Older Uniform Acts

Report on Commercial Liens 1994


IV. WHETHER THE LIEN OF A COMMON CARRIER SHOULD BE EXPANDED TO PROVIDE LIEN PROTECTION TO THOSE WHO TRANSPORT GOODS WITHOUT HAVING THE STATUS OF A COMMON CARRIER?

The Alberta Report recommended an expansion of two traditional categories of liens: repairers and storers. This expansion has prompted the question whether the lien of the common carrier should be extended to those who transport goods.

While the common carrier's right to a lien is based on the requirement that the carrier take "all comers", it is difficult to justify a distinction between a storer and a carrier or, for that matter, a repairer and a carrier. In all cases, the value of the goods involved has been notionally enhanced. Transport of goods to a new market has an effect on their value. While it might be argued that a "private" carrier can negotiate for a security interest, the matter of priorities cannot be addressed through agreement. Since a carrier's claim should have priority over security (and other) interests, it will be necessary to create a statutory lien having this priority.

4. RECOMMENDATION:

The distinction between common carriers and other types of carriers should be eliminated in favour of a statutory transporters' lien.


V. WHETHER THE LIENOR NEED NEVER HAVE HAD POSSESSION AS A REQUIREMENT TO CREATE THE LIEN?

When the Ontario draft Repairers' and Storers' Lien Act was first released for public comment, it contemplated that the repairer, in order to claim a lien, would have to have possession before a non-possessory lien could be granted. As indicated above Mr. Arthur Close, Q.C. provided a commentary on the proposal (see: (1985) 10 C.B.L.J. 359). On the issue of whether the repairer should at some point have possession as a condition of lien protection, he said this (at p. 364):

The second observation that might be made about s. 7(1) is that in order to claim a non-possessory lien, the lien claimant must once have had a possessory lien. This is a serious limitation on the scope of Part II. There are many situations in which work will be carried out on the premises of the owner. An example is where a piece of heavy equipment breaks down at a remote work site and it is wholly impractical to relocate it to the repairer's premises. It is doubtful whether the person who performs repairs at a place which is under the effective control of the owner of the property being repaired can ever be said to have possession of the property sufficient to support a lien. Yet to deny him a non-possessory lien creates a wholly artificial distinction between work which is lienable and work which is not, depending on the essentially irrelevant issue of where the repairs are made.

These words fell on fallow ground, and the legislation, when introduced, removed the requirement that the repairer have possession as a prerequisite to lien status. The Repairers' and Storers' Liens Act provides that a lien claimant who gives up possession of an article without having been paid in full has, in place of the possessory lien, a non-possessory lien (see: s. 7(1)). But s. 3(4) of the Repairers' and Storers Liens Act states that a repairer who commences the repair of an article not in the repairer's actual possession "shall be deemed to have gained possession of the article when the repair is commenced and shall be deemed to have given up possession when the repair is completed or abandoned".

Similarly, the Alberta Draft Act does not require the lienor to have had possession as a condition of claiming lien protection. Section 2 provides who is entitled to a lien. Section 5(1) then states that a lien [other that a thresher's lien or a forestry worker's lien] is "enforceable against the debtor or a third party only where (a) the goods are in the possession of the lien claimant, or (b) the debtor has signed an acknowledgment of the indebtedness which includes a description of the goods subject to the lien." This avoids the statutory reference to possessory and non-possessory liens which occurs in the Repairers' and Storers' Liens Act.

The legitimacy of Mr. Close's comments cannot be denied. His view is also consistent with the PPSA, which allows a secured party to seize an item in the debtor's possession simply by rendering the item unusable. The logic is the same. One concern may relate to low ticket consumer items like washers and dryers and also to repairs of small dollar value. Should it be possible for a lien claimant to repossess items of this type? To do so may increase costs to the consumer relative to the value of the repaired item. The Committee considered this possible problem and decided to leave the issue to exemptions reform, if necessary. Good business practices dictate such repossessions will be rare. Furthermore, no such concern exists in the PPSA. The PPSA permits a secured party to repossess an item where the amount secured is small, as long as the secured party behaves in a commercially reasonable manner in doing so. Similarly, a secured party is permitted under exemption legislation to repossess exempt consumer goods if it holds a purchase-money mortgage which is somewhat akin to a repairer's lien.

5. RECOMMENDATION:

The lien clamant should not be required to have possession of the liened article before claiming a non-possessory lien.


Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018