Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204
Tort; conversion; interference with proprietary rights.
Facts: Penfolds sold its wines in bottles that were permanently embossed with its name. Purchasers of the wine were supposed to return the empty bottles to Penfolds, which remained owner of the bottles. Some purchasers of Penfolds wine kept the bottles and used them to buy wine from Elliott, an hotelier, who would fill empty bottles brought to him with his own bulk supplies of wine. Penfolds sought an injunction against Elliott, to stop him doing this.
Issue: Did Elliott's conduct amount to conversion of Penfolds' bottles?
Decision: Elliott's conduct did not amount to conversion.
Reason: Dixon J said at 229, 230:
"The essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel... [D]amage to the chattel is not conversion, nor is use, nor is a transfer of possession otherwise than for the purpose of affecting the immediate right to possession, nor is it always conversion to lose the goods beyond hope of recovery. An intent to do that which would deprive 'the true owner' of his immediate right to possession or impair it may be said to form the essential ground of the tort. There is nothing in the course followed by the [defendant] in supplying wine to his customers who brought bottles to receive it involving any deprival or impairment of property in the bottles, that is, of the immediate right to possession. The re-delivery of the bottles to the persons who left them could not amount to a conversion...because ...its purpose was not to confer any right over the property...but merely to return or restore them to the person who had left them there to be filled... It was not an act derogating from the proprietary right of the [plaintiff]."