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Notice - Consumer Disclosure. Rosita v. Supreme Towing & Recovery, Prozone Auto Collision [consumer disclosure]
In Rosita v. Supreme Towing & Recovery, Prozone Auto Collision (Ont Divisional Ct, 2025) the Divisional Court allowed an appeal from a Small Claims ruling, here where "it was held that the Respondents were entitled to retain and sell the subject vehicle pursuant to section 23 of the RSLA."
Here the court considers RSLA s.15 ["Sale of article"] and s.17 ["Retention of article"] issues, which involve issues of consumer disclosure (a form of notice):[3] The Appellant was involved in a motor vehicle accident on May 3, 2021. At the roadside, the Appellant signed a two-page double-sided contract for the Respondents to tow and store their vehicle at their business premises. The legal dispute concerns the interpretation of clauses in that contract and the RSLA.
[4] The Appellant, assisted by his insurer, sought return and transfer of their vehicle from the Respondent’s storage about a week after the accident. The Respondent invoiced for storage fees plus a $2500 cancellation of contract fee. The Appellant disputed the cancellation fee as unreasonable. The Respondents placed a possessory lien on the vehicle and then took enforcement action relying on their interpretation of the RSLA.
[5] Before the case was litigated and the legal disputes determined, the Respondents sold the Appellants vehicle and retained the proceeds. They did not advise the Appellant when they intended to sell the vehicle or that they had sold the vehicle or for how much. They did not return any excess funds from the proceeds of the sale. The Appellant submitted that the value of the vehicle far exceeded the amount in dispute.
[6] The Small Claims court case was heard June 18, 2024. In reasons dated July 3, 2024, the Deputy Judge granted the Respondent’s section 23(1)(e) [SS: "Determination of rights by court"] application under the RSLA and found that the Respondents sale of the Appellant’s vehicle was authorized by the Respondent’s compliance with sections 15 and 17 of the RSLA. The Respondents were entitled to retain and then dispose of the Appellant’s vehicle pursuant to the contract.
[7] The Appellant submits that the Deputy Judge engaged in several legal errors that can be distilled down to the misinterpretation of sections 15, 17, 23 and 24 of the RSLA.
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[33] The relevant sections of the RSLA are reproduced below since they are central to the appeal.Sale of article
15 (1) A lien claimant who has a right, under this Act, to sell an article shall not exercise that right unless the lien claimant has given notice of intention to sell the article.
Idem
(2) A notice of intention to sell an article shall be in writing and shall be given at least fifteen days before the sale to,
(a) The person from whom the article was received for repair, storage or storage and repair;
(b) Where the article was received for repair, storage or storage and repair from a person other than the owner,
(i) The person who is the registered owner of the article, if the article is a motor vehicle, or
(ii) The person the lien claimant knows or has reason to believe is the owner, if the article is not a motor vehicle;
(c) Every person who has a security interest in the article under the Personal Property Security Act that is perfected by registration against,
(i) The name of the owner, if the owner is a person entitled to notice under clause (a) or (b),
(ii) The vehicle identification number, if the article is a motor vehicle; and
(d) Every person who has registered a claim for lien under Part II (Non-possessory Liens) against,
(i) The name of the owner, if the owner is a person entitled to notice under clause (a) or (b),
(ii) The vehicle identification number, if the article is a motor vehicle.
Contents of notice
(3) The notice required by subsection (2) shall contain,
(a) A description of the article sufficient to enable it to be identified;
(b) A statement of the amount required to satisfy the lien, as of the time when the notice is given, and any costs of seizure;
(c) A statement of the method of calculating, on a daily basis, any further costs for storage or preservation of the article that may be incurred between the time when the notice is given and the time when the sale is to take place;
(d) A statement that the article may be redeemed by any person entitled to receive notice by payment of the amount determined under clauses (b) and (c) plus any other reasonable costs incurred in preparing the article for sale;
(e) A statement of,
(i) The name of the person to whom payment may be made,
(ii) The address where the article may be redeemed,
(iii) The times during which redemption may be made,
(iv) The telephone number, if any, of the person giving notice;
(f) A statement of the date, time and place of any public sale at which the article is to be sold, or the date after which any private sale of the article is to be made; and
(g) A statement that the article may be sold unless it is redeemed on or before the day required to be specified in the notice by clause (f).
