Case No: B2/2009/1195
Neutral Citation Number: [2011] EWCA Civ 189
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MANCHESTER COUNTY COURT
HIS HONOUR JUDGE ARMITAGE QC

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 02/03/2011
Before :

THE PRESIDENT OF THE FAMILY DIVISION
LORD JUSTICE SEDLEY
and
LADY JUSTICE ARDEN
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Between :

	MAINLINE PRIVATE HIRE LIMITED	Respondent	
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	ANTHONY NOLAN	Appellant	
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(Transcript of the Handed Down Judgment of
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Mr Charles Samek QC & Mr Dale Martin (instructed by Abbey Solicitors) for the Appellant
Mr James Barnard (instructed by Berg Legal) for the Respondent

Hearing date : 15 February 2011
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Judgment
Lady Justice Arden : 
This is an appeal from the order dated 18 May 2009 of HHJ Armitage QC sitting in the Manchester County Court following a trial on liability.  By virtue of that order, so far as relevant, the appellant, Mr Anthony Nolan, was found liable for the conversion of a silver seven-seater Peugeot 806 taxi (registration number SJ52 YLL) and in breach of an agreement recorded in a compromise agreement.    The essence of the dispute therefore before the judge was: who had “possession” of the Peugeot at the material time?  The main plank in Mr Nolan’s case is that the judge must have been wrong to hold that he had possession of the Peugeot.   As will appear below, the Peugeot, which was already some four years old at the date of the events in issue, is now probably worthless.  It has for about the last five years lain in an un-drivable state in a garage in central Manchester.  However, Mainline claims about £80,000 in respect of the lost profits due to Mr Nolan’s failure to redeliver it to Mainline in 2006.
Meaning of “possession”
1.	To succeed on a claim in conversion the claimant must show that he, and only he, at the time of the alleged act of conversion had either actual possession, or the immediate right to possession, of the property in question. So that is what Mainline had to show in this case: it claimed to have the immediate right to possession.  It is common ground that, to have possession of land or a chattel, a person must have not only the requisite degree of actual custody and control but also an intention to exercise that custody or control on his own behalf and for his own benefit.   The meaning of possession in law was explained by Lord Browne-Wilkinson in J A Pye (Oxford) Ltd  v Graham [2003] 1 AC 419 at paragraph 40:
“…there are two elements necessary for legal possession: (1) a sufficient degree of physical custody and control ("factual possession"); (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit ("intention to possess"). What is crucial is to understand that, without the requisite intention, in law there can be no possession. … But there is no doubt in my judgment that there are two separate elements in legal possession.”
2.	An aspect of factual possession is that possession must be exclusive.  Thus Lord Browne-Wilkinson in Pye at paragraph 41 approved the holding of Slade J in Powell v McFarlane (1977) 38 P & CR 452 at pages 470-471 that:
"(3) Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession…” 
3.	This point is of some importance in this case because the appellant submits that a bailee for reward for an agreed period has both actual possession and the immediate right to possession of the property bailed to him for that period: see Chitty on Contracts, Vol. 2 (30 ed) para. 33-021. Accordingly, if there was a person to whom the Peugeot was bailed for a period for reward, Mainline could not also be entitled to possession of it at the same time.  
The background
4.	Mr Nolan was formerly the owner of an independent taxi business but by the material date his business had been merged with that of his sister, Mrs Glennys Glover.  The combined business, Mainline Private Hire Ltd, (“Mainline”), was the undisputed owner of the Peugeot.  Mr Nolan’s wife, Mrs E A Nolan, was a director of, and shareholder in, Mainline.  Mr Nolan was Mrs Nolan's alternate. Mr Nolan continued to earn his living by operating the Peugeot as a taxi for hire on behalf of Mainline.  To enable him to do this he kept the Peugeot outside his home in Manchester.  Accordingly, before December 2005, he had had physical custody and control of the Peugeot, and, the judge held, possession in law. 
