Liens commonly give people the right to keep another person’s property to secure payment for services that improve the property’s value. The proposed Commercial Liens Act will apply to liens for service providers who provide labour or materials to restore, improve, store, transport, carry, tow or salvage goods. Currently, repair, storage and transportation liens have different rules, but the Act provides one set of requirements in all those areas.
The new legislation will create a lien for services as soon as the services begin, establish clear rules for the amount secured by a lien and remove the requirement that the repairer be in possession of the goods, as a means of improving fairness for people who work on major equipment that cannot be moved. It will also give lien holders the option to keep possession of the goods to maintain the lien or give the goods back to the customer by obtaining a signed authorization for services or a signed acknowledgment for payment. Those authorizations can be used to register the lien in the province’s personal property registry (PPR), which records security interests and liens against personal property. A new commercial lien category will be created in the registry.
David Gordon of Alexander Holburn Beaudin + Lang LLP said the previous system for the liens was excessively complex, but there will be some “growing pains” if the new law is passed and comes into force. He noted there are distinct aspects of the Act that service providers and lawyers are going to have to be aware of, including how the value of a service is determined.
“Obviously there can be disputes where a service provider says one thing and the customer says another, so if the services aren’t done and the job isn’t completed it is the fair market value of the services completed to that point which will be determinative,” he said. “There will need to be a bit of leg work in coming up with the fair market value, and I’m sure there will be some court cases about that.”
And people should be aware that the personal property registry can be “fairly unforgiving” if you make mistakes, said Gordon.
“Be very careful with what you are registering and how you are registering it to make sure it is correct and valid, because this will involve a new process and class of goods being registered,” he said. “People should keep an eye out for announcements from government or any industry commentary because these things are ironed out — you can see it other fields of law like tax, where there is a legislative change and a few guinea pig situations where the government realizes it needs to make some regulations to fill in the blanks because something comes up that they didn’t anticipate.”
British Columbia is adopting the model Uniform Liens Act prepared by the Uniform Law Conference of Canada, which has also been enacted in Saskatchewan. The Commercial Liens Act will consolidate the law by replacing the Repairers Lien Act, the Warehouse Lien Act and the Livestock Lien Act, while also abolishing the Woodworker Lien Act and the Tugboat Worker Lien Act, which became law in the late 19th and early 20th centuries and are no longer used. The new Act will not apply to liens under the Builders Lien Act or the Forestry Service Providers Protection Act.
The Commercial Liens Act is before committee at the B.C. legislature and will be brought into force by regulation at a later date after required change to the personal property registry is made.
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