CITATION: 1258917 Ontario Inc. (417 Truck Center) v. Daimler Truck Financial, a division of DCF’S Canada Corp., 2012 ONSC 2522

DIVISIONAL COURT FILE NO.: 11-DV-1723

DATE: 2012/05/04

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Justice R. Smith

BETWEEN:

1258917 ONTARIO INC. carrying on business as 417 TRUCK CENTER

Plaintiff/Defendant by Counterclaim/Respondent

– and –

DAIMLER TRUCK FINANCIAL, a division of DCF’S CANADA CORP.

Defendant/Plaintiff by Counterclaim/Appellant

Robert E. Tolhurst, for the Plaintiff/Respondent

Talar Beylerian, for the Defendant/Appellant

HEARD in L’Orignal: March 30, 2012

REASONS FOR DECISION ON THE APPEAL

Overview

[1] Daimler Truck Financial (“Daimler”) appeals from the decision of Deputy Judge Leclaire who held that 417 Truck Centre (“417”)’s unregistered non-possessory lien for repairs to the Truck under the Repair and Storage Liens Act (“RSLA”) had priority over Daimler’s registered security interest in the Truck.

[2] Daimler claims that its security interest, namely a conditional sales agreement, had priority over 417’s non-possessory lien for repairs performed on the Truck, because 417 never registered a claim for its non-possessory lien.

[3] Daimler also appeals from the deputy judge’s decision granting 417 a lien for storing the Truck on its property for approximately twelve (12) months, which had priority over Daimler’s security interest in the Truck.

[4] Daimler submits that a storage lien never arose in favour of 417 because there was no evidence of an understanding, either expressly or implicitly, that 417 would be paid for storing the Truck when possession of the vehicle was initially given to 417.

[5] 417 argues that the deputy judge was correct to give priority to its unregistered non-possessory lien for repairs to the Truck because it did further repair work on the Truck and as a result acquired a valid possessory lien under the RSLA. It submits that no prejudice was caused to any party as a result of its failure to register a claim for a non-possessory lien.

[6] 417 further submits that Daimler was not a third party that had acquired its rights against the Truck, after 417’s non-possessory lien arose, as Daimler had acquired its conditional sales agreement two years before 417’s non-possessory lien arose.

[7] 417 further submits that there was evidence at trial of an understanding between 6110975 Canada Inc. (“611”) and 417, that 417 would be paid for the storage of the Truck. 417 submits that the storage fee of $30 per day was a reasonable amount and was a finding of fact supported by the uncontradicted evidence at trial.

[8] The following issues must be decided in this appeal:

(1) Does 417’s unregistered non-possessory lien under the RSLA have priority over Daimler’s previously registered security interest in the Truck?

(2) Did the deputy judge err in finding that 417 had a valid storage lien under the RSLA?

Factual Background

[9] I have adopted the summarized facts from the factums filed by both 417 and Daimler.

[10] The appellant Daimler Truck Financial, is a division of DCFS Canada Corp., now known as Daimler Truck Financial, a business of Mercedes Benz Financial Services Canada Corporation (“Daimler”). On March 13, 2006, Fairview Garage Limited (“Fairview”) agreed to conditionally sell to 611 a new 2006 Freightliner Coronado truck (the “Truck”). François Charlebois (“Charlebois”) is the principal of 611.

[11] The conditional sales contract was assigned by Fairview to Daimler, a business unit of Daimler Chrysler Financial Services Canada Inc. (“Chrysler”) which was a predecessor of Daimler.

[12] In March of 2008, Charlebois brought the Truck to be repaired by the respondent 1258917 Ontario Inc. carrying on business as 417 Truck Centre (“417”). 417 completed the repairs in March of 2008 and returned the truck to 611 without being paid.

[13] 417 claims a non-possessory lien for the sum of $3,661.52 for repair work performed on the Truck as set out in work order number 7449 dated March 21, 2008 and in the corresponding invoice number 58048 dated March 31, 2008. 417 never registered its claim for a non-possessory lien.

