Priorities Outside The Alberta Personal Property Security Act (PPSA) - Charges, Mortgages, Indemnities

A. INTRODUCTION

S4 of the PPSA, provides that "except as otherwise provided" in the PPSA, the PPSA does not apply to a number of enumerated liens, charges or other interests, including as set out in s4(a) "a lien, charge or other interest given by an Act or rule of law in force in Alberta".

Also, s32 of the PPSA provides that where a person in the ordinary course of business furnishes materials or services with respect to goods, any lien that that person has with respect to the materials or services has priority over perfected or unperfected PPSA security interests in the goods unless the lien is given by an Act that provides that the lien does not have priority.

This paper discusses some of the "liens, charges or other interests" where, save as otherwise provided under the PPSA, the PPSA priority rules do not apply or are of limited application. Unless otherwise stated, all references to the word "property" in this paper, refer to personal property.

B. COMMON LAW LIENS AND RIGHTS OF SET-OFF

1. Common Law Liens

The Master Funduk 1984 decision in Continental Bank of Canada v. Henry Morgensen Transport Ltd.2 ("Continental") contains a good summary of the common law lien broken down into two classes, namely a general lien that allows the lien claimant to retain possession of property to recover both claims relating to the property and not related to the property, and a particular lien, that gives the lien claimant the right to retain possession of property to recover liability relating only to the property.

The more commonly encountered common law liens, consist of:

(a) the repairer lien, that developed at common law, principally due to the fact that a legal owner under a conditional sales contract or chattel lease, or a secured party under a chattel mortgage or security agreement require the conditional sales purchaser, the lessee or debtor as applicable (collectively the "Debtor") to maintain the property in good repair; and as a result a repairer at common law provided it retains possession of the repaired personal property, was granted a lien in priority to a prior owner, lessor or secured creditor for recovery of the reasonable amounts payable by the Debtor to the repairer for its work and services to the applicable property; and

(b) the solicitor's lien that consists of either:

(i) retaining lien3, namely the right of a solicitor to retain documents and other personal property in his possession to recover outstanding fees payable in respect of services performed in respect of such documents or property (including money, as long as such funds are not held in trust for a third party); and

(ii) a general charging lien4, which attaches to property (including money, again as long as such funds are not held in trust for a third party) as an immediate consequence of the work performed by the lawyer for his client in recovering such property, to pay all amounts payable by the client to the solicitor for services relating to, or not relating to, the recovered property.

A common law lien gives the lien claimant the right to hold the property in question, but no further rights5. Essentially, the lien claimant may hold the property as "hostage" until the lien claim is paid, but the common law lien does not give the lienholder the right to dispose of the property, without a court order. If a common law lienholder needs to assert its rights vis-à-vis a PPSA security interest, the writer is of the opinion that a court order disposing of the property free and clear of a PPSA security interest, most likely could be obtained by application of the common law lienholder, on notice to the debtor and other affected secured parties, pursuant to ss64 and 69 of the PPSA.

2. Common Law Rights of Set-Off

In those instances where the competition is between the holder of money not subject to a trust in favour of a third party (the "Fundholder") and the owner of the money and/or the holder of a lien, charge or security interest in the funds, the Fundholder, has a common law right of set-off to pay from such funds monies owed by the owner to the Fundholder before releasing the balance of the funds to the owner or otherwise entitled competing secured creditor6.

The common law set-off rights depend upon when the Fundholder received notice of the competing security interest, when the debt to be set-off became payable, and whether the debt to be set-off arose from Fundholder services or obligations related to the funds, or is a collateral debt not related to the funds5.

A solicitor in the case of Canadian Commercial Bank v. Parlee McLaws7, was found to have the right to set-off outstanding fees payable by his client against money held by a solicitor for his client (not subject to any trust in favour of a third party) regardless of whether or not the fees owed to the solicitor were in respect of fees for services that pertain to the monies held by the solicitor, or other fees owing to the solicitor that did not relate to the monies held by the solicitor.

