This happens when the item up for repair is not available for return into the players inventory. It is not so much a bug as a design flaw. If the person receiving repairs does not have the inventory space to accept the item back (100/100 full inventory) or if the person has in possession the same item which has a unique status where the player can hold only 1 of the same type, you get that message. It's most like the player is has a full bag and needs to make the proper space before you can repair the item. But I agree that this needs fixing.