The Supreme Court of Canada has ruled that federal bankruptcy law trumps provincial legislation that the 407 relied on to pursue unpaid tolls and interest.
Score one for the little guys, in the battle to rein in the 407 ETR’s collection practices and refusal to recognize bankruptcy law.
The Supreme Court of Canada has ruled that federal bankruptcy law trumps provincial legislation the 407 relied on to continue to pursue unpaid balances from people whose debts had been discharged by bankruptcy.
Anyone who’s been declared bankrupt can now have their 407 debt included in their discharge, and the company running the toll road can no longer deny them a licence-plate renewal.
The 407 issued a news release saying it “is immediately implementing the decision of the court” and that anyone approved for bankruptcy can have their 407 debt cleared.
The news release said it “will remove from plate denial pre-bankruptcy amounts owed by persons who have been discharged from bankruptcy and who have provided their discharge documents.”
It’s a huge win for people who have fought the 407’s refusal to recognize federal bankruptcy laws and the only setback to the ironclad contract that was inked with the former Tory government to lease the road for 99 years.
It has unparalleled power to use plate denial as a means of collection, and it charges interest of 26.82 per cent, compounded annually, on unpaid balances, all of which has been the ruin of many people. We started reporting on the interest charges and collection tactics a half-dozen years ago, prompting response from hundreds of readers who complained about outrageous bills that were mostly interest.
The 407 formerly engaged in “bill suppression” which meant that if the first bills sent out weren’t paid, it stopped sending them, while the clock ticked on compound interest. After a few years, it would resume sending bills that could add up to thousands of dollars and aggressively pursued payment by using collection agencies and plate denial.
It says it no longer uses bill suppression and sends out a bill at least once a year for all unpaid balances.
Bankruptcy trustee Doug Hoyes noted in a blog post that the Ontario Court of Appeal ruled in 2013 that 407 debts are dischargeable in bankruptcy, but the 407 took it all the way to Canada’s highest court, where it also lost.
“Isn’t it obvious that debts are discharged in a bankruptcy?” he asked. “Isn’t that the point?
“It is, but the 407 ETR didn’t want to lose their special power to suspend a license plate renewal for non-payment of 407 tolls.”
Kevin Sack, a spokesperson for the 407, said in a statement that “the fully open-access highway does not permit 407 ETR to limit or control access or assess the ability of a customer to pay, prior to their use and purchase of toll road services.”
But with the world’s highest road tolls, it seems to us it is still a pretty sweet deal for the 407 ownership consortium, even if it can’t get its pound of flesh from everyone.