Monday, 24 December 2012
407 operator facing $25-m lawsuit
The company that operates the 407 highway has been hit with a $25-million class action lawsuit over its allegedly “callous” toll collection practices.
Hamilton lawyers David Thompson and Matthew Moloci have launched the lawsuit on behalf of people who declared bankruptcy and owed the 407 ETR company outstanding tolls and fees at the time.
The lawsuit alleges that the 407 company has been unlawfully collecting outstanding fees by using measures that violate the Bankruptcy and Insolvency Act.
The lawsuit’s statement of claim alleges the 407 ETR company uses the threat of denying a vehicle permit renewal to coerce payments from those people who should be protected under bankruptcy legislation.
The allegations contained in the statement of claim have not been proven in court.
The lawsuit also asks the court to order the 407 company to establish a $20-million trust fund to help reimburse class members who qualify.
“The conduct of 407 ETR was deliberate, callous, wilful, without care and with intentional disregard of the rights and circumstances of class members,” the lawsuit alleges. “407 ETR behaved with arrogance and high-handedness, demonstrating a callous disregard and complete lack of care for the rights of class members. The conduct of 407 ETR ought to be punished and deterred.”
A spokesperson for 407 ETR indicated that the company will defend itself against the lawsuit.
“This issue has been the subject of a decision of the Superior Court that concluded that there is no conflict between the Highway 407 Act and the bankruptcy legislation, and that the licence plate denial provisions applied,” said Kevin Sack, vice-president of communications for 407 ETR.
Under special provincial legislation that applies to the 407 highway, a vehicle owner’s licence plate renewal can be denied if there are outstanding 407 tolls and fees that haven’t been paid.
But when a person declares bankruptcy with 407 tolls and fees left owing, Thompson and Moloci contend that the 407 ETR company is no different than any other creditor in a bankruptcy and shouldn’t be able to use the threat of denying licence plate renewal to obtain payment ahead of other creditors.
“The vehicle permit renewal denial is a very powerful remedy,” said Thompson. “It really strangles many individuals, particularly bankrupts, who typically need to drive to get to work to earn an income so they can get back on their feet.
“It’s a powerful remedy that we say is being used against people who are in a very vulnerable position.”
In some cases, they say, the fee collection and denial of stickers continues even after a person has been discharged from bankruptcy.
“We think this is one of those cases where you have a government and a corporation that are doing stuff that they shouldn’t be allowed to do, and who’s going to fight with them? The bankrupt?” said Moloci. “Is the bankrupt really going to launch a $100,000 legal battle against the 407?
“Chances are they’re going to pay their thousand bucks in tolls or whatever, while biting their tongues, and then just try to get on with their lives.”
Since 2007, about 6,300 people have declared bankruptcy listing the 407 ETR company as a creditor.
Some of the 407 debts, including interest and penalties, are in the tens of thousands of dollars, according to Moloci, and under the current setup, that debt could possibly survive bankruptcy and keep those people from obtaining a licence plate sticker.
“If they had that type of money, they likely wouldn’t have needed to go bankrupt in the first place,” he added. “What are they going to do, go out and get a bank loan so they can get a vehicle permit? It’s ridiculous.”
Potential class members can visit classactionlaw.ca or call 905-526-4394 for more information.