Method of sale
(4) The article may be sold in whole or in part, by public or private sale, at any time and place, on any terms, so long as every aspect of the sale is commercially reasonable.
Purchase by lien claimant
(5) The lien claimant may purchase the article only at a public sale.
Retention of article
17 (1) A lien claimant who has a right to sell an article may propose, in lieu of selling it, to retain the article in satisfaction of the amount of the lien claimed by giving written notice of the proposal to the persons entitled to notice under subsection 15 (2).
Objection
(2) Where a person entitled to notice under subsection (1) gives the lien claimant a written objection to the proposal within thirty days of the receipt of the proposal, the lien claimant, subject to subsections (3) and (4), shall sell the article in accordance with section 15.
Application to court
(3) Upon application to the Superior Court of Justice and upon notice to every person who has given a written objection to the proposal, the court may order that the objection is ineffective because,
(a) The objection was made for a purpose other than the protection of the interest in the article of the person who made the objection; or
(b) The fair market value of the article is less than the amount of the lien of the lien claimant and the estimated expenses to which the lien claimant is entitled under this Act.
Foreclosure
(4) If no effective objection is made, the lien claimant, at the expiration of the thirty-day period mentioned in subsection (2), shall be deemed to have irrevocably elected to retain the article and thereafter is entitled to hold or dispose of the article free from the rights and interests of every person to whom the written notice of the proposal was given. .... ....
RSLA Sections 15 and 17 Requirements Not Met
[41] The Deputy Judge legally erred in finding sections 15 and 17 of the RSLA were complied with by the Respondents.
[42] The Deputy Judge erred in finding that the contract and draft notice of objection complied with the RSLA because “the wording is taken from the RSLA. I do not know what further notice would be required.” Nowhere in the Deputy Judge’s decision is there reference to compliance with the detailed mandatory contents of the notice to the owner as required by section 15. Had the Deputy Judge’s decision factored the mandatory notice requirements under sections 15(2) and 15(3) of the RSLA, it would have become clear that the Respondents failed to provide the notice required by statute. Unfortunately, none of the notice requirements detailed in these sections of the RSLA are analyzed in the decision under review.
[43] I accept the Appellant’s argument that the Respondents failed to deliver proper notices pursuant to sections 15 and 17 of the RSLA to retain and then sell the Appellant’s vehicle after May 3rd.
[44] The Respondent’s conduct is an egregious violation of the purpose and content of the RSLA section 15 notice provisions. The language in section 15(1) is that a lien claimant shall not exercise that right unless the lien claimant has given notice of intention to sell the article.
[45] I do not accept the Respondents’ position that their email re-sending the contract and invoice to the Appellant on May 10, 2021, telling them to read the back and front, served as a clear notice of an intention to (subsequently and at an unknown date) sell the vehicle pursuant to section 15(2). The Respondents’ emails to the Appellant and the contract or invoice makes no mention that the vehicle will be sold.
[46] Respectfully, the Deputy Judge legally erred in finding that the Respondents’ contract and notice of objection constitutes the obligatory notice of an intention to sell the vehicle under the RSLA pursuant to section 15(2). The Deputy Judge’s finding that the contract (or any other correspondence or document tendered by the Respondent for that matter) included the necessary language was an error of law. The Small Claims decision fails to consider the obligatory wording of s. 15(2) of the statute.
[47] In addition, the Deputy Judge erred by finding that the Respondents complied with the RSLA even though the Respondents clearly failed to abide by every requirement of the contents of the notice required in ss.15(3) from (b) through (g):(b) A statement of the amount required to satisfy the lien, as of the time when the notice is given, and any costs of seizure;
(c) A statement of the method of calculating, on a daily basis, any further costs for storage or preservation of the article that may be incurred between the time when the notice is given and the time when the sale is to take place;
(d) A statement that the article may be redeemed by any person entitled to receive notice by payment of the amount determined under clauses (b) and (c) plus any other reasonable costs incurred in preparing the article for sale;
(e) A statement of,
(i) The name of the person to whom payment may be made,
(ii) The address where the article may be redeemed,
(iii) The times during which redemption may be made,
(iv) The telephone number, if any, of the person giving notice;
(f) A statement of the date, time and place of any public sale at which the article is to be sold, or the date after which any private sale of the article is to be made; and
(g) A statement that the article may be sold unless it is redeemed on or before the day required to be specified in the notice by clause (f). [48] The Respondent’s contract, signed at the time of the accident, clearly does not comply with the RSLA requirements that shall be included in the contents of the notice to sell pursuant to section 15(3), subsections (b) through (g). Kew v. Konarski, 2020 ONSC 4677, at para. 37.
