Difference between revisions of "Creditors' Remedies against Debtors (10:III)"

'''On the registration of a financing statement, the lien will expire after 180 days, unless the automobile, etc., has been seized within that period (s 4).'''

When a buyer has made a partial or full payment to a seller - and the goods are unascertained or future consumer goods, the buyer can place a lien against all goods that are in, or will come into, the possession of the seller that correspond with the description or sample of goods agreed upon (See Part 9 of the ''Sale of Goods Act''). This holds as long as the goods were not sold to someone else. The buyer also has a lien against any bank account where the seller normally deposits  the  proceeds  of  sales.  This  lien  has  priority  over  all  other  security  interests, but generally is not valid in bankruptcy. Generally, provincial liens will only be recognized in bankruptcy if the specific property can be identified. If the seller has maintained records or documents that clearly identify the goods  for which a deposit was paid, the buyer may be entitled to the lien. Where the seller maintains a separate trust account, the buyer can file a property claim for the trust funds which is in priority to other security interests. For examples of the trustee in bankruptcy (of the buyer’s estate) having priority over unpaid sellers, see ''[https://www.canlii.org/en/bc/bcsc/doc/2006/2006bcsc1414/2006bcsc1414.html?autocompleteStr=In%20the%20Bankruptcy%20of%20Ian%20Gregory%20Thow%2C%202006%20BCSC%2C%201414&autocompletePos=1 In the Bankruptcy of Ian Gregory Thow'', 2006 BCSC, 1414] and ''[https://www.canlii.org/en/bc/bcsc/doc/2001/2001bcsc1476/2001bcsc1476.html?autocompleteStr=Anderson%27s%20Engineering%20Ltd%202001%20BCSC%201476&autocompletePos=1 In the Matter of the Bankruptcy of Anderson's Engineering Ltd.'' 2001 BCSC 1476].   

The seller can discharge the lien by handing over the good or returning the buyer’s deposit, but the latter will not relieve the seller from the possibility of suit for breach of contract. The buyer’s lien permits the buyer, upon application to court, to have goods seized and sold and have the proceeds delivered, or just have the goods delivered.

The ''Warehouse Lien Act'', RSBC 1996, c 480 provides that every warehouse owner or operator has a lien on goods deposited with them for storage, whether  deposited by the owner of goods or by their authority, or by any person entrusted with possession of the goods by the owner, or by their authority (s 2(1)). This right does not apply to unpaid charges for goods previously stored; see ''[https://www.canlii.org/en/bc/bcsc/doc/1980/1980canlii495/1980canlii495.html?autocompleteStr=Re%20Dutton%20Pacific%20Forest%20Products%20Ltd%20(1980)%2C%20117%20DLR%20(3d)%20507%20(SC)&autocompletePos=1 Re Dutton Pacific Forest Products Ltd.'' (1980), 117 DLR (3d) 507 (SC)], sub nom ''Squamish Terminals Ltd. v Price-Waterhouse Limited''. After the warehouser gives the appropriate  notices, the goods may be sold to collect the charges (ss 3 and 4).  

If the lien is valid and the debtor wishes to discharge the lien, but disputes the amount of the claim, the debtor may wish to make the payment to the court by application under s  23(1) of the ''Builder’s Lien Act''. This discharges the liability with respect to the Lien under s 23(2) The court will then assess the proper amount to be paid by receiving evidence, or directing a trial.