CITATION: Giorgianni v. Schaer, 2007 ONCA 111

DATE: 20070221

DOCKET: C45691

COURT OF APPEAL FOR ONTARIO

O’CONNOR A.C.J.O., FELDMAN and ROULEAU JJ.A.

B E T W E E N :

CHARLES GIORGIANNI, c.o.b. CALL SERVICE

Andrew Schaer, in person

(Applicant/Respondent on Appeal)

• and -

ANDREW PETER SCHAER and SHERILL LYNN STACEY

Oliver Bremer for the applicant/respondent

(Respondents/Appellants)

Heard: January 26, 2007

On appeal from the judgment of Justice Peter H. Howden of the Superior Court of Justice, dated March 24, 2005, with reasons reported at [2005] O.J. No. 405.

O’CONNOR A.C.J.O.:

[1] This appeal is concerned with the adequacy of a notice claiming a storer’s lien under s. 4(4) and (5) of the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (the “Act”).

Background

[2] The appellants are joint owners of a 1982 Tanzer twenty-six foot sailboat. The respondent owns and operates a storage facility in Barrie known as Call Service.

[3] On November 25, 2000, a bailiff, Robert Langton, seized the appellants’ boat at the Barrie Yacht Club marina and brought it to the respondent’s premises for storage. The boat was removed from its mooring at the club because the club took the position that the appellants had failed to pay their membership and mooring fees and because the boat was at risk of being damaged by the water freezing around it.

[4] On December 19, 2000, Langton delivered to the appellants a Notice of Lien, which is the subject of this appeal. Among other things, the notice indicated that there would be storage charges of $20 per day for storing the boat at the respondent’s compound. I will discuss the contents of this notice in more detail below. The appellants did not pay the storage charges nor did they attempt to redeem the boat from the respondent.

[5] In 2001 and 2002, the appellants sued the Barrie Yacht Club and Langton, claiming damages for, among other things, wrongful seizure and unlawful impounding of the boat. The Small Claims Court deputy judge dismissed their action. The Divisional Court upheld the dismissal (see Schaer v. Barrie Yacht Club (2003), 2003 16878 (ON SCDC), 180 O.A.C. 90) and this court refused leave to appeal.

[6] On May 16, 2002, the respondent gave the appellants a notice of his intention to sell the boat for unpaid storage charges pursuant to s. 15 of the Act. However, he did not proceed with the sale. On April 5, 2004, the respondent gave the appellants a second notice of intention to sell the boat. The appellants objected to the sale of the boat.

[7] On October 29, 2004, the respondent brought the application that gives rise to this appeal under s. 23(1) of the Act, seeking a declaration that he had a possessory lien over the boat, a determination of the amount of the lien, a declaration that he is entitled to sell the boat and judgment against the appellants in the amount of the lien.

[8] On March 24, 2005, the application judge held that the respondent was entitled to all of the relief requested. He issued a declaration that the amount of the lien was $29,920, as of January 25, 2005, with an additional $20 per day accumulating until the boat is sold or the appellants pay the storage fees. He granted a judgment against the appellants in that amount. He also made a declaration that the respondent is entitled to sell the boat and ordered the appellants to pay the respondent’s costs of the application.

Issues

[9] There are two issues in this appeal:

• Was Langton’s Notice of Lien dated December 19, 2000 a valid notice of the respondent’s lien claim in accordance with ss. 4(4) and (5) of the Act?

• Did the application judge err in awarding judgment against the appellants in the amount of the outstanding storage charges?

Analysis

(i) The Notice of Lien

[10] Section 4(1) of the Act creates a possessory lien in favour of a storer of an article. It 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.

[11] The appellants accept that the respondent was entitled to receive the boat from Langton and that upon receipt of the boat he became a “storer” as defined in the Act. The appellants also accept that the respondent acquired a possessory lien with respect to the boat upon receiving it from Langton for the purpose of storing it.

[12] Section 4(4) of the Act addresses the situation in which a storer receives an article from someone other than the owner. In that instance the storer is required to give notice of the lien to the owner within sixty days of receiving the article. The relevant part of s. 4(4) provides:

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, …

[13] In this case it is clear that the appellant did not deliver or authorize the delivery of the boat to the respondent. Thus, the notice requirement in s. 4(4) comes into play.

