“My friend borrowed my motor vehicle and damaged it. She took it to the repair shop and undertook to pay for the repair cost. A couple of weeks later my friend is nowhere to be found and has not paid the repair cost of my motor vehicle. The repair shop does not want to return my motor vehicle until the repair cost has been paid in full. What do I do?”
The repair shop (“the creditor”) in these circumstances has a right of retention. In South African law this is called a lien. 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 following are the requirements for a lawful retention for property. Firstly, there must be a debt owing to the holder of the retention right. Secondly, the holder of the right and the debtor must be parties to a contract in terms of which the debt is owed. Thirdly, the debt to the holder of the right must be owed by debtor. Fourthly, the debt must be in respect of the specific property retained. Lastly, the holder of the right must hold and be in control of the property.
A lien enables the creditor to enforce payment of a debt by the debtor. In other words, the property acts as security for the payment of the debt by the debtor to the creditor. It is important to note that although the creditor may refuse to return the property to the debtor, the creditor may not dispose of the property i.e. sell the property to a third party to recover the debt. In order to realise the security which, the lien creates, the creditor must first take legal action, by way of summons, against the debtor to obtain judgement against the debtor. Only then can the property be sold on auction by the sheriff in terms of a warrant of execution issued after judgement has been obtained.
A lien is a personal right and cannot be exercised against everyone. The creditor can only exercise the personal right against the other contracting party who is subject to the lien and who owes the debt. It cannot be enforced against the owner of the property unless, the owner is a party to the contract or consented to the repair costs. The owner of the property may tender security for payment of the debt to release the property, and will have a right of recourse against the debtor for payment of the debt.
In the above scenario the contract was entered into by the friend and the repair shop. In terms of the agreement the repair shop will have to exercise its lien against the friend. The owner is entitled to tender security for the payment of the debt. The owner will have a right of recourse against the debtor the payment of debt.
In the case where the owner of the property consented to repair cost, the creditor will is able to enforce its right against the owner, and the owner will be obliged to pay the debt to obtain possession of the property.
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. Consult an attorney to ensure that your agreement is valid and enforceable.