Resin Systems Inc. v. Global Composite Manufacturing Inc., [2008] O.J. No. 5427, (Ont. S.C.J., Commercial List)

Resin developed certain equipment used to manufacture transmission poles. Resin entered into a manufacturing and licence agreement with Global Composite, and leased the equipment to Global Composite to make and improve the product. The agreements provided Global Composite was to keep the equipment free of any lien or claim, unless there was the express written consent of Resin.

Global Composite subcontracted the work to its related company, Global Vehicle Systems (“GVS”). Global Composite entered into some “lien rights” in favour GVS registered under the PPSA, including the equipment, and in some way postponed this registration in favour of Global Composite’s banker.

In the receivership of Resin, there was a claim by GVS for some $2 million for work done on the equipment and products produced. GVS claimed an RSLA lien against the equipment for work done for the improvements to the equipment.

The Court denied the RSLA repair lien on the basis that:

  1. given the relationship between Global Composite and GVS, GVS knew that the specific
  2. consent of Resin was required to create a lien;
  3. neither Global Composite nor GVS told Resin about the PPSA lien; and
  4. the fact that Resin may have known that GVS was doing the work was not sufficient to create the express consent by Resin required by the agreement.