5.	In the course of 2005, relations between Mrs Glover and the Nolans became so strained that on 10 November 2005 Mrs Glover presented a petition against the Nolans under what is now section 994 of the Companies Act 2006 on the grounds of unfair prejudice in relation to Mainline's affairs.  She made numerous allegations.
6.	In December 2005, the Peugeot was stolen from outside Mr Nolan’s gym.  Mr Nolan reported its loss to the police.  Happily, before long the police recovered it and told the Nolans that they could collect it from Billington Bros in Middleton, another part of Manchester.  So, on 6 January 2011, the Nolans went to fetch the Peugeot from Billington Bros. They found, however, that the Peugeot was not in a drivable state.  So they towed it back to central Manchester.  When they could go no further, they left the Peugeot to be collected and taken to a third party, Mr Coulter trading as Mercedes of Interest (“MOI”), for storage.  His premises were at Cheetham Park Centre, Sherborne Street, Manchester.   
7.	Mrs Nolan then caused Mainline to enter into a written contract of storage with MOI.   The terms of the contract were contained in a printed form produced by MOI but she completed the details of the registration number of the vehicle and the agreed charge (£10 per day) in her own handwriting. She said that there was haggling over the amount of the storage charge. The storage charge was only payable on demand but I do not think that anything turns on that formality.  I accept as a general proposition the submission, which appears to be common ground, that a bailee for reward has possession in law for the duration of the bailment.  I also accept that this proposition does not depend on the question whether the bailee has yet to serve a demand for its charges.  Moreover, under the contract MOI had a lien for the storage charges, and so, if anything were to turn on this further point, the lien too was not in my judgment dependent on a demand being made.
8.	The judge considered the question whether putting the Peugeot into storage with MOI was a reasonable thing for the Nolans to have done and he decided that issue in Mr Nolan’s favour.  The judge also found that for practical purposes Mrs Nolan exercised her powers as a director on behalf of Mr Nolan and at his direction.  
9.	There were a series of opportunities for the Nolans to tell Mainline that the Peugeot had been recovered, where it was located and on what terms it was held there.  The evidence of Mr Coulter (which was not challenged in cross-examination) was that he telephoned Mrs Nolan shortly after 6 January 2006 to ask her how long the Peugeot was to be left at MOI, that she said that she did not know and that Mr Coulter should wait until he heard from someone (whom Mr Coulter named as Glennys Glover), and that if he did not hear from her he should get back to her.  He never did. Nor did Mrs Nolan make contact with Mainline.  She made a phone call to Mrs Glover but found her voicemail on, and did not send her a text message or call Mainline on its business line.  In February 2006, Mrs Glover sent Mr Nolan an insurance form to complete.  He did not complete it.  The judge was satisfied, having heard all the evidence on this point, that Mr Nolan had not co-operated with Mainline’s insurers.   He failed also to reply to letters from Mrs Glover’s solicitors dated 11 May 2006 and 11 July 2006 asking for the return of the Peugeot.
10.	The judge also found that Mr Coulter did not send any invoice for his charges to Mainline until 31 October 2007, and in particular that he did not send a letter with details of his charges on 21 March 2006 as he asserted he had done.  Mrs Nolan said that she had sent a copy of the storage contract to Mainline by post but the judge did not accept this evidence.  The judge noted that, when Mr Coulter of MOI gave his evidence, he had sought to distance himself from any knowledge of Mrs Glover, but it was clear that he knew about her.  
11.	The judge found that there were connections between Mr Coulter and Mr Nolan.  Mr Nolan had sent an invoice to Mainline in September 2005 for rent for the use of premises at Sherborne Street, so he was clearly familiar with the area in which Mr Coulter had his business.  Moreover, at the time of the trial, Mr Nolan was carrying on business at premises in Sherborne Street, using part of the same premises as occupied by MOI.  In addition, the Nolans’ son was also working at the same premises.  Mr Nolan's brother, Peter, also had a connection with the premises.  The judge concluded that there were business connections between Mr Nolan and Mr Coulter which constituted strong but not irresistible evidence that the persons trading at Sherborne Street would be likely to co-operate with Mr Nolan and not Mrs Glover or Mainline, and that they had done so, to the exclusion of Mainline (judgment, paragraph 131).
