WHEN DOES THE REPAIRER’S LIEN APPLY?
The repairer’s lien is a right under the common law that may assist a business to secure payment by customers
However, this common law right does not apply in all circumstances. It is important to have an understanding of when the repairer’s lien applies to assist your business to retain vehicles lawfully.
For example, it is highly unlikely the repairer’s lien will apply where a vehicle is only assessed to diagnose the issue and repair work is not conducted despite the skilled work involved in making the assessment.
It is important to note that this article considers the common law repairer’s lien, it does not consider a lien agreed to under contract which may apply differently to the common law repairer’s lien.
What is a repairer’s lien?
For a mechanic, the repairer’s lien enables a mechanic to retain a vehicle as security for payment for improvements made to the vehicle. Put simply the mechanic can refuse to provide the customer with the vehicle until the customer pays the invoice but only if all the required elements are satisfied.
What elements must be satisfied for the repairer’s lien to apply?
Generally, the elements required to establish that a repairer’s lien applies are:
• a repairer receives goods for repair/improvement; and
• the goods have been provided by the owner or a person with authority; and
• the goods have been repaired/improved (or increased in value), by a person with the required skills; and
• possession of the goods has remained with the repairer at all times.
The requirement for improvement
In order for the repairer’s lien to apply, an improvement must be made to the vehicle.
Caselaw distinguishes between ‘improvement’ and ‘maintenance,’ noting that a lien arises where a vehicle is improved or increased in value, but not where the good is merely maintained (even where labour and skill are expended in maintaining the good).
Putting this in terms of work on a vehicle, although assessing a vehicle to identify the issue required to be repaired is skilled work there is a high risk that if the repairer retains the vehicle where repair work has not been conducted that the repairer unlawfully retains the vehicle as it is highly likely the repairer’s lien will not apply. If you have any concerns, please contact Industry Legal Group.
Retaining the vehicle in the possession of the business
If the business releases the vehicle so that the business no longer has possession of the vehicle, then the repairer’s lien is lost. The vehicle cannot be retrieved at a later time. For this reason, it is important that the business does not release the vehicle before payment is made.
What if the customer also has other outstanding debts?
The repairer’s lien only extends to work carried out on the vehicle and cannot be used to obtain payment for the customer’s other outstanding debts, including outstanding debts relating to the same vehicle.
Storage fees cannot be charged
The repairer’s lien does not give the repairer the right to charge the customer storage fees. If the business would like to have this option, then this should be appropriately addressed through the terms and conditions of the business.
Disposal of the vehicle
The repairer’s lien does not give the repairer the right to dispose of the vehicle. If the repairer is considering disposing of the vehicle the repairer should consult the uncollected goods legislative regime applicable to the state or territory in which the business is located.
The key takeaways relating to the repairer’s lien arising under common law are:
• the repairer’s lien only applies if an improvement is made to the vehicle;
• the vehicle must be received for repair and the vehicle must have been provided by the owner or a person with authority;
• the vehicle must remain in the possession of the repairer (to retain the repairer’s lien);
• the repairer’s lien applies to work carried out on the vehicle and the vehicle cannot be retained to satisfy the customer’s other debts;
• the repairer’s lien does not give the repairer the right to charge storage fees or to dispose of the vehicle.
This document is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal Group if you require legal advice
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If you have any questions relating to the above information, please contact Industry Legal Group on 1300 369 703 or email@example.com