Disappointingly, for many movie-goers, the scenario, the rider and even the bike in the Great Escape, were all fakes, misrepresented to provide one of the most memorable scenes in the war-time film – the one where Steve McQueen (actually stunt rider Bud Ekins) nearly jumped the border fence into Switzerland (it never actually happened) on an old German motorbike (actually a modern motorcycle disguised as a German Army BMW R75).
By contrast to this fiction, in the recently determined High Court case Sheianov and others v Sarner International Limited  EWHC 1214 (QB), a collection of twenty seven genuine World War Two motorcycles were at the centre of a dispute which came before Mr Justice Griffiths in the High Court earlier this month.
The motorcycles owned by the claimants were leased to a BVI company. The BVI company entered into a £1,75m contract with the defendant, an exhibition design company, for it to create a temporary touring exhibition of the collection of motorcycles. The motorcycles leased to the BVI company were provided to the defendant by the BVI company to assist the defendant with the creation of the touring exhibition. When a dispute arose under the contract the work was suspended. The claimants then terminated their lease of the motorcycles and sought their return from the defendant. However, the defendant refused to hand over possession of the motorcycles, asserting its right to exercise a particular lien over the collection of bikes until its unpaid invoice had been paid in full by the BVI company.
The claimants brought a claim for delivery up on the grounds that the Defendant had no basis to claim a lien as a matter of law, irrespective of who owed it money.
A particular lien may arise where a person claims a right to retain property in its possession, in respect of labour or money expended on the property for which it has not been compensated. Crucially a particular lien is only created where (a) a contractor actually works on goods and (b) where that work improves the goods or their value. Whether or not the defendant was entitled to keep the motorcycles until it was paid depended primarily on whether the Defendant was entitled to exercise a particular lien in the circumstances.
For the Claimants it was argued that the Defendant did not carry out any work “on” the motorcycles and at most the work was done “with” or “with respect to” them. However, the Defendant argued that the work done under the contract in creating the exhibition in which the motorcycles would feature increased the value of the motorcycles, particularly if viewed as a collection.
In his judgement, Mr Justice Griffiths said:
“The law of lien, including the particular lien being claimed in this case, has the interesting quality of being an important commercial right which derives entirely from the common law. It has never been codified or regulated by statute. It therefore cannot be deduced from the interpretation and application of definitive statutory words. Like all common law, the law of lien has developed on a case by case basis. Since the circumstances of every case differ, claims which fall outside the usual run (which this one certainly does) do not have direct precedents, and require a careful review of the earlier cases and their subsequent development so that the essentials and the boundaries of the principle can be thoroughly understood.”
Mr Justice Griffiths summarised the relevant legal precedent, stating “the essential requirements for the exercise of a particular lien include the following:-
- A particular lien can only operate on something physical, a chattel. It cannot operate on something incorporeal, such as an idea, or intellectual property.
- Work must be done “on” the chattel being detained and not merely “with” it or “using” it or “in relation to” it.
- The work must improve or give additional value to the chattel in question. Whether it does so is a question of fact.
- The improvement need not be physical, but it must be inherent to the chattel itself.
- If the agreed work is of a hybrid nature, some of which is apt to create a particular lien and some of which is not, and the work cannot be severed into those two constituent parts, no particular lien is created.”
With reference to principle 2, Mr Justice Griffiths held that the defendant’s evidence suggested that work was performed by the defendant “with respect to” the collection of motorcycles. However, in order to exercise a particular lien work must be done “on” the chattel being detained and not merely “with” it or “in relation to” it.
Further, with regard to principle 5, Mr Justice Griffiths held that a hybrid invoice for work cannot create a particular lien when it is impossible to say which parts of the invoice, if any, relate to work capable of creating a particular lien.
Applying all five principles to the facts of the case, Mr Justice Griffiths determined that neither “the Defendant’s challenge to the Claimants’ claim to ownership (or superior possessory title), nor its claim to be entitled to exercise a particular lien over the motorcycles until payment of the third invoice, have any real prospect of success. The Claimants are entitled under CPR 24.2 to summary judgment on their claim (and on the Counterclaim), and to an order for delivery up by the Defendant to the Claimants (or their nominated agent) of the motorcycles.”
- There are a number of different types of lien which operate in different ways. However, the general concept of a lien provides a person with the right to retain property in their possession until their accrued claims are satisfied. It is important to consider the potential risks when releasing property to another party and in particular, whether an event of default may trigger the right to exercise a lien.
- Standard terms that include lien clauses are produced in many industries that deal with the supply, repair or transportation of goods so it is important to carefully check the terms and conditions to identify and if necessary seek to modify the terms that will apply in this respect, before entering into the agreement.
- A contractual lien can also extend the ambit of a common law lien by providing for enforcement rights (such as a power of sale over the property) if there is a default. However, it is possible to exclude the right for a party to seek to exercise a lien by an appropriately drafted contract term.
- In the event you contract to exclude the right to exercise a lien it is good practice to ensure that anyone to whom you give possession of property also agrees to notify (and get a suitable contractual commitment from) anyone to whom they intend to release the property in issue, to ensure that they cannot become the subject to a contractual lien claim.
Malcolm Robson (Partner) and Lucinda Ellen (Solicitor) from our Dispute Resolution team acted for the Claimants and advised on the issue of a lien, recommending that it was capable of being challenged.
If you would like more information about any of the issues mentioned above or to discuss a specific matter, please email Malcolm or Lucinda directly or call 020 7551 7777 and ask to speak to them.
All content on this page is correct as of May 22, 2020.