12.	The judge made findings about the number plates which the Peugeot had when it left Billington Bros.  The police records showed that when the Peugeot was recovered it bore different number plates.  The correct registration number was, however, given on the storage contract and according to Mainline’s accounting records someone had purchased new number plates bearing the Peugeot’s registration number on 18 January 2006, and Mainline had paid for them.  The judge rejected Mr Nolan’s argument that the new plates must have been ordered by Mrs Glover as she did not know that the vehicle had been recovered. The judge held that the new plates must have been ordered by Mrs Nolan.  He also found that the new plates had been fitted while the Peugeot was in storage.
13.	The judge found that there was a possible motive for Mr Nolan to want to keep possession of the Peugeot:
“It is not fanciful to consider whether, once the compromise was reached, Mr Nolan decided to keep the vehicle because he thought – then – that it was agreed, or because he wanted to keep it despite the compromise and share sale.  It seems to me that he could not expect to keep it openly in the long term because he was not the registered keeper, may have had no document of title and would have found it difficult or impossible to re-tax and insure without Mainline’s consent.  But, in late 2005 and even early 2006, he might have thought that if he kept physical control over the car his sister might allow him to keep it – whether out of affection or as not being worth disputing over.  If so, it turns out that he was wrong.  In any event Mr Nolan’s decisions must be considered in the light of his assessment that although both he and his wife compromised the petition in November 2005 he did not regard his clean break with the claimant as having occurred until the deal was done, that is when the money was paid.  He said that the agreement for him to use the Peugeot stood until that time and that between the compromise and payment he had understood that Mrs Glover might be trying to avoid the compromise.  He said that it was agreed that he should use the bus until everything was signed off.” (judgment, paragraph 96)
14.	On 17 January 2006, the parties entered into a consent order compromising the petition.  The basic terms were that Mrs Nolan was to transfer her shares to Mrs Glover for £175,000.  Mrs Glover paid that sum and she then became the sole shareholder of Mainline.  One of the recitals to the consent order states:
“…[Mr Nolan] … has agreed that he will within 24 hours of a written request to deliver up to [Mrs Glover] (as agent for [Mainline]) any assets of [Mainline], which he might have in his possession.”
15.	The compromise agreement made no express reference to the Peugeot, but clearly Mr Nolan was bound to deliver it up to Mainline on demand under his agreement with it.  Mainline’s case was that the relevant demand was first made on 11 May 2006.  
16.	Mrs Glover did not know where the Peugeot was and she failed to discover that from enquiries made to the Nolans. She only discovered that the police had found the vehicle and that the Nolans had collected it when on 10 May 2006 Mainline’s insurers (who had got the information from sources other than the parties) refused to continue cover for it on the grounds that it had been recovered but was no longer in the possession of Mainline.  On 21 July 2006 Mainline brought proceedings against Mr Nolan for delivery up of the Peugeot, alternatively damages consequent upon his breach of the compromise agreement, and conversion in failing to return other items of property said to belong to Mainline. The trial also concerned claims to one other vehicle but all those claims were dismissed by the judge and so we are concerned only with the claim to the Peugeot.  
17.	Mr Nolan’s defence put Mainline to proof of its ownership of the Peugeot, but the judge found in favour of Mainline on that point and so it need no longer concern us.  It raised the issue whether Mainline had sufficient possession to bring a claim in conversion.  Mr Nolan denied that he had possession after 6 January 2006.  His case was that the Peugeot had been placed in storage with MOI by Mainline acting by Mrs Nolan.  