[14] On or about April 7, 2008, Charlebois and 611 took the Truck back to 417 for further repairs. 417 performed additional repairs and retained possession of the Truck. 417 claimed a possessory lien under the RSLA for the additional repair work in the amount of $6,304.87. 417’s claim for a possessory lien in the Truck is not disputed by Daimler.

[15] 417 was unaware that Daimler held a security interest in the Truck until November of 2008 when Charlebois advised it that 611 was going bankrupt. About the same time, Daimler learned that the Truck was located on 417’s premises.

[16] Daimler and 417 were unable to reach an agreement on the amount claimed for repair and storage liens against the Truck. As a result, Daimler paid the following sums into Court pursuant to the s. 24 of the RSLA; $3,661.52 for the non-possessory lien, $6,304.87 for the possessory lien, and $3,433.50 for the storage lien claimed by 417. The payments were made on April 20, 2009 and the Truck was released to Daimler on the same day.

[17] The trial of the action took place at the Small Claims Court in L’Orignal on January 14, 2011.

[18] At trial, Mr. Herb Vink, the principal of 417, testified that he had notified Daimler in the fall of 2008 that storage fees for the Truck would continue to be charged. Vink also testified that he had discussed with Charlebois that 417 would start charging storage fees for the Truck after a reasonable period of time. This conversation occurred several months after the second repair was made to the Truck by 417.

[19] The trial judge found that representatives of Daimler spoke to Mr. Vink and to Gilbert Séguin in November of 2008 and told them that they would not pay more than 60 days of storage at $30 per day. Thereafter, 417 invoiced Daimler for storage fees at $30 per day for only 60 days. The date of the invoice was November 20, 2008. At that time, 417 had stored the Truck on its premises for approximately seven months.

[20] The evidence at trial was that Herb Vink had notified Daimler, after the initial invoice for storage was sent, that storage fees would continue to be charged on a daily basis until the Truck was removed from 417’s storage yard. The Truck was finally removed six months later when the amount claimed for liens was paid into court.

[21] The deputy judge expressly held that $30 per day as a storage fee was reasonable and found that there was no evidence to the contrary.

Issue #1 Does 417’s unregistered non-possessory lien under the RSLA have priority over Daimler’s previously registered security interest in the Truck?

Deputy Judge’s Decision on Non-Possessory Lien

[22] Deputy Judge Leclaire held that 417’s non-possessory lien was enforceable and had priority over Daimler’s security interest even though it was not registered.

[23] In his reasons, the deputy judge stated as follows:

I do not believe that section 10 is to be applied as counsel suggests. Here the non-possessory lien was created by the work done in March of 2008. Daimler’s interest in the vehicle preceded that in the role, time of the sale and the financing of the truck in 2006. Section 10 addresses “Right against an article after” and not before a “non-possessory lien arises”.

Section 10 in my view is of no assistance to the defendant.

Analysis

(a) Priority of the Non-Possessory Lien

[24] The issue is whether 417’s non-possessory lien retained its priority over Daimler’s security interest in the circumstances where:

(a) 417 also held a valid possessory lien against the Truck and had retained possession of the Truck;

(b) Daimler had received notice of 417’s claim for a non-possessory lien for repairs performed on the Truck before Daimler acquired any additional interest in the Truck;

(c) 417 never registered its claim for a non-possessory lien;

(d) 417’s possessory and non-possessory repair liens were discharged and became a charge on the amount paid into Court pursuant to s. 24 of the RSLA.

[25] Daimler’s position is that the trial judge erred in his interpretation of s. 10 of the RSLA and that 417’s failure to register its non-possessory lien claim prevented it from enforcing its lien against the funds paid into Court by Daimler. As a result, Daimler submits that its security interest had priority over the amount of 417’s unregistered non-possessory lien.

