Older Uniform Acts

Report on Commercial Liens 1994

ALBERTA REPORT RECOMMENDATIONS WITH COMMITTEE RESPONSE

ALTA. RECOMMENDATION 1 -- ONE STATUTE

Non-consensual liens in personal property should be governed by a single statute. The statute should set out a unified set of rules concerning the nature and extent of the lien, the priority of the lien against third parties and the procedure for its enforcement. The statute would replace the following legislation:

  • Garagemen's Lien Act
  • Innkeepers Act (ss 2-6)
  • Livery Stable Keepers Act
  • Possessory Liens Act
  • Threshers' Lien Act
  • Warehousemen's Lien Act
  • Woodmen's Lien Act

The same rules would apply to the various types of liens unless there is a good reason that justifies a difference in treatment.

Committee Recommendation:

Adopt this recommendation, but confine it to garagekeepers liens, repairers, storers and transporters liens.

ALTA. RECOMMENDATION 2 -- NON-APPLICATION OF PROPOSED STATUTE

The statute should not apply to Crown liens or other non-consensual security interests given to public or quasi-governmental bodies, to general liens, to the landlord's right of distress for unpaid rent or to an unpaid seller's lien governed by the Sale of Goods Act.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 3 -- TRANSITION

The proposed statute should apply to liens that were created before its coming into force. A non-possessory lien under the Garagemen's Lien Act should be considered registered until the registration expires. The proposed statute should provide that a garageman's lien may be re-registered in the Personal Property Registry before the registration expires.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 4 -- ABOLITION OF OBSOLETE LIENS

The Beet Lien Act should be repealed.

Committee Recommendation:

The committee has no comment on this other than to indicate that this is an example of the type of lien best governed by local option.

ALTA. RECOMMENDATION 5 -- ENTITLEMENT TO A LIEN

The following classes of lien claimants should be recognized:

(a) a person has a lien on goods in respect of which the person has expended labour or skill for the purpose of improving, restoring or maintaining its condition or properties;

(b) a storer has a lien on goods that have been stored;

(c) a common carrier has a lien on goods for carriage charges in respect of which a bill of lading is issued;

(d) an innkeeper, boarding house keeper or lodging house keeper has a lien on the goods brought on to the premises;

(e) a thresher has a lien on any grain that has been cut or threshed.

(f) a forest worker has a lien on logs or timber in respect of which labour or services are rendered and any logs or timber which have been mixed with logs or timber in respect of which the labour or services have been rendered.

Committee Recommendation:

Adopt this recommendation, but confine it to garagekeepers liens, repairers, storers and transporters liens.

ALTA. RECOMMENDATION 6 -- OBLIGATION SECURED BY LIEN

The claim secured by the lien should be restricted to the amount agreed to be paid for the services relating to the property against which the lien is claimed. If no amount has been agreed upon, the lien should secure the fair value of the services rendered.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 7 -- GOODS BELONGING TO THIRD PARTY

A lien should attach only to goods owned by the debtor or goods in respect of which the owner has authorized the debtor to obtain the services giving rise to the lien. A secured party should not be considered an owner for the purposes of this provision. A forestry worker's lien should not be subject to this restriction. However, a forestry worker's lien should only secure the amount owing by the owner to a contractor after the owner has been notified of the lien. The owner should be liable for any amounts paid to the contractor following notification.

Committee Recommendation:

Agreed except that the Uniform Liens Act will not deal with forestry workers' liens.

ALTA. RECOMMENDATION 8 -- ENFORCEABILITY

A lien should be enforceable against the debtor or third parties only if the goods are in the possession of the lien claimant or the debtor has signed an acknowledgment of the indebtedness. A lien claimant should be deemed not to have taken possession of goods that are not in the apparent possession or control of the debtor or the debtor's agent. If a lien claimant has not complied with the enforceability requirements at the time a third party acquires an interest in the goods, subsequent compliance by the lien claimant should not render the lien enforceable against the third party. The signing of the acknowledgment should be without prejudice to the right of the debtor or other person to dispute the amount. The requirement for enforceability should not apply to a thresher's lien or a woodworker's lien.

Committee Recommendation:

The Committee is in substantial agreement with this recommendation except that the Uniform Liens Act will not deal with thresher's liens or woodworker's liens. In addition, the Committee thought the concept of "an acknowledgement of the indebtedness" was too narrowly conceived. Acknowledgement of the indebtedness should not be a pre-condition to release of the item or to the creation of a lien. What is required is some document recognizing that the authorization of work gives rise to a lien, but leaves room to dispute the amount of the lien. The lien claimant registers for the full amount claimed, but the amount may be disputed. Drafting work is required on this point.

