Ahmed Dharsi LLP successfully defended a Divisional Court appeal concerning the enforceability of a non-possessory lien under the Ontario Repair and Storage Liens Act (RSLA). The appellant had claimed a lien over a vehicle that had been repossessed by our client, asserting that the lien arose from payment for tires and repairs.

The appeal challenged the lower court’s conclusion that no valid lien existed at the time of assignment, and that the statutory requirement under s. 7(5) of the RSLA, obtaining a signed acknowledgment of indebtedness, had not been met. The Divisional Court upheld the original decision, finding no palpable and overriding error in the trial judge’s interpretation. The invoice relied on by the appellant was marked “paid” and did not satisfy the statutory requirement for an enforceable lien.

Our client not only preserved its security interest but also received a full costs award for the appeal.

Significance

This decision reinforces the strict statutory requirements for asserting non-possessory liens under the RSLA. It also confirms that courts will scrutinize lien documentation closely, particularly when third-party financing and registered security interests are involved. The case sets a precedent for finance companies seeking to prioritize their claims against improperly registered liens.