C. OTHER ALBERTA STATUTORY LIENS, CHARGES OR OTHER INTERESTS

There are a number of "liens, charges or other interests" given by Alberta statutes other than the PPSA, where the PPSA is limited, or of no help, in determining the priority afforded to these other liens, charges or interests.

What follows, is a summary of a number of the liens, charges or other interests given by other Alberta statutes and their priority, on the assumption that the owner or party in possession of the property is not in bankruptcy, or has not filed proposal proceedings, governed by the Bankruptcy and Insolvency Act8 ("Bankruptcy Act").

1. Garage Keepers' Lien Act9 (the "GKLA")

S2 of the GKLA provides that in addition to every other remedy that a garage keeper has for the recovery of money owing to the garage keeper for the storage, repair or maintenance of all or any part of a "motor vehicle" or a "farm vehicle" as defined in the GKLA ("vehicle"), or for the price of accessories or parts furnished to all or any part of the vehicle, a garage keeper has a lien ("GKLA Lien") on the vehicle or part of it for the sum to which the garage keeper in entitled. Unlike the common law repairer's lien that for the most part ceases upon the repairer surrendering possession of the repaired property, the GKLA allows the GKLA Lien to be maintained by a garage keeper on the vehicle after possession of the vehicle is given up by the garage keeper, provided that:

(a) the garage keeper obtains from the person who authorized the storage, repair and maintenance or the person who ordered the accessories or parts to be furnished for the vehicle, an acknowledgment of indebtedness by requiring such person, or that person's agent, to sign an invoice or other statement; and

(b) the garage keeper registers the GKLA Lien at the Alberta Personal Property Registry ("APPR") within the time period provided for in the GKLA.

The following is a summary of other pertinent GKLA provisions:

(a) s2(2) provides that a GKLA Lien cannot be claimed for the price of fuel, oil or grease furnished to an applicable vehicle;

(b) s3 provides that the GKLA Lien terminates on the 21st day after possession of the vehicle is surrendered, or after repairs were completed to the vehicle at a time when the garage keeper was not in possession of the property, or after the accessories or parts to the motor vehicle or farm vehicle were furnished, unless prior to such time, the garage keeper registers at APPR a financing statement claiming its GKLA Lien on the vehicle;

(c) s6 provides that the GKLA Lien terminates six months after the date of registration at APPR unless within the six month period the garage keeper provides the requisite proof of registration and warrant to a civil enforcement agent and causes the vehicle to be seized, or as long as the seizure instructions and proof of registration were provided to a civil enforcement agent within the six month period, the garage keeper obtains, without notice, an order of the Court of Queen's Bench prior to the expiry of the six month period that extends the time for the seizure for a further period not exceeding six months; and

(d) s4 provides that a GKLA Lien shall be postponed to an interest or charge, lien or encumbrance on the vehicle created in good faith and without notice of the GKLA Lien and was created or arose before the registration of the GKLA Lien as required under s3(1).

Justice K.D. Yamauchi held in the case of Royal Bank of Canada v. Cow Harbour Construction Ltd.10 that the combined effect of s32 of the PPSA and s4 of the GKLA is that a GKLA Lien is postponed to a security interest taken bona fide and without notice in the intervening period between the GKLA Lien arising and notice of it being registered. In other words, a properly registered and enforced GKLA Lien would take priority over a prior perfected or unperfected security interest in the vehicle created before the garage keeper lien arises (s32 of the PPSA), and would take priority over a subsequent charge, lien or encumbrance created after the GKLA Lien is registered, but would not, by virtue of s4 of the GKLA, take priority over a bona fide charge, lien or encumbrance in the applicable vehicle taken without notice of the GKLA Lien created between the period of time after the GKLA Lien arises and it is registered at APPR.

