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Telephone: 416-203-9500

Newsletter > December 2006


Sadly enough, there appears to be a “not so uncommon practice” by carriers in the trucking industry (particularly, smaller outfits) to improperly lien cargo, in essence, holding it for ransom. Every year we receive calls from clients advising that a carrier holds cargo hostage demanding that some obscure debt of dubious character from 3 years ago be paid. Often times the client is a load broker or a carrier itself, who subcontracted the load and does not even own the cargo.

Usually the debt that the carrier claims has nothing to do with this particularly movement of goods; sometimes the debt is owed to a completely different company; and often times, there is a very good argument whether the debt is even owed at all. Invariably, the client has already tried contacting the police; however, they will advise “it is a civil matter” and not become involved in the situation. Although the law is relatively black and white on this subject, the decision of what to do, given the business realities, is not so clear.

Unless there is an explicit contract that states otherwise, a carrier’s cargo lien is a particular lien, not a general lien. This means, that a carrier can only lien cargo for freight owing for that particular shipment and not for debts from previous shipments or for any other charges (see Bad Boy Appliances and Furniture Ltd. v. T. Landry, Ltd. [1977] O.J. No. 536 para 15). Even assuming there is a proper debt owing from your company from another transaction to the carrier holding the cargo hostage, and the cargo being held is actually owned by your company, the cargo is still being illegally detained. A proper cargo lien is particular only for that actual movement.

Despite this, in Ontario, you really only have a few options for a carrier hell bent on holding onto the cargo until the alleged debt is paid. Your company may decide to either:

  1. simply pay the debt;
  2. bring a court application for the carrier to either release the cargo to you or force them to make delivery; or
  3. pay the debt under protest and sue the carrier for the return of the money.

In essence, you can either “pay the carrier” or “pay your lawyers”. Not an enviable situation, but one that you should be prepared for. Though the law is clear, it requires a bit of work from your lawyers to obtain the court order.

It is generally recommended, depending on the circumstances, that you take the second option. If your lawyer moves quickly enough, within a week or so, you can obtain a court order requiring the release and/or delivery of the cargo. If there are special urgent reasons, and your lawyer works throughout the night, you can even have your order for release or delivery of the cargo within a couple days. However, this will typically cost anywhere from $7,000 – $10,000 in legal fees.

The last option, if an action in the small claims court, will likely cost just as much as the second option, (depending on how many roadblocks are thrown up by the defendant), and take anywhere from 1-2 years. If its an action in regular court, then the legal fees will be doubled and the time frame will be anywhere from 2-3 years. If successful on either the application or court action, a court will generally order that the carrier pay a couple thousand dollars of your company’s legal bills.

The worst thing you can do is to do nothing. Depending on the expectations of the consignee, it is worth trying to negotiate or apply industry pressure from outside players to convince the carrier to release the cargo; however, be prepared that this is not often successful. It is an unfair situation, but one that needs to be dealt with immediately. It is also a good practice to keep the consignee and shipper in the loop as to the situation and ask them to apply pressure on the carrier to release the goods. If this matter is not dealt with soon, your company may itself be on the receiving end of a lawsuit by the consignee and/or shipper.

Demetrios Yiokaris

This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

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Telephone: 416-203-9500 | Fax: 416-203-9444

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