Three Important Changes to the Repair and Storage Liens Act as of July 1, 2016

Written by:  Adam Nathanson

Recently, I provided our clients with a bulletin regarding changes coming into force on July 1, 2016 to Ontario’s Repair and Storage Liens Act (“RSLA”). Within the bulletin, I highlighted three important changes as it relates to vehicle financiers. I will post a shortened version of this bulletin as a blog post, and this update can be seen as an elaboration on my recent interview on this subject with the Law Times newspaper

Currently, under the RSLA, if a storer receives a vehicle from someone other than its owner, or someone with the authority of the owner (i.e. from the police or a towing company), the Act permits a storer to charge for up to 60 days storage without prior notification to owner, lienholders, and/or other interested parties. The upcoming changes to the RSLA reduce this notification period from 60 days to 15 days.

The key here from a financier’s perspective is that the change only affects situations involving storage of the vehicle without the owner’s consent or authority. The reduced notice period protects consumers (and their insurers) from towing companies delivering vehicles to storage facilities without the knowledge or consent of the owner (or a person having the owner’s “authority”); however, the changes will not protect financiers from being left with the bill (and a lien against its vehicle) after a repairer/storer receives a vehicle from the registered owner (or person having the owner’s authority) where that person agreed to the storage. Overall, the reduced notice period is a positive development, but will not likely curb abuses of the Act by some storers/mechanics.

Second, the RSLA now provides a list of the following factors for the determination of the “fair value” of the storage and/or repair costs: a repairer’s or storer’s fixed costs, variable costs, direct costs, indirect costs, and profit. Due to the scarcity of published caselaw on this point, previously, courts would conduct an ad hoc examination to determine fair value. Accordingly, listing these factors should assist the courts, but in my opinion, it does not provide the necessary caps and guidance the legislature could have outlined. It remains to be seen how the courts will interpret these factors to determine the quantum of storage costs and how helpful this change will be to creditors.

A third, and very important change to the operation of the RSLA, is that parties may now deliver RSLA documents via fax or e-mail. Previously, the RSLA required RSLA lienholders to deliver documents (such as notices of intention to sell) via two methods – personally, or via registered mail. If delivered via registered mail, the document was deemed to have been given on the earlier of the day the intended recipient actually received it, or on the tenth day after the day it was sent. Therefore, parties would typically have a total of twenty-five days within which to make its decision whether to pay the lien claimant, dispute the lien, or apply for other relief from the court. Now, the amendments allow for the service of documents via fax or electronic transmission, with the document deemed delivered on the earlier of the day the intended recipient actually received it, or the first business day after the sending of the document.

As always, to continue with best practices, whenever an RSLA issue arises, a party should closely examine the circumstances which gave rise to the lien and/or immediately consult with legal counsel before determining your course of action. This remains especially true with the changes to the service rules possibly shortening a party’s reaction time to RSLA notices.

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