Since s2(1) of the GKLA provides that the GKLA Lien is "in addition to any other remedy that a garage keeper has for the recovery of money" owing to the garage keeper for its work or services to the vehicle, the repairer's common law lien most likely can still be enforced in Alberta as long as the garage keeper/repairer retains possession of the applicable vehicle, and most certainly would apply if the garage keeper/repairer maintains possession of any other property (other than a vehicle) for the recovery of outstanding amounts payable to the garage keeper for the repairs of such property. In those circumstances where the garagekeeper continues to maintain possession of the applicable vehicle after making its repairs, it may be advantageous for the garagekeeper to enforce its common law lien, especially where the garagekeeper wants to claim the price of fuel, oil or grease, failed to register its lien within the 21 days as provided in s3 of GKLA, failed to enforce its lien within the six months as provided in s6, or where the garageman may potentially have a stronger priority under its common law lien then that afforded to it under the GKLA (although a common law repairer's lien most likely cannot be enforced in priority to a subsequent bona fide purchaser or mortgagee for value without notice to the prior common law repairer lien).

2. Statutory Solicitor's Lien under the Rule 10.4 of the Alberta Rules of Court – "Charging Order"11

Under Rule 10.4, a lawyer may apply to the court for an order to place a charge on the property of the client-debtor. Granting such an order under Rule 10.4 is subject to several criteria:

(a) the fees must be unlikely to be paid unless the charging order is granted;

(b) the property subject to the charge is associated with an action (litigation) conducted by the lawyer on the client's behalf; and

The courts have interpreted these requirements very strictly, which makes it somewhat difficult to get a charging order under Rule 10.4. In interpreting this rule, the courts have held only the fees incurred in the action giving rise to the property targeted by the solicitor's lien may be recovered.12 Additionally, the charge is restricted to the property recovered or preserved in that action. Furthermore, the court may still refuse to grant the charging order, even if all criteria are satisfied, if it would be unfair to do so.13

The charging order, once and if granted, then grants the solicitor priority to the charged property, over all other creditors and parties except a bona fide purchaser without notice of the charge.14

It may be more advantageous for a solicitor to enforce its common law retaining lien or a general charging lien, or exercise its rights of set-off.

3. Woodmen's Lien Act15 ("WLA")

S5 of the WLA grants:

(a) to any person that performs any "labour or services" (defined in the WLA as including cutting, skidding, felling, hauling, scaling, banking, driving, running, rafting, or booming of any logs or timber, any persons employed in any capacity in any lumbering or timber operations or in or about any timber limit or mill where lumber is processed, and any work done by cooks, blacksmiths, artisans, and others usually employed in the operations of the aforementioned labour and services whether performed by wage earners or others);

(b) a lien ("WLA Lien") for amounts due to the person for such labour or services on:

(i) any logs or timber in respect of which the labour or services were rendered;

(ii) any other logs belonging to the same owner that have been mixed with any of the logs or timber in respect of which labour or services were rendered; and

(iii) any lumber made out of any such logs or timber, so long as the lumber has not been sold to and fully paid by a bona fide purchaser for value without notice of the lien.

The Alberta Court of Appeal in Brandt Tractor v. Seehta Forest Products Ltd. 16 held that the rental of equipment to a logging company does not constitute labour and services as defined under the WLA and accordingly outstanding rental payments for the leased logger equipment cannot be claimed under a WLA Lien by a lessor. That being said, the Alberta Court of Appeal in Brandt Tractor v. Seehta Forest Products Ltd. also held that the outstanding amounts for repair services or the delivery of replacement parts to the rental equipment performed by the lessor for the logging company, constitute labour and services for which the lessor can claim a WLA Lien.

S5(4) of the WLA provides that a WLA Lien constitutes a first lien or charge on the logs, timber and applicable lumber and has "precedence" over all other claims or liens on them, except claims of the Crown for dues or charges. In addition, in the event any lumber made out of the applicable logs or timber which a WLA Lien attaches, is sold to a bona fide purchaser for value who purchased the lumber without notice of the lien, the WLA Lien takes priority for the amount of the unpaid purchase price payable by the purchaser for the lumber at the date that the purchaser receives notice of the WLA Lien.

