Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Grant v YYH Holdings Pty Ltd [2012] NSWCA 360
• Hearing dates: 25 October 2012
• Decision date: 09 November 2012
• Before: McColl JA at [1]; Basten JA at [65]; Tobias AJA at [98]

Decision

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: TORTS - conversion and detinue - action to recover sheep - where tortfeasor bred progeny from sheep - where plaintiffs' title extinguished by operation of Limitation Act 1969, s 65 - whether plaintiffs' title to progeny also extinguished; LIMITATION OF ACTIONS - conversion and detinue - whether claim statute barred - where title to sheep extinguished pursuant to Limitation Act, s 65 - whether cause of action to recover progeny a further cause of action for the conversion or detention of the original sheep and not maintainable by operation of Limitation Act, s 21; LIMITATION OF ACTIONS - conversion and detinue - burden of proof in respect of limitation defence - where defendant pleads proceedings not maintainable by operation of Limitation Act, s 14(1)(b) and plaintiffs' title to goods extinguished by operation of Limitation Act, s 65
• Legislation Cited: Criminal Code Act 1995 (Cth), s 270.3; Limitation Act 1969 (NSW), ss 14, 21, 65, 68A; Personal Property Securities Act 2009 (Cth), ss 10, 31; Uniform Civil Procedure Rules 2005 (NSW), rr 14.14, 14.27
• Cases Cited: Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159; Borg v Howlett [1996] NSWSC 153; (1996) 8 BPR 15,535; Buckley v Buckley, Administratrix of the Estate of Henry A Buckley, deceased 12 Nev. 423, 1877 WL 4371 (Nev.); Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; Case of Swans [1572] EngR 403; (1572) 7 Co Rep 15b; 77 ER 435; CHEP Australia Limited v Bunnings Group Limited [2010] NSWSC 301; Clayton v Le Roy [1911] 2 KB; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1; Forbes v Cochrane (1824) 107 ER 450; Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175; Greenwood v Bennett [1973] 1 QB 195; Hill v Reglon Pty Ltd [2007] NSWCA 295; John F Goulding Pty Ltd v Victorian Railways Commissioners [1932] HCA 37; (1932) 48 CLR 157; Jones v De Marchant (1916) 28 DLR 561; Lloyd v Osborne (1899) 20 LR (NSW) 190; Mabo v Queensland (No 2) [1992] HCA; 175 CLR 1; McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303; Miller v Dell [1891] 1 QB 468; Pearne v Lisle (1749) Amb 75 (at 76 - 77); (1749) EngR 142; 27 ER 47; Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; Philpott v Kelley (1835) 3 Ad & El 106; (1835) 111 ER 353; Pratten v Pratten [2005] QCA 213; Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27; R v Tang [2008] HCA 39; (2008) 237 CLR 1; Sandeman & Sons v Tyzack & Branfoot Steamship Co Ltd [1913] AC 680; Santos v Illidge (1860) 141 ER 681; Santos v Illidge (1860) 141 ER 1404; Seay v Bacon (1856) 4 Sneed (TN) 99, 36 Tenn. 99 (Tenn.), 1856 WL 2500 (Tenn.); Somerset v Stewart (1772) Lofft 1; (1772) 20 State Tr 1; (1772) 98 ER 499; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; Tucker v Farm & General Investment Trust Ltd [1966] 2 QB 421 (at 426, 430, 431); University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481; Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351
• Texts Cited: Andrew McGee, Limitation Periods, 6th ed (2007) Sweet & Maxwell at [21.010]ff; William Blackstone, Commentaries on the Laws of England, 1766, Book 2, c 25 at 390; Bridge, Personal Property Law (1993, Blackstone Press Ltd, UK), p 82; Clerk & Lindsell on Torts, A M Dugdale et al (eds), 19th ed (2006) Sweet & Maxwell at 1060 [17-104], fn 81; Halsbury's Laws of England, 4th ed (reissue) (2003) LexisNexis UK, vol 2(1) (at 259 [509], fn 2-3); Halsbury's Laws of England, LexisNexis UK online at [1238]; Morgan, The Law of Animals (1967, Butterworths), p 8; Preston and Newsom on Limitation of Actions, 3rd ed (1953) The Solicitors' Law Stationery Society Ltd at 41; Second Report of the Law Reform Commission on the Limitation of Actions, Report 12 (1971) at 12-13; Ziff, Principles of Property Law (2006, 4th ed, Thomson Carswell), p 108
• Category: Principal judgment
• Parties: Phillip Dwyer Grant (First Appellant); Karen Sandra Grant (Second Appellant); YYH Holdings Pty Ltd (First Respondent); Hamoud Ali Al-Khalaf trading as Transportation EST (Second Respondent)
• Representation: Counsel: Mr M Windsor SC with Mr B McManus (Appellants); Mr M Neil QC with Mr J Bishop (Respondents); Solicitors: Harris Freidman (Appellants); Benjamin & Khoury (Respondents)
• File Number(s): 2012/226245

Decision under appeal

• Jurisdiction: 9101
• Date of Decision: 2012-03-23 00:00:00
• Before: Rolfe DCJ
• File Number(s): 10/408389

Judgment

1 McColl JA: YYH Holdings Pty Ltd ("YYH Holdings") and Hamoud Ali Al-Khalaf (trading as Transportation EST), the respondents, brought an action in detinue and conversion against Phillip and Karen Grant, the appellants, for the return of 16 Awassi sheep, all other sheep which had been bred from those sheep and any other sheep of any cross containing Awassi genetics. Rolfe DCJ found that although the cause of action in respect of the 16 sheep had expired, the same was not the case for the progeny and semen of those sheep. Accordingly, his Honour ordered that the appellants deliver up to the respondents all of the progeny and any embryos and/or straws and pellets of semen of the 16 original sheep: YYH Holdings Pty Ltd v Grant (District Court of New South Wales, Rolfe DCJ, unreported, 23 March 2012). The appellants appeal from those orders.

2 The issue on appeal is whether the respondents' claim to the progeny and "genetics" of the 16 original sheep is also statute barred.

Legislative framework

3 Section 14(1)(b) of the Limitation Act 1969 provides, relevantly, that "[a]n action on a cause of action founded on tort is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff".

4 The following provisions of the Limitation Act are also relevant:

"21 Successive wrongs to goods

Where:

(a) a cause of action for the conversion or detention of goods accrues to a person, and

(b) afterwards, possession of the goods not having been recovered by the person or by a person claiming through the person, a further cause of action for the conversion or detention of the goods or a cause of action to recover the proceeds of sale of the goods accrues to the person or to a person claiming through the person,

an action on the further cause of action for conversion or detention or on the cause of action to recover the proceeds of sale is not maintainable if brought after the expiration of a limitation period of six years running from the date when the first cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

...

65 Property

(1) Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action specified in column 1 of Schedule 4, the title of a person formerly having the cause of action to the property specified opposite the cause of action in column 2 of that Schedule is, as against the person against whom the cause of action formerly lay and as against the person's successors, extinguished.

(2) Where, before the expiration of a limitation period fixed by or under this Act for a cause of action specified in column 1 of that Schedule, an action is brought on the cause of action, the expiration of the limitation period does not affect the right or title of the plaintiff to property specified in column 2 of that Schedule in respect of which the action is brought:

(a) for the purposes of the action, or

(b) so far as the right or title is established in the action.