[14] Section 4(5) sets out what must be included in a notice of lien. It states:

4(5) A notice under subsection (4) shall contain,

(a) a description of the article sufficient to enable it to be identified;

(b) the address of the place of storage, the date that it was received and the name of the person from whom it was received;

(c) a statement that a lien is claimed under this Act by the storer in respect of the article; and

(d) a statement advising how the article may be redeemed.

[15] Pursuant to s. 4(6), when a storer fails to give the notice required by subsection (4), the storer’s lien is limited to sixty days’ storage charges. The parties have agreed that if Langton’s notice of December 19, 2000 was not a valid notice of the respondent’s lien, then pursuant to s. 4(6) of the Act, the amount of the lien is limited to storage charges for sixty days, which amount is $1,200.

[16] In this case, the respondent did not give the appellants written notice pursuant to ss. 4(4) and (5) of the Act. The respondent relies, however, on the notice given by Langton on December 19, 2000, arguing that it satisfies the requirements of ss. 4(4) and (5). That notice reads as follows:

December 19, 2000

NOTICE OF LIEN

Under the Repair and Storage Liens Act

Robert Langton Appointed Bailiff for Simcoe County

For: Barrie Yacht Club

Respondent: Mr. Schaer

Tanzer 26-ft. Sailboat

On November 25, 2000 at 9:00am I attended the Barrie Yacht Club to supervise the removal of Mr. Schaer’s sail boat as a third party witness. The reason for the Boat removal was to prevent it from being frozen into the ice. At the time the club claims $50.00 owing in club membership and mooring fees. The Barrie Yacht Club has assigned th[eir] possessory lien and cost to Robert J. Langton Appointed Bailiff.

The amount to satisfy the lien:

Boat removal and transportation $628.00

Legal and administration $535.00

Amount owing to the club $ 50.00

Storage to date 25 days X $20.00/day $537.63

$1,750.63

The Tanzer 26-ft Sailboat will incur a daily storage cost of $20.00/day from this day December 19, 2000. The owner Mr. Schaer’s [sic] or any other lien holder or any other party with proven interest in this vehicle may redeem this boat plus cost and upkeep by contacting Robert Langton. The boat is being stored at Call Service compound at Ferndale and Dunlop St. in the City of Barrie.

This payment should be made to Robert Langton Appointed Bailiff for Simcoe County between 8am and 5pm Monday to Friday or with previous arrangements being made.

[17] The appellants argue that this notice (the “Langton notice”) does not discharge the respondent’s obligations under the Act. Section 4(4) provides that the “storer” shall give written notice of the lien. Here, the respondent, who is the storer, did not give the notice; Langton did. There is no evidence that Langton was acting as the agent of the respondent when he gave the notice.

[18] The respondent says that this problem is merely one of procedure, not substance. He submits that s. 4(4) is mandatory only with respect to identifying those persons to whom notice should be given. It is directory as to who must give the notice. The respondent argues that because the appellant received all of the information required by s. 4(5) of the Act, any error in the procedure by which the notice was given should not render it a nullity.

[19] While it may be successfully argued in some circumstances that the giving of notice by someone other than the storer may satisfy the requirements of the Act, that argument cannot prevail when there is potential prejudice to the recipient. In my view, that is the situation in this case.

[20] The problem with the notice in this case, is that it gives notice of a lien claim for amounts in addition to the respondent’s storage charges. It indicates that the amount that the appellants must pay to satisfy the lien includes $628.00 for boat removal and transportation, $535.00 for legal and administration costs, and $50.00 owing to the Barrie Yacht Club. None of these amounts was either owed to the respondent, or properly the subject of its storer’s lien.

[21] 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. Indeed, s. 4(1) of the Act is specific. The storer’s lien against an article is limited to either the amount agreed upon (not this case), or the fair value of the storage, including related expenses incurred. There is no evidence to suggest that the additional amounts claimed in the Langton notice were incurred in relation to the respondent’s storage of the boat.

[22] Significantly, when the respondent eventually asserted his own claim against the appellants in the notices of intention to sell delivered in May 2002 and April 2004, he claimed only his charges for storage at the rate of $20 per day. He did not then, nor on any other occasion, assert that the other amounts claimed in the Langton notice were included in his storer’s lien.

