The Risk You Don’t Know About.

Posted on: November 5th, 2013

Conversion? To what?
Some time ago, we had a distressed, well known auctioneer approach us, telling us he could get nowhere with his claim.
The circumstances were that, despite taking all reasonable precautions, he had sold various items that had been previously stolen by the ‘vendor’, who was one of the better known authorities in his corner of the trades.
The true owner of the works appointed one of the more aggressive London solicitors, who decided to use the archaic offence of conversion.
Now, it is probably better that you look up the legal tort of conversion on Wikipedia, rather than I write at length on it (as it does go on a bit), but, in a nutshell, if you sell something quite innocently, which does not belong to the person offering it for sale, a conversion has occurred.
There is no defence against this tort, unlike most offences.
You cannot argue that you took all reasonable precautions or that you had known the ‘vendor’ and believed him or her to be honest.
Just selling the item creates the offence!
So, what can you do about it?
The Auctioneer who had approached us had bought Professional Indemnity Insurance, but, unfortunately, the policy wording he had was rather out of date and the Insurers said that, because he had not committed an error or allowed an omission, they were not liable. We did try, together with his own solicitor, to put forward some arguments to refute this, but in the end, potential costs outweighed any possible benefit and the Auctioneer had to swallow the loss himself.
The real answer to the question is to make sure that you buy a Professional Indemnity policy that offers Civil Liability cover, rather than just Errors and Omissions and buy it from an Insurer that you have heard of. With Professional Indemnity, as well as most types of Insurance, Insurer Quality is king!