(3) This section does not apply where the cause of action is for conversion or detention of goods and, before the expiration of the limitation period fixed by or under this Act for the cause of action, the person having the cause of action recovers possession of the goods."

5 Schedule 4, which is referred to in s 65(1) lists relevantly, in column 1, a cause of action for "conversion or detinue of goods" and, in column 2, "[t]he goods". There is no definition of "goods" in the Limitation Act. Prima facie, that expression would include personal property or chattels personal, being a movable possession, as distinct from real property. It was common ground it included sheep.

6 A party seeking to rely upon extinction of a right or title pursuant to s 65A in proceedings before a judicial tribunal is required to plead or "otherwise appropriately claim in accordance with the procedures of the tribunal" that the right or title has been so extinguished: s 68A(1), Limitation Act; Uniform Civil Procedure Rules ("UCPR") 14.14.

Statement of the case

7 The appellants, Phillip and Karen Grant, are farmers. Mr Grant was a shareholder in Awassi (Aust) Pty Ltd ("Awassi Pty Ltd"). The first respondent, YYH Holdings, is a company incorporated in Western Australia. YYH Holdings was also a shareholder in Awassi Pty Ltd. The second respondent is a company incorporated in Saudi Arabia. Mr Daws, a director of YYH Holdings, was the authorised representative of the second respondent at trial. He was also a director of Awassi Pty Ltd.

8 Awassi sheep are a breed of sheep which originates from the Middle East. They are highly sought after as a source of meat and dairy. They have a distinctive appearance with a brown face and legs along with other distinguishing features. According to Mr Daws, the respondents "own all Awassi genetics in Australia". The primary judge noted (at [5]) that the effect of this evidence was that, leaving aside the sheep the subject of these proceedings, all Awassi sheep in Australia are owned by the respondents who, it is apparent, assert exclusive rights to breed such sheep in this country: see primary judgment at [35].

9 Awassi Pty Ltd was "the vehicle which was used in Eastern Australia to breed Awassi sheep for milk and export": primary judgment (at [7]). By November 2002, all but 16 of Awassi Pty Ltd's sheep had been transferred to YYH Holding's property, Kynoch Station, in South Australia. The remaining sheep, consisting of six ewes, six rams and four cross-breeds, were held by Mr Tom Grant, the first appellant's father, in Cowra: primary judgment (at [8]).

10 Awassi Pty Ltd went into liquidation in August 2003. In October 2003, YYH Holdings made an offer to the liquidator to purchase "all live animals comprising any Awassi genetics": primary judgment (at [10]). This offer was accepted on 21 October 2003, according to the primary judge (at [11]), "on the understanding that it related to all Awassi livestock in situ at Kynoch Station ...". The following day, Mr Daws wrote to the liquidator pointing out that the offer included not only those sheep that had already been transferred to Kynoch Station, but all other such animals in Eastern Australia and also that the respondents would be offering to purchase 4043 pellets of Awassi sheep semen owned by Awassi Pty Ltd apparently then held by another company on its behalf. The liquidator advised Mr Daws that 16 additional Awassi sheep were located on Mr Tom Grant's farm in Cowra.

11 On 23 October 2003 Mr Daws wrote to the liquidator on behalf of the respondents offering to buy the pellets of Awassi sheep semen. The liquidator accepted the offer on 27 October 2003 and sent Mr Daws two tax invoices, one evidencing the purchase of "all Awassi sheep owned by Awassi (Aust) Pty Limited (In Liquidation)", the other the purchase of "4043 Pellets of Awassi Sheep Semen owned by Awassi (Aust) Pty Limited" for a total consideration of $132,236.50 (including GST). It was not in dispute that at some stage the respondents paid that amount to the liquidator. On 7 November 2003 the liquidator wrote to Mr Daws confirming that "ownership of all Awassi Sheep" belonging to Awassi Pty Ltd was transferred to the respondents on 4 November 2003.

12 At some stage the respondents appear to have taken possession of the pellets of Awassi sheep semen. However various practical difficulties of a regulatory nature it is unnecessary to recount then prevented them from taking delivery of the sheep until January 2004.

13 By January 2004, Mr Tom Grant had sold his property and the sheep had been moved to the appellants' property. The respondents then arranged for a Mr Sims to collect the 16 sheep.

14 On a date described as "in or around the end of January 2004", Mr Sims telephoned the first respondent, introduced himself on behalf of Mr Daws, and said: "I want to organise a day with you to collect the 16 Awassi sheep from your property in Cowra." The first appellant replied: "If you come here to try and collect I won't let you onto my property": primary judgment (at [24]). On 30 January 2004 Mr Daws received a facsimile from the liquidator advising he had been unsuccessful in his attempts to convince the first appellant to release the 16 Awassi sheep to the first respondent.

15 Thereafter the respondents made various attempts to have the appellants release the sheep, including threatening to commence proceedings, although legal action did not eventuate, as appears from what follows, until 8 December 2010

16 On 11 April 2005, Mr Grant sent the respondents' solicitors a letter. Relevantly, it acknowledged "receipt of your letter dated 14 February 2005 regarding the above Company's sale of the sixteen (16) sheep to your client, YYH Holding Pty Limited" and referred to the solicitors' statement "regarding my failure to make delivery of the sheep to the Liquidator or your client". It then complained that YYH Holdings was requested by the Liquidator to collect the sheep within a certain timeframe", that that "did not occur, nor were any alternate arrangement [sic] made" and "[i]t was after this time that I considered the sheep to be abandoned and took over their care."

17 The respondents made a number of further attempts in 2005 to obtain delivery of the sheep but these were either rebuffed or ignored: primary judgment (at [42]). Nothing much happened for the next four years: primary judgment (at [44]).

18 In November 2010, the respondents found out that the appellants were advertising the sale of 209 Awassi sheep at auction. On 2 November 2010 the respondents' solicitors sent a letter to the appellants in the following terms:

"On 1 July 2005 we confirmed in a letter to you that you were in possession of 16 Awassi sheep or Awassi cross-bred sheep (9 rams, 7 ewes). These were sheep that had been purchased from Awassi (Aust) Pty Limited (In Liq.) by our client. We gave you notice to deliver up these sheep as they were the property of our client. You failed to deliver up the sheep. You made it impossible for our client to come onto your property and take them without committing trespass.

On 3 November 2010 you are holding an auction of 200 'Awassi Fat Tail Sheep'. As the advertisement indicates, this will be the first time that genuine purebred Awassi sheep will be available for public sale. The auction notice goes on to say that the Awassi sheep offered for sale were all bred by the 'owners', yourselves.

These Awassi sheep are the sheep that you wrongfully withheld from our client and/or sheep that you have wrongfully bred from them. As you know, there are no other Pure Awassi sheep in Australia.

We give you Notice by this letter, that we are about to sue you for damages, for the detention of our clients [sic] goods over a long period of time, and the conversion of those goods to your own use.

Given that the proposed sale of the Awassi sheep may produce multiple purchasers, there will be a destruction of the genetic protection that our clients have with their own Awassi sheep, and the diminution of value in our client's sheep as a result. Our client's losses will be in the millions of dollars. Our client's action will be to claim such damages from you.

We call upon you, one again, to deliver up our original 16 sheep and all other sheep that have been bred from those original sheep. In the alternative we are taking proceedings against you for damages."