[26] Part II of the RSLA deals with non-possessory liens. Section 7(1) gives a lien claimant entitled to a lien under Part I (Possessory Liens) who gives up possession of the article without having been paid in full, a non-possessory lien against the article. The lien takes effect from when the lien claimant gives up possession of the article and a non-possessory lien has priority over the interest in the article of any other person, other than a possessory lien claimant under Part I.

[27] Section 7(1)(2) and (3) of the RSLA read as follows:

7. (1) A lien claimant who is entitled to a lien under Part I (Possessory Liens) against an article, and who gives up possession of the article without having been paid the full amount of the lien to which the lien claimant is entitled under Part I, has, in place of the possessory lien, a non-possessory lien against the article for the amount of the lien claimed under Part I that remains unpaid.

When lien arises

(2) A non-possessory lien arises and takes effect when the lien claimant gives up possession of the article.

Priority

(3) A non-possessory lien has priority over the interest in the article of any other person other than a lien claimant who is claiming a lien under Part I, and, where more than one non-possessory lien is claimed in the same article, priority shall be determined according to the same rules of priority as govern the distribution of proceeds under section 16. [Emphasis added]

[28] The evidence is not disputed that 417 acquired a non-possessory lien under the RSLA in March 2008 when it performed $3,661.52 worth of repair work on the Truck. 417 gave up possession of the article in this case the Truck to 611 on March 26, 2008 without having been paid for the repair work it performed. The non-possessory lien in favour of 417 therefore arose on March 26, 2008.

[29] Section 10 of the RSLA reads as follows:

A non-possessory lien is enforceable against third parties only if a claim for lien has been registered, and, where a person acquires a right against an article after a non-possessory lien arises, the right of the person has priority over the non-possessory lien of the lien claimant if a claim for lien was not registered before the person acquired the right.

[30] In Royal Tire Service Ltd. v. Shelleby Transportation (1999), 1 B.L.R. 3(d) 250 (Ont. C.A.), the Court of Appeal held that Little Bros.’ security interest in the trailers had priority over the non-possessory repair lien of Royal Tire. Little Bros. had seized the trailers pursuant to its security interest and resold them before Royal Tire registered its non-possessory lien. In this decision, the Court of Appeal stated that Little Bros. was a third party within the meaning of s. 10 of the RSLA as long as it retained any interest in the trailers. However, Little Bros. no longer retained any interest in the trailers because they had been repossessed and sold pursuant to the terms of the security agreement before the non-possessory repair lien was registered.

[31] The critical fact underlying the Court of Appeal’s reasoning in Royal Tire Service Ltd. v. Shelleby Transportation, supra, was that the secured party had repossessed the trailers and sold them pursuant to its security agreement before the non-possessory lien was registered. While not explicitly stated, the decision fits squarely within the provisions of s. 10 as Little Bros. was a third party who acquired “a right against an article after a non-possessory lien arises and before the lien was registered”. Little Brothers had acquired the additional right to possession of the trailers and the right to sell them as a result of the default under its security agreement. In addition, Little Bros. had not received notice of the claim for a non-possessory lien because it had not been registered.

[32] The distinguishing factors in the case before me are that Daimler did not acquire a right to possess the Truck after the non-possessory lien arose, because 417 already had this right pursuant to its possessory lien. Daimler also had received prior notice of 417’s non-possessory lien claim before it exercised any of its rights under its pre-existing security agreement and before it paid the money into court to acquire possession of the Truck.

[33] In Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, 2 S.C.R. 559, 2002 S.C.J. No. 43, at para. 26, the Supreme Court adopted the statutory interpretation as set out in Driedger on the Construction of Statutes, 2nd Ed., Toronto: Butterworths 1973, at page 87 as follows:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[34] The sections of the RSLA must be read in context, harmoniously with the scheme and object of the Act, and in accordance with the intention of Parliament. Section 7(3) of the RSLA gives a claimant, who is entitled to a non-possessory lien in an article, priority over any other person other than a possessory lien claimant. This section clearly expresses the intention of the legislature to give priority to a non-possessory lien claimant over a person holding a prior security interest in the article such as Daimler. This is also consistent with the object and scheme of the RSLA which is to protect the interest of the repairer, who improves the value of the article by supplying his or her labour and materials.

