“The Insurance Corporation of British Columbia may, without a hearing, refuse to issue a driver’s licence to a person who is indebted to the Insurance Corporation of British Columbia for any motor vehicle indebtedness.”
I quoted those words directly from section 26(1)(b) of the Motor Vehicle Act.
During my early lawyering years, my practice included debt collection. The laws of British Columbia allow for all sorts of steps to be taken to “encourage” payment of debts, including seizing assets, garnishing a debtor’s employer or bank accounts, and even jail if a judge has imposed a monthly payment plan. I quickly learned, though, that pushing too hard was counter-productive because debts can be wiped out through bankruptcy.
We have decided, as a society, to give our citizens a fresh start if debts become unmanageable though the Bankruptcy and Insolvency Act, which is a piece of federal legislation. Some of our laws are passed by the Government of Canada, and some by the Province of British Columbia. This one, being federal, applies to the whole of Canada.
Under the Bankruptcy and Insolvency Act, the various enforcement steps I listed are prohibited once bankruptcy steps are initiated. Technically, the debt is still owed, but practically speaking it is as if the debt is wiped out because the creditor is prohibited from taking any steps to collect it.
The debtor’s assets, and income during the period of the bankruptcy, are handled by a trustee who makes orderly allocations to debtors according to well established priorities.
The Motor Vehicle Act provision I quoted gives the Insurance Corporation of British Columbia