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In a landmark ruling the Supreme Court of Canada ruled that debts owed to the 407 ETR Highway in Canada are dischargeable in bankruptcy. In their decision regarding 407 ETR Concession Company Limited the Supreme Court decided that federal bankruptcy law is paramount to provincial legislation, and therefore 407 ETR debts are discharged in bankruptcy. In addition, the 407 cannot use it’s powers of plate denial to override bankruptcy law.
I’ve met with many people over the years who live in and around the GTA and use the 407 to commute to their jobs in the Toronto area, and some of them have built up significant debts to 407. If they file bankruptcy or a consumer proposal to eliminate their debts, the last thing they need is a plate denial. The good news is that, after several court cases, 407 ETR debts are discharged in a bankruptcy or proposal and the 407 can no longer deny plate renewal for debts discharged through a bankruptcy or proposal.
Based on information published by the 407 ETR, if you filed bankruptcy or a proposal after November 13, 2015, 407 ETR will remove from plate denial any amounts included in the bankruptcy or proposal as long as you have no new 407 debts or other debts with the Ministry of Transportation (eg parking tickets). If you filed a bankruptcy before November 13, 2015 you can refer to the 407 position here.
If you file with Hoyes Michalos, we will contact 407 ETR directly on your behalf.
If you have more debt than you can handle, including 407 debt, call us at 1-866-747-0660 and we can explain how you can get a fresh start.
What Happens If You Don’t Pay Your 407 ETR Bill?
Can your license be suspended for unpaid 407 ETR debt?
Yes, the 407 ETR can request that the Ministry of Transportation deny your license plate renewal for unpaid bills. However, if you file for bankruptcy or a consumer proposal, this changes:
- For bankruptcies or proposals filed after November 13, 2015: 407 ETR will remove from plate denial any amounts included in the bankruptcy or proposal, provided you have no new 407 debts or other debts with the Ministry of Transportation.
- For bankruptcies filed before November 13, 2015, check with your Licensed Insolvency Trustee, as different rules may apply.
Does a 407 bill affect credit?
Yes, unpaid 407 ETR bills can negatively impact your credit score. The 407 ETR reports delinquent accounts to credit bureaus, which can lower your credit score and make it harder to obtain loans or credit in the future.
Does 407 debt go to collections?
Yes, 407 ETR can send unpaid debts to collections. If you fail to pay your bills, the 407 ETR may engage a collection agency to recover the debt. This can result in frequent collection calls and potential legal action. A bankruptcy or consumer proposal can stop collection calls for 407 ETR debts.
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Court Rules 407 Debts are Unsecured Debts
This ruling and the 407 ETR’s capitulation were long coming. For those who are interested, here is a history of the back-and-forth legal actions that got us to the point of ensuring 407 debts are eliminated if you file for bankruptcy or make a consumer debt proposal.
The Bankruptcy & Insolvency Act eliminates unsecured debts. So wouldn’t that make money owing to the 407 a debt discharge in a bankruptcy? You would think so, but the 407 ETR didn’t want to lose their special power to suspend a license plate renewal for non-payment of 407 tolls, so they took the matter all the way to the Supreme Court.
When the 407 was purchased by a private company, the Highway 407 Act in 1998 gave the 407 the right to collect tolls, and if you don’t pay your tolls they have the power to suspend your vehicle permit issued by Ontario’s Registrar of Motor Vehicles. So, up until the supreme court ruling, if you went bankrupt and didn’t pay your 407 debt, you would not be able to renew your vehicle license plate.
A lower court originally agreed that the 407 had the power to deny a license plate renewal for unpaid charges. The Office of the Superintendent of Bankruptcy argued that federal law is paramount to provincial law. In other words, if there exists both provincial and federal legislation on the same point of law, the federal law has paramountcy; it wins.