19 On 4 November 2010, the respondents' solicitor wrote to the appellants in the following terms:

"We advise you that, under no circumstances whatsoever, are you to dispose of any Awassi Fat Tail Sheep ('Awassi Sheep'). Our client demands that you make immediate arrangements for the surrender to our client of all sixteen original Awassi Sheep, as well as all purebreds and cross-breeds bred from the original sixteen (16) Awassi Sheep directly or indirectly. For the removal of any doubt, what we are asking for is the surrender of all Awassi Sheep in your possession, or that you may have placed in the possession of any other person/party. The practical effect of complying with the demand is that you will no longer have a capacity to breed nor deal with Awassi Sheep in Australia."

20 The statement of claim commencing the proceedings was filed on 8 December 2010. In their amended defence, the appellants relevantly pleaded that if they had converted the 16 Awassi sheep, the conversion occurred on any of three dates, the latest of which was 7 December 2004 and that on 30 January 2010 or, at the latest, 7 December 2010, the respondents' title to the 16 Awassi sheep was extinguished by virtue of s 65 of the Limitation Act. The respondents filed a reply which pleaded that the appellants were prevented from relying on the Limitation Act by virtue either of estoppel or waiver. It did not expressly join issue with the defence, but, by virtue of UCPR 14.27(2), there was an implied joinder of issue on that defence.

21 The appellants conceded at trial that they had converted the respondents' sheep in that they had wrongfully retained them, wrongly denied the respondents access to them, withheld them and, insofar as they had bred from them, "wrongfully misused" the sheep because breeding amounted to "employing the goods as if they were [their] own".

Primary judgment

22 After reciting the facts in substantially the same terms as set out above, the primary judge found (at [42]) that "[e]sssentially for no explained, proper or adequate reasons, [the appellants] unlawfully appropriated the sheep for their own use and benefit".

23 The appellants' defence to their wrongful act was that the respondents' causes of action in detinue and conversion had been extinguished by the operation of s 14(1)(b) and s 65 of the Limitation Act. They asserted that the causes of action had accrued no later than 2 February 2004 when the respondents' unequivocal demands for the return of the 16 sheep had been refused in unqualified terms.

24 The primary judge accepted that submission insofar as the 16 original sheep were concerned. He found (at [58]) that the respondents' cause of action in detinue in relation to those sheep "started to accrue on 31 January 2004". His Honour therefore held (at [60]) that "by reason of ss 14(1)(b) and 21 of the Limitation Act ... the [respondents'] cause of action in detinue is not maintainable in respect of the 16 Awassi sheep because proceedings were commenced more than six years after the date of accrual of the cause of action to the [respondents] on 31 January 2004". He held that the same consequence flowed in relation to the respondents' cause of action in conversion in relation to the 16 sheep. His Honour appears to have selected 31 January as the date of accrual of the causes of action because of the uncertainty in the respondents' evidence as to the date demand was made for the 16 sheep - a "date" fixed with no greater precision than "in or around the end of January 2004".

25 The respondents do not contest his Honour's finding that their cause of action in relation to the 16 original sheep was statute barred.

26 The primary judge reached a different conclusion in relation to the progeny and what he called "the genetics", describing (at [82]) their position as "entirely different".

27 In this respect the appellants relied on s 21 of the Limitation Act and the proposition that the "goods" referred to in that provision included both the original 16 sheep as well as their progeny and semen.

28 The primary judge rejected that submission, preferring the respondents' proposition that the original sheep were different "goods" from their progeny and semen. His Honour accepted that, first, the progeny of the original 16 sheep were the property of the sheep's owner (at least until the extinguishment of the respondents' cause of action, that owner being the respondents), secondly, that even if it was the case that the respondents' "goods" had in some way become mixed with the appellants', as that "mixing" was the appellants' fault, the respondents could still claim the goods but, in any event, that if each party's goods could be separated from the others' then the owner could recover possession: see primary judgment (at [85] - [88]).

29 The primary judge found (at [89]) that in the absence of any evidence from the appellants that they owned any sheep of their own which were bred with sheep belonging to the respondents, all the sheep the appellants bred were bred from the respondents' stock. Accordingly, he concluded (at [90]) that the progeny and semen of the 16 Awassi sheep were the respondents' property. His Honour then said:

"90 ... As matter of commonsense, the progeny could only become property of the plaintiffs once they came into existence either in utero or when they were born. Therefore, the progeny could not have been converted or detained unlawfully until sometime after either of these events occurred.

91 Accordingly, the cause of action in detinue did not start to accrue in relation to the progeny and semen until, at the earliest, a demand was made by the plaintiffs for their return. In this respect, I am satisfied on the evidence that the first demand made in relation to the progeny and the semen was on 4 November 2010 when the plaintiffs' solicitors sent a demand for their surrender to the defendants (Exhibit A p121). Accordingly, for this reason, the plaintiffs' claims in detinue and conversion in relation to the progeny and the semen are not statute barred."

30 The primary judge then dealt with an application the appellants made at the end of the trial to amend paragraph 20 of their Amended Defence. It was paragraph 20 in which the appellants pleaded their Limitation Act defence. The effect of the amendment, if successful, would have been to insert the words underlined in the following part of that defence " ... the plaintiffs' title to the 16 Awassi Sheep and their progeny and/or genetics was extinguished". The primary judge (at [93]) refused leave to amend for reasons it is unnecessary to recount. The amendment was apparently sought to resist a possible submission that the appellants' defence did not plead extinction of the respondents' title to the progeny and/or genetics. Mr Neil of Queens Counsel, who appeared for the respondents at trial and on appeal, accepted that the trial was conducted on the basis that the extinction plea went to all the "goods" the respondents sought to recover.

Issues on appeal

31 The appellants contend the primary judge erred in the following respects:

"(1) Finding that the cause of action in detinue and conversion did not start to accrue in relation to the progeny and the semen until at the earliest, a demand was made by the Respondents for their return on 4 November 2010;

(2) Finding that the Respondents [sic] claim in detinue and conversion in relation to the progeny and the semen was not statute-barred;

(3) Finding that the Respondents were entitled to succeed in the claim against the Appellants for detaining the progeny and the semen;

(4) Finding that the Respondents were entitled to an order for delivery up of the sheep, embryos and semen in accordance with orders 1 - 3 made by his Honour on 4 April 2012;

(5) Finding that the progeny could not have been converted or detained unlawfully until sometime after they came into existence in utero or when they were born."

Submissions

32 It is common ground that the effect of the operation of s 14(1)(b) and s 65 of the Limitation Act when read with Schedule 4 was that the respondents' title to the original 16 sheep was extinguished.

33 In his written submissions, Mr M Windsor of Senior Counsel, who appeared on appeal but not at trial, with Mr B McManus, submitted that the case below concerned "16 Awassi sheep ..., their progeny and genetics". The former were said to have been on the appellants' farm, while "[t]he 'genetics' being ... certain 'straws' of semen and embryos were stored at a facility in Victoria". In his oral submissions, Mr Windsor contended that the respondents' claim to recover the progeny, semen and embryos was defeated by s 21 because, wherever the word "goods" appeared in that section, it should be understood to refer to the "genetics" meaning the "unit of inheritance" which carried the Awassi trait. Accordingly, he argued, the January 2004 conversion of the 16 Awassi sheep, properly understood, was a conversion of their "genetics" and as the progeny, semen and embryos were also "genetics" in the sense that all carried the Awassi "unit of inheritance", they were the same "goods" as had been converted on or about 31 January 2004. Thus the November 2010 demand for the return of the "purebreds and cross-breeds bred from the original 16 Awassi sheep" was a further cause of action for the conversion or detention of the "goods" within the meaning of s 21 of the Limitation Act, and was not maintainable as it was brought after more than six years after 31 January 2004, being the date when the first cause of action had accrued to the respondents.