[49] During submissions, counsel for the Respondents was asked but unable to point this court to anywhere in the relevant back-page of the Respondent’s contract (or elsewhere in their record) that complied with the statutory requirements in RLSA section 15(3).
[50] The RSLA states that notice must identify in a statement: the article, set out the amount required to satisfy the lien when notice is given and the time when the sale is to take place, explain how to redeem the article by payment, include contact particulars, and provide the deadline by which the article must be redeemed before it is sold by public auction or private sale.
[51] Further, the Respondents’ contract wrongly states, in a pre-emptive manner, “We acknowledge that all requirements of Part III of the Act (RSLA) have been met.”
[52] To the contrary, the mandatory notice requirements of the RSLA are clearly not met by the Respondents contract and the clauses that are relied upon by the Respondents are non-enforceable. The Respondents did not provide clear notice otherwise.
[53] The Respondents’ conduct of deliberately relying on their contract language despite its failure to comply with the RSLA while maintaining they are authorized by that statute to retain and dispose of the Appellant’s assets is misleading and contrary to public policy. When the parties entered the contract for towing and storage, the owner of the vehicle clearly did not authorize the Respondents to sell the vehicle without clear notice as required by the RSLA. It would be illogical and unfair if, by contract, the Respondents could negate the notice provisions of section 15 of the RSLA while also using their contract to argue compliance with those same provisions. To permit contracting out of the provision in this problematic manner would defeat the whole purpose of RSLA legislation enacted in the public interest to resolve disputes over fees and amounts owing in a fair and efficient manner: Royal Trust Co. v. Potash, 1986 CanLII 34 (SCC), at para. 37, 40, [1986] 2 S.C.R. 351, at pp. 372-373.
[54] Contractual interpretation requires courts to consider the principle of commercial reasonableness and efficacy. Contracts ought therefore to be interpreted “in accordance with sound commercial principles and good business sense.” Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60 at para. 79 citing Scanlon v. Castlepoint Development Corp. (1992), 1992 CanLII 7745 (ON CA), 11 O.R. (3d) 744, at p. 770.
[55] This contract’s non-compliance with mandatory notice provisions was illegal. On balance, where the waiver of statutory notice requirements was not made clear in the contract and not intentionally agreed to by the parties, (who are also not on equal footing at the time the contract is entered) the general principle applies that a contract that conflicts with, or is expressly or impliedly prohibited by statute is void: Re Northwestern Trust Co., 1926 CanLII 57 (SCC), [1926] S.C.R. 412; see also Machtinger v. HOJ Industries, 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, at p. 1001; Jordan v CIBC Mortgages Inc., 2019 ONSC 1178 at para. 95.
[56] I do not accept counsel for the Respondents’ argument that their contract serves as pre-emptive or continuing notice to the owner that the lien claimant will retain and sell the vehicle pursuant to sections 15 and 17 of the RSLA. The contract does not comply with the RSLA.
[57] The Respondents also did not comply with section 17 (1) of the RSLA. The obligations that arise from this section are not addressed by the Deputy Judge also constituting legal error. Section 17 requires written notice of a proposal by the lien claimant to retain the item, (instead of selling it), to the persons entitled to notice under subsection 15(2). No proposal was put forward by the Respondents during the time it was retained.
[58] Overall, the Respondents failed to comply with the obligatory and statutory requirements in sections 15 and 17 of the RSLA. This is determinative of my decision to grant the appeal.
[59] In addition, the Deputy Judge erred by failing to address that the Respondents did not account for the amount and proceeds of the sale, nor advise if there was any residual amount of the proceeds remaining to be paid as required by section 16. For example, where a lien claimant has sold an article and the proceeds thereof exceed the aggregate of the expenses associated with its sale and seizure (if applicable), the amount of the relevant lien, and the amount of any other liens or security interests in the article, the owner has a right to be paid such excess moneys. See Section 16(1)(g).
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