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Cite as: July 2014 88 (07) LIJ, p.62

Action for conversion –limitation of actions

Levy v Watt & Anor [2014] VSCA 60 (unreported, 14 May 2014, No S APCI 2012 0234, Warren CJ, Tate and Santamaria JJA).

This appeal concerned entitlement to a painting by Rupert Bunny titled “Girl in Sunlight” painted circa 1915.

The appellant claimed to be entitled to the painting under the will of one Peter Rand. The appellant had been the solicitor for Mr Rand. The respondents claimed entitlement to the work as executors of the estate of James Watt who had died on 11 April 1993. It was alleged that the painting had been stolen from Mr Watt. There was no suggestion that Mr Rand was the thief or was suspected of having stolen the painting.

The police seized the painting from the appellant and proceedings were brought by the police under the Police Regulation Act 1958 (Vic) s125 which resulted in an order that the painting be delivered to the respondents until such time as ownership was determined. The appellant brought proceedings for a declaration that the respondents’ proprietary rights in the painting had been extinguished, that he was the owner of it and that the work be returned to him. He relied on his possessory title. The respondents relied on their documentary title and a right of action in conversion.

The principal matter in contention both at trial and in the Court of Appeal was the application of the Limitation of Actions Act 1958 (Vic). The relevant provisions are as follows:

Section 5(1)(a) bars actions “founded on tort” after “the expiration of six years from the date on which the cause of action accrued”.

Section 6(1) applies to successive conversions or wrongful detention of a chattel. Time runs from the accrual of the original cause of action, and does not recommence on the happening of any successive conversion or wrongful detention.

Section 6(2) operates to extinguish any title a person has to a chattel if possession has not been recovered during the periods prescribed for the bringing of an action founded upon conversion or wrongful detention.

Section 6(2) does not operate to confer on a person any title to a chattel.

Section 27 operates to postpone the commencement of the period of limitation in cases of (a) fraud by the defendant or his agent, (b) concealment by fraud by such person, or (c) the action is for relief from the consequences of a mistake.

Section 27 is subject to a proviso which prevents the postponement operating where the property the subject of the proceeding has been “purchased for valuable consideration” by a person who, at the time of the purchase, did not know or had no reason to know of the fraud or of the mistake.

Santamaria JA delivered the principal judgment of the Court. He traced the history of concealment in equity, noted the effect of the adoption of the Judicature system in Victoria in 1884, the work of the Law Revision Committee in 1936, the Limitation Act 1936 (Eng) and the decisions on that Act in England, including the decision of the English Court of Appeal in Beaman v A.R.T.S. Limited [1949] 1 KB 550 and the decision of Streatfeild J in RB Policies at Lloyd’s v Butler [1950] 1 KB 76. His Honour noted that the Victorian Parliament in 1958 had adopted the English Act of 1936.

In the Butler case, where a car stolen from the plaintiff was found in the possession of an innocent defendant some years later, Streatfeild J said at [81]:

“Can it be said, therefore, that the cause of action being otherwise complete, the ignorance of the owner of the car of the identity of the person against whom he could bring an action was of itself sufficient to prevent the accrual of that cause of action? I think not, and I agree with the argument of [counsel for the defendant]. If that were so it would lead to appalling results. As [counsel for the defendant] suggested to me, if his watch were stolen, and he discovered it years later, in the pocket of a wholly innocent person who had bought it many years before, it would follow that, if the plaintiffs are right, he could bring an action for the recovery of his watch merely because he had not known who was the original thief. I cannot think that that is the policy of the Act, or that to construe its words in favour of the plaintiffs’ argument would harmonise with the intention of the legislature”.

The trial judge had refused to follow the Butler case noting that Streatfeild J had not referred to the decision of the Court of Appeal in Beaman v A.R.T.S. Limited where a liberal interpretation of “concealment of fraud” had been adopted. In Beaman v A.R.T.S. Limited, Lord Greene MR said (at [1949] 1 KB 550, 559):

“But there may, in my opinion, be fraudulent concealment of a cause of action which is not subsequent to the act which gives rise to the cause of action; it may acquire its character as such from the very manner in which that act is performed. It is not, I think a right construction of the statute to confine ‘fraudulent concealment’ to what [counsel for the defendants] described as ‘fraud in the ordinary sense’. This, as far as I understood him, meant fraud which, in its nature, is sufficient to give rise to an independent cause of action. This definition would exclude the wide range of conduct which before the statute was regarded in equity as so dishonest as to prevent the Statute of Limitations (or its analogous application in equity) from coming into operation. As this is an amending statute it would, of course, have been open to the legislature to effect so sweeping a change in the law. If it had done so a striking result would have followed. Provided an action was not based on fraud and provided there was not any subsequent active concealment of a fraudulent nature, the wrongdoer would have obtained the benefit of the statute, however furtively or surreptitiously the act complained of was committed”.