In a ruling released on December 19, 2013, three judges from the Court of Appeal for Ontario ruled that the the practice of denying the license plate renewal for people who owed money to 407 ETR and who have filed a bankruptcy or consumer proposal is contrary to the “fresh start” principles of the Bankruptcy & Insolvency Act. In effect, the Ontario Court of Appeal ruled that 407 ETR debts are dischargeable in bankruptcy, but 407 ETR appealed that ruling all the way to the Supreme Court
The arguments in the Supreme Court case were based around two pieces of legislation. The Ontario Highway Traffic Act grants 407 ETR the power to request that the Ministry of Transportation deny a license plate renewal if there are unpaid 407 tolls at the time of renewal. The federal Bankruptcy & Insolvency Act says that “unsecured debts are eliminated in a bankruptcy”.
The Supreme Court then decided, as expected, that federal law wins. In fact they went so far as to say it’s in the best interest of the bankrupt debtor and that this is entirely consistent with bankruptcy law:
The operation of s. 22(4) also frustrates Parliament’s purpose of providing discharged bankrupts with the ability to financially rehabilitate themselves. While the intent of s. 178(2) is that the debtor will no longer be encumbered by the burden of pre-bankruptcy indebtedness, s. 22(4) allows ETR to continue burdening the discharged bankrupt until full payment of the debt. Had Parliament wished to exempt ETR’s toll debt from the bankruptcy process, as well as from the consequences of a discharge, it would have done so expressly in s. 178(1). It did not.
In my opinion, that’s as it should be. If the provincial and federal governments both want special laws for toll roads, they should pass specific legislation. They haven’t, so I agree with the Supreme Court’s decision.
Can you advise as to what options are available to me on an issue with 407. Old vehicle (has not had a valid plate for 7 years (or even been in our possession for 4 years). Plate was in the name of a corporation. 407 has been dogging me for years now to collect on money that I don’t owe, nor could I have billed to me as the corp ceased existence 5 years ago, and the car is in some scrapyard somewhere if that at this point. Plates won’t ever be renewed. They are now coming after me personally for $3000 via some Law office in London Harrison Pensa LLP. At this point I am willing to pay whatever original back charge existed to make them go away but I won’t even begin to entertain paying $3000. I don’t even consider whatever the original amount is to be mine as I did explain to the 407 people at some point along the way to no avail.
Is there not some statute of limitations on how long they can pester someone? Am I personally considered Liable for a plate that belonged to a corporation at the time (as president of that now defunkt corp? I just want this all to go away and not reflect on my personal credit bureau (which is isn’t thus far). Any advice would be welcomed. Like I said. I’m willing to pay to make this go away but $3000 is unacceptable.
I should also note I actually have an account personally at 407 for our two personal cars that is paid up to date, with transponders…..
Hi Joe. You have two choices. The first choice would be to talk to the law office and make a deal. Tell them you are willing to pay some set amount ($1,000, or whatever you think is reasonable), and that’s it. They may be willing to accept that deal.
The other option is to do nothing, They can pester you for as long as they want, but the true power of the 407 is to deny your license plate renewal. That does not appear to be an issue in your case, since the car no longer exists, and you personally have other transponders, so there may be nothing more they can do. They could take you to court and sue you, but generally lawsuits must be started within two years, so it’s unlikely they will take that action at this time, but with the 407, you never know.
Joe,
I do agree with most of what you’re saying in this article. It was very informative with whats happening. However, for those not knowing the back end with how the 407 ETR conducts its unethical business practices. In my case, I had a final owing amount of $500 in 2006. I went through health issues with cancer for many years and I still tried to run my business. I eventually had to file for bankruptcy and I was discharged in January 2012. My most recent bill in January 2016 from the 407 ETR was about $17,000 which is outrageous!! On a daily basis people are being charged absurd interest rates. To my understanding it is a Spanish country that owns the 407 ETR.
I understand I will be exempted when I do contact the 407 ETR and my plate denial will be lifted. But what are your thoughts of people paying the outrageous interest rates on a daily basis? Yes, I do agree with paying the owing amount so I will be doing that even though I know its not necessary. Since I am an ethical person I will be making that payment.
Regards,
Rick