34 The appellants appeared at times to claim that their act in breeding the original sheep was both an act of conversion (which cannot be gainsaid) and, too, the time when a further cause of action accrued to the respondents. I understand that submission is only put as part of their "same goods" argument, with the breeding of the original sheep said to constitute a further cause of action for the purposes of s 21, rather than a contention that a period of six years had elapsed from any particular breeding so that any cause of action in that respect had been extinguished. No evidence was led to establish any extinction separate from that for which the appellants contended arose from s 21 - that is to say, successive, as opposed to an independent, causes of action. The appellants accepted that the November 2010 demand was sufficient to constitute a component of the respondents' causes of action in detinue and conversion.

35 Alternatively, Mr Windsor contended that if the progeny of the original 16 sheep, semen and embryos semen were not regarded as the same "goods" for the purposes of s 21, nevertheless once the respondents' title to the original 16 sheep was extinguished by the operation of s 65 of the Limitation Act, the respondents' title to all progeny, semen and embryos was also extinguished. Accordingly, at the time of the November 2010 demand, the respondents had no title to goods which could be the subject of a demand for the purpose of either conversion or detinue.

36 Mr Neil embraced the primary judge's conclusions that the progeny, semen and embryos were not the same "goods" for the purposes of s 21. He complained that the alternative argument had not been run below, but submitted that even if it was correct, it could only apply to progeny, semen and embryos which came into existence after 30 January 2010 when the respondents' title to the original sheep was extinguished. He said there was no evidence that any of the progeny, semen and embryos the primary judge ordered be returned to the respondents came into existence after that date, a proposition Mr Windsor did not dispute.

Consideration

37 The respondents' claimed entitlement to the progeny of the original 16 sheep is based on the maxim that offspring of domestic animals are the property of the owner of the dam: Case of Swans [1572] EngR 403; (1572) 7 Co Rep 15b (at 17b); 77 ER 435 cited with approval in Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 (at [24]) per Gleeson CJ, Gaudron, Kirby and Hayne JJ; see also Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159 (at [35]) per Brereton J; Tucker v Farm & General Investment Trust Ltd [1966] 2 QB 421 (at 426, 430, 431); Halsbury's Laws of England, 4th ed (reissue) (2003) LexisNexis UK, vol 2(1) (at 259 [509], fn 2-3): "the maxim partus sequitur ventrem (the offspring follow the dam) applies to all animals other than swans". Blackstone's Commentaries on the Laws of England, special edition (1983), Book II (Of the Rights of Things) (at 390) gives two rationales for this maxim: the first, relevantly being:

"... because the male is frequently unknown; but also because the dam, during the time of her pregnancy, is almost useless to the proprietor, and must be maintained with greater experience and care: wherefore as her owner is the loser by her pregnancy, he ought to be the gainer by her brood. An exception to this rule is in the case of young cygnets; which belong equally to the owner of the cock and hen, and shall be divided between them. But here the reasons of the general rule cease, and 'cessante ratione cessat et ipsa lex': for the male is well known, by his constant association with the female; and for the same reason the owner of the one doth not suffer more disadvantage, during the time of pregnancy and nurture, then the owner of the other."

38 The primary judge did not draw a distinction between the torts of detinue and conversion, treating a proposition proved in relation to detinue as also established in relation to conversion. Neither party criticised that approach. It is not unique to his Honour or the parties: see, for example, Clayton v Le Roy [1911] 2 KB 1031 (at 1052) per Farwell LJ. Indeed, in Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175 (at 177) Giles J (as his Honour then was) observed that "conversion and detinue now offer overlapping remedies". In Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342 (at [173]) Allsop P (Giles and Macfarlan JJA agreeing) endorsed the description of Giles J's analysis by the learned authors of Clerk & Lindsell on Torts, A M Dugdale et al (eds), 19th ed (2006) Sweet & Maxwell (at 1060 [17-104], fn 81) as a "careful and instructive" judgment.

39 In some circumstances it may be well to remember that the torts do differ. These differences are reflected in the different remedies, in particular as to damages, which lie in respect of each tort as Giles J noted in Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (at 177 - 178).

40 Although it has been said that "[t]he framing of a precise definition of the tort of conversion has been described as 'well nigh impossible' ", the "essential elements, or basic features, involve an intentional act or dealing with goods inconsistent with or repugnant to the rights of the owner, including possession and any right to possession [which] will amount to such an infringement of the possessory or proprietary rights of the owner if it is an intended act of dominion or assertion of rights over the goods": Bunnings Group Limited v CHEP Australia Limited (at [124]); see also Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 (at 229) per Dixon J; Pratten v Pratten [2005] QCA 213 (at [60]) per Muir J (Williams JA agreeing).

41 Thus it may have been arguable that the respondents' cause of action to some of the progeny accrued at the time of the appellants' admitted acts of conversion involving breeding them (see [21] above). However, as I have said, no such case was pleaded or conducted. The appellants did not challenge the primary judge's conclusions that the causes of action he identified accrued when the respondents demanded the return of the 16 sheep in January 2004 or, subject to their s 21 and s 65 arguments, when demand was made for the progeny in November 2010. Such a demand, if wrongfully refused, is often the best evidence of conversion: Preston and Newsom on Limitation of Actions, 3rd ed (1953) The Solicitors' Law Stationery Society Ltd (at 41).

42 A cause of action in conversion accrues once the person in possession of the goods engages in an act which is repugnant to the owner's right to possession, for example, by retaining the goods after a lawful demand: see Bunnings Group Limited v CHEP Australia Limited (at [117] - [121]). Mere unauthorised possession of another's chattel is not a conversion of it: Bunnings Group Limited v CHEP Australia Limited (at [117]).

43 The essence of detinue lies in a wrongful refusal to deliver up goods to a person having the immediate right to the possession of those goods: CHEP Australia Limited v Bunnings Group Limited [2010] NSWSC 301 (at [183]) per McDougall J. Similarly, the cause of action in detinue accrues once a lawful demand for the return of possession of the chattel is made and the demand is refused: Philpott v Kelley (1835) 3 Ad & El 106; (1835) 111 ER 353; Miller v Dell [1891] 1 QB 468; Lloyd v Osborne (1899) 20 LR (NSW) 190. Accordingly at the end of six years after the accrual of the cause of action, the title of the original owner to the converted or wrongfully detained chattel, and hence any cause of action for conversion and/or detinue, is extinguished: s 65(1) Limitation Act. There may be different limitation periods if the facts establish that the causes of action in conversion and detinue accrued at different times: John F Goulding Pty Ltd v Victorian Railways Commissioners [1932] HCA 37; (1932) 48 CLR 157 (at 169 -170).