The trial judge chose not to follow Butler’s case and said at [71]-[75] ([2012] VSC 539):

“Although the writers of leading textbooks and learned articles appear to have accepted Butler as a good authority for the proposition that time begins to run against the owner of a stolen chattel, even though the owner does not know the identity of the thief or the whereabouts of the chattel, I agree with the criticisms of the decision. First, it does not make sense, in my opinion, to say that time should begin to run because all of the ingredients of the cause of action are present and a statement of claim could be drawn, if the identity of the defendant is not known to the plaintiff and could not with reasonable diligence have been discovered by him or her.

“Secondly, whilst there is good reason for protecting people against ‘stale demands’, the proviso to s27 of the Limitation Act provides a mechanism for balancing the competing interests of the true owner of the chattel and the possessor of the chattel. Not even the true owner can recover the chattel where it has been purchased ‘for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed’. As stated previously, application of the proviso would have led to the same result in Butler.

“Thirdly, the existence of the proviso means that the ‘appalling results’ for innocent persons, which Streatfeild J feared would follow from holding that time did not run if the identity of the thief was not known, will not occur.

“Finally, it seems to me that it is not relevant to talk about people ‘sleeping upon their claims’ when the identity of the thief or subsequent converters is not known and could not with reasonable diligence have been discovered.

“I therefore consider that I should not regard the decision in Butler as pre-empting the question of what s27(b) means. It seems to me that concealing the right of action by fraud logically should also include concealing the identity of the tortfeasor. As I have said before, it seems to me to be incongruous that time can run against the owner of a chattel and that ownership rights can be lost when the owner does not know who he or she can sue to recover the chattel. It has been said that a cause of action accrues when all of the necessary facts have occurred and there exists both a competent plaintiff who can sue and a competent defendant who can be sued. But if the identity of the potential defendant is not known how does one know that there is a competent defendant capable of being sued in existence? The thief may have died intestate in the period between the theft and the commencement of the proceeding and no grant of letters of administration may yet have been obtained, or the wrongdoer may be entitled to diplomatic immunity at the time of the tort, so that there is no defendant capable of being sued in existence. Even if there is a competent defendant in existence without these unusual impediments to being sued, how can he be capable of being sued if his identity is not known? I therefore agree with the suggestion by Michael Goodman that “the identity of the defendant is an integral part of the ‘cause of action’”.

Santamaria JA accepted the reasons of the trial judge subject to a reservation and observations at [78]-[79]:

“My reservation is as follows: it should be noticed that Part I of the Act is headed ‘Periods of Limitation’ and Part II is headed ‘Extension of Limitation Periods’. Section 27 comprises Division 4 of Part II. Division 4 of Part II is headed ‘Fraud and mistake’. Section 27 provides that, in the circumstances that it describes, ‘the period of limitation shall not begin to run’. Thus, s27 is premised on the hypothesis that, but for fraud, fraudulent concealment or mistake, the period of limitation has begun to run. Accordingly, in so far as the trial judge’s reasons may be read as suggesting that, in a case of conversion by theft, the cause of action does not accrue until the identity of the thief is known, I cannot agree with them.

“My further observation: in argument before Streatfeild J and in his reasons, no reference is made to the decision of the Court of Appeal (Eng) in Beaman v A.R.T.S. Limited. As my analysis above attempts to demonstrate, when a thief converts property by stealing it, the very failure of the thief to disclose his or her identity to the true owner constitutes fraudulent concealment within 27(b)”.

It followed that the appeal failed.

The Court rejected at [67] the respondents’ submission in their notice of contention that “fraud” in s27(a) “contemplates ‘a wider concept of fraud, which focuses on the character of the defendant’s conduct and not merely on the strict characterisation of the cause of action itself, so as to include actions arising from equitable fraud or other dishonest conduct’”. A claim in conversion is not a claim based upon fraud (at [70]).

PROFESSOR GREG REINHARDT is executive director of the Australasian Institute of Judicial Administration and a member of the Faculty of Law at Monash University, ph 9600 1311, email The numbers in square brackets in the text refer to the paragraph numbers in the judgment. The full version of this judgment can be found at


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