can be measured in terms of a reasonable hire for the detained chattels or for the likely profits that the plaintiff would have earned but for the wrongful detention. In cases where the goods are of a non-profit earning character, consequential damages can be awarded for the loss of their use occasioned by the wrongful detention - see Egan v State Transport Authority [1982] 31 SASR 481. In this case, the damages must be measured according to restitutionary principles. Mr Gallagher must not be allowed to profit from his misdeed and Mr Palmer must not be denied an opportunity to profit by reason of the misdeed.
28 In Egan White J, with regard to the measure of damages as likely profits, said at 531:
"I will assess Egan's loss as the loss of a chance to put the materials to profitable use. The Master is to estimate the likely profit which Egan would have made in a trouble free incorporation of that quantity of materials into these or similar works."
29 In Gaba Formwork, Giles J said at 188 with regard to the measure of damages as a hiring charge:
"On this basis it would seem that Gaba is entitled to the hiring fee for the period to 17 May 1991, since although there is no express finding by the referee it may be inferred that the formwork materials were used by Turner or its sub-contractor the second defendant for its benefit during that period."
30 In neither case, nor any of the authorities cited therein, is there any suggestion that damages for consequential loss in detinue are damages at large.
31 It was open to the Magistrate, as a matter of fact, to find that damage arose as a consequence of the wrongful detention of the vehicle. The measure for such damages should have been based on the loss of use of the vehicle occasioned by the tort. The Magistrate awarded damages in the sum of $17,000 which included the cost of stripping and repainting the vehicle. The reasoning process for how this sum was arrived at is not clear. Such damage cannot be said to arise out of the wrongful detention of the vehicle. That is, the damages in truth are not compensatory damages for the tort of detinue. I have come to the conclusion that there has been an unreasonable application of the law to the facts. The Magistrate has misdirected himself as to the type of damages which he is entitled to award. There is an error of law.
32 Even if damages are recoverable for injury to the chattel, such injury must have been sustained during the period of the wrongful detention. As a matter of fact, the damage to the vehicle by way of the faulty paintwork was sustained during the period in which the vehicle was in the lawful possession of The John Gallagher Panel Beating Company Pty Ltd.
33 The appeal is upheld. The decision of Magistrate Dare LCM dated 7 July 2006 is quashed insofar as it relates to damages awarded in [47(h)] and Order 5. The matter is remitted to Local Court for redetermination according to law.
34 Costs are discretionary. Normally costs follow the event. The defendant is to pay the plaintiffs' costs as agreed or assessed. The defendant is to have a Certificate under the Suitor's Fund Act, if appropriate.