Lawsuit over 407 toll debts settled for $8 million

Claimants fought ‘hard battle’ after being denied licence plate renewal

The private company that maintains the 407 toll highway has agreed to pay almost $8 million to settle a four-year-old lawsuit over bankrupt drivers who have had their licence plate renewals denied.

As with unpaid parking tickets, the Ontario Ministry of Transportation can deny licence plate registration renewals to anyone with an outstanding debt involving 407 tolls. Federal bankruptcy law lets a debtor’s assets be distributed equitably to creditors, with the outstanding debts erased so he or she can have a clean start.

The suit challenged the 407 Express Toll Route’s practice of continuing to deny licence plate renewal to its debtors, even after they’d emerged from the bankruptcy process.

In November last year, the Supreme Court ruled that practice violated federal bankruptcy laws and ordered a stop to it.

Under the terms of Friday’s settlement, the company does not admit liability.

The 407 ETR does, however, go a step further than the Supreme Court required, by agreeing to remove people from plate registration denial at the outset of bankruptcy proceedings rather than the end. It will also do this automatically, instead of waiting for drivers to provide paperwork proving their bankruptcy proceedings are complete.

“It’s been a long, hard battle,” said lawyer David Thompson, whose firm Scarfone Hawkins LLP represented the plaintiffs.

“Through our negotiation we managed to persuade them to change their business practice,” Thompson said. “That’s a significant concession.”

Kevin Sack, a spokesman for the 407 ETR, confirmed the company will do the same for debtors who make offers to settle without going through the bankruptcy process.

That’s what co-lead plaintiff Peter Teolis says he tried to do in 2009.

Teolis said he wound up owing $1,200 to the 407 ETR in 2005.

He said that by 2009, his debt had grown to $6,400, when he offered to settle. He said the 407 ETR refused, and by 2015 his debt had climbed to $24,000.

The Star was unable to independently verify the details of Teolis’s claims.

“Finally, now it’s a relief,” Teolis said.

Teolis said despite the long road, he and the other plaintiffs chose to press forward because they felt that “if we don’t do this, (the 407 ETR) will continue on forever.”

Sack said the company faces a unique challenge in pursuing drivers who don’t pay their fees because they can’t close the highway or deny the service.

“You don’t have to stop at a cash register when you purchase our services. There’s no toll booth,” Sack said.

“We can’t control or limit the use of the highway, even for people who don’t pay. This was something that was clearly recognized by the lower court when this matter began. They found that we were clearly operating within our rights under Ontario law.”

But the Supreme Court ruling found that the federal bankruptcy law trumps the provincial Highway 407 Act.

“The Supreme Court of course has the final say, and the law has been clarified. And we’re pleased that it’s been clarified,” Sack said.

The settlement has yet to be approved by the court. A hearing is scheduled at the Ontario Superior Court at Osgoode Hall for Nov. 15.

Eligible class members now have until March 27, 2017, to apply for compensation.

Everyone accepted will receive a base payment of $200 and may be eligible for more, depending on how long the 407 ETR suspended their plate renewal.

Claimants who made partial payments to the 407 ETR hoping to have their plates reinstated may be eligible to get that money back, Thompson said.

The class action lawsuit started in the Ontario Superior Court of Justice in Toronto on April 27, 2012.