[23] Section 4(5)(d) of the Act requires that a notice of lien include a statement of how a stored article may be redeemed. The scheme of the Act is that an article subject to a storer’s lien may be redeemed by the owner upon payment of the storer’s charges calculated in accordance with s. 4(1) of the Act. The obvious intent of s. 4(5)(d) is that the notice should include an accurate statement about how the owner may redeem an article. Clearly, the notice should not overstate the amount that must be paid.

[24] Potentially, the Langton notice created a significant disincentive to the appellants to redeem the boat. The record discloses that at the time the appellants received the Langton notice they were in the midst of ongoing disputes with the Barrie Yacht Club and Langton. They were very upset that the boat had been moved to the respondent’s premises without their consent. Whatever the merits of those disagreements might have been, a valid notice of the respondent’s storer’s lien should not have required payment of other amounts over which the respondent did not have a lien claim in order to redeem the boat.

[25] In the result, I conclude that that the Langton notice did not comply with the requirements of s. 4 of the Act. As mentioned above, the consequence of this finding is that, under s. 4(6) of the Act, the respondent’s lien is limited to $1,200.00.

(ii) The Judgment

[26] Given my conclusion that the amount of the respondent’s lien is limited to $1,200, judgment in favour of the respondent in the amount of the total of the respondent’s storage charges cannot stand. On the record in this case, it is clear that the amount of the judgment was directly linked to the amount of the storer’s lien as found by the application judge.

[27] The application judge issued the judgment against the appellants under s. 23(1)(e), the purpose of which is to give effect to rights arising from the application of the Act. The relevant part of that section reads as follows:

23.(1) Any person may apply to a court for a determination of the rights of the parties where a question arises with respect to, …

(e) any other matter arising out of the application of the Act,

and the court may make such order as it considers necessary to give effect to those rights.

[28] The Act, as its title suggests, is directed at creating liens and providing for remedies for the enforcement of liens. It is not concerned with other claims, in law or in equity, that may arise between an owner, on the one hand, and a storer or repairer, on the other. The respondent’s application linked his request for judgment directly to the amount of his lien. He did not seek judgment for amounts owing on the basis of a claim for unjust enrichment or on any other basis unrelated to his claim for a storer’s lien.

[29] Both in this court and on the application below, the parties approached the issues solely on the basis of whether the respondent has a valid claim for a storage lien and, if so, in what amount.

[30] Thus, I would set aside the judgment in favour of the respondent. The parties did not make submissions as to whether or not, if this court were to reduce the respondent’s lien claim to $1,200 as I would do, there should also be judgment in that amount in favour of the respondent. We were told that the value of the boat is sufficient to satisfy the respondent’s lien. In these circumstances, I do not find it necessary to decide whether, under s. 23(1) of the Act, a court that makes a declaration that a party has a lien also has the authority to order a separate judgment for the amount of that lien.

Disposition

[31] I would, therefore, allow the appeal. I would set aside para. 2 of the judgment below, which granted the respondent a lien in the amount of $29,920, and direct that the amount of the respondent’s lien instead be $1,200. I would amend para. 4 of the judgment to provide that any amount received by the respondent on the sale of the boat over $1,200 be payable to the appellants. Paragraphs 1 and 3 of the judgment, granting the respondent a possessory lien in respect of the appellants’ sailboat and allowing him to sell the boat in satisfaction of the lien, continue in effect.

[32] In para. 5 of the judgment, the application judge awarded the respondent costs of the proceedings below in the amount of $6,850.67 (GST not included). The appellants have achieved substantial success in overturning the award below. The appellants appeared in person on the application. I would, therefore, set aside para. 5 and direct that there be no order as to costs of the application.

[33] As to the costs of this appeal, the appellants appeared to argue the appeal in person. They had, however, retained counsel to prepare their factum. I would order that the respondent pay the appellant’s costs of this appeal fixed in the amount of $2,500, inclusive of GST and disbursements.

RELEASED: “FEB 21 2007” “DOC”

“Dennis O’Connor A.C.J.O.”

“I agree K. Feldman J.A.”

“I agree Paul Rouleau J.A.”