44 There was no discussion by the parties as to who bore the burden of proof in relation to the limitation point. That point is not without controversy: see Andrew McGee, Limitation Periods, 6th ed (2007) Sweet & Maxwell (at [21.010]ff). It was discussed at length in a case of professional negligence, Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27. In that case, the court (Brooking, Tadgell and Hayne JJ) observed (at 73) that:

"In considering the burden of proof it is necessary to put to one side the special case of the statutes of limitation with regard to real property and the conversion or detention of chattels. These do not merely prevent the remedy: they extinguish the title. If on the face of the pleading it appears that time has run, the pleading shows that the plaintiff's title is extinguished (unless the case falls within one of the exceptions allowed by the statute) and is demurrable: Dawkins v Lord Penrhyn (1878) 4 App Cas 51 and Pearson v Russell 9 ALT 2."

45 Although their Honours did not continue their analysis of the situation concerning the burden of proof in these special cases, it is apparent from the subsequent discussion that at least in cases which fell within the demurrable class to which they referred, in their view the burden of proving the action was not statute-barred lay on the plaintiff. The rationale for this is that a plaintiff pursuing a cause of action to recover goods allegedly converted or wrongfully detained must establish title to the goods. Where, prima facie, that title has been extinguished by operation of s 65, the plaintiff bears the burden of proving the cause of action accrued within time: see Pullen v Gutteridge Haskins & Davey Pty Ltd (at 74, 76); Second Report of the Law Reform Commission on the Limitation of Actions, Report 12 (1971) (at 12 - 13). This may have had consequences for the appellants' alternative argument to which I refer later in these reasons.

The one goods argument

46 It was common ground that wherever the word "goods" appears in s 21(b) of the Limitation Act, it refers to the "goods" in respect of which a cause of action for the conversion or detention has accrued to a person as provided in s 21(a).

47 The appellants contended that the original 16 Awassi sheep and the progeny were the same "goods" for the purposes of s 21 because the respondents' entitlement to the progeny arose from the conversion of the original goods (the genetic material of the original sheep) into the progeny which contained the same goods (genetic material). Accordingly, they argued the original demand for the return of the 16 sheep was a demand for the return of that genetic material, as, too, was the November 2010 demand. Accordingly the November 2010 cause of action was a "further cause of action for the conversion or detinue of the (genetic material)" and was not maintainable because it was not brought until more than six years after the first demand was made, in January 2004.

48 The appellants cited a number of cases said to support this proposition. Some were cases in which the "goods of A [became] indistinguishably and inseparably mixed with the goods of B" (Sandeman & Sons v Tyzack & Branfoot Steamship Co Ltd [1913] AC 680 (at 695) per Lord Moulton; referred to with approval Hill v Reglon Pty Ltd [2007] NSWCA 295 (at [91] - [100]) per Beazley JA (Spigelman CJ and Ipp JA agreeing)) and it was held that if that mixing arose from B's fault, A could claim the intermingled goods. Another, McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303, concerned the law of accession, that is to say, the principle by which "[i]f any corporeal substance receives an accession by natural or artificial means, as by the growth of vegetables, the pregnancy of animals or the embroidery of cloth, the original owner is entitled by his right of possession to the property in its improved state": Halsbury's Laws of England, LexisNexis UK online (at [1238]). None concerned the operation of the limitation period on the intermingled or improved goods. They rise no higher than the proposition that the owner of the goods which are intermingled with the tortfeasor's goods or improved as Halsbury explains, are the property of the original owner.

49 The appellants also relied upon Seay v Bacon (1856) 4 Sneed (TN) 99, 36 Tenn. 99 (Tenn.), 1856 WL 2500 (Tenn.), a decision of the Supreme Court of Tennessee. The facts of Seay v Bacon as they appear from the headnote were that:

"The maternal grandfather of the complainants, then all minors, by deed of gift unregistered, in 1831 conveyed to them a female slave [Dinah], and delivered the possession of said slave to the father and mother of the complainants. In 1832, the father and mother, by joint bill of sale, for a valuable consideration sold and conveyed the slave to the defendant, who had full knowledge of the gift to the complainants, and who held said slave and her in-crease until 1852, when this bill was filed, within less than three years after the youngest of the complainants became of age. Between the time of the sale to defendant and the filing of the bill, the slave had borne six children, several of whom were born after the eldest of the complainants was free from all disability to sue."

50 The complainants sought to recover Dinah and her six children. The defendant resisted the claim on the basis that as at least one of the complainants was free from disability when the right of action accrued, the limitation statute ran against all complainants, thus barring recovery as to all of Dinah's children born after the eldest complainant attained majority. The court described this argument as "ingenious" and dependant upon the proposition that:

"The child, it is said, is, in law and in fact, a separate, distinct, individual being; that, as such, it is capable of a separate dominion, property and possession, and the title and possession may be transferred in any of the various modes provided for the transfer of other personal chattels ... Consequently, it is argued, when the mother is wrongfully held by another, at the birth of a child, a right of action accrues to the owner to bring a separate suit, at his election, for the recovery of the child alone, and a successive action for each child subsequently born. And hence the conclusion is deduced that the statute attaches at the instant of the birth of each child."

51 The argument was rejected in the following terms:

"This reasoning, however plausible, is contrary to the course of professional and judicial opinion in this State. By our law, the issue of a female slave follows the condition of the mother. The children are part of the mother, and, potentially, exist in her before they have a being. The ownership of the mother carries with it the property in the children born of her during the period of such ownership. The mother and her issue are treated, in respect of the title and rights of the owner, as an aggregate property. Whatever affects the rights or remedies of the owner as respects the mother, equally affects his rights and remedies in respect to her issue.

It is certainly true, in law as in fact, that this unity of interest and of possession is capable of being severed, either by the voluntary act of the owner, or the tortious act of another, or by act of law; and upon this being done, distinct and opposing rights may spring up. But until such severance is actually effected, the statute of limitations cannot operate upon part of the aggregate property, and be inoperative as to the remaining part. If the right of the owner is saved for a definite period as to the mother, it is saved likewise as to the issue born of her during such period.

The argument for the defendants rests mainly, as we suppose, upon a mistaken assumption, namely, that a separate right of action accrues to the owner for the recovery of each child at the moment of its birth. If the mother and her issue, as has been already assumed, constitute an aggregate mass, then the cause of action is entire; and being so, it cannot, upon principle, be split into several actions. The consequence would perhaps be, that, if a part were recovered in a separate action, the judgment would be a bar to another action for that part of the property not sued for in the first action." (Emphasis added).

52 The appellants relied upon Seay v Bacon to support their contention that the progeny of the original 16 sheep are "aggregate property", and, accordingly, the same "goods" for the purposes of s 21 of the Limitation Act. I do not accept that submission. As the passages emphasised in the extract from the case demonstrate, the Tennessee court's decision appeared to be founded on the law as to slavery in that State which treated slaves as in a special category. However, in Buckley v Buckley, Administratrix of the Estate of Henry A Buckley, deceased 12 Nev. 423, 1877 WL 4371 (Nev.) (an action brought to recover a flock of ewe sheep or their value, the right to their increase and the wool subsequently shorn from the flock), the Supreme Court of Nevada, having cited the passage the appellants rely upon from Seay v Bacon (at [5]), and referring to other cases dealing with slaves, said (at [6]) that, "there was no distinction at that time, as objects of property, between negroes and domestic animals".

