Highway No Longer Takes Toll on Bankruptcy
Posted on: June 16, 2014Posted in Bankruptcy, Debt | Comments Off on Highway No Longer Takes Toll on Bankruptcy
The operators of Ontario’s Highway 407 Express Toll Route (ETR) can no longer arrange for vehicle permits to be withheld from bankrupt drivers, according to a recent Ontario’s Court of Appeal ruling.
A January 2nd Toronto Star article states, “A recent series of court battles have attempted to resolve a key question that pits federal legislation against provincial: if a driver doesn’t pay the 407ETR toll, should the province take away their licence?”
The provincial Highway 407 Act dictated that the answer was yes. If the drivers didn’t take care of their tolls then the highway company could contact the province, which would refuse to issue vehicle permits to the drivers until everything was paid up.
This would include people who were undergoing bankruptcy and sometimes owed tens of thousands of dollars to the toll highway. Feeling that this violated the “fresh start” principle of the Bankruptcy Insolvency Act (BIA), lawyers launched a class action suit on behalf of insolvent drivers denied vehicle licences despite being declared bankrupt.
“As a trustee we had to tell people that though their future discharge would legally erase the debt, they would probably still have to pay the 407ETR debt or at least make a settlement with them if they wanted to license their car,” explains Richard Killen, president and trustee with Richard Killen & Associates. “There was nothing illegal about the 407ETR accepting a ‘voluntary’ payment from a discharged bankrupt. The Ministry of Transportation would then receive a notice from the 407ETR that the debt was paid and a licence would be issued. The circular argument made any effort to solve the problem an exercise in futility. The MOT simply shrugged and tossed the ball over to the 407ETR.”
He adds, “It took years for the Federal Office of the Superintendent of Bankruptcy to involve itself, and even that was only after a bankrupt pushed this challenge through the lower courts. This appellate decision pretty well puts to rest the whole question. Now we are in a position to tell people when they consult us that their debt to the 407ETR is as dischargeable as their debt to Visa. This is news.”