[35] The purpose of the RSLA is to provide a mechanism for a repairer to acquire a lien and security for payment for repairs performed to an article. This may be acquired either by way of a possessory lien or alternatively a non-possessory lien. Both types of liens are given priority over all other interests in the article. The intention and purpose of the legislation is to protect a repairer who enhances the value of the article, in this case the Truck, by repairing it for the benefit of the owner and any party with a prior security interest. Generally, repairs to a vehicle such as a truck would be performed after the vehicle was sold and after the initial security interest was registered to finance the vehicle. Security interests in the vehicle, such as conditional sales agreements, leases or other security interests are generally taken as security for financing at the time of purchase. This was the case for Daimler.

[36] In General Electric Capital Canada Inc. v. Interlink Freight Systems Inc. (1998), 42 O.R. (3d) 348, O.J. No. 4910 (Ont. Gen. Div.), G.E. Capital was a lendor in connection with a fleet of trucks owned by Interlink. G.E. Capital held a prior security interest over Interlink’s vehicles. Mr. Front-End was a repairer who performed repairs on a number of Interlink’s trucks resulting in it acquiring a non-possessory lien and Interlink had not paid for the repairs. Interlink went bankrupt on July 4, 1997 and Mr. Front-End registered its claim for a non-possessory lien ten days later on July 14, 1997. The Court had to determine the priority between GE Capital as a prior security holder and Mr. Front-End as a non-possessory lien holder. At paras. 4-5, the Court stated as follows: “The only issue remaining for me to determine is whether or not one is entitled to register a lien under the RSLA after an intervening bankruptcy.”

[37] In the G.E. Capital case, the Court interpreted s. 10(1) of the RSLA to give the non-possessory lien claimant priority over G.E. Capital, even after an intervening bankruptcy. The Court held that the only exception to acquire priority over a non-possessory lien was for bona fide purchasers and financiers who acquired their interest in the subject matter of the lien, after it arose but before registration.

[38] I agree with the reasoning in G.E. Capital, supra, and I find that by enacting s. 10 of the RSLA, the legislature intended to protect a third party who acquired an interest in the article, after the non-possessory lien arose and before it was registered. This interpretation would accord with basic fairness and commercial reasonableness as a purchaser or other party who acquired an interest in the article for valuable consideration would not generally have notice of the non-possessory lien claim. In most circumstances, the third party would not have notice because the article or vehicle would not be in the possession of the non-possessory lien claimant. As a result, the third party would be unaware of the non-possessory lien claimed if it was not registered.

[39] Where a third party acquires a right against an article after the non-possessory lien arose and before the claim for a non-possessory lien is registered, then this third party’s right is unaffected by the unregistered non-possessory lien’s priority given in s. 7(3) of the RSLA. This interpretation is consistent with the object and scheme of the Act which is to give priority to those parties who acquire rights in an article that is not in the possession of a repairer, without notice of any non-possessory lien claim by a repairer.

[40] However, on the facts before the deputy judge, Daimler had notice of 417’s non-possessory lien claim in November of 2008 and as a result, it did not acquire any further right against the Truck without notice of 417’s non-possessory lien claim. If Daimler had taken possession and sold the Truck from 611 without notice of 417’s non-possessory lien claim, then Daimler would have priority over 417 following the reasoning of Royal Tire Service Ltd., supra. However, these were not the facts before the deputy judge.

[41] Section 10(1) of the RSLA carves out an exception to the priority granted to a non-possessory lien claimant in s. 7(3). It states that a non-possessory lien is enforceable against third parties only where: (a) the claim for lien has been registered, and (b) where a person acquires a right against an article (i) after the non-possessory lien arose, and (ii) before the claim for lien was registered.

[42] I find that the third parties referred to in s. 10 of the RSLA are those persons or parties who are individuals other than the owner, who acquired an interest in the Truck after the first non-possessory lien arose and before the claim for a non-possessory lien was registered. In this case, Daimler did not acquire its security interest in the Truck after 417’s first lien arose however 417 also never registered its claim for a non-possessory lien.