A summary of other pertinent WLA sections are as follows:

(a) s6 provides that any provision in a contract or agreement purporting to deprive any person of the WLA Lien is void;

(b) s7 provides that to maintain a WLA Lien the person claiming the lien, or someone authorized on such person's behalf:

(i) must file a statement of the lien in writing that includes the name and address of the person claiming the lien or of the person's solicitor, with the Clerk of the Court at the judicial centre closest to the place where the labour or services or some part of the labour and services have been performed (and where labour and services are performed on logs or timber taken down or run down any river or streams within Alberta, such statement at the option of the lien claimant may be filed with the Clerk of the Court at the judicial centre closest to the place where the log drive terminates or reaches its destination); and

(ii) cause a copy of the statement of the claim to be served on the owner (or agent of such owner who holds possessions, custody and control of the liened logs, timber or lumber), of the logs, timber or lumber, in which the lien is claimed, and upon any other person that is not the owner of the logs, timber or lumber, that may owe the amount to the WLA Lien claimant;

(i) if the outstanding labour or services claimed in the WLA Lien are performed between October 1 and the following June 1, the statement of claim for the amount due to the lien claimant that describes the logs, timber or lumber in which the lien is claimed must be filed by on or before June 30, but if the labour or services are done or performed on or after June 1 and before October 1 in any year, then the required statement of claim must be filed within 30 days after the last day that the labour or services were performed; and

(ii) any mortgage, sale or transfer of the logs, timber and lumber on which a WLA Lien exists during the time limited for the filing of the required statement of claim and prior to its filing, or after its filing and during the time limited for the enforcement of it, in no way affects the WLA Lien that remains in full force against the logs, timber or lumber, no matter who is in possession or where such logs, timber or lumber may be found;

(d) s10 provides that:

(i) as long as the outstanding amount payable to the lien claimant is due, or where credit has been given by the lien claimant, after the expiry of the period of such credit, a lien claimant may enforce its WLA Lien by the regular practice and procedure of the Court of Queen's Bench in the district in which the claimed logs, timber or lumber or any part of them are situate at the time of the commencement of the statement of claim to enforce the WLA Lien; and

(ii) the WLA Lien on the applicable logs, timber or lumber named in the statement of claim ceases to exist, unless proceedings to enforce the statement of claim are taken by the lien claimant within 30 days of filing the statement of claim, or within 30 days after the expiry of the period of credit, as applicable;

(e) ss13 - 21, inclusive, in summary provide that:

(i) a lien claimant whose claim is not less than $10.00, upon the filing with the applicable Clerk of the Court of a copy of its claim and an affidavit sworn by the lien claimant supporting its WLA Lien deposing that:

(A) the lien claimant has good reason to believe and does believe that the logs, timber or lumber subject to the Lien are about to be removed, the person indebted for the amount of the Lien has absconded from Alberta with the intent to defraud or defeat such person's creditors, or the logs, timber or lumber are about to be disposed of or dealt with in such a way that they cannot be identified; and

(B) the lien claimant is in danger of losing its lien claim if an attachment does not issue,

the Clerk of the Court of the jurisdiction in which the applicable logs, timber are lumber or situate, must issue a writ of attachment to direct a civil enforcement agency to attach, seize, take and safely keep the claimed logs, timber or lumber, or a sufficient portion thereof, to secure the amount owing to the lien claimant, inclusive of the lien claimant's costs;

(ii) a seizure by the civil enforcement agency cannot be made on the applicable logs or timber if they are in transit by water from the place where such logs or timber were cut to the place of destination;

(iii) once the Clerk issues the writ of attachment, such writ of attachment, if no statement of claim has yet been issued, summons the person that owes the funds ("defendant") to the lien claimant to enter an appearance in the Court;

(iv) the lienholder must cause a copy of the writ of attachment to be served on the defendant, and as well if a defendant is not the owner of the logs, timber or lumber claimed by the lienholder, the writ must also be served on the owner or any agent or person who has possession custody and control of the claimed logs, timber or lumber on behalf of the owner;

(v) upon service of the writ of attachment, the person that owes the claimed lien, or the applicable owner, must file a statement of defence to the lien claimant's claim, failing which judgment may be entered in accordance with the practice or procedure where the lawsuit was begun by statement of claim; and

