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Possessory Lien Over Sailboat Limited to Storage Charges
Published in the March 2007 issue of Transportation Notes - View Article
In reversing the judgment of an applications judge which issued a declaration with respect to a boat storer’s lien, the Ontario Court of Appeal recently made findings on the requirements of a Notice of Lien under the Repair and Storage Liens Act (“the Act”).
The appellants were joint owners of a sailboat and the respondent owned and operated a storage facility in Barrie. The sailboat was moored at the Barrie Yacht Club and it is alleged that the appellants were in default of their membership and mooring fees. Langton, a bailiff, seized the appellant’s sailboat from the Barrie Yacht Club marina and brought it to the respondent’s premises for storage.
Langton delivered to the appellants a Notice of Lien, which indicated there would be storage charges of $20 per day for storing the boat at the respondent’s premises. The appellants did not pay the charges or attempt to redeem the boat from the respondent. Rather, they sued the Barrie Yacht Club and the bailiff, for wrongful seizure and unlawful impounding of the boat. The Small Claims Court dismissed that action and the Divisional Court upheld the dismissal. Leave to appeal to the Court of Appeal was refused.
This, however, was not the end of the matter. The respondent wished to recover monies to satisfy its charges and gave notice of his intention to sell the boat for unpaid storage charges pursuant to s.15 of the Act. The appellants objected and the respondent brought an application out of which the present appeal arises. The relief sought was a declaration that the storer had a possessory lien over the boat, determination of the amount of the lien, and a declaration that he was entitled to sell the boat and obtain judgment against the appellants in the amount of the lien. The application judge held that the respondent was entitled to all of the relief requested, and that the amount of the lien was $29,920.
The legislation in question undoubtedly creates a possessory lien in favour of a storer of an article and gives the right to possession of the article until the relevant charges are paid. However, the Act also contains provisions which protect the interests of the owner of the item. In particular, where the storer receives an item from someone other than the owner, the Act defines the notice which must be given to the owner. The storer did not give any such notice, but the bailiff engaged to effect the seizure did.
The Court of Appeal found that the notice given by the bailiff did not constitute proper notice under the Act. In the first place the Act requires notice from the “storer” and there was no evidence the bailiff was acting as agent of the respondent storer when he gave the notice. The respondent submitted that this problem was merely one of procedure, not substance, and the notice was essentially valid as the appellant received all the information required by the Act. The Court found that while in some circumstances, the giving of notice by someone other than the storer may satisfy the Act, that argument cannot prevail where there is potential prejudice to the recipient.
The notice given by the bailiff in this case was clearly deficient. It purported to include a claim for boat removal and transportation fees, legal and administration costs and amounts owing to the Barrie Yacht Club. These clearly had nothing to do with the storer’s lien. The Court held that “there is nothing in the Act to suggest that a storer, such as the respondent, may use its storer’s lien to claim others’ unrelated debts.” The intent of the Act is that notice should include an accurate statement of how the owner may redeem the stored article and clearly, the notice should not overstate the amount that must be paid. Therefore, the notice potentially created a significant disincentive to the appellants to redeem the boat.
The parties were in agreement that if the notice given by the bailiff was not valid, the amount of the lien would be limited to storage charges for sixty days. As a result, the Court of Appeal found that the lien was limited to $1,200.