Did Daimler acquire any right against the Truck when it paid the amount claimed for liens into court pursuant to s. 24 of the RSLA?

[43] Section 24(13) of the RSLA states that where the amount of the claim for lien is paid into court and the article is released to the applicant, in this case Daimler, and the lien is discharged as against the article and “becomes instead a charge upon the amount paid into court”.

[44] Daimler acquired the right to possession of the Truck on April 20, 2009 when it paid the amount claimed for liens into court, which included the amount claimed for the non-possessory lien. The Truck was then released to Daimler by 417. However, Daimler had full notice of 417’s claim for a non-possessory lien before it acquired possession of the Truck and therefore did not acquire a new right without notice of a prior claim for a non-possessory lien. In addition, the money paid into court was substituted as security for the claims for both the possessory and the non-possessory liens against the Truck.

[45] Upon payment into court, 417’s possessory and non-possessory liens were discharged as against the Truck, but instead the liens became a charge on the amount paid into court. I find that 417’s possessory claim for lien did not lose its priority over Daimler’s security interest when payment was made into court and by analogy, I find that there is no rational reason why the non-possessory lien claimant would lose its priority in the Truck as a result of payment into Court.

[46] Daimler does not dispute that if 417 had registered its claim for a non-possessory lien at any time before April 20, 2009 that 417’s claim for a non-possessory lien would have had priority over Daimler’s security interest in the Truck. If 417 registered its claim for lien against the funds held in court, would its claim for a non-possessory lien become enforceable and entitled to priority over Daimler’s claim under its security interest? This would allow 417 to comply with the technical requirement of registration and if no other third party had acquired rights in the funds paid into Court before the claim was registered, then 417 would have priority following this reasoning.

[47] However, no practical or valid commercial purpose would be served by requiring 417 to register notice of its claim for a non-possessory lien in these circumstances other than to meet the technical requirements of s. 10 of the RSLA, as Daimler was fully aware of 417’s claim for a non-possessory lien since November of 2008. Notice of 417’s claim for a non-possessory lien was given to Daimler approximately five months before Daimler acquired possession of the Truck by paying the amount claimed into Court as substitutional security.

[48] In General Electric Capital Equipment Finance Inc. v. Transland Tire Sales & Service Ltd. (1991), 6 O.R. (3d) 131 (Ont. Gen. Div.), at para. 61, the Court held that the RSLA addressed itself both to the priority interest of the non-possessory liens as well as the enforceability of the non-possessory liens against third parties. In the Transland Tire, supra, case, the repairer registered a claim for a non-possessory lien before the secured party lendor repossessed the trailer on which the repairs had been performed. However, the registration contained an error, namely that the incorrect debtor’s name was used. The Court held that the secured lendor had priority over the erroneous registered claim for a non-possessory lien. In the Transland Tire, supra, case, an innocent third party would have been misled by failing to discover the non-possessory lien due to the error in the registration and as a result, the integrity of the registry system was compromised by the error. This case is distinguishable as Daimler had received notice of the claim for a non-possessory lien and there was no erroneous registration of the claim.

[49] In Lease Truck Inc. v. 375603 Ontario Ltd. (1996), 4 O.T.C. 97, 11 P.P.S.A.C. (2d) 351 (Ont. Gen. Div.), the repairer carried out repairs on 12 different occasions. After each repair, except for the last repair, the repairer returned the truck to the possession of the lessee. The repairer never registered a financing statement with respect to any amount claimed to be owing for the repairs. The secured party lessor paid the repairer the full amount claimed for both the possessory and non-possessory liens under protest and then sued for the return of the amount it had paid for the non-possessory lien.

[50] In Lease Truck Inc., supra, the Court held that the payment under protest was not voluntary. It held that it was commercially responsible and prudent for the lessor to recover the truck as quickly as possible rather than to proceed under the dispute resolution sections set out in Part IV of the RSLA.

