Court of Appeal for Ontario

Date: 2017-05-24 Docket: C62934

Judges: Lauwers, Hourigan and Benotto JJ.A.

Between

Eden Agency Inc. Plaintiff (Appellant)

and

Michael W. Palinkas Defendant (Respondent)

Counsel

Barry L. Yellin, for the appellant

Marc A. Munro, for the respondent

Heard: May 16, 2017

On appeal from: the judgment of Justice Jane A. Milanetti of the Superior Court of Justice, dated November 16, 2015.

Reasons for Decision

[1] The respondent, Palinkas, stored food processing equipment owned by the appellant, Eden Agency Inc., and claimed a storage lien under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25.

[2] The respondent retained the equipment in breach of his obligation under s. 17 of the Act to sell it after receiving a letter from the appellant dated May 30, 2012. Under s. 21 of the Act, the effect of his failure to comply was that the respondent became liable to pay damages. The trial judge ordered him to pay damages to the appellant in the amount of $129,500 USD.

[3] The trial judge reduced the damages to be paid by giving the respondent a credit of $27,900 for storage fees calculated at $900 a month for 31 months, from January 1, 2010 to July 31, 2012.

[4] The appellant's appeal is limited to whether credit should have been given to the respondent and to the amount.

[5] The appellant makes two arguments. First, the respondent is not entitled to a credit because he did not claim a set-off in the statement of defence and did not counterclaim for the credit.

[6] We reject this argument. As is noted in the Canadian Encyclopedic Digest (Ont. 4th), vol. 37, title 94 at § 3:

A legal lien is a defence rather than a cause of action, although it will usually relate to a cause of action. Generally speaking, such liens are not subject to limitations periods, since under the law of Ontario limitation periods generally tend only to bar recourse to judicial remedies, rather than to extinguish rights. However, in the case of some statutory liens, the lien expires at the end of a relevant limitation period and ceases to exist as a right. [Footnotes omitted.]

It was open to the trial judge to reduce the measure of damages by the value of the amount of the lien: Debor Contracting Co. v. Core Rentals Ltd., (1982), 40 O.R. (2d) 24, at para. 40 [per Pennell J.].

[7] Second, the appellant argues that there was no evidence to support the amount of the credit for storage fees.

[8] We do not give effect to this argument. There was evidence before the trial court that the consignor of the equipment (not the appellant) and the respondent had agreed on a storage fee of $900 per month. This was known to the appellant's principal who acknowledged by letter of May 30, 2012 to pay at that rate for a short period of time. The Act does not require the relevant agreement to be between the owner of an article and the storer. Further, there is no evidence that the amount charged was unreasonable. The trial judge properly exercised her authority under s. 4 of the Act by providing for a credit.

[9] The appellant also submits that the time period for the credit should be no longer than the two year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. This would reduce the credit from $27,900 to $21,600. However, as noted above, the limitations period does not generally run against possessory liens. The appellant has offered no contrary authority to us.

[10] The appeal is dismissed, with costs payable by the appellant to the respondent in the amount of $6,500.

P. Lauwers J.A.

C.W. Hourigan J.A.

M.L. Benotto J.A.