Legal Battle Over Towed Vehicle Ends in Favour of Insurer

A judgment from the High Court of South Africa, Eastern Cape Division, Mthatha, serves as a timely reminder that a lien (right of retention) can be defeated by providing adequate security for the debt alleged to be due.

On 7 March 2023, the insured was involved in a collision on the road between Port St Johns and Lusikisiki, resulting in the insured vehicle being towed by the respondent’s towing truck and kept in a storage facility in Port St Johns.

An invoice for the towing and storage of the vehicle was subsequently sent to the applicant, the insurer of the vehicle. Following receipt of the invoice, the applicant strongly contested the charges, claiming they were excessive and inflated, whereas the respondent asserted that the charges were reasonable.

The applicant’s attorneys then wrote to the respondent, offering an amount the applicant considered fair and reasonable for the release of the vehicle. They stated that the remaining balance would be held by them in trust as security, pending any legal proceedings the respondent might take to recover the balance of the invoice.

The respondent replied, rather bluntly, that they would not release the vehicle until the invoice was paid in full and advised that the storage fee would continue to accumulate.

The deadlock led to the applicant bringing an application in which it sought an order for the vehicle to be released within twenty-four hours of the order being served on the respondent. The remaining balance of the respondent's invoice would be held in trust for 30 days, on the condition that the respondent instituted legal proceedings within this time period.

The respondent opposed the application, asserting a right of lien over the vehicle until its claim for the balance of the invoice was satisfied.

The court found that the money held in trust by the applicant’s attorney provided adequate security to defeat the lien the respondent exercised over the vehicle. The court further criticised the respondent for the unreasonable approach it had adopted.

Consequently, the court ordered the respondent to release the vehicle, simultaneously authorising the sheriff of the court to immediately hand over the vehicle to the applicant if the respondent failed to do so. The respondent was also ordered to pay the applicant's legal costs for bringing the application.