[51] In the Lease Truck Inc., supra, decision, the Court also held that pursuant to s. 10 of the RSLA, the non-possessory lien was only enforceable against third parties if the claim for lien had been registered. In Lease Truck Inc., the Court did not address the situation of whether the person acquired a right against an article after the non-possessory lien arose, and also did not address the issue of priorities where payment was made into Court, which replaced the Truck as security and as such is distinguishable.

[52] In the decision of Canadian Imperial Bank of Commerce v. Kawartha Feed Mills Inc., (1998), 41 O.R. (3d) 124; [1998] O.J. No. 2828 (Gen. Div.), Ferrier J. held that the unregistered non-possessory lien under the RSLA had priority over the previously registered security interest of CIBC. This case is very similar to the facts before me.

[53] In the CIBC case at p. 5, Ferrier J. stated as follows:

I find that this part of the statutory scheme, s. 10, is directed at protecting the interests of third parties who are not other lien holders, and that s. 10 achieves this effect by protecting someone who may have searched the register after the lien has arisen but before its registration.

[54] Ferrier J. further stated:

In any analysis of a question regarding registration, two complementary concerns must be paramount: commercial efficacy, and the integrity of the register. If an otherwise reasonable interpretation would lead to a flaw in the register, then it must be avoided. Commercial efficacy is served by maintaining the integrity of the register. By the same token, if a possible interpretation of the statute does not affect the register, then it may be acceptable. In this case the register is not impaired, because of the subordination protection provided to third parties in s. 10.

[55] At page 5, Ferrier J. continued:

By aggregating, or not registering individual repairs, the repairer or storer will be taking their chances as against each other and subsequently registered rights holders. This is a choice that is up to the repairer or storer to make, whether or not to go to the trouble of registration for what may be small individual amounts. Given, however, that the RSLA is an expeditious procedure, meant to assist these individuals, I think it serves commercial efficacy not to add further burdens to the repairers or storers.

[56] I agree with Ferrier J.’s reasoning in the Kawartha Fee Mills Inc, supra, case and prefer this reasoning over that of the Lease Truck Inc. decision. Daimler did not acquire any rights which were dependent on searching the register after 417’s non-possessory lien arose and therefore the integrity of the registration system and commercial efficacy would be maintained by allowing 417’s non-possessory lien to take priority over Daimler’s previously acquired security interest pursuant to s. 7 of the RSLA.

Disposition of Non-Possessory Lien Issue

[57] The appeal of the deputy judge’s finding that 417 Truck Centre had priority for its claim for a non-possessory lien over Daimler’s security interest is dismissed for the above reasons which are summarized below.

(a) Daimler was not a third party who had acquired an interest in the Truck after 417’s non-possessory lien first arose.

(b) The efficacy of the register would be maintained as there was no error in registration and Daimler had prior notice of the non-possesssory lien claim.

(c) In circumstances where 417 retained possession of the Truck and also had a valid possessory lien and gave notice of its claim for a non-possessory lien to Daimler, before Daimler acquired any further right in the article, commercial efficacy does not require registration by small repairers where no party suffers any prejudice from the lack of registration.

(d) There was no prejudice to Daimler because it had prior notice of 417’s claim for a non-possessory lien, before it paid the amount of the non-possessory lien into Court.

(e) Daimler did not acquire a further right in the Truck when it paid the money into court, as it only substituted cash security in place of the Truck.

(f) By not registering its claim for a non-possessory lien, 417 took the risk that a third party could have acquired some interest in the Truck after its non-possessory lien arose and before it was registered. However, there was no third party who acquired an interest in the Truck after 417’s non-possessory lien arose, as Daimler security interest was acquired before 417’s non-possessory lien arose.

(g) This interpretation is consistent with the scheme of the Act, the object of the Act, and the intention of Parliament to protect repairers and grant them priority for the reasonable value of the repair work performed on an article, in this case, the Truck, unless some third party acquired an interest subsequent to the non-possessory lien arising and before notice of such lien was registered.