53 Seay v Bacon reflected a view which had currency in some quarters prior to the abolition of slavery, that slaves were regarded as chattels and, accordingly, that actions for their conversion or wrongful detention would lie at the suit of their owners: see Pearne v Lisle (1749) Amb 75 (at 76 - 77); (1749) EngR 142; 27 ER 47. The conclusion in Buckley v Buckley, Administratrix of the Estate of Henry A Buckley, deceased is consistent with to the conclusion reached in Pearne v Lisle. In that case, the Lord Chancellor, Lord Hardwicke, had "no doubt that trover will lie for a Negro slave; it is as much property as any other thing". His Lordship declined to grant specific performance of a contract to provide such slaves saying, by analogy with "stock on farm", that they were not in a special category. As Young J said in Borg v Howlett [1996] NSWSC 153; (1996) 8 BPR 15,535 (at 15, 538), "the exact words used by his Lordship are now outdated, and, indeed, the whole thrust of what he said would now be considered abhorrent". Nevertheless his Honour applied his Lordship's reasoning insofar as it concerned stock on a farm to conclude that, prima facie, racehorses were not of the nature of a special chattel. That reasoning, in my view, applies, a fortiori, to sheep, even those of the Awassi line which, while perhaps of a distinct genus, are bred for primary production purposes no different from the greater Australian sheep stock.

54 The Seay v Bacon approach to commodification of individuals by treating them as an article of possession was effectively rejected in Somerset v Stewart (Somerset's Case) (1772) Lofft 1; (1772) 20 State Tr 1; (1772) 98 ER 499 prior to the settlement of the Colony of New South Wales in 1788. In that famous case, Lord Mansfield held (Lofft, at [19]) that "[t]he state of slavery is of such a nature, that it is incapable of being introduced [into the law of England] on any reasons, moral or political". "Chattel slavery" being " 'full ownership of another human being" was unlawful under Imperial legislation dating back to colonial times, a position now reflected in s 270.3(1)(a) of the Criminal Code Act 1995 (Cth): R v Tang [2008] HCA 39; (2008) 237 CLR 1 (at [81]) per Kirby J.

55 Shortly after Seay v Bacon, the American Civil War began in 1861 and, after the success of the Union forces, slavery was abolished in that country. It might be thought that the notions of chattel slavery such as are reflected in Seay v Bacon might have vanished with that abolition, although subsequent cases, including Buckley v Buckley, Administratrix of the Estate of Henry A Buckley, deceased tend to confound that belief.

56 Seay v Bacon does not, in my view, enunciate a principle concerning the title to the progeny of the sheep which finds a basis in Australian law. The appellants cited no binding or persuasive authority which applied its reasoning concerning "aggregate property" in the present context. There is, in my view, no reason why, as a matter of principle, the owner of the 16 original sheep does not obtain a separate title to the progeny. The progeny have a separate existence. Although the respondents' ownership of them was derived from their title to the original 16 Awassi sheep, once the progeny were no longer in utero they were separate entities and the respondents had a separate title to them.

57 In any event, in my view the one goods argument cannot be sustained on the facts. The respondents offered to, and did, purchase "all Awassi sheep owned by Awassi (Aust) Pty Limited (In Liquidation)" from the liquidator. The respondents' January 2004 demand was "to collect the 16 Awassi sheep from [the appellants'] property in Cowra", while the November 2010 demand was to recover "the sixteen original Awassi Sheep, as well as all purebreds and cross-breeds bred from the original sixteen (16) Awassi Sheep directly or indirectly".

58 It was never put to Mr Daws at trial, that the respondents had purchased the "genetic material" rather than the sheep. Any proposition to that effect would have been inconsistent with the objective evidence of the contract: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165. While it might be accepted that from time to time Mr Daws used the word "genetics" as, for example when he referred to the first respondent attempting to recover "the full genetics that were purchased", it is plain that he used that expression to refer to "the 16 sheep": see Transcript at 38(45)-(50). As the November 2010 demand demonstrated, the respondents regarded the 16 original sheep as different from the progeny.

The alternative argument

59 There is some force in the appellants' alternative argument, at least in theory, insofar as progeny came into existence after 30 January 2010, the date the respondents' title to the original 16 Awassi sheep was extinguished by the operation of s 65. Once that occurred then, in my view, they could no longer claim ownership of the progeny of those sheep, as their title to the progeny depended on ownership of the progeny's dams.

60 However, the appellants did not run this case at trial and should not be able to raise it for the first time on appeal. It is a point which should have been pleaded: UCPR 14.14. Had it been pleaded, it would have been open to the respondents to seek to ascertain when the progeny the appellants had in their possession had been born or, in the case of sticks of semen or embryos, extracted or created. Depending upon who bore the burden of proof on the limitation point (see discussion at [44] - [45] above) as to which I express no final view, the respondents may have been able to meet such an argument by adducing evidence. The appellants should be bound by the way they conducted the trial: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 (at 7) per Gibbs CJ, Wilson, Brennan and Dawson JJ; University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481. As it was, in any event, there is simply no evidence concerning when the progeny came into existence, other than it was accepted by both sides of the bar table that it was after 2004.

61 The position is otherwise in relation to progeny that came into existence prior to the extinction of the respondents' title to the original 16 Awassi sheep. The appellants did not cite any authority to support the proposition that extinction of the respondents' title to the original 16 Awassi sheep also extinguished their title to any progeny whether they came into existence before or after that extinction. It seems to me, however, to follow as a matter of first principle that once the progeny came into existence prior to the expiration of the limitation period, then, as the foregoing discussion reveals, they were owned by the respondents who had separate title to them capable of supporting an action for their conversion and/or detinue. In other words, up until 30 January 2010, the respondents had title to the 16 sheep and, therefore, on the application of the maxim to which I have earlier referred (at [37]), also had title to the progeny.

Conclusion

62 The appeal must, accordingly fail.

63 I would observe that although the issue of amending the defence is no longer a matter of controversy, there is force in McGee's suggestion (Limitation Periods, op cit, at [2.024]) that in cases where the effect of the expiry of the limitation period is to extinguish the plaintiff's title to the goods alleged to have been converted or improperly detained, leave to amend a defence to plead the limitation point should, subject to costs, "more readily be given".

Orders

64 I would dismiss the appeal with costs.

65 BASTEN JA: The issue which arises in this case may be shortly stated. In 2003 the appellants came into possession of 16 Awassi sheep, the property of the respondents. In January 2004 the respondents demanded the return of the sheep. The demand was rejected. From 2005 to 2010 the appellants used the sheep for breeding purposes, developing a flock of over 300 Awassi sheep together with supplies of semen and embryos.

66 The respondents sued for return of their property, including the original 16 sheep, together with their progeny and the products used for breeding purposes. They were, however, dilatory in so doing. Proceedings were commenced in December 2010 in conversion, detinue and trespass.

67 The trial judge, Rolfe DCJ, held that the entitlement of the respondents to 16 original sheep the subject of the respondents' demand, was extinguished in January 2010: Limitation Act 1969 (NSW), ss 14, 21 and 65. That conclusion was not challenged on the appeal.

68 It was accepted by the appellants that breeding activities did not take place between January and December 2004, but only thereafter. The trial judge held that the respondents were entitled to recover the progeny of the 16 original sheep, together with what appeared to be the ingredients and produce of in vitro fertilisation, somewhat eccentrically referred to as "the genetics". The demand for the progeny and the genetic material was first made in November 2010. However, it did not matter when that demand was made as proceedings were commenced within six years of the birth of the progeny and, in the absence of evidence to the contrary, the collection of semen and ova.

