Unfortunately, the solicitors had got it wrong. The creditor had no power to appoint receivers. When the company subsequently went into liquidation, the liquidator sued the receivers for the loss and damage arising from the invalid appointment. This, in turn, largely involved a consideration of the law of ‘conversion’. There was no real dispute about liability in respect of conversion of tangible assets, such as real property (‘choses in possession’), but there was dispute about liability over conversion of intangibles, such as the right to sue (‘choses in action’). The HL decided that, as a matter of English law, a conversion of a chose in action was not possible, and there could only be a conversion of a chose in possession. Thus, the invalidly appointed receivers were not liable for damages in respect of contracts they had settled or terminated (ie choses in action). From an insolvency point of view, this decision is limited to the UK. Remember that there are foreign jurisdictions that do allow conversion of intangibles (eg the US). Accordingly, if a chose in action has a significant link to such a foreign country, it may well be that the protection given by the UK courts will turn out to be of limited value. As a matter of principle, there are many who feel that the logic of the HL’s decision is highly questionable. In this day and age, there does not seem to be any practical reason why the tort of conversion should not extend to choses in action. See discussion of OBG v Allan [2007] UKHL 21 in [2007] The In-House Lawyer October p42. © Practical Lawyer