ALTA. RECOMMENDATION 9 -- ATTACHMENT OF LIEN

A lien should attach to the goods on the commencement of the services giving rise to the lien.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 10 --CARE OF GOODS IN POSSESSION OF LIEN CLAIMANT

A lien claimant or a sheriff who has possession of goods subject to a lien shall be under a duty to use reasonable care in the custody and preservation of the goods unless a higher standard is imposed by some other law. Unless the parties otherwise agree, the parties should be subject to the following implied terms:

(a) reasonable expenses in obtaining, maintaining and preserving the goods are chargeable to the debtor and secured by the lien;

(b) the risk of loss to the extent of any deficiency in any insurance coverage is on the debtor; and

(c) the lien claimant or sheriff shall keep the goods identifiable, except that fungible goods may be co-mingled.

A lien claimant should be permitted to use the goods in accordance with any agreement with the owner, for the purpose of preserving the goods or pursuant to an order of a Court.

Committee Recommendation:

Agreed except that it would be the committee's approach to incorporate the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 11 -- REQUEST FOR INFORMATION

The debtor, a creditor, a sheriff or a third party who has an interest in the property should have the right to demand the following information from a lien claimant:

(a) a copy of any acknowledgment of indebtedness;

(b) a statement in writing of the amount of the indebtedness;

(c) a written approval or correction of an itemized list of goods attached to the demand indicating which goods are subject to the lien.

The person making the demand should have the right to obtain a court order requiring disclosure if the lien claimant fails to respond. The court should have the power to order that lien be extinguished or a registration discharged if the lien claimant does not comply with the demand. The Court should also have the power to exempt a lien claimant from compliance and to extend the time for compliance.

Committee Recommendation:

Agreed except that it would be the committee's approach to incorporate the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 12 -- ASSIGNMENT OF LIEN

A lien should be capable of assignment by an instrument in writing.

Committee Recommendation:

Agreed. It is the Committee's view this provision should be expressly stated in the Uniform Liens Act because of its potential importance to the possibility of financing of repairs.

ALTA. RECOMMENDATION 13 -- TERMINATION OF LIEN

A lien should not be lost by reason only that the lien claimant has allowed a period of credit for the payment of the debt. If a lien claimant takes a security interest in goods subject to a lien in order to secure an obligation which includes the amount of the lien, the lien claimant should be deemed to have taken the security interest in substitution of the lien.

Committee Recommendation:

Agreed. The Committee noted that a security interest so taken would not succeed to the superpriority of the lien which renders it unnecessary to contain an express statement on this point.

ALTA. RECOMMENDATION 14 -- PERFECTION OF LIEN

A lien should be capable of being perfected by possession or by registration. A lien claimant should be deemed not to have possession of goods in the actual or apparent possession of the debtor or the debtor's agent.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 15 -- TEMPORARY PERFECTION

A lien should be temporarily perfected for 15 days after the lien claimant delivers possession of the goods to the debtor. Temporary perfection should not be effective against a buyer or lessee who gives value for the interest without knowledge of the lien.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 16 -- EFFECT OF NON-PERFECTION

An unperfected lien should be subordinate to a person who causes the collateral to be seized under legal process, a trustee in bankruptcy or liquidator and a buyer or other transferee who acquires the interest for value and without knowledge of the lien.

Committee Recommendation:

Agreed except that it would be the committee's approach to incorporate the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 17 -- PRIORITY AGAINST BUYERS

A buyer or lessee of goods from a seller who sells it in the ordinary course of business should take free of any lien. A buyer or lessee of consumer goods of a value that does not exceed $1000 should take free of a lien if the buyer or lessee gave value and was without knowledge of the lien.

Committee Recommendation:

Agreed except that it would be the committee's approach to incorporate the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 18 --PRIORITY AGAINST SECURED CREDITORS

A lien should be subordinate to a security interest that is perfected during a time when the lien is attached but unperfected.

Committee Recommendation:

This recommendation was not followed by the committee. The committee recommendation is that a lienholder should take priority over a prior secured party even if the lienholder fails to register or allows the registration to lapse.

ALTA. RECOMMENDATION 19 -- PRIORITY AMONG LIEN CLAIMANTS

Priority among perfected lien claimants should be determined in reverse order to the order in which the liens were created. If the lien is not continuously perfected, priority should be based on the order of perfection. A perfected lien should have priority over an unperfected lien. Priority between two unperfected liens should be determined by the order of attachment of the liens.

Committee Recommendation:

Please see Committee Recommendation 9 contained in the accompanying Report.

ALTA. RECOMMENDATION 20 -- REGISTRATION OF LIEN

Registration of a lien should be accomplished by registration of a financing statement at the Personal Property Registry. The registration should have a life of one year and it should be renewable for further periods of one year.

Committee Recommendation:

The Committee agreed with the first part of this recommendation, but proposed flexible registration for liens as being more in keeping with the security aspect of liens.

