Liens - Right to Hold Goods Until Payment Received

This Topic Includes:
Example of a lien
Before selling the goods
After goods are sold
Holding goods during a dispute

A lien is a right for retailers and service providers to hold goods until payment is received. It can be applied to goods not collected after they have been brought into a service provider for repair or servicing.

If, two months after the payment should have been received, the goods have still not been collected and paid for, the holder of the goods has the right to sell the goods at auction. This right is given by the Wages Protection and Contractors' Liens Act Repeal Act 1987 (view this law at the government Legislation website). The Act sets out the steps that must be followed when deciding to sell the goods.  

Example

Jo took her sterling silver lucky charm bracelet to her local jewellery shop to be repaired. Three months later she finally got back to the jeweller and found, to her horror, that her bracelet had been sold to pay for the repairs. The jeweller had no luck trying to contact her to pick up the bracelet and pay the repair, so decided to sell the bracelet to cover the cost of repairs.

The jeweller had placed a lien over Jo's bracelet.

Before selling the goods

The service provider or retailer must:

• Provide one week's notice of the sale in writing to the owner (if the owner's address is known)
• Advertise in a local newspaper providing particulars of:
  • name of the person/company to whom the money is owed
  • amount of the debt
  • description of the goods
  • time and place of the sale
  • name of the auctioneer.

After the goods are sold

The retailer or service provider must apply the proceeds of the sale to pay:

• the cost of advertising
• the costs of the sale
• the original debt for the work done.

Any money left over must be paid to the Registrar of the District Court nearest to the place of sale, where it will be held for the owner of the goods.

Holding goods during a dispute

eg, Jo called to collect her repaired bracelet from the jeweller as soon as it was ready. When she checked the bracelet she was dissatisfied with the quality of the repair which cost $135. Jo refused to pay that amount. The jeweller refused to give the bracelet back to Jo unless she paid $135. The jeweller placed a lien on the goods.

If there is a dispute between the parties, the goods cannot be held or sold. But in practice the retailer or service provider may attempt to hold onto the goods until the full payment is received.

If you are not able to reach an agreement with the retailer or service provider, you may be better to pay the full amount to get the goods back, and then seek to resolve the dispute in the Disputes Tribunal.

You must tell the retailer or service provider that you are paying "without prejudice". This means that you are not accepting the amount charged. Or, you could offer to pay part of the bill in order to get the goods back and seek their agreement that they go to the Disputes Tribunal to resolve the issue over the balance.