The judge’s judgment
18.	At trial, Mr Nolan sought to resist the claims against him on the grounds that Mainline knew that the Peugeot had been recovered and that the storage contract had been executed.  He relied upon Mainline having this knowledge through Mrs Nolan.  The judge, however, held that Mr Nolan knew that in fact the Peugeot would not be recovered by Mainline unless someone else at Mainline was informed.
19.	There was a certain lack of clarity about Mainline’s case at trial as to whether it contended that the storage contract was a sham, or that it was not genuine, or whether it contended that Mrs Nolan did not sent it to Mainline as she said.  There was a suggestion by Mrs Glover that there was a conspiracy to cause her difficulty in recovering the Peugeot without paying the storage charges to what she regarded as a non-existent business.  In the course of the trial, counsel then appearing for Mainline (Mr Martin Budworth) restricted his case to contending that the storage contract was not genuine.
20.	The judge took a middle path between the two parties’ cases. The judge gave a long and careful judgment.  After some very detailed fact-finding, the judge held that the storage contract was genuine and binding on Mainline and MOI, but yet that Mr Nolan had possession in law of the Peugeot until its location was revealed to Mainline.  Because the ultimate issue was one of possession, the judge’s analysis proceeded in terms of who had possession.  The judge’s conclusions were contained in the following passage:
“137. In my judgment the evidence shows, at least on the balance of probabilities –
a.	That the defendant was in possession of the Peugeot until it was taken from him, probably on the 2nd December 2005.
b.	That the defendant regained possession on the 6th January 2006, because he was directly concerned and interested in taking physical control and did so, albeit jointly with his wife, then a director of Mainline.  The original intention had been to take the Peugeot home, that is to say where it usually was, when not in use.
c.	That the defendant remained in possession despite placing the Peugeot in the physical custody of Mr Coulter at Sherborne Street and Mrs Nolan’s agreement that his firm, Mercedes of Interest should become a bailee for reward.  Mrs Nolan confirmed that the choice of recovery and storage facility had been Mr Nolan’s.  In the circumstances the general intention to possess the vehicle had not changed.  Circumstances merely dictated a change of storage place, no different from the situation where an owner gives physical custody of a vehicle for routine servicing.  Intention, control and possession are retained, subject to lien.  At that point, anyone authorised by Mainline could have paid the charge and taken the vehicle.  That included the defendant, either directly because it was his assigned taxi, or if necessary with the agreement of Mrs Nolan as director.
d.	That the defendant remained in possession until, at the very least, he directly or through his wife, informed the claimant about the location of the vehicle and that it was held to their order.  In my judgment that was not done in January 2006 and the defendant’s deliberate failure to answer reasonable requests demonstrates an intention to exercise control which, coupled with his relationship with Mr Coulter, was exercisable, to the exclusion of the claimant.
e.	That the defendant was in breach of agreement from the time when the agreement was made followed by a demand in writing identifying the Peugeot.
f.	Having regard to the definition proposed by Mr Budworth, not challenged by Mr Chaisty QC, the same findings lead me to the conclusion that at latest by first post-compromise demand, the defendant converted the Peugeot.
138.  I am not asked to and do not find that the conduct was fraudulent.  I do not find that the Mercedes of Interest contract was a sham in the sense that it is not what it purports to be.  I am satisfied that it was a device intended to be enforced against the claimant, but not against the defendant.  I do find that the defendant engaged in a deliberate course of conduct intended to and having the twin consequences of retaining possession on and after 6th January 2006 and excluding the claimant from use and possession of the Peugeot.  The evidence adduced by and for him has been directed at attempting to avoid the consequences of that conduct.”
21.	The order following the judge’s jugdment deals with consequential matters but not the effect of his judgment.  In my judgment, the effect of his judgment is as stated in paragraphs 137e and f of his judgment.  It follows that it is only the correctness of the rulings in those subparagraphs which is in issue on this appeal.
