Lien Question

Consumer Law past papers 2012

  1. Lien question ?

This post is sponsored by Solicitors in Birmingham

Intro to Q –

  • Arises by operation of law, without agreement of parties
  • Sometimes referred to as a ‘self help’ remedy as no court order is required
  • Creditor in possession of debtor’s property may retain it as security for payment
  • SOGA s.39(1)(a)
  • Possession is the essence of lien
  • Possession must be distinguished from custody
  • Can use lien to force payment but can also apply to court for warrant to sell property

Special Lien

  • Means that creditor can only retain property relating to that particular transaction for payment in relation to that particular transaction.
  • Also, cannot retain property unconnected with that transaction to force payment
  • Special Lien
  • Special Lien is based on the simple premise that, if A carries out work for B on particular goods entrusted to him by B, he Is entitled to retain those goods until he is paid for his services.

National Homecare ltd v Belling 1994

  • Manufacturers of domestic electrical appliances employed another company under an agreement. The other company was to deliver and instal items of equipment from the manufacturers’ products held at the installers’ regional centres. The stock remained the property of the manufacturers. The obligation on the manufacturers was to pay the installers, on receipt of an invoice, for each supply made from the stocks and to replace stocks in the regional centres when requisitioned by the installers.
  • Held, that (1) special lien depended upon and was part of the law of mutual contract; and (2) since the installers had been holding goods as a means to performing their part of the contract, they were entitled to rely on special lien; and manufacturers’ pleas

Asset security itself divides into two types. In the first place, the asset may remain vested in the debtor, with the creditor having a limited right in the property. There are thus two proprietary rights in the same property. An example of this is the standard security. The debtor remains the owner of the property in question, notwithstanding the grant of the standard security. The security, on being registered, confers on the lender a real right in the land, but it is a limited or subordinate right, a right in something of which the right of ownership is vested in another person. The same happens if goods are pledged with a pawnbroker.

The most common form of special lien is that of a person who repairs goods, but it would also extend to anyone who does any work on goods as in the case of  Chase v westome 1816

Lamonby v Foulds 1928

An action was brought in the Sheriff Court concluding for delivery of a motor lorry, and, failing delivery, for payment of the sum of £297. The defenders maintained a right to retain the lorry under a lien for payment of an account for repairs and garage rent amounting to £31, 13s. 11d., and they offered on record to deliver the lorry on consignation of this sum. The Sheriff, holding that the defenders had a lien for their account for repairs amounting to £8, 17s. 2d., ordained them to deliver the lorry on the receipt of that sum from the pursuer. The pursuer appealed to the Court of Session.

Held that the appeal was competent, in respect that, under the conclusions of the action, decree could have been granted for a sum exceeding £50.

We have received from time to time representations that the law as stated in Lamonby v. Foulds operates unjustly. In that case it was held that repairers of a lorry had no lien for their work against the owners who claimed delivery. They established that the hirer, who had caused the repairs to be executed, was (unbeknown to the repairers) prohibited by his contract from creating a lien, though he was obliged to keep the vehicle in repair.

AFL can claim for damages due to “ act of god” and clouds issue however, Real right supersedes subordinate right. So no valid Lien can be used here.