ALTA. RECOMMENDATION 21 -- CONTENTS OF REGISTRATION

A financing statement relating to a lien should provide for the name and address of the debtor, the name and address of the lien claimant, and should require that the goods be described by item or by kind. Goods classified as "serial number goods" should be required to be registered by serial number. Information contained in a financing statement should be capable of being changed by registration of a financing change statement.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 22 -- DUTY TO PROVIDE FINANCING STATEMENT

A lien claimant should be required to give a copy of a financing statement or verification statement to each person named as debtor.

Committee Recommendation:

The Uniform Liens Act should follow the PPSA of the jurisdiction on this point.

ALTA. RECOMMENDATION 23 -- EFFECT OF ERRORS IN REGISTRATION

The validity of a registration should not be affected by an error unless it is seriously misleading. It should not be necessary to demonstrate that anyone was actually misled by the error.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 24 -- DISCHARGE OF LIEN

The debtor or any person with an interest in the goods should be able to give a written demand requiring the lien claimant to amend or discharge a registration if the indebtedness has been paid or if the lien claimant is not entitled to claim a lien on the described goods. The lien claimant should then be required to amend or discharge the registration or provide the Registrar with an order of the Court confirming the registration. If the lien claimant fails to comply with the demand, the debtor or other person should be entitled to register a financing change statement amending or discharging the registration.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 25 -- SEIZURE OF GOODS SUBJECT TO A NON-POSSESSORY LIEN

A seizure of goods under a non-possessory lien should be effected by a sheriff or a person appointed by a sheriff. The procedure should be substantially the same as the procedure for seizure of collateral under a security agreement.

Committee Recommendation:

Agreed.

ALTA. RECOMMENDATION 26 -- SALE OF GOODS SUBJECT TO LIEN

A lien claimant should have the right to sell the goods 30 days after the debt becomes due. The lien claimant should be required to give notice of the intended sale not less than 20 days prior to the disposition of the goods. The notice should contain a description of the collateral, the amount of indebtedness including any expenses for storage and disposition, and a statement that the goods may be redeemed, and should set out the particulars of the intended sale. The goods may be disposed of by private or public sale, but the lien claimant may not purchase the goods in the case of a private sale.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 27 -- COSTS OF REALIZATION SECURED BY LIEN

The lien should secure reasonable costs of seizure and sale, including costs of storage after default in payment.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 28 -- SURPLUS OR DEFICIENCY

A debtor should be liable to the lien claimant for any deficiency following sale. A surplus should distributed first to any subordinate secured parties or lien claimants who have perfected their interests, then to any other person who has notified the lien claimant, and then to the debtor or any other person known to be the owner. The lien claimant should be entitled to pay the surplus into Court where there is a question concerning entitlement to the money.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 29 -- RETENTION OF GOODS IN SATISFACTION OF OBLIGATION

A lien claimant should have the right to propose to retain the goods in satisfaction of the obligation. The lien claimant should be required to give a notice of intention to the debtor and other interested parties. If the debtor or other interested party objects, the lien claimant should be required to conduct a sale or obtain an order of a Court dispensing with the objection.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 30 -- REDEMPTION OF GOODS

A debtor or other interested party should have the right to redeem the goods by satisfying the amount of the lien and any reasonable costs of storage and seizure.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 31 -- SUPERVISORY POWER OF COURT

The Court should be empowered to make orders to ensure compliance with the Act, to give directions, relieve compliance or stay enforcement, to determine questions of priority or to make any other order that is necessary to ensure protection of the interests of any person in the goods.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 32 -- GOOD FAITH AND COMMERCIAL REASONABLENESS

The parties should be under a duty to exercise or discharge all rights, duties or obligations in good faith and in a commercially reasonable manner. A person to whom an obligation or duty is owed should have a right to recover damages for loss that was reasonably foreseeable as liable to result from a failure to meet this standard.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 33 -- DEEMED DAMAGES

A lien claimant who without reasonable excuse fails to comply with the duty to provide the debtor with a copy of the financing statement or the duty to amend or discharge a financing statement is liable to pay deemed damages to the person named as debtor. The right to claim deemed damages should also be available to a debtor where consumer goods are involved. The amount of the deemed damages should be the same as the amount of deemed damages prescribed under the PPSA.

Committee Recommendation:

Agreed except that it would be the committee's approach to refer to the applicable provisions from the Uniform PPSA.

ALTA. RECOMMENDATION 34 -- DISPUTE RESOLUTION

Where there is a dispute about the amount of the lien or the right of the lien claimant to take or retain possession of the goods, the owner should be entitled to pay into Court the full amount claimed by the lien claimant. Upon doing so, the owner should be entitled to a release of the goods if retained by the lien claimant and the lien is discharged. In its place, the lien claimant should have a charge on the money paid into Court. The owner should be permitted to include an offer of settlement in the application. The charge on the money paid into Court should be discharged if an offer of settlement is not accepted or the lien claimant does not commence action to recover the money within 90 days.

Committee Recommendation:

Agreed.

Next Annual Meeting

2017 Conference

Hotel Saskatchewan

Regina, SK

August 13 - 17, 2017
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