Executive Summary: Key Legal and Evidentiary Issues

• Whether the towing and storage companies complied with mandatory notice provisions under sections 15 and 17 of the Repair and Storage Liens Act (RSLA).

• Assessment of whether a vehicle could lawfully be sold after a lien was contested and funds were paid into court.

• Examination of the improper use of section 23(1)(e) RSLA to bypass an active application under section 24.

• Evaluation of whether the contract signed roadside constituted valid statutory notice to sell the vehicle.

• Determination of whether the sale of the vehicle without notice or accounting of proceeds violated the owner’s rights.

• Assessment of whether the Small Claims Court decision involved legal errors justifying reversal on appeal.

Facts of the case

Vincent Rosita was involved in a car accident on May 3, 2021, and his vehicle, a 2020 RAM 1500, was towed by Supreme Towing & Recovery. At the roadside, he signed a two-page contract authorizing towing and storage, which included a $2,500 cancellation fee. A week later, he asked that his vehicle be transferred to a different repair facility. In response, Supreme Towing invoiced him for $3,826.18, including the disputed cancellation fee. With assistance from his insurer, Aviva, Rosita contested the lien under section 24 of the RSLA by paying the amount into court. Aviva advised the towing company of the application and offered a settlement, but the towing company refused release of the vehicle and stated they would enforce the full invoice amount.

While the dispute was active and before any legal decision had been rendered, Supreme Towing and its affiliate, Prozone Auto Collision, sold Rosita’s vehicle without giving statutory notice and without disclosing the sale price or returning any excess funds. They subsequently initiated a court application under section 23(1)(e) of the RSLA to validate their actions. The Small Claims Court accepted the respondents' argument and ruled that they were entitled to retain and sell the vehicle. Rosita appealed the decision to the Divisional Court.

Outcome of the decision

The Ontario Superior Court of Justice (Divisional Court) allowed Rosita’s appeal. Justice Mirza found that the Small Claims Deputy Judge had committed errors of law by misinterpreting the mandatory notice requirements under sections 15 and 17 of the RSLA. The judge ruled that the roadside contract and follow-up emails did not constitute valid statutory notice of intent to sell the vehicle. The respondents had not delivered a proper notice containing the detailed information required under section 15(3), including the sale date, redemption procedures, and payment contact details.

Moreover, the Court found that the respondents wrongfully used section 23(1)(e) as a procedural workaround to avoid the legal consequences of an active application under section 24, which statutorily barred a concurrent application under 23(1)(d). The judge emphasized that the vehicle was sold without notice, and the respondents failed to report the proceeds or provide the excess amount, violating section 16 of the RSLA as well.

Justice Mirza strongly condemned the misuse of standard contracts that purport to pre-authorize vehicle sale without proper statutory process. The Court found that the respondents' conduct was contrary to the purpose and public interest objectives of the RSLA, which is designed to ensure fairness and transparency in disputes involving possessory liens.

The Court set aside the Small Claims Court order and declared the sale unauthorized by law. Rosita was awarded $11,665.34 in costs, payable jointly and severally by Supreme Towing and Prozone Auto Collision.