On July 1, 2016, changes to the Repair and Storage Lien
Act, R.S.O., 1990, c. R.25 (the RSLA) will take effect that
relate to fees a storer or repairer of motor vehicles can claim
under the RSLA.
You may recall that the RSLA creates rights for storage and
repair companies to claim priority liens in respect of storage or
repair costs in favour of the storer or repairer. The changes to
the RSLA help to regulate the amount of the preferential storage or
repair cost that can be claimed pursuant to the RSLA and should be
welcomed by secured creditors, including motor vehicle
The most significant changes being made to the RSLA are:
reductions to the storer's
maximum delay for notification to a lien holder from 60 to 15 days
for a motor vehicle with a permit under the Highway Traffic
Act, R.S.O. 1990, c. H.8; and
guidance as to what should be
included in calculating the "fair value" of storage
Storer's Maximum Delay Notification
Under the RSLA a storer of vehicles is afforded priority over
other secured creditors registered under the PPSA on account of
storage costs. Currently under the RSLA, a storer of vehicles is
permitted, subject to the terms of the Act, to accumulate storage
costs for up to 60 days without notifying the owner of the motor
vehicle when the motor vehicle is brought into storage by a person
other than the owner or the person having the authority of the
owner. This has been problematic for secured creditors as this can
lead to a substantial sum for storage accumulated over the 60 day
period that has priority over secured creditors registered under
The amendments to the RSLA reduce the period that a storer of
motor vehicles can delay in notifying the owner from 60 days to 15
days for motor vehicles that have been issued a permit under the
Highway Traffic Act. Note that based on the wording
'owner or the person having the authority of the owner'
this does not protect a financier of motor vehicles from storage
charges that were agreed to by, for example, its lessee, who would
be acting on authority of the owner and in such a situation no
notice is required to be delivered to secured creditors under the
terms of the RSLA. As such, the amendments to the RSLA protect
finance companies and other secured creditors from third party
storers but not from their own lessees.
Fair Value of Storage or Repair
Under the RSLA, the amount of storage that can be claimed by a
storer or repairer of vehicles is based on the fair value of the
storage or repair in absence of an amount that is agreed upon by
the parties. Given this, there was previously no guidance under the
RSLA as to what constitutes fair value. The changes to the RSLA set
out factors to be used as guidance in what constitutes fair value,
when no amount is agreed upon.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Right before the holidays, on December 24, 2016, the Government of Canada gave notice under Part 1 of the Canada Gazette of new proposed regulations dealing with compulsory insurance of passenger vessels...
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