The Repair and Storage Liens Act1 (RSLA) provides legal mechanisms for vehicle storage operators to secure payment for their services through liens. Under Section 3(1) of the RSLA, storage operators have a possessory lien over vehicle stored, provided that they are in compliance with the Towing and Storage Safety and Enforcement Act (TSSEA).2 Under the TSSEA, vehicle storage operators are required to possess a vehicle storage certificate in order to provide or offer to provide vehicle storage services,3 or to hold themself out as a vehicle storage operator.4 Possessing this certificate allows them to retain possession of the stored vehicle until their reasonable storage charges are paid.
It is quite common in auto insurance claims that insurance companies attempt to challenge or reduce vehicle storage fees (daily charges) being levied by a vehicle storage operator following an accident. Consequently, disputes often arise where storage operators are left unpaid for their services, or where insurance companies argue for their fees to be reduced. What may seem unfair to the storage operator is that they entered into contract with the vehicle owner at an agreed price. However, after, or while service is being provided, the insurance company intervenes and attempts to reduce the agreed price or on some occasions refuses to pay at all.
This is somewhat infuriating to the storage operators because they provided their service in reliance on the agreement between the vehicle owner and themselves, and yet the insurance company is able to enter into the agreement and change those terms and/or conditions after some or the full service have already been provided. The storage operator’s contention is that there is no privity of contract with them and the insurance company, and as such, the insurance company should not be able to intervene into the settled agreement.
Why can the insurance company intervene?
The common law doctrine of privity of contract stipulates that only parties to a contract possess the legal standing to enforce or be bound by its terms.5 As a result, since the insurance company typically does not have a direct contractual relationship with the storage operator—the agreement being between the vehicle owner and the storage provider—the insurer generally lacks an inherent right to influence or reduce storage charges.
Nevertheless, an insurance company may exercise its right of subrogation by pursuing claims against third parties to recover amounts paid out to its insured. In situations where storage operators initiate proceedings against an insurer for unpaid storage fees, the insurer is entitled to participate in the litigation and challenge the reasonableness of the fees or contest the validity of the underlying contract, for instance, on the basis of a missing essential term. Alternatively, the insurer may assert a claim or counterclaim on behalf of the insured, such as in cases involving allegations of excessive charges by the storage facility.
How can Vehicle Storage operators ensure that their Liens are enforceable
Storage operators may enforce a lien against the insurance company, owner, or financing company, provided they comply with statutory laws.6 If the storage operator does not adhere to the requisite provisions, the lien becomes unenforceable, and the operator may be responsible for paying the greater of $200 or the actual damages incurred. 7
In 2016, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 20148 made significant amendments to the RSLA. In particular, vehicle storage operators are now required to give written notice of Lien within 15 days of receiving the vehicle – a reduction from 60 days.9 Further, this notice must be given not just to the owner and insurer but to any registered interest holders,10 including the Personal Property Security Act11 lienholders.
Importantly, where a storage operator withholds a vehicle due to unpaid fees, the insured may deposit the amount due to the storage operator into court, thereby halting the accrual of daily
storage fees and facilitating the return of their vehicle.12 Additionally, storage operators are required to disclose the location of the stored vehicle, provide an itemized breakdown of storage fees, and supply contact information to enable vehicle owners or insurers to retrieve or inspect the vehicle.13
In summary, storage operators are required to operate with transparency and fairness. They must use clear written contracts, avoid high-pressure or unfair practices, and fully disclose all fees and terms. By law, a valid certificate of registration is necessary to operate as a storage facility for towed vehicles.14
Vehicle storage operators must also post their storage rates and fees in writing, maintain accurate records of services (including dates and times of storage), and provide notice to the vehicle owner or insurance company within 15 days of receiving the vehicle. Failure to provide this notice can result in losing the right to charge storage fees beyond that 15-day period. 15
Lastly, vehicle storage operators are obligated to release the vehicle upon request once payment is made. Non-compliance with these requirements may invalidate storage charges, expose operators to legal penalties, and grant vehicle owners strong legal remedies.16
This publication constitutes the first part of a two-part series. The subsequent section will address the rights afforded to storage operators regarding the sale of stored vehicles.
Kedeshia Tapper-Bandoo is a Licensed Attorney-at-law in Jamaica and serves as a Law Clerk at Taylor’d Litigation Professional Corporation in Ontario, Canada. The content reflects the author’s research and perspective.
[1] R.S.O. 1990, c. R.25 (RSLA) [2] S.O. 2021, c. 26, Sched. 3 (TSSEA) [3]Ibid, s 4(a) [4]Ibid, s 5(a) [5] Provender v Wood (1630), Het. 30, 124 ER 318 [6] Supra note 1 at s 2.1 [7] Supra note 1 at s 21 [8] SO 2014, c 9. [9] https://www.ontario.ca/laws/regulation/150427 [10] Supra note 1 at s 15 (2) [11] RSO 1990, c P10 [12] Supra note 1 at s 24. [13] Supra note 9. [14] Supra note 2. [15] Supra note 9. [16] Ibid.