(vi) once the writ of attachment is issued, the person who owes the WLA Lien, or any other person on behalf of the owner, may file with the Clerk of the Court a good and sufficient bond in favour of the person claiming the lien executed by two sureties and approved by the Clerk, or pay sufficient monies to the Clerk to cover the amounts claimed by the lienholder, inclusive of all damages, costs, charges and disbursements and expenses, and once such bond is filed or payment is made, the Clerk shall issue an order to the civil enforcement agency to release the seizure of the logs, timber or lumber;

(f) ss22 - 24, inclusive, in summary provide that:

(i) upon filing of a statement of defence, an application can be made by the lienholder to a judge in chambers to have its lien claim determined and to settle the applicable priorities;

(ii) once the judge makes its order, if the amount payable to the lien claimant is not paid within eight days, the applicable logs, timber or lumber may be sold by a civil enforcement agency for the satisfaction of the lien amounts found due by the judge; and

(iii) the procedure to be followed by a civil enforcement agency in selling the liened logs, timber or lumber is the same procedure set out in the Civil Enforcement Act for the enforcement of a writ of enforcement unless the judge otherwise directs another procedure; and

(g) s30 provides that nothing in the WLA disentitles any lien claimant to any other remedy other than that afforded by the WLA for its recovery of the amounts due for its outstanding labour or services performed, and when a suit is brought to enforce a WLA Lien, but no lien is found to exist, judgment can nevertheless be directed for the amount due in the lienholder's action.

Subject to a WLA lienholder's satisfaction of its obligations in enforcing its WLA Lien, a valid WLA Lien, by virtue of s5(4) of the WLA and s32 of the PPSA, in the writer's opinion would take priority over all perfected and unperfected competing PPSA security interests in the logs, lumber or timber subject to the WLA Lien17.

4. Innkeepers Act18 ("IA")

The IA provides a statutory mechanism by which an "innkeeper" (defined as persons operating a hotel, motel, inn, or any other person who provides lodging to guest willing to pay for accommodation) can retain and dispose of property brought by the guest to the lodging premises to satisfy unpaid lodging charges.

S2 of the IA permits an innkeeper in possession of the detained property to sell the property at public auction if debt remains outstanding for more than one month after the start of detention, and requires the innkeeper to post a public announcement in a local newspaper at least one week before the auction.

S3 provides that the auction proceeds may be applied to the outstanding debt and the costs of the advertising and auction, any surplus funds may be paid, on application to the court, to party claiming an interest in the surplus, and if surplus funds are not claimed within one year, they fall to the Minister of Justice and Solicitor General as part of the General Revenue Fund.

S4 provides that the debtor can dispute the innkeeper's claim, by paying into court, $10 or 10% of the disputed amount, whichever is greater, and by serving notice of the payment upon the innkeeper. Upon the payment into court, all of the innkeeper's right to the detained property ceases. If, within 30 days of notice of the debtor's payment into court, the innkeeper brings an action to recover the debt, the money paid into court cannot be released until the matter is disposed of. If the innkeeper fails to commence the action within 30 days of notice of the debtor's payment into court, the money is returned to the debtor (or authorized recipient) and, for the purposes of the IA, the matter is disposed of.

There is no provision in the IA that grants a specific lien to an innkeeper or that grants priority to the innkeeper over the claims that the owner of the detained property or any security charging the detained property. That being said, Justice Kirby found in R. Cunningham Enterprises Ltd. v. Vollmers et al.19, by following the 1914 Ontario Court of Appeal decision in United Typewriter Co. v. Edward Hotel Co., that the IA is a codification of an innkeeper's common law lien that can be enforced in priority to the true owner of the detained goods as well as any detained goods owned by the lodger.

Since the IA is a codification of an innkeeper's common law lien and grants to an innkeeper an interest in the detained goods ("IA Lien") to enable the innkeeper to sell the detained goods, the interest of an innkeeper under the IA most likely takes priority over a perfected or unperfected security interest in the goods governed by the PPSA. That being said, an innkeeper's lien in the writer's opinion does not fit within s32 of the PPSA because lodging services are not furnished with respect to the liened goods.