69 The reasoning of the trial judge commenced with the proposition, not in dispute on the appeal, that the owner of the dam (in this case each of the Awassi ewes) was the owner of the progeny. However, the appellants challenged the proposition that the respondents maintained their rights with respect to the progeny (and the genetic material) after their rights in the original 16 sheep were extinguished. The primary submission made in this Court in support of that proposition was that the true value of the sheep to the respondents was that they contained "genetics", being part of the 16 original sheep. Thus it was said that there had been a conversion and detinue of "the genetics" in January 2004, so that no cause of action for conversion of "the genetics in the 16 original sheep" was available in these proceedings.

70 A second argument, apparently presented for the first time on appeal, and not fully articulated, was that at the point of time at which the respondents lost their entitlement to the original sheep, they also lost their entitlement to the progeny.

Unity of property

71 The legal basis for the primary submission was derived from s 21 of the Limitation Act. That section provides that where a cause of action for conversion or detention of goods has accrued, an action is not maintainable more than six years after the initial accrual on the basis of a further cause of action arising for the conversion or detention of the goods. The argument was that "the goods" were the "genetic material" which passed from the original flock to the progeny, leading to the assertion that ewe and progeny were, in law, one thing.

72 This argument owed more to ingenuity than commonsense. It sought to draw support from the doctrine of accretion or accession which operates with respect to inanimate products. Thus, in Jones v De Marchant (1916) 28 DLR 561, the Manitoba Court of Appeal (in a judgment delivered by Richards JA) held that the owner of certain beaver skins was entitled to succeed against a defendant who had acquired, by gift, a fur coat made from the beaver skins, property in which was held to remain in the owner by virtue of the principle of "accession".

73 A leading Canadian text, Ziff, Principles of Property Law (2006, 4th ed, Thomson Carswell) notes, under the heading "The transformation of chattel ownership" at 108:

"Title to chattels may be affected

(i) by the intermixture of the chattels of two or more people;

(ii) through the accession (or joining) of goods; or

(iii) through an alteration under which an entirely new object is created."

There follows a discussion of "confusion (also known as commingling, intermixture, admixture)", and "accession". The latter discussion is almost entirely devoted to cars, trucks and boats. However, it commences with the following statement:

"The doctrine of accession is designed primarily to resolve disputes in which two or more chattels become attached, such as when A's paint is applied to B's car. In addition, a natural accession occurs when an animal gives birth to offspring. Here, the general rule is that the owner of the mother acquires title to the progeny."

74 There is nothing more about animals and offspring and the footnotes refer to the underlying principle as to ownership, rather than its relationship to accession. Just as it is no longer acceptable to treat people as, in law, chattels (see below) it is neither logical nor morally acceptable to treat animals, though chattels, as in all respects equivalent to inanimate objects. Nor indeed does the law allow such an equation; there are specific offences for cruelty to animals: see, for example, Prevention of Cruelty to Animals Act 1979 (NSW).

75 Bridge, Personal Property Law (1993, Blackstone Press Ltd, UK) also treats the impregnation of one animal by another as a long standing example of the principle of accessio, namely "the joining of a smaller thing to a larger one, so that the identity of the smaller becomes submerged in the larger": at 82. Authority for this principle is supposedly derived from Blackstone, Commentaries on the Laws of England, 1765, Book II, Ch 25 "Of Property in Things Personal", p 390.

76 Blackstone, in the passage referred to, stated:

"Of all tame and domestic animals, the brood belongs to the owner of the dam or mother; the English law agreeing with the civil, that 'partus sequitur ventrem' in the brute creation, though for the most part in the human species it disallows that maxim".

It is by no means clear that Blackstone was invoking any principle of accession: he referred to none in this passage. What is tolerably clear is that, if the reference to "in the human species" was a reference to slavery, it was by way of exception rather than application. (The first edition of Commentaries was published before Lord Mansfield's famous holding in Sommersett's Case (1772) 20 St Tr 1 at 80-82 as to the unenforceability of the status of slavery in England, a decision adopted by Blackstone with apparent alacrity: see Best J in Forbes v Cochrane (1824) 107 ER 450 at 459, rejecting a claim brought by a British slave-owner in East Florida against the commander of a British ship on the high seas who refused to hand over the slaves who had sought refuge on his ship.)

77 A New Zealand text, Morgan, The Law of Animals (1967, Butterworths) blithely stated under the heading "Natural Increase" (at 8):

"The offspring of domestic animals belong normally to the owner of the dam, this type of acquisition being based ultimately on the maxim contained in Justinian, Partus sequitur ventrem, to which the most recent English reference appears to be Santos v Illidge [(1860) 141 ER 681 at 685] arising from a contract for the sale of slaves and their progeny."

78 The footnote to Santos continues the same theme (at 8(f)):

"In Official Assignee of Bailey v Union Bank of Australia Ltd [1916] NZLR 9..., Chapman J observed: 'the doctrine of Partus sequitur ventrem whether with reference to slaves or cattle embodies a world-wide understanding to which business men habitually adhere'."

79 The factual assertion as to commercial slavery in 1916 may be doubted, although in 1860 in Santos v Illidge on appeal (141 ER 1404) the Court of Exchequer Chamber enforced against a British slave-owner a contract for the sale of slaves in Brazil. More importantly, the legal principle identified by Chapman J is inconsistent with Blackstone.

80 Absent authority, it might be doubted whether the principle of accession would apply with respect to progeny based on the transmission of a single cell (or gamete) from the ewe which, in combination with a cell from the ram, created a zygote which ultimately developed into an individual lamb. There is no hint in any legal text to which the Court's attention was drawn that any such biological process underpinned the legal consequence. Indeed, it was only the extraordinary diligence of the appellants that identified an authority which might, at least by analogy, support the conclusion. The authority was a decision of the Supreme Court of Tennessee, Seay v Bacon 4 Sneed (TN) 99, 36 Tenn 99 (Tenn), 1856 WL 2500 (Tenn) (1856). The subject matter of the case is utterly distasteful to a readership offended by the treatment of people as chattels. (It pre-dated Emancipation by only 7 years.) The subject matter of the claim involved a slave, Dinah, who was transmitted by her owner to his minor grandchildren. Before the grandchildren came of age, their parents sold Dinah to a third party: the proceedings were brought by the children, upon obtaining majority, as against the administrator of the estate of the third party.

81 By the time the proceedings were brought, Dinah had given birth to six children. The question was whether the proper owners of Dinah could recover not only her, but also her children. There was no dispute as to the fact that ownership of her offspring vested in her owner. The issue related entirely to a question as to the effect of a limitation statute. At the time the cause of action accrued, all of the plaintiffs to whom Dinah had been transmitted, were minors. The proceedings with respect to Dinah were brought in time because they were brought within three years of the date on which the youngest plaintiff achieved majority. However, if one of the plaintiffs had achieved majority before the cause of action arose, the limitation period would not have been so suspended. Some of Dinah's six children were born after the oldest plaintiff achieved majority. Accordingly, if separate causes of action arose in respect of ownership of the children, the proceedings were out of time. The Supreme Court of Tennessee rejected that submission, holding:

"By our law, the issue of a female slave follows the condition of the mother. The children are part of the mother, and, potentially, exist in her before they have a being. The ownership of the mother carries with it the property in the children born of her during the period of such ownership. The mother and her issue are treated, in respect of the title and rights of the owner, as aggregate property. Whatever affects the rights or remedies of the owner as respects the mother, equally affects his rights and remedies in respect to her issue."

