Motor vehicle accidents happen ever so frequently. When they do, it is often the case that a towing company will tow the damaged vehicle(s) to a yard for safe keeping and whilst doing so, they charge for storage, and such fees ought to be paid before the vehicle or scrap may be released to the owner. Is this lawful?

On the other hand, a motor mechanic after fixing a damaged vehicle refuses to release the vehicle until his labour is settled, is this lawful? Or better yet, can the mechanic and the toeing company lawfully sell or alienate my vehicle because of storage fees or their outstanding labour?

This article wishes to explore the legal implications of circumstances that people often find themselves in when they are involved in motor vehicle accidents, whether their vehicles are stored at a toeing company yard or with a motor vehicle mechanic.

THE LEGAL RELATIONSHIP

What is the legal relationship that is created when the towing company or mechanic stores your damaged vehicle? The relationship is contractual. Basically, they have to store or fix the vehicle against– provide a service, against payment by the vehicle owner. Appreciating that, fixing an accident damaged vehicle may be very expensive, what may be consequent if the vehicle owner cannot afford to pay the storage fees or the mechanic, can those service providers refuse to release the vehicle, can they legally assume ownership or sell the vehicle.

The answer is yes and no.

THE RIGHT TO REFUSE TO RELEASE THE VEHICLE

The South African law gives a creditor (in this case, the storage provider or mechanic) a right called lien over the property. This right may also be referred to as the right of retention. A lien is a “right” to retain physical control of another’s property as security for payment.  The right of retention enables the creditor to retain the client’s (“the debtor”) property if the debtor fails to settle their account. This specific retention right in these circumstances is a called a “debtor- creditor” retention right.

The “retained” property acts as security for the payment of the debt by the debtor to the creditor, thus, a lien enables the creditor to enforce payment of the debt.

HOW A LIEN/RIGHT TO RETENTION WORKS

This right is a legal remedy and must comply with the law for it to be legally enforceable. For a lawful right of retention to exist, the following has to be in place:

1. There must be a debt owing to the holder of the retention right. In our case, debt may be on account of the storage provided for storing and safe keeping the damaged vehicle or the debt occasioned by the motor vehicle mechanic having rendered services by fixing the accident damaged vehicle.
2. There must be a legal agreement/contract. The holder of the right and the debtor must be parties to a contract in terms of which the debt is owed, in our case, the agreement to fix the vehicle or to store and safe keep it at a fee.
3. The debt to the holder of the right must be owed by debtor.
4. The debt must be in respect of the specific property retained.
5. The holder of the right must hold and be in control of the property.

CAN THE CREDITOR ALIENATE THE PROPERTY FOR NONE PAYMENT

IT IS IMPORTANT TO NOTE THAT the property retained acts as security for the payment of the debt by the debtor to the creditor, the property on its own does not automatically become the payment to the debt, but it can be retained to enforce payment. Consequently, the creditor may not dispose of the property or sell it to someone else to get money and recover the debt.

If the debt, notwithstanding the retention remains unsatisfied, the creditor to recover his fees must first take legal action, by way of summons, against the debtor to obtain judgement against the debtor. Only then, during execution and enforcement of the judgement can the property be sold on auction by the sheriff in terms of a warrant of execution issued after judgement has been obtained.

CONCLUSION

No one has an automatic right to dispose of another’s property owing to debt. There must be a legally concluded and enforceable agreement and the right may only be realized through following appropriate legal action.

It is important to consider the lien clause of a service agreement when entering into such an agreement with a service provider. In the same way, if you are a service provider you must ensure that the agreement with your client enables you to exercise your lien when the client fails to pay. It is prudent to seek advice of a knowledgeable attorney to ensure that your agreement is valid and enforceable and to secure your interests.