Commercial logistics chains often involve multiple contractors, carriers, storage providers, and intermediaries. When a debt collection issue arises, determining who is legally responsible can become complicated, particularly where goods are stored by a party that never dealt directly with the property owner.
In its recent decision in Interload Truck Services Ltd. v. General Motors of Canada Co., the Ontario Superior Court of Justice considered whether a storage provider could assert a lien over 655 storage containers owned by a major automotive company after the containers were deposited by a transportation intermediary. The storage provider also claimed unjust enrichment and quantum meruit, arguing that the property owner had received the benefit of safe storage and should be responsible for the unpaid invoices.
The decision provides useful guidance for commercial parties, logistics providers, warehouse operators, and property owners dealing with storage arrangements, subcontracting chains, and lien claims under Ontario’s Repair and Storage Liens Act.
The Dispute Over the Stored Containers
The property owner used storage containers as part of its manufacturing and logistics operations. Vehicle parts were placed into the containers and moved through a broader transportation network. An affiliated company contracted with a logistics services provider, which then subcontracted with a carrier.
The carrier later arranged for the containers to be stored at the storage provider’s facility. The storage provider invoiced the carrier, which made some partial payments but left a substantial balance outstanding. After the carrier stopped responding, the storage provider contacted the property owner. The property owner maintained that it had not directed, approved, or consented to the containers being stored at the facility and had no contract with the storage provider.
The property owner demanded the return of the containers. The storage provider refused to release them until the invoices were paid. The parties eventually arranged for $134,568.83 to be paid into the property owner’s lawyer’s trust account. The containers were released, and the storage provider brought an application to determine its rights to the funds.
The Storage Provider’s Lien Claim
The storage provider argued that it had a valid possessory lien under the Repair and Storage Liens Act. In the alternative, it sought damages based on unjust enrichment and quantum meruit.
The property owner resisted the application, arguing that the carrier had not acted as its agent and had no authority to impose storage liability on it. The property owner also argued that the storage provider’s proper claim was against the carrier, which had requested the services and received the invoices.
The carrier had since been placed into receivership. The Court noted that the storage provider had not pursued its remedies in the receivership and instead sought recovery from the property owner.
When Does a Storage Lien Arise?
The Court reviewed the statutory framework under the Repair and Storage Liens Act. A storage lien may arise when a storer receives an article for storage on the understanding that payment will be made. In many cases, the lien attaches automatically when the storer takes possession.
However, the Act also protects owners whose property is deposited for storage by someone else. Where a storer knows or has reason to believe that the article was received from someone other than the owner, or someone acting with the owner’s authority, the storer must provide written notice to the owner within 60 days.
If the storer fails to provide the required notice, the lien is limited to the unpaid amount owing for the first 60 days after the article was received. This notice requirement was central to the Court’s analysis.
Agency and Authority in the Commercial Chain
The property owner argued that the carrier was not its agent and could not bind it to a storage arrangement. The relevant transportation agreement stated that the carrier and contracting entity were independent parties, and that neither could act as agent for the other.
The Court accepted that there was no evidence that the carrier had authority to act as the property owner’s agent when it deposited the containers for storage. The carrier had been authorized to provide transportation services, but that did not mean it could create storage obligations on behalf of the property owner.
However, the Court also found that the carrier was not a stranger to the containers. It had lawful possession through the commercial logistics chain. As a result, the Court concluded that the storage provider did acquire a possessory lien when the containers were deposited at its facility.
Notice to the Owner Was Required
The storage provider knew the carrier did not own the containers when they were delivered. Each container had a tag identifying the property owner, although the storage provider did not examine the tags until after the carrier defaulted on payment.
The storage provider argued that it had no reason to believe the carrier lacked authority to deposit the containers for storage. The Court found that this did not avoid the statutory notice requirement. The fact that the storage provider knew the carrier was not the owner was enough to trigger the obligation to provide notice within 60 days.
The Court emphasized that this requirement protects owners from open-ended exposure to storage charges where their property is stored without their knowledge or consent. Because the storage provider had not delivered the required notice, its lien claim was limited to the first 60 days of storage.
Payment Into Trust Was Not an Admission of Debt
The storage provider also argued that it had a charge against the funds paid into trust for the release of the containers. The Court agreed only in part. Under the Repair and Storage Liens Act, an owner may pay a disputed amount into court to secure the release of property over which a lien is asserted. Here, the parties used a similar process by having funds paid into the property owner’s lawyer’s trust account.
However, the Court rejected the argument that the payment into trust amounted to an acknowledgment of debt. The payment was made to secure the release of the containers and allow the property owner to continue operations while the lien dispute was determined. It was not an admission that the invoices were owed.
This mattered because a non-possessory lien requires a signed acknowledgment of indebtedness. The Court found that no such acknowledgment existed.
Unjust Enrichment and Quantum Meruit Claims Dismissed
The storage provider also sought recovery based on unjust enrichment and quantum meruit. These equitable claims may sometimes provide a remedy where no enforceable contract exists. However, for claims involving services, the claimant must generally show that the recipient freely accepted the services or incontrovertibly benefited from them. The recipient must also have requested, encouraged, or acquiesced in the services in a way that would make it unjust to retain the benefit without payment.
The Court found that the property owner had not requested, encouraged, or acquiesced in the storage services. It did not learn that the containers had been stored at the facility until months later, and was not given the opportunity to accept or decline the arrangement.
Although the containers were returned without loss, theft, or damage, that did not establish the type of benefit required for an unjust enrichment claim. The property owner’s evidence was that the temporary loss of the containers required it to purchase new containers to maintain its logistics network. The Court concluded that the carrier, not the property owner, requested and accepted the storage services. The claims for unjust enrichment and quantum meruit against the property owner were dismissed.
Only Partial Lien Recovery Available
The Court held that the storage provider had a possessory lien, but only for the amount invoiced during the first 60 days of storage. Its broader lien claim failed because it had not provided the statutory notice required after receiving property from a party it knew was not the owner.
The claims for unjust enrichment and quantum meruit were dismissed. The Court noted that the storage provider could pursue a claim in the carrier’s receivership for the balance of the unpaid invoices.
Given the mixed result, the Court made no order as to costs.
Why Storage Lien Disputes Can Escalate Quickly
Lien disputes can create immediate business pressure. A property owner may need access to containers, equipment, inventory, vehicles, or other commercial property to continue operating. A storage provider may be left with unpaid invoices and limited recovery options if the contracting party becomes insolvent.
These disputes often require urgent steps, including demands for release, negotiated trust arrangements, court applications, or claims under the Repair and Storage Liens Act. The legal issues may include possession, agency, notice, contract interpretation, unjust enrichment, quantum meruit, settlement privilege, and insolvency considerations.
The decision is a reminder that commercial litigation involving storage liens may turn on more than unpaid invoices. It may also depend on statutory compliance, the structure of the commercial relationship, and whether the party seeking payment can prove that the owner had notice, consent, or a legally recognized obligation to pay.
Contact Milosevic & Associates for Experienced Commercial Litigation Services in Toronto
For businesses involved in commercial litigation, storage lien disputes, logistics claims, warehousing conflicts, unpaid invoice litigation, contract disputes, or recovery of commercial property in Toronto and across Ontario, Milosevic & Associates can assist with strategic dispute resolution and litigation support. Our commercial litigation lawyers advise companies, owners, creditors, suppliers, service providers, and commercial parties on lien claims, urgent property recovery, contract enforcement, unjust enrichment claims, and debt collection issues.
Based in the heart of Toronto, Milosevic & Associates proudly serves clients throughout the GTA. Contact us online or call (416) 916-1387 to book a consultation.