March 1, 2000
Scott Ewart and Bob Harris
Don’t Get Stiffed Protect Yourself
When a garage operation invests its labour and parts in an expensive and time-consuming service job, the last thing management expects is not to get paid. But that's what happens in all too many cases. Here, an experienced bailiff and expert on the issue, offers some valuable advice.
We Got Stiffed – Again. It is an all too common remark heard over the cluttered desk tops of too many repair shops across Ontario — and the rest of Canada, for that matter.
All too often there is no immediate action taken by the victimized repairman to recoup the losses that just worsened his day.
If you or someone you know has fallen into this category and are asking ‘What am I going to do now?’ there are alternatives. Fear not.
Be advised that there is no Mechanic’s Lien Act any longer. The Repair and Storage Liens Act replaced this in the statutes of Ontario.
It gives you, the repairer, the right to protect the hard work and costs of parts that go into a good repair job. Follow the basic steps laid out in this article and you will definitely have the racer’s edge to reducing, if not eliminating, your business losses.
Review your shop work order/invoice
The work order or invoice is a most valuable piece of paper. What it amounts to is a contract between you, your client and the item being repaired.
All work orders must contain sufficient information to properly identify the vehicle being repaired.
As a minimum, the documentation should include full and proper serial numbers, license plate number, name and address of the client and phone numbers.
The following statement is a time and litigation-tested example of the wording that must appear on all work orders and must be signed by the client in order to fully protect your interests and provide you with a legal and binding contract:
Key wording protects your ass-ets
“I hereby authorize the above repair work to be done along with the necessary material, and hereby grant you and/or your employees permission to operate the vehicle herein described on streets, highways or elsewhere for the purpose of testing and/or inspection.
“I hereby acknowledge my indebtedness in the amount shown and further acknowledge the existence of a lien in favour of the within dealer pursuant to the Repair and Storage Liens Act.
“Until payment in full of the within account is received, the said lien shall continue in force and while the vehicle is in my possession it shall at all times be subject to seizure on demand by the dealers designated and authorized agent, together with costs of said seizure…”
This should get your attention: All work orders must contain certain acknowledgments by the client. This is the first step in the right direction to your full protection.
Contract on work order/invoice
Sufficient information to identify the vehicle
Understand the Repair and Storage Liens Act
There are only two areas of concern.
A) Possessor Lien
This arises when you retain possession of the vehicle until the customer pays the debt or makes satisfactory arrangements for payment.
B) Non-possessor Lien
This arises when you accept arrangements for payment (i.e. credit card or cheque).
When you have this scenario, it means you have lawfully released the repaired item to the owner or his agent and have now given up your possessor lien rights in favour of an immediate non-possessor lien right.
Provided your paperwork is in order (as previously discussed) and a lien has been registered in the proper format under the Personal Property Security Registration System, this gives you the protection of an undefeatable secured creditor – even over the possible bankruptcy of your client.
You now have by statute, the ‘self help right’ as it is called, to seize the repaired item until the repairs and all costs of seizure are paid for in full or the vehicle is sold to satisfy your claim pursuant to the rules of the act.
The seizure is, in most cases, effected by a person knowledgeable of the Repair and Storage Liens Act, ensuring that all facets of the Act are followed properly by law and is usually performed by an appointed bailiff or sheriff. SSGM