Issue #2 Did the deputy judge err in finding that 417 had a valid storage under the RSLA?

Deputy Judge’s Decision on Storage Lien

[58] Deputy Judge Leclaire held that Daimler was liable for the storage charges for 60 days as invoiced and also for an additional amount of extra storage from November 20, 2008 to April 20, 2009 in the amount of $3,433.50 because Daimler “waited until April to pick up the truck after having been advised in November of its location”.

[59] Daimler appeals the deputy judge’s finding that 417 was entitled to a storage lien calculated at $30 per day under the RSLA.

[60] The definition of storer is contained in s. 1 of the RSLA and reads as follows:

“storer” means a person who receives an article for storage or storage and repair on the understanding that the person will be paid for the storage or storage and repair, as the case may be. (“entreposeur”)

[61] Section 4(1) of the RSLA is also relevant and reads as follows:

4. (1) Subject to subsection (2), a storer has a lien against an article that the storer has stored or stored and repaired for an amount equal to,

(a) the amount agreed upon for the storage or storage and repair of the article;

(b) where no such amount has been agreed upon, the fair value of the storage or storage and repair, including all lawful claims for money advanced, interest on money advanced, insurance, transportation, labour, weighing, packing and other expenses incurred in relation to the storage or storage and repair of the article,

and the storer may retain possession of the article until the amount is paid. R.S.O. 1990, c. R.25, s. 4 (1).

[62] The appellant submits that in order to claim a lien for storage costs, the respondent must prove there was an understanding that 417 would be paid for the storage and repair of the Truck at the time the Truck was delivered to 417. Daimler submits that in the absence of any understanding, express or implied, when the Truck was initially delivered into 417’s possession that 417 would be paid for storage and repair, then no storage lien would arise.

[63] I find that there was evidence on which the deputy judge could find as a fact when 611 initially brought the Truck to 417, that the parties implicitly agreed and understood that 417 would conduct the repairs and store the Truck until the repairs were completed and until 611 attended to pick up the Truck. As a result, there was an understanding that 417 would repair and store the Truck however he amount of the storage charges and when they would commence were not agreed upon.

[64] The uncontradicted evidence at trial was that Herb Vink discussed with the owner of the Truck, Mr. Charlebois, that 417 would need to start to charge it for storage of the Truck. This discussion occurred after the Truck had been repaired and had been left on 417’s premises for several months.

[65] Section 4(1)(b) of the RSLA states that where no amount has been agreed upon for the storage cost, the lien will be for an amount equal to the fair value of the storage. Deputy Judge Leclaire found as a fact that the storage fee of $30 per day plus applicable taxes was reasonable and there was no evidence contradicting this factual finding.

[66] Discussions concerning storage charges also took place between 417 and Daimler after Daimler became aware that the Truck was located a 417 premises. 417 submits that there was evidence on which the deputy judge could find that there was an understanding between Daimler and 417 that storage costs would be paid to the storer, in this case, 417. The deputy judge held that additional storage costs of $3,403.50 should be paid from the date 417 sent its invoice for storage charges for 60 days namely on November 20, 2008 until April 20, 2009 when Daimler finally removed the Truck from 417’s storage yard.

Was the Truck received by 417 from a person other than the owner?

[67] Daimler argues that it is not required to pay any storage charges because it was the legal owner and the Truck was received by 417 from a person other than the owner and therefore notice had to be given pursuant to s. 4(4)(c) of the RSLA.

[68] Section 4(4) of the RSLA reads as follows:

4. (4) Where the storer knows or has reason to believe that possession of an article subject to a lien was received from a person other than,

(a) its owner; or

(b) a person having its owner’s authority,

the storer, within sixty days after the day of receiving the article, shall give written notice of the lien,

(c) to every person whom the storer knows or has reason to believe is the owner or has an interest in the article, including every person who has a security interest in the article that is perfected by registration under the Personal Property Security Act against the name of the person whom the storer knows or has reason to believe is the owner; and

(d) in addition to the notices required by clause (c) where the article is a vehicle,

(i) to every person who has a registered claim for lien against the article under Part II of this Act,

(ii) to every person who has a security interest in the vehicle that is perfected by registration under the Personal Property Security Act against the vehicle identification number of the vehicle, and

(iii) if the vehicle is registered under the Highway Traffic Act, to the registered owner. R.S.O. 1990, c. R.25, s. 4 (4).

