Executive Summary: Key Legal and Evidentiary Issues

• The court examined whether A to Z Truck Parts Inc. established a valid statutory lien and right of detention over a semi-truck under Manitoba's Garage Keepers Act.
   
• Evidence showed the underlying lease between Mitsubishi and Albaurak Logistics Inc. was a financing lease, making Albaurak the vehicle's "owner" for GKA purposes.
   
• No documentary evidence supported A to Z's claim that Albaurak, acting through an individual named Don Hodgson, authorized the towing, repair, and storage services.
   
• Justice Monnin rejected the argument that sections 2 and 3 of the GKA create a lien regardless of whether the requesting party had authority to bind the owner.
   
• Mitsubishi's payment into court of the amount stated in A to Z's only invoice was found to satisfy section 13(4) of the GKA.
   
• Because A to Z failed to commence an action within 30 days of that payment and refused to surrender the vehicle, any lien that may have existed was no longer enforceable.
   

Facts of the case

Mitsubishi HC Capital Canada Leasing Inc. sought a determination of its rights under The Garage Keepers Act, C.C.S.M. c. G10, regarding a 2022 International LT625 semi-truck. A to Z Truck Parts Inc. had possessed the vehicle since approximately January 19, 2023, and claimed a statutory lien and right of detention for towing, repair, and storage services. According to the affidavit of Frank Laba, a part-time A to Z operations employee, he received a call in January 2023 from Don Hodgson, who said he was dispatching on behalf of Albaurak and asked A to Z to retrieve and repair the truck after an accident. Laba arranged for Hisar Towing to recover the vehicle, and A to Z performed front-axle repairs while additional work was to be completed elsewhere in Ontario. Hodgson eventually stopped responding to calls, and A to Z's attempts to reach Albaurak were unsuccessful. A search for ownership documents in the vehicle turned up nothing, and it was only later, through a credit union search, that A to Z learned Mitsubishi had registered a Manitoba Personal Property Registry security interest on May 14, 2024. Communications followed between A to Z and Bruce Godbehere, a bailiff acting for Mitsubishi. On February 8, 2024, A to Z issued a First Invoice for $42,601, covering $3,700 for towing, $4,200 for repairs, and $37,700 for storage at $100 per day [these three line items sum to $45,600, which does not match the $42,601 total stated in the source document]. Mitsubishi disputed the invoice, particularly the storage component, and asked A to Z for details including the full amount then claimed. A to Z did not provide a revised figure. After further correspondence and an unanswered settlement proposal from Mitsubishi's counsel, Mitsubishi filed a Notice of Payment into court on July 29, 2024, paying in the $42,601 invoice amount together with an additional $50. When a bailiff and the RCMP attended on August 1, 2024, to recover the truck, A to Z refused to release it and issued a Second Invoice claiming an additional $19,775. On January 7, 2025, A to Z served a Notice to Owner(s) – Auction claiming $90,490 was owing. A to Z never obtained an acknowledgment of indebtedness from Mitsubishi or Albaurak, and never registered a financing statement, as required under the GKA. Mitsubishi filed this motion on February 11, 2025.

Policy and legislative provisions at issue

Several provisions of the GKA framed the dispute. Section 2 grants a garage keeper a lien on a vehicle for services rendered, up to the value of the charge for those services. Section 3 gives a garage keeper the right to detain a vehicle belonging to "a person who is indebted to them for any service," with priority over other encumbrances. Section 5(1) allows a garage keeper to surrender possession without losing its lien, provided it first obtains a signed acknowledgment of indebtedness and registers a financing statement. Section 12 requires the garage keeper to give the owner a notice of detention within a reasonable time, failing which it loses the right to sell the vehicle. Section 13 permits an owner who disputes the debt to pay the claimed amount, plus the lesser of 10% or $50, into court, extinguishing the lien upon service of that notice; it also requires the garage keeper to furnish a statement of charges on completion of service (13(4)), to surrender possession once served with the notice of payment (13(9)), and provides that if no action is commenced within 30 days of service, the money in court is paid out to the owner (13(7), (8)). A to Z argued that sections 2 and 3 create a lien whenever a garage keeper holds a vehicle belonging to an indebted person, regardless of whether the person requesting the work had authority to bind the true owner. It further argued that section 13 required strict compliance, meaning Mitsubishi should have paid in the amount later claimed in the Second Invoice rather than the First Invoice alone.

Reasoning and analysis

Justice Monnin found the Lease Agreement between Mitsubishi and Albaurak was a financing lease rather than a true lease, based on clauses requiring Albaurak to maintain and repair the truck, carry insurance, notify Mitsubishi of damage, and pay any shortfall in repair costs, together with Albaurak's option to purchase the vehicle at the end of the lease term. This meant Albaurak was an "owner" capable of authorizing repairs. However, the court held that A to Z had not shown Albaurak actually authorized the services: Hodgson's asserted instructions were unsupported by any work orders, repair authorizations, contemporaneous emails, texts, or telephone records, and the sole documentary exchange between Laba and Hodgson predated the incident by years, made no mention of Albaurak or the truck, and identified Hodgson as an officer of unrelated companies. Turning to A to Z's alternative argument, the court reasoned that sections 2 and 3 of the GKA presuppose that the person incurring the debt had the legal authority to do so, since the legislation protects garage keepers who perform services for those entitled to request them, not those who let an unauthorized third party burden an innocent owner's property. On the enforceability question, addressed in the alternative given the first finding, the court held section 5(1) did not apply because A to Z never surrendered possession, and section 12 was not determinative on these facts. On section 13, Mitsubishi was found to have complied by paying into court the amount stated in the only invoice A to Z had furnished, particularly since Mitsubishi had asked A to Z to confirm the full amount owing before invoking section 13 and received no response. The court rejected A to Z's position that Mitsubishi needed to anticipate and pay the later, larger Second Invoice amount. Ultimately, the court concluded that A to Z's failure to commence an action within 30 days of being served with the Notice of Payment into Court, combined with its refusal to surrender the truck, was inconsistent with the scheme of section 13, under which payment into court substitutes for the garage keeper's possessory security and obliges it to give up the vehicle.

Ruling and overall outcome

Justice Monnin ruled in favour of Mitsubishi HC Capital Canada Leasing Inc., finding that A to Z Truck Parts Inc. had not established a valid statutory lien or right of detention and that, even if such rights had arisen, they were no longer enforceable. The court ordered the release to Mitsubishi of the funds paid into court — the $42,601 invoice amount together with the additional $50 required under section 13(2) — and directed A to Z to release the semi-truck and take reasonable steps to facilitate its recovery. The court declined to award the additional monetary relief Mitsubishi sought under section 13(9), noting the case raised issues of first impression under the GKA. The decision did not resolve any contractual or common law claims A to Z might separately hold regarding the services it provided. Mitsubishi was awarded costs in accordance with the applicable Tariff, with the parties permitted to return to the court if they could not agree on the amount.