Supreme Court of Canada decides 407 ETR and Moloney cases

The Supreme Court of Canada (SCC) today released the long awaited decision regarding 407 ETR and Moloney cases.

Both of these cases dealt with the issue of provincial bodies withholding driver’s licenses or insurance where a debtor has gone bankrupt and owed money for unpaid insurance or highway tolls.  Both of these debts are provable claims in bankruptcy.

The SCC ruled that the sections that allow provincial bodies to withhold licenses or other services are in conflict with the Bankruptcy an Insolvency Act (BIA).  The Court stated that when applying the doctrine of federal paramountcy, sections that give provincial bodies the authority to withhold licenses becomes inoperative to the extent that it conflicted with the BIA’s purpose of giving a discharged bankrupt a fresh start.

What the Court didn’t say is when the license is to be issued.  It is our view, that the provincial bodies have the right to withhold or renew licenses until the debtor is discharged.  S178 (2) provides that an order of discharge releases the bankrupt from all claims provable in bankruptcy.

To read the full decisions here:

Should you wish to discuss this case with us, please contact us at (604) 605-3335.