REPAIRERS LIENS: THE UNPAID BILL
Almost all companies in the business of repairing or improving vehicles (whether that be cars, trucks, buses, semi-trailers, planes, boats or other similar goods) has experienced this issue: a customer hires you to do work on their vehicle and you, on good faith that you will be paid, do the required work. When the customer later comes in to collect their now serviced or improved vehicle, they refuse to pay some or all of the bill. In such cases, the Repairers Lien Act can help in ensuring you get paid.
The Common Law
The law is not unsympathetic to businesses in the above situation. Under common law, anyone in the business of servicing, repairing or improving a customer’s goods has the right to keep possession of goods they repaired until they are paid. However, the common law remedy does not allow the repairer to sell the repaired goods to recover the money owed. Also, if the business gives the goods back to the customer without first being paid, then any claim to the goods is lost and the repairer has to sue the customer for the amount owed.
The Repairers Lien Act
While helpful, the common law remedy can be cumbersome and isn’t always practical. As a result, British Columbia introduced the Repairers Lien Act (the “Act”) to supplement the common law options available to the unpaid repairer, and in particular those repairers that service, repair or improve vehicles. Under the Act, a vehicle includes any boat, outboard engine, aircraft or motorized vehicle capable of carrying a driver. In short, the Act gives these repairers a statutory lien for the full cost of the unpaid work done on the vehicle. Additionally, the repairer is allowed to sell the vehicle to pay the customer’s outstanding bill, if the bill is still unpaid 90 days after it was rendered.
So long as the vehicle remains in the repairer’s possession, the Act applies, and no additional steps have to be taken by the repairer to assert the lien. However, if the repairer opts to release the vehicle back to the customer before the bill is paid, the Act requires the repairer to do certain things in order to maintain that lien claim:
- have the customer acknowledge the full amount of the bill by signing the bill or other form of statement of account before the vehicle is released; and
- file a financing statement in the British Columbia Personal Property Registry as soon as the vehicle is released to the customer, and not later than 21 days afterwards, in any event.
Recall that the common law does not allow a repairer to actually sell the vehicle to recover the amount of the debt. The repairer’s only option is to hold the vehicle until they are paid, or some other arrangement with the customer is reached. However, under the Act, after a bill has gone unpaid for more than 90 days, the repairer is allowed to sell the vehicle (at auction or otherwise) to recover the amount owed. Any surplus amount remaining, after the repair costs and other certain allowable costs are paid from the sales proceeds, must be returned to the customer, subject to certain exceptions.
Where the repairer decides to hold the vehicle at their place of business, the process of waiting the 90 days to sell the vehicle is relatively straightforward. Where the repairer decides to release the vehicle to the customer before payment is made, the repairers lien registered in the Personal Property Registry is valid for 180 days after registration. During this period, the repairer can hire a bailiff to seize the vehicle and return it to the repairer, at which point the repairer is entitled to sell the vehicle to recover the amount owed by the customer (if the bill is more than 90 days overdue). It goes almost without saying that a repairer, thinking of releasing a vehicle to a customer who hasn’t paid their bill, should consider (even with the ability to register a repairers lien) the chances that the repairer or bailiff will actually be able to locate and seize the vehicle, or what condition it will be in once located and seized.
Limitations of the Repairers Lien Act
The Act is definitely a powerful tool for repairers looking to be paid for work performed on customers’ vehicles. Importantly, even where there are prior registered charges on the vehicle in the Personal Property Registry, a lien under the Act generally sits in first place priority, subject to some limited exceptions.
However, because of the broad protections provided by the Act, a repairer must follow the lien procedures exactly, or risk losing its lien entirely. This requirement for exact adherence to the procedures laid out in the Act is called strict interpretation, and means even minor administrative errors can leave a repairer without a lien claim. Cases where a claim to a repairers lien have been found to be unenforceable include:
- not having the customer clearly agree to the amount owed before the vehicle was released;
- having the wrong year of the vehicle recorded in the Personal Property Registry;
- having an incorrect character in the Vehicle Identification Number recorded in the Personal Property Registry; and
- filing the correct financing statement in the Personal Property Registry, but making the filing more than 21 days after the vehicle was released back to the customer.
Is it worth it?
The Act can be a useful tool to assist you in getting paid. However, because the application of the Act is strictly interpreted, exact adherence to its provisions are required if an unpaid repairer is to successfully rely on its protections. As such, repairers are strongly encouraged to contact their legal counsel before taking steps to claim a repairers lien.