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05 July 2007 / Gregory Mitchell
Issue: 7280 / Categories: Features , Commercial
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Economic tort (2)

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Should the tort of conversion apply to intangible property? Gregory Mitchell QC investigates

The tort of conversion is increasingly significant in the electronic world where intangible rights are held for their true “owners” without being evidenced or comprised in a piece of paper or other chattel such as a cheque or certificate. The majority (three) of the law lords in OBG v Allan Ltd [2007] UKHL 21, [2007] All ER (D) 44 (May) held that the tort of conversion is limited to chattels only. Intangible rights can be converted only so far as those rights are sufficiently connected with a chattel and where rights of ownership in the chattel are usurped. There was a powerful minority view from Lord Nicholls and Baroness Hale that English law should be extended.

BACKGROUND

In OBG the defendants were appointed in June 1992 over a company as administrative receivers. They took possession of the company’s assets and assumed the right to manage its business. The company had circa 88 different contracts with one major customer under which there

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