Older Uniform Acts
Page 2 of 5
NATURE AND EXTENT OF LIEN
Person who has a lien
2. A person has a lien on goods for services provided by that person in relation to the goods at the request of a person in possession of the goods.
Commentary: This section creates the lien for the services as defined in section 1. It reflects a conscious policy choice to permit the creation of the lien at the request of person in possession of the goods. This is the position under the western Garagekeepers' Acts and is intended to permit the widest possible lien creation without considerations of apparent authority or ownership. At common law, a storer could claim a lien against goods entrusted to the debtor by the owner. A common carrier who was by its nature obliged by law to provide services to those willing to pay had a lien on the goods carried.
This section does not create a lien analogous to a hotelkeeper's lien. With the repeal of sections 8 and 9 of The Uniform Hotelkeepers Act and the enactment of subsection 25(2) of this Act, the hotelkeeper's lien will be abolished.
Amount of lien
3. (1) Subject to subsection 4(1), a lien secures the amount that the person requesting the services agrees to pay for the services.
(2) If no amount is agreed on, the lien secures the fair value of the services rendered.
Commentary: The lien only secures the amount agreed or, if not agreed, the fair value of the services. Thus, these are particular as opposed to general liens.
When lien attaches
4 (1) Subject to subsection (2), a lien attaches to goods on the commencement of the services giving rise to the lien but, until completion of the services, secures only the fair value of the services provided.
(2) Where the lien claimant repudiates the agreement before completion of the services provided for in the agreement, the attachment of the lien ends.
Commentary: To permit a lien to attach on commencement of the services, as subsection 4(1) does, represents a revision to the common law which required work to have been completed before a lien would attach. To balance this, it was decided to build in some safeguards for the owner of the goods. The first safeguard is to ensure that if the services are not completed only the fair value is secured by the lien. The committee decided upon "fair value" recognizing that in some instances the parties may have agreed on a figure that was either more or less than what the fair value might indicate. Fair value will normally be determined by reference to market value. The second safeguard is that contemplated by subsection 4(2) which will ensure the lien claimant does not have a lien where it has repudiated the contract.
When lien enforceable
5. (1) Subject to subsection (4), a lien is enforceable only where
(a) the goods are in the possession of the lien claimant; or
(b) the person requesting the services has, at any time:
- (i) authorized the services giving rise to the lien in a signed writing that includes a description of the goods that are subject to the lien, or
- (ii) acknowledged an obligation to pay for the services giving rise to the lien in a signed writing that includes a description of the goods that are subject to the lien.
This is a departure from the policy choice of the PPSA, which provides that a failure to obtain a security agreement signed by the debtor only renders the security agreement unenforceable against third parties. For liens, the acknowledgment fulfils the additional requirement of specifying the required services and the agreed amount in an effort to avoid disputes.
(2) For the purposes of clause (1)(a), a lien claimant is deemed not to have possession of goods that are in the apparent possession or control of the person requesting the services or that person's agent.
Commentary: There is a comparable provision in the PPSA that provides that a secured party is not considered to be in possession of goods that are in the apparent or visible possession of the person debtor.
(3) An acknowledgment of an obligation to pay pursuant to subclause (1)(b)(ii) is without prejudice to the right of the person requesting the services or any other person to dispute the amount the lien claimant is owed.
Commentary: A person who signs an acknowledgment of indebtedness should not be prevented from disputing the amount of the lien. It simply reflects the amount due. If it were otherwise, a person requiring immediate use might be coerced into signing the acknowledgment to obtain the release of the lien. A dispute mechanism is provided in section 20 of this Act.
(4) If a lien claimant acquires possession of goods, an authorization in writing or an acknowledgment of the provision of services with respect to goods after a third party acquires an interest in the goods, the lien is not enforceable against the third party.
Commentary: There can be no prejudice from this feature that might be of assistance to lien claimants where periodic repairs are performed.
[(5) For the purposes of subsection (1), the authorization or acknowledgment is deemed to be in writing and signed by the person requesting the services when it is in the form of a tangible authenticated record.]
Commentary: This subsection is intended to accommodate agreement by electronic means. In those enacting jurisdictions where "writing" is given an extended meaning, this provision may be unnecessary.
Lien may be assigned
6. Where the debt secured by a lien is assigned, the lien claimant may, in writing, assign the lien to the person to whom the debt is assigned.
Commentary: At common law a lien could not be assigned (see: Beaver River Community Futures Development Corporation v. Joe Hansen and Kalinowski Trucking Ltd (Sask.Q.B.). This can present difficulties particularly when a business owning certain claims is sold. Assignability may also be useful in the financing of repairs. There may be cases where the person requiring services cannot immediately pay for the repairs and the lien claimant is unable to carry the cost. Knowing that the ultimate lien is assignable may induce the lien claimant to make the repairs.
The reference to the writing requirement is consistent with legislation providing for the assignment of choses in action that provides that every debt and every chose in action arising out of contract shall be assignable at law by any form of writing.
Effect of credit and taking of security
7. (1) The granting of credit by a lien claimant for the payment of the debt to which a lien relates
- (a) does not affect the attachment, enforceability, perfection or priority of the lien; and
- (b) does not extinguish the lien
(2) A lien claimant who takes a security interest in goods that are subject to a lien in order to secure the amount of the lien is deemed to have taken the security interest in substitution for the lien.
Commentary: A lien claimant loses its lien rights when a security interest is taken respecting the goods.