The arguments
22.	Mr Charles Samek QC, for Mr Nolan, by way of principal submission focuses on the effect of the written storage contract in this case.  It was clear that, once the storage contract was executed, Mainline was bound by it and thus in law possession passed to MOI.  The judge correctly found that the storage contract was not a sham.   There was thus no answer to the point that MOI had possession, which had been one of Mr Nolan’s grounds of defence. The judge should not have gone on in paragraph 138 of his judgment to hold that the contract was a device, or to rely on conduct of Mr Nolan.  That conduct had no effect on the contractual documentation and it was not pleaded that there had been conduct which constituted an act of possession.  The position throughout was that MOI held the vehicle under the terms of the storage contract.  There was no evidence that MOI ever allowed Mr Nolan to remove it.  The judge had indeed rejected the evidence of Mr Temple who was called to say that he had seen Mr Nolan using the taxi after 6 January 2006.  The judge declined to make any finding of fraud or dishonesty and neither was pleaded in any event. The judge’s holding that the storage contract was a device intended to be enforced against Mainline, but not against Mr Nolan, was a subsidiary finding and it could not add to or detract from the judge’s clear conclusion, as the judge put it in paragraph 132 of his judgment, that the storage contract was “a legitimate means of creating - as between the defendant and the claimant – a prima facie or technical answer to possession”, and the judge’s further conclusion that the storage contract was not a sham.  The storage contract was, therefore, the document that governed the right to possession and it vested that possession in MOI and not Mainline or Mr Nolan.  That document should have been treated as the end of the case and resulted in the dismissal of Mainline’s claim.  As Mr Samek put it at one point in his able submissions, “the storage contract did what it said on the tin.”
23.	The judge held that anyone authorised by Mainline could have collected the Peugeot on paying the charges.  This, submits Mr Samek, is inconsistent with his later conclusion that Mr Nolan had possession, which was accordingly wrong.  It was, moreover, not open to the judge on the pleaded case to say that Mr Nolan intended to deprive Mainline of the use and possession of the Peugeot.  
24.	Mr Samek further submits that the judge was wrong in principle to rely on Mr Nolan’s conduct as opposed to considering the position under the storage contract.  As a result of the storage contract, Mr Coulter had possession and Mr Nolan did not.  Mainline was not excluded from obtaining possession of the Peugeot.  It simply had to pay the charges.  Mr Nolan’s intention to exclude Mainline, if that was his intention, cannot make any difference to the analysis. Mr Samek submits that the points were never put to Mr Coulter and that the judge was not entitled to make the finding that at all times Mr Coulter held the Peugeot for Mr Nolan and not for Mainline as the storage contract said.  But Mr Coulter was clearly asked in cross-examination whether he held the Peugeot to the order of Mr Nolan. He gave no clear answer and certainly did not deny this.  Accordingly, in my judgment, the judge was entitled to decide whether he was prepared to accept this evidence or not.  
25.	The response of Mr James Barnard, for Mainline, to this central submission by Mr Samek is to submit that the judge did not just look at the contractual documentation.  He looked to see who actually had possession.  The result of the judge’s findings was that neither the Nolans nor MOI had actually communicated the fact of the recovery of the Peugeot or its location or the terms of the storage contract until long after those events, that is, when the defence and list of documents were served in November 2006 and March 2007 respectively.  Indeed the defence as served denied that Mr Nolan had had any involvement in the recovery of the Peugeot from Billington Bros or in the making of the storage contract.  The judge was entitled to find that in the meantime Mr Nolan had actual control of the Peugeot and intended to keep it for himself.  Accordingly the judge was correct to hold that during this period Mr Nolan had possession in law.   Mr Barnard submits, however, that this court should consider Mr Samek’s challenges to the judge’s findings before it considers this point, and I agree with him on that and accordingly turn to those submissions.