82 Continuing the somewhat distasteful process, the appellants submitted that the principles applied to slaves in Tennessee in 1856 are also applicable to sheep. To accept that proposition it would be necessary to understand a cultural milieu which is entirely foreign to this Court in 2012, despite the fact that slavery in various emanations probably remains rife in some parts of the world. It is unacceptable to base common law principles on concepts which fail to recognize the equality of all before the law: Mabo v Queensland (No 2) [1992] HCA 23; 175 CLR 1 at 42 (Brennan J). However, for the law to treat a person as a chattel is one thing; to treat children as "part of the mother" so that they form, with her, "an aggregate property" is virtually incomprehensible, both biologically and legally.

83 The Supreme Court of Tennessee noted that "this unity of interest and of possession is capable of being severed, either by the voluntary act of the owner, or the tortious act of another, or by act of law". However, the very concept of "an aggregate property" or, as the Court later put it "an aggregate mass", is inconsistent with the common law principle with respect to domestic animals that, subject to exceptions, ownership of the progeny vests in the owner of the dam: see, eg, Tucker v Farm and General Investment Trust Ltd [1966] 2 QB 421 at 426E (Lord Denning MR). (A different principle may apply with respect to a lessor of livestock.) Such a principle would be unnecessary if the progeny and the mother formed a single aggregate entity. The unlikelihood that any such principle forms part of the common law is confirmed by the absence of other authority (none was referred to by the Supreme Court of Tennessee) and the absence of any discussion of the anomalies which would need to be dealt with if that principle were correct, such as the effect of the death of the mother and the ownership of later generations.

84 The preferred approach is consistent with the conceptual underpinning of the Personal Property Securities Act 2009 (Cth). The Dictionary to the Act includes the following (s 10):

"In this Act:

...

accession to other goods means goods that are installed in, or affixed to, the other goods, ...

...

livestock includes:

(a) while they are alive - alpacas, cattle, fish, goats, horses, llamas, ostriches, poultry, sheep, swine and other animals; and

(b) the unborn young of animals mentioned in paragraph (a); and

(c) the products of livestock before they become proceeds (for example, the wool on a sheep's back before the sheep is shorn)."

(The term "proceeds" is further defined in s 31(4)-(6) in relation to security interests, in terms which need not be pursued for present purposes.)

Alternative argument

85 The secondary argument asserted that, as a matter of law, upon the respondents losing property in the original 16 sheep, they also lost property in the progeny, including, presumably, successive generations. While it is true that the respondents obtained property in the progeny because of their ownership of the ewes at the time the further generations were born, why they should lose property once their title to the original ewes was extinguished, was obscure. The fact that a ewe dies, or is sold, would not ordinarily be thought to extinguish title to her progeny once they had vested in the respondents. If such a legal consequence flowed, to how many generations would it apply? No authority was relied on for the proposition, beyond the concept of "aggregate mass" discussed above.

86 There is a further reason why neither submission should be accepted. It turns on the premise underlying the legal conclusion that title to the original 16 sheep was extinguished, namely the lapse of six years from the demand made in January 2004. The legal consequences flowing from making the demand, and the lapse of time thereafter without commencement of proceedings, must turn on the proper construction of the demand.

Construction of demand

87 Once it is accepted that livestock and their progeny may form different "goods" for the purposes of the torts of detinue and conversion, and therefore for the purposes of s 21 of the Limitation Act, the remaining question was whether the demand made in January 2004 related to the progeny and other material extracted from sheep within the flock.

88 Dealing first with the question of progeny, there is a question as to whether it is sensible to talk of a demand for non-existent goods. It is difficult to see how a cause of action could arise in detinue from the refusal to transfer to the putative owner goods which were not in existence.

89 That being so, little time need be spent on the terms of the demand. The uncontroversial evidence was that an agent of the owner rang the first appellant in late January 2004 stating:

"I want to organise a day with you to collect the 16 Awassi sheep from your property in Cowra."

The request was rejected.

90 If it were necessary to construe the demand, it would be appropriate to do so by reference to the understanding of the reasonable person in the position of the recipient of the demand, in much the same way as a contractual offer might be construed. In such circumstances, it might well be accepted that the demand not only covered the sheep, but also extended to products which had been extracted from the sheep and retained, such as semen and ova and, if the animal were pregnant, possibly the offspring if delivered before the animal was returned to its owner. However, it is not necessary to determine these matters, there being no evidence that there were such products or progeny in existence prior to December 2004 which constituted the subject matter of the proceedings.

91 It remains to consider a consequentialist argument put forward by the appellants against the construction of s 21 and the operation of a demand in detinue adopted above. The result of the preferred construction, it was submitted, would be to allow the owner of livestock to sit back and watch the stock grow in number over the years, without fear of property in the stock being extinguished under the Limitation Act. Thus, in the present case, the 16 sheep had multiplied twenty fold over the six year period during which no proceedings had been brought. The owners may have lost their entitlement to the original 16, but retained an entitlement to the balance of the flock. The same calculation could be made over succeeding periods, for so long as the owner desisted from making a demand for return of the sheep alive from time to time.

92 The appearance of injustice in such circumstances lends itself to two different forms of response. The first form of response is that the source of any apparent injustice may lie elsewhere. Thus there may be defences available in appropriate circumstances, for example where the farmer expends resources and labour in augmenting the numbers and quality of the livestock belonging to another: cf, Greenwood v Bennett [1973] 1 QB 195. There may be a defence available such as estoppel, which was run in the present case, although unsuccessfully on the facts.

93 The second form of response is that the lack of a demand may in any event leave the unauthorised holder of chattels in a state of limbo, because the cause of action in detinue will not have accrued. As explained by Fletcher Moulton LJ, with a degree of hyperbole, in Clayton v Le Roy [1911] 2 KB 1031 at 1048:

"In an action of detinue, as in other actions of tort, the Statute of Limitations runs from the time when the cause of action arose; consequently, if nothing has happened to give rise to an action of detinue, there is no period of time which can operate to extinguish the title of the real owner. He may have been deprived of control of his chattel for a hundred years, but it stills remains his property, and action will lie to recover it, unless there have been a demand and a refusal which would be sufficient to give rise to a cause of action."

94 Far from treating this consequence as warranting ready acceptance that there has been a demand and a refusal, Fletcher Moulton LJ considered that where, following a demand and refusal and the lapse of six years, the owner would be barred it was "therefore very important for the owner that the law should lay down the principle that some clear act of that kind is required to constitute a cause of action in detinue." He continued:

"It would be mulcting the real owner of his rights, if the law did not thus insist upon some definite act or deliberate withholding as being necessary preliminaries to the arising of this cause of action. If something less were sufficient, the Statute of Limitations might commence to run against the true owner without his knowledge."

95 It would be inconsistent with this approach to suggest that a demand should extend to property, the existence of which was not only unknown to the putative owner, but which did not in fact exist, at the time of the demand; or that s 21 should have that effect.

96 The strength of the consequentialist argument can therefore be seen to lie more in rhetoric than in substance. It should not affect the analysis set out above.

Conclusion

97 For these reasons, the trial judge reached the correct result. Whether the issues were articulated in quite the same way before him as in this Court need not be addressed. The appeal should be dismissed; the appellants must pay the respondents' costs of the appeal.

98 TOBIAS AJA: I agree with the orders proposed by McColl JA for the reasons she has expressed.

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Decision last updated: 09 November 2012