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CONSUMER LAW
98
Industry Legal Group has recently received anumber of AAAA Member queries resulting fromcustomers failing to return to collect their vehicleand/or pay their invoices. In these circumstances,repairers can exercise what is called a mechanic’slien.
If the owner of a vehicle brings their vehicle to yourworkshop to have the radiator fixed for example,you have a right to retain possession of the vehicleas a form of security until the customer makes fullpayment of the agreed fee for service.
This is known as a lien (pronounced ‘lean’). It isoften referred to as a mechanic’s or repairer’s lien.
There are some important points to remember ifyou need to exercise a repairer’s lien.
The repairer’s lien is based in common law, thismeans it arises automatically once you have donework which improves the vehicle at the request ofthe customer. You do not have to register your lienas a security interest on the Government’s PersonalProperty Securities Register (PPSR).
The lien is in force for as long as you retainpossession of the vehicle. If you release the vehicleto another person or to your customer before theyhave paid, you waive your lien. This does not meanthe customer’s debt is no longer enforceable, it justmeans you lose the vehicle as form of security forpayment.
The mechanic’s lien does not automatically entitleyou to charge storage fees whilst the vehicleremains at your premises. However, you caninclude a clause in your standard form contractrequiring storage and insurance fees to be paid insuch circumstances.
Can I sell the customer’s vehicle to recover the debt? The lien does not give you the right to sell thevehicle in order to satisfy the debt but the customermay give you written authorisation.
Depending on the circumstances, you may beable to sell the vehicle in accordance with theuncollected goods legislation in your state orterritory.
Please note that eligibility criteria and therequirements that must be complied with in orderto sell the vehicle varies depending on the jurisdiction. As such, IndustryLegal Group recommends you contact its teamprior to taking any action to sell the vehicle foradvice specific to your jurisdiction.
For example, in accordance with the AustralianConsumer Law and Fair Trading Act 2012 (Vic),uncollected goods as defined under section 54 ofthe Act can be disposed of if the followingrequirements are met:
1. For low-value uncollected vehicles ($1,000.00or less): a. Give notice to customer of intention to
dispose the uncollected vehicle. There ismandatory information that must beincluded in the notice.
b. Retain the vehicle for a further 28 days aftergiving notice (60 days if you cannot contactthe customer after reasonable attempts).
c. Record of disposal must contain requireddetails.
d. If sold without court order, give the buyer areceipt with required details.
e. Any money left over after you have deductedyour costs must be handled in accordancewith the Unclaimed Money Act 2008.
f. If the money received from the disposaldoes not cover your costs, you can take legalaction against the customer to recover theremainder of the debt.
2. For higher-value uncollected vehicles($1,000.00 or more):a. Obtain written search result from the
Personal Property Securities Register. b. Give notice to the customer, anyone who has
a registered interest, proprietary or securedinterest of the good and the owner orregistered operator of your intention todispose of the good.
c. Retain the vehicle for a further 28 days aftergiving notice (180 days if you cannot makecontact after reasonable attempts).
d. Dispose the good at public auction orprivate sale. If by private auction, the
auction must be advertised (or held over) atleast seven days in advance. If by privatesale, give notice to all people required andensure sold for best price.
e. Follow steps 1 c.-f. above.
Please note that the vehicle cannot be disposed ofif there is a dispute about the debt, an applicationhas been filed or if there was an agreement in placeabout what would happen in the event the goodswere uncollected.
Also, as mentioned above, the requirements varydepending on the jurisdiction and therefore it isvital that you obtain legal advice before you takeany action.
Can I charge a fee for storing the vehicle? The lien does not give you the right to charge astorage fee. You can charge a storage fee forvehicles if you include a clause regarding storagefees in the contract or agreement with thecustomer. Please contact Industry Legal Group foradvice on inserting a storage fee clause into yourstandard contracts.
You may be able to recover the cost of storage onselling the vehicle in accordance with theuncollected goods legislation in your jurisdiction.
Personal Property SecuritiesThe Personal Property Securities Act 2009 (PPSA)does not apply to liens and therefore there is norequirement to register the interest.
In certain circumstances, the lien may have priorityover other registered security interests. This isdetermined by reference to section 73 (1) of thePPSA. For advice on this issue, please contactIndustry Legal Group.
RIGHTS OF REPAIRERSLiens and Disposal of Uncollected Vehicles
Need assistance?Industry Legal Group provides AAAA members
with legal advice on all business related mattersincluding liens.
Please contact Industry Legal Group on 1300 736 435or [email protected] if you have anyquestion relating to this article or to discuss any
issues that arise in your business.
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