April 11, 2024

By Nick Melchiorre 

The law of possessory liens in Ontario is governed by the Repair and Storage Liens Act. This law attempts to balance the rights of owners and creditors.

THE ISSUE

It is a complex act and relying on self-help remedies or not doing the paperwork properly,  may lead to costly lawsuits.

THE CASE

Careful policies starting at the contract stage reduce conflict and cost. An example of this is 9806881 Canada Corp. v. Swan.

In that case, the plaintiff was in the business of aircraft repair. They performed work on Swan’s plane. It began with a written work order, but substantial additional work was agreed to verbally.

The RSLA permits a possessory lien by which the repairer retains the object repaired until paid and provides a mechanism to sell the article if they remain unpaid.

Swan was unhappy not to have their plane. They had paid over a million dollars and went to court to ask for return of the plane. This led to a final invoice, which they disputed, claiming that the additional work should have been included in the amounts already paid.

The application judge held that although there was work performed that had not been paid for, because it was not subject to a written authorization, it could not be the subject of a lien. She did not explain her reasoning thoroughly. Nothing in the parties’ agreement required additional work to be agreed to in writing, and section 3 of the RSLA allows a possessory lien without a written agreement unless one is required by the contract.

As a result, the Court of Appeal directed a new trial on the issues of:

1. Whether the work described in the appellants’ April 19, 2023, invoice should have been completed under the scope of work contemplated by the parties’ first and second written agreements;
2. If the work was additional to the two written agreements, whether it was authorized by the respondent, in writing or orally; and
3. If the work was authorized, what amounts, if any, are owing by the respondent to the appellants.

TAKEAWAYS

• Repairers need to confirm with the RSLA.
• Written authorization is the gold standard to avoid costly disputes.
• Written authorization may not be required in all cases.
• Knowing when written authorization is required is tricky, like the RSLA generally. 
• Repair disputes may be expensive- doing it right is the best protection.

WHAT WEILERS LLP CAN DO TO HELP YOU

At Weilers LLP we have significant experience advising clients on their rights under the Repair and Storage Liens Act. We can advise repairers on proper procedures and paperwork in advance, to avoid disputes.

We act on behalf of both repairers and clients if there is a dispute. We always recommend steps to resolve the dispute quickly and cost-effectively.

If you need advice regarding the Repair and Storage Liens Act, give Weilers LLP a call and see if we are the right lawyers for you.