5. Animal Keepers Act20 ("AKA")

S1 of the AKA defines:

(a) "animal" as "cattle, horses, swine, sheep, bison, deer, elk, goats, mules and asses";

(b) "animal keeper" as the person who receives payment for boarding, feeding or caring for an animal owned by another person;

(d) "gear" as meaning tack equipment used for riding, driving, showing or caring for animals, and stock trailers, horse trailers, sleighs, buggies and carriages.

S2 of the AKA grants a lien ("AKA Lien") to an "animal keeper" against an "animal" and "gear" for the "debt" payable to the animal keeper.

S3 of the AKA permits an animal keeper to claim the AKA Lien on more than one animal or gear belonging to the same owner, or to limit the lien to specific animals and gear and release the balance to the owner.

S4 of the AKA provides that when an animal keeper detains an animal or to enforce its an AKA Lien, the animal keeper must keep the detained property in its custody possession, and is responsible for the proper care of each detained animal in accordance with accepted industry standards. Pursuant to s6, the owner of the detained animal and gear must discharge the debt within 14 days, failing which the animal keeper may sell the detained animal and gear by public auction or in any other reasonable manner on providing notice of the sale under ss7 - 9 inclusive.

S10 of the AKA provides that when a detained animal and gear is sold by the animal keeper in compliance with the AKA, the sale proceeds are to be applied firstly to the animal keeper's expenses, secondly in satisfaction of the animal keeper's AKA Lien, and the balance to be paid if one or more other person has or have, as applicable, an interest in the sold animal or gear to that person, or if no other person has an interest in the sold animal or gear, to the Minister of Justice and Solicitor General, or paid into court by application made under s12 of the AKA.

S12 provides that any person with an interest in the liened animal or gear that has either been detained or sold may apply to the Court of Queen's Bench to determine the rights of the applicable parties. S12 grants the Court the power to make any orders it considers necessary to give effect to any rights or any question that arises with respect to the amount of the AKA Lien, the right of the animal keeper to a AKA Lien, the circumstances surrounding the sale, the application of the proceeds under s10 of the AKA, the disposition of the balance of the proceeds or other matters arising out of the operation of the AKA. Ss12(3) provides that the balance of the proceeds of any animal or gear sold under the AKA, are, if an application is made pursuant to s12 of the AKA, to be distributed according to the rights and priorities established under the PPSA or any other applicable legislation, and ss12(4) provides that the application under s12 must be made within one year and one week after the date of sale of the animal or gear.

The AKA replaces the Livery Stable Keepers Act which contained similar provisions as the AKA.

The Alberta Court of Appeal in the case of Twin Rivers Feed Lot Ltd. (Trustee of) v. V & B Feeds Ltd.21 held that the lien granted under the previous Livery Stable Keepers Act, could be enforced against any animal or gear of the owner whether or not the debt claimed in the lien related to the actual animal or detained by the lienholder. The case also provides that any payment of the outstanding debt to the animal keeper made by the owner for the release of the lien does not constitute a fraudulent preference as the payment is made to discharge the secured claim of the animal keeper under the Livery Stable Keeper' Act which gives the lienholder priority over the owner's unsecured and other secured creditors.

6. Builders' Lien Act 22 ("BLA")

In addition to the statutory lien on improved land of the owner granted in the BLA (the "BLA Land Lien") to any person that causes any work or services in respect of an improvement of such land, or furnishes any material to be used in respect of an improvement on such land (which is beyond the purview of this paper), s17(2) of the BLA:

(a) grants a charge (the "BLA Materials Charge") in favour of a person ("Material Supplier") that furnishes material to the land to be used for an improvement but not as yet incorporated in the improvement, for recovery of the debt payable to the person for the supply of the material; and

(b) provides that such material is not subject to any other execution or process to enforce any other debt, other than the debt payable to the Material Supplier.

