Throughout Australia, legislation exists that enables a person to recover the cost of storage, claims for insurance, transportation, labour and other expenses in relation to goods in their possession where the person who deposits the goods fails to pay for the storage charges or cannot be located.
This power is provided by the establishment of a 'statutory lien' over the stored goods. Each State and Territory has enacted its own legislation establishing such liens, which includes the Storage Liens Act 1935 (NSW), Warehouseman's Liens Act 1958 (Vic), Warehouse Liens and Storage Act 1990 (SA), Storage Liens Act 1973 (QLD), Warehousemen's Liens Act 1969 (NT), Disposal of Uncollected Goods Act 1968 (TAS), Warehousemen's Liens Act 1952 (WA) and Mercantile Law Act 1962 (ACT) (Storage Liens Legislation).
What is a Lien?
In essence, a lien is a legal right or interest in property that allows a person to maintain possession of property belonging to another person until a debt owed by that person has been satisfactorily discharged. Generally, the right to claim a lien over goods can be established by common law (general lien or particular lien), legislation or in some cases, by contract.
Who can claim a storage lien?
Under the Storage Liens Legislation, a person who stores ones goods is either referred to as a 'Storer' or 'Warehouseman', depending on the jurisdiction.
There is no express requirement that a 'Storer' or 'Warehouseman' be solely involved in business or storing goods and a 'Storer' or 'Warehouseman' can extend to a freight or transport company that holds or stores goods in the course of providing transportation and warehousing services.
Rights in respect of a storage lien
In situations where a storage lien may be in force and the owner of the stored goods fails to return to collect the goods or pay the storage fees (and other ancillary expenses), a 'Storer' or 'Warehouseman' in possession of the goods is entitled to:
- retain the goods as security until the owner pays the relevant storage charges and other costs prescribed by the Storage Liens Legislation; or
- after complying with the required notice and advertising provisions of the Storage Liens Legislation, sell the goods at public auction to satisfy those charges and other costs.
- Importantly, any statutory lien established does not grant a general right or entitlement to hold goods as security for debts owed to a creditor by the debtor generally. The charges and costs claimed are limited to what is permitted under the relevant Storage Liens Legislation.
The use of a storage lien can be a powerful tool, particularly in cases where other security interests under the Personal Property Securities Act 2009 (Cth) (PPSA) exist over the stored goods.
A storage lien claimed under the Storage Liens Legislation generally takes priority over security interests without any need for the Storer or Warehouseman to have registered their interest on the PPSR.
This can be very beneficial for a Storer or Warehouseman in circumstances where the owner of the stored goods is at risk of bankruptcy or insolvency and the stored goods are subject to one or more claims from other creditors, including those registered on the PPSR. It places the Storer or Warehousemen in a strong position to secure monies ahead of the other creditors.
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.