[69] In this case, 611 delivered the Truck to 417 for repairs and to be stored until the repairs were completed. 611 was the beneficial owner and Charlebois as the principal of 611, was also a person having the owner’s authority. I find that s. 4(4) of the RSLA does not apply because the Truck was delivered to 417 by 611, the beneficial owner of the Truck. This was not a vehicle, abandoned at the side of a highway which was towed to a storage facility by someone other than the owner or without the owner’s authority and consent.

[70] Black’s Law Dictionary, Ninth Edition, Thomson Reuters, 2009, defines an owner as “one who has the right to possess, use, and convey something; a person in whom one or more interests are vested”.

[71] In this case, 611 was the beneficial owner and had the right to possess, use and convey the Truck and as such, I find was the owner within the meaning of s. 4(4) of the RSLA. Daimler retained legal title to the Truck under its conditional sales agreement. However, I find that the definition of owner in s. 4(4)(a) and (b) includes 611 who was the registered owner of the Truck, the beneficial owner of the Truck, and had possession and the right to use the Truck. 611 also had the legal owner’s authority to have possession of the Truck and to make repairs to the Truck, and as a result, s. 4(4)(b) would also apply.

Can costs of storing the Truck be added as an expense to the possessory lien under s. 28(2) of the RSLA?

[72] I have also reviewed s. 28(2) of the RSLA which states as follows:

Unless otherwise agreed, a lien claimant is entitled to recover the commercially reasonable expenses incurred in the custody, preservation and preparation for sale of an article that is subject to a lien, including the cost of insurance and the payment of taxes or other charges incurred therefor, and the expenses are chargeable to and secured by the article and may be included by the lien claimant in determining the amount required to satisfy the lien. [Emphasis added]

[73] In this case, Daimler has acknowledged that 417 had a valid possessory lien for the amount of $6,304.87. Pursuant to s. 28(2) of the RSLA, the possessory lien claimant would be entitled to recover the commercially reasonable expenses incurred in the custody and preservation of the Truck, which would include the reasonable storage charges for the Truck. These storage expenses may be included by the lien claimant in determining the amount required to satisfy the lien. I find that 417 can also rely on s. 28(2) to claim storage charges for the Truck, especially in these circumstances where it stored the Truck for approximately 12 months (April 2008 – April 2009).

[74] The deputy judge made a finding of fact that the $30 per day was a commercially reasonable storage cost. There was evidence before the deputy judge that this amount was reasonable and that greater amounts were charged to other customers of 417 and there was no evidence contradicting the plaintiff’s evidence at trial as to the reasonableness of the storage cost.

Disposition of the Claim for a Storage Lien

[75] I find that there was evidence to support the following findings of fact made by the deputy judge namely, the Truck was initially delivered to 417 on the understanding it would be repaired and stored, that no amount for storage was agreed upon, that a $30 per day storage charge was reasonable, that there was an implied understanding between 611 and 417 that storage charges would be claimed by 417 after a reasonable period of time when 611 was advised by Herb Vink that 417 would start charging for storage of the Truck, and that 417 had a valid storage lien for the amount awarded pursuant to s. 4 and also as a reasonable expense for custody and preservation under s. 28(2) of the RSLA.

Overall Disposition of Appeal

[76] For the above reasons, Daimler’s appeal is dismissed on all issues.

Costs

[77] 417 shall have ten (10) days to make brief submissions on costs, Daimler shall have ten (10) days to respond and 417 shall have seven (7) days to reply.

R. Smith J.

Released: May 4, 2012