The s17 BLA Materials Charge is virtually identical to s16 of the previous 1960 Alberta Mechanics Lien Act, and s14 of the previous 1980 Builders' Lien Act. In the writer's opinion, it is settled in the case law that the BLA Materials Charge is a separate charge from that of the BLA Land Lien on the owner's lands, and can been forced by a Material Supplier on the applicable materials not yet incorporated in the improvement and located on the lands, for the unpaid purchase price of the supplied material in priority to all BLA Land Liens.23

S59(4) of the BLA gives the Court the power to direct the sale of supplied materials. Civil Enforcement Agents licensed under the Civil Enforcement Act of Alberta will, upon the issuance of a warrant, attend the lands and cause the materials not incorporated in the improvement to be seized usually under a bailee's undertaking signed by the owner or any party having possession and control of the materials, pending any objection that may be made by the owner or any other person claiming an interest in the materials to be resolved by Court application.

S17(1) of the BLA provides that during the continuance of a BLA Land Lien, no part of the material giving rise to a BLA Land Lien shall be removed to the prejudice of the BLA Land Lien. That being said, the cited case law24 has held that any material that has not been incorporated in the improvement to the land does not form part of the land to which a BLA Land Lien attaches, and accordingly, the writer is of the opinion that material that hasn't been incorporated into the improvement to the land, can be removed for the purpose of enforcing the BLA Materials Charge.

The writer is of the opinion that s32 of the PPSA most probably grants priority to a BLA Materials Charge over competing PPSA security interests in the materials not incorporated into the improvement, and to enforce the BLA Materials Charge, the Material Supplier could make application under s64 and s69 of the PPSA for an order determining the priority of the BLA Materials Charge and the procedure to be followed for the enforcement of such Charge.

7. Warehousemen's Lien Act25

Pursuant to ss3 and 4 of the Warehousemen's Lien Act, a "warehouser", namely a person engaged in the business of storing personal property deposited with a warehouser ("goods"), has a lien ("Warehouser Lien") for all lawful charges for the storage and preservation of the goods, the lawful claims for interest, insurance, transportation, labour, weighing, coopering and other expenses in relation to the goods, and all reasonable charges for any notice required under the Act, including the required notice and advertisement for sale, and for the sale of the goods in satisfying the warehouser's lien.

S5 of this Act obliges the warehouser to issue notice to the owner of the goods, or any other person having a security interest in the goods registered by financing statement, or if goods were not deposited with the owner's authority, the person entrusted by the owner, and if the warehouser fails to issue such notice within two months after such deposit, the lien is void on the expiry of two months.

S6 of the Act sets out the procedure whereby a warehouser, upon issuing appropriate notices to the owner and to any person known to the warehouser to have an interest in the goods, including goods subject to the security interest registered at APPR and publishing an advertisement in a local newspaper for two consecutive weeks, is entitled to sell the goods by public auction not less than 14 days from the publication of the first advertisement.

S8 of the Act provides that the sale proceeds are to be applied firstly to satisfy the Warehouser Lien, and the balance is to be paid over to any person entitled to it. If the surplus is not within 10 days after the sale demanded by an entitled person, or if there are a number of different claimants to the surplus, the warehouser can apply to a Judge, without notice, for an order to pay the surplus into Court and to direct the terms and conditions dealing with the costs of such application and the procedure by which the entitlement of the surplus isto be determined. Also, the warehouser upon paying the surplus into Court must file with the Court a statement of account that accounts for the surplus.

S9 provides that before any sale is made, any person with an interest or right to possession of the goods, may pay the warehouser the outstanding amount owing, and if such payment is made, the warehouser is to deliver the goods to such person, provided that person is entitled to possession of the goods, otherwise the warehouser shall retain possession of the goods according to the warehouser's storage contract.

Since the storage of goods are services that relate to the goods, the writer is of the opinion that s32 of the PPSA grants the Warehouser Lien priority over any competing security interest in the goods.

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Canada: Priorities Outside The Alberta Personal Property Security Act (PPSA)