An Ontario towing company has been ordered to stop using a standard contract they require drivers to sign as an ongoing notification that they will take possession of a vehicle and sell it off.
“This contract’s non-compliance with mandatory notice provisions [required to take possession of the vehicle and sell it] was illegal,” Ontario Superior Court (Divisional Court) Justice Faisal Mirza wrote in a decision released Monday.
“To the extent that the [towing company is] engaged in similar use of their standard contract with people shortly after being involved in accidents as a basis to retain and sell their vehicles without notice, under the pre-text of the RSLA [Repair and Storage Liens Act], this must not continue.”
Vincent Rosita was involved in a motor vehicle accident in Brampton, Ont., on May 3, 2021. At the roadside, he signed a two-page, double-sided contract allowing Supreme Towing & Recovery, Prozone Auto Collision to tow and store his 2020 RAM 1500 truck at their business premises.
A week later, with the assistance of his auto insurer, Aviva Canada, Rosita requested Supreme Towing to release his truck so he could send it to his preferred auto repair shop.
Supreme Towing responded by emailing Rosita a copy of the contract and an invoice for $3,826 — including a $2,500 cancellation fee. In its email, the towing company said: “Please take the time to read your [contract] copy both front and back to better understand the process thank you.”
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The next day, on behalf of Rosita, Aviva Canada e-mailed Supreme Towing with an offer to resolve payment for the charges claimed in the invoice for towing, storage to date, admin and environmental fees.
Supreme Towing responded to the insurer’s offer in an email: “You are not my customer. I have a contract and will enforce it under the law. You want your insureds car, then pay the bill that was given to your insured. If not[,] you know what to do, I’m already started.”
Rosita agreed to pay the towing, storage, and related fees but formally disputed the cancellation fee. He started the legal process to reclaim his vehicle; on his behalf, Aviva paid $4,165 into court, including a $1,068 settlement amount. A certificate was sent to the towing company.
Supreme Towing replied that it would formally object to the certificate in court. (The divisional court decision says no evidence indicates the objection was ever filed with the court.) It then told Rosita it now sought $35,000 and payment into court of $30,834.82. It claimed the RLSA now gave it the legal authority to assume title ownership of the vehicle.
Aviva and Rosita obtained a writ of seizure from the court to repossess the vehicle. But when Assistenza International and a sheriff went to Supreme Towing’s location to seize the vehicle, they informed Aviva by email the vehicle was not there.
“On some undisclosed date prior to [a] Small Claims Court hearing [on] June 18, 2024, the respondents [Supreme Towing] sold [Rosita’s] vehicle without notice,” the Ontario Divisional Court found. “[Supreme Towing has] not provided this information to [Rosita] or the court to date.
“The VIN search history report for [Rosita’s] vehicle shows that the vehicle was registered to [Supreme Towing] on Sept. 30, 2021, while the litigation was pending and well before the Small Claims Court decision was rendered.”
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In Small Claims Court, a deputy judge agreed with Supreme Towing that its contract provided adequate notice that the company had legal authority to take possession of the truck and sell it. The deputy judge also found Aviva was not a party to the matter; it was a contractual dispute between the insured and towing company only.
The Ontario Superior Court overturned the deputy judge’s decision. In his ruling, Mirza says towing companies must follow very specific notification requirements in the RSLA before taking possession of vehicles and selling them. He added Supreme Towing’s contract with Rosita listed none of these requirements.
“[Supreme Towing]’s conduct is an egregious violation of the purpose and content of the RSLA section 15 notice provisions,” the Ontario Divisional Court found. “The language in section 15(1) [of the RSLA] is that a lien claimant shall not exercise that right [to sell the vehicle] unless the lien claimant has given notice of intention to sell the article.
“I do not accept [Supreme Towing’s] position that their email re-sending the contract and invoice to [Rosita] on May 10, 2021, telling [him] to read the back and front, served as a clear notice of an intention to (subsequently and at an unknown date) sell the vehicle pursuant to section 15(2).
“[Supreme Towing’s] emails to [Rosita] and the contract or invoice makes no mention that the vehicle will be sold.
“Respectfully, the deputy Judge legally erred in finding that [Supreme Towing’s] contract and notice of objection constitutes the obligatory notice of an intention to sell the vehicle under the RSLA…”