26.	Mr Samek contends (as a subsidiary submission to his principal submission) that four findings of the judge were perverse and should be set aside.  First, the judge’s finding that Mr Coulter did not send a letter to Mainline on 20 March 2006 was against the weight of the evidence.  The principal basis for this submission appears to be an acceptance by Mrs Glover in her oral evidence that when she wrote to MOI on 25 May 2007 she was writing in reply to a letter from MOI.  But, as Mr Barnard points out, her testimony on this point, when seen as a whole, was not unequivocal and her letter made no reference to the earlier letter.  The judge was therefore entitled to making the finding he did.  The second finding which Mr Samek submits was perverse was the finding that Mrs Nolan did not send a copy of the storage contract she signed to Mainline, but again as Mr Barnard points out, it was quite clear that Mainline did not know that the Peugeot had been recovered until its insurers wrote to it to that effect in May 2006, and so the judge was entitled to make that finding.  
27.	The third finding challenged by Mr Samek is the judge’s finding that the Nolans must have fitted the new number plates.  The judge observes that these were paid for by Mainline and the supplier had used Mrs Nolan’s details.  Mr Samek points out that the judge did not find that conclusive because her details were held on file.   He asks us to infer that the order for these new plates, which was placed on 18 January 2006, must have been placed by someone else at Mainline.  I do not consider that this challenge can succeed.  The judge was entitled to conclude that the Nolans must have ordered the new number plates as they were the only persons at Mainline who could have known that the Peugeot had been recovered and that it needed new plates.  Moreover, in my judgment, the completion by Mrs Nolan of the storage contract with the correct registration number was consistent with the Nolans wishing to have possession of the Peugeot and the judge was fully entitled to treat his findings about the new number plates as supporting and confirming his conclusion that Mr Nolan had control and not MOI.  No evidence has been produced to show that the Peugeot did not have the correct number plates and that means that the judge’s finding that they had been fitted was one open to him.  Even if I had been persuaded by Mr Samek on this point, I would have had reservations about setting aside the judge’s finding given that the transcripts from that part of the oral evidence are not available on this appeal.
28.	The fourth finding of fact which Mr Samek seeks to challenge is raised by a late application for permission to amend the grounds of appeal.  Mr Samek seeks to challenge the finding of the judge in paragraph 131 of his judgment that Mr Coulter was likely to co-operate with Mr Nolan and not with Mainline or Mrs Glover and would have done so to the exclusion of Mainline.   Mr Samek submits that there is no evidence to support this finding and that it was never put to Mr Coulter.  But, as I have explained above, there was plenty of evidence that Mr Coulter and Mr Nolan knew each other and had had business dealings before.  When Mr Coulter was cross-examined he was cross-examined on his dealings with Mr Nolan, and it was put to him that he held the Peugeot to Mr Nolan’s order.  There was therefore sufficient evidence for the judge to make his finding in paragraph 131 of his judgment.  I would therefore give permission and an extension of time for the application to amend the grounds of appeal but dismiss this new ground. 
29.	I am similarly unpersuaded by Mr Samek’s pleading points.  Mr Samek submits among other points that the particulars of claim did not set out a course of conduct such as that found by the judge.  At the trial Mr Nolan was represented by other experienced leading counsel (Mr Paul Chaisty QC).  The judge understood Mainline’s case and made that understanding explicit when he observed on the third day of evidence that it was that Mr Nolan, with the assistance of others, had in fact put the Peugeot, temporarily or permanently, beyond the control of Mainline, either with a view to gain or with a view causing maximum inconvenience to Mainline, and that what he did, he did deliberately, and it was to put the Peugeot in a position where Mainline could not exercise its proprietary rights (see transcript, Day 3, page 76). Mr Budworth agreed with the judge’s summary and Mr Chaisty did not demur.  Mr Samek observes that, if that was what Mr Nolan did, he cannot have thought that he would have been able to keep the Peugeot’s whereabouts secret for long.  It was thus irrational for the judge to ascribe to Mr Nolan an intention to possess.  But that all depended on how determined Mrs Glover was to find out where it was.  It appears that she did not give up easily.  As I have explained above, the judge made a clear finding about possible motive.
30.	Having dealt with the challenges to the judge’s findings of fact and the submission that he erred in going beyond the pleadings, I can now turn to the legal crux of the case which is whether Mr Samek is right to say that the judge was wrong not to have dealt with this case purely according to the rights conferred by the storage contract.  In my judgment, the judge had to have regard to what actually took place because possession involves the two elements described in paragraph 2 of this judgment, namely factual possession and the intention to possess.  In fact, as can be seen from the next five paragraphs of this judgment, the sequence of events in this case contains a number of illustrations of how those elements operate in different factual situations.
31.	The relevant events start when the Peugeot is assigned to Mr Nolan by Mainline at some date prior to December 2005.  He used the Peugeot for the purposes of Mainline’s taxi business.  With Mainline’s consent, he kept it outside his house and not at the premises of Mainline.  It was his taxi and Mainline could not assign another driver for it.  At that time, on the judge’s findings which are not appealed, Mr Nolan had actual possession of the Peugeot, and an intention to control it for his own purposes.  He could say when the taxi would be available for hire.  Mainline was the owner of the taxi, but ownership does not carry with it the right to possess the taxi in circumstances such as these.
32.	In December 2005, the Peugeot was stolen.  Although this point has not been argued it would appear that the thief acquired possession of the Peugeot by having custody and control of it and forming an intention to use it for his own purposes.  
33.	The police then recovered the Peugeot and cause it to be delivered back to Mr Nolan who once again acquired possession of it on leaving the premises of Billington Bros.  Mr Nolan had actual custody and control of the Peugeot and on the judge’s findings he intended to have custody and control of the Peugeot for his own benefit.  That possession may have been jointly with Mrs Nolan but no-one has suggested that anything on this appeal turns on that.
34.	From 6 January 2006 the Peugeot was located at MOI’s garage under the storage contract described above.  The storage contract was made by Mrs Nolan acting in her capacity as a director of Mainline, and the judge found that the contract was binding on Mainline accordingly.  In the normal way, a bailee for reward has both factual possession of the property bailed and an intention to retain it for its own purposes for so long as its charges remain unpaid (see paragraphs 2 and 8 above).  However, a person who appears to be a bailee for reward may not actually satisfy the two elements of possession.  
35.	The first sentence of paragraph 137c shows that the judge did not regard MOI as having possession.  Mr Samek draws attention to the judge's holding later in the same paragraph that  "At that point, anyone authorised by Mainline could have paid the charge and taken the vehicle".  However, I consider that that holding is properly reconcilable with his overall conclusion that Mr Nolan had possession in law and not MOI.  The holding to which Mr Samek draws attention must be read as predicated on the judge’s conclusion earlier in that paragraph that MOI did not have possession in law. MOI could not have possession in law if it did not have exclusive possession and it is clear from the next sub-paragraph of paragraph 137 that the judge did not consider that MOI had exclusive possession in this case.  Accordingly, the rights given to MOI lacked that vital element of exclusivity on which possession in law is based.  
36.	The judge concluded that Mr Nolan had possession in law at the time when Mainline acquired the right to have the Peugeot delivered up to it.  In arriving at his conclusion, the judge considered the reality of the relationship between Mr Coulter who acted in the transaction and Mr Nolan.  He took the view that, by keeping Mainline in ignorance of the contract, Mr Nolan had in fact obtained factual possession of the Peugeot since Mr Coulter would not assert the storage contract against Mr Nolan (judgment, paragraph 138).  Because it was possible that he hoped at the end of the day he would get to keep the Peugeot, Mr Nolan also had the intention to keep the Peugeot for his own purposes.  His rights prevailed over those of MOI because the judge found that MOI and Mr Nolan did not intend to rely on the rights given by the storage contract as against Mr Nolan.  So long as Mainline was unable through lack of actual knowledge about the Peugeot’s whereabouts to take any action to recover the car (which is the only period in issue), an arrangement to this effect was neither irrational nor unworkable.
37.	In my judgment, the essential steps in the reasoning of the judge were the steps set out above.  Although it may be tempting to think that the judge’s conclusion turns on his description of the storage contract as a “device”, especially in paragraph 138 of his judgment, his critical reasoning is in fact that in paragraph 137d, which I have set out above.  He returned to the point in paragraph 138:
“I do find that the defendant engaged in a deliberate course of conduct intended to and having the twin consequences of retaining possession on and after 6th January 2006 and excluding the claimant from use and possession of the Peugeot.”
38.	Was the judge entitled to reach these conclusions? In my judgment, as a matter of law, it cannot universally be the case that a person who receives a vehicle for storage for reward obtains possession. Since both elements of possession turn on the facts, the court must look at all the circumstances of a case, and not simply, where there is a contract, at the terms of that contract.  A person may, notwithstanding the terms of a storage contract, give away something which has been entrusted to him for safe-keeping, or he may agree with a third party to deal with that property at the third party’s direction. Neither of these possibilities would result in the contract of storage being a sham or cause the contract of storage to come to an end.  Thus I do not consider that the judge erred merely because, having found that the storage contract was not a sham, he did not hold that the storage contract was a complete answer to Mainline’s claim.  It was not critical to the judge’s conclusions that the storage contract should be a sham.  
39.	Moreover, there was in my judgment an adequate factual foundation for the judge’s crucial conclusions in paragraph 137d.  Those conclusions stem from the judge’s findings in the round, but particularly his findings that Mainline was not actually informed of the Peugeot’s recovery and storage at MOI’s premises when they occurred but only at a much later date, that there were business connections between Mr Nolan and Mr Coulter and that Mr Coulter was likely to co-operate and that Mr Nolan had a possible motive for keeping control of the Peugeot for as long as he could.  There had been what Mr Barnard memorably termed “the drip-feeding” of information by the Nolans to Mainline.  The Nolans and Mr Coulter had no reason of substance for not making greater efforts to ensure Mainline acting by Mrs Glover knew where the Peugeot was.  There was no evidence that Mr Coulter had sought to exercise his lien and there was a telling slowness on his part in coming forward with his bills for his charges.
40.	In the light of the conclusions which I have reached it is not necessary to deal with Mainline’s arguments in its respondent’s notice that, contrary to the judge’s judgment, the storage contract was in fact a sham, that Mrs Nolan’s knowledge of the storage contract ought not in the circumstances to be attributed to Mainline, that Mr Nolan was a de facto director of Mainline and that this court should give permission for the particulars of claim to be amended so that Mainline could rely on a claim for breach of fiduciary duty against the Nolans.  
41.	Finally, the conversion of goods constitutes “wrongful interference with goods” for the purposes of section 1 of the Torts (Wrongful Interference with Goods) Act 1977.  But none of the provisions of that Act affect this appeal.
Disposal of this appeal
42.	I would grant Mr Samek’s application to amend his grounds of appeal but dismiss both the appeal and the respondent’s notice.
43.	I add this post-script. This case has been fought tooth and nail and in the end the only claim to succeed is about a broken down car which in Mr Samek’s words has not turned a wheel in nearly five years. It may be that there is a substantial claim for damages still to be adjudicated upon.  Had matters been otherwise, this court would under its present practice have refused permission to appeal (Schofield v Schofield [2010] EWCA Civ 1387). However, it is difficult to believe that after about four days before the judge and another in this court there is much left to gain in this for either party.  Moreover, litigation of this kind is not a proportionate use of an expensive and scarce public resource.  I am not suggesting that either party should bear all the blame but I am asking them, and their advisers, to make every effort to find a way of reaching some agreement about this outstanding claim before engaging them in further litigation. I have no doubt that the courts which are concerned with the trial on damages will wish also to know that that has been done.
Lord Justice Sedley:
44.	I agree.
Sir Nicholas Wall P:
45.	I also agree, and would like to associate myself particularly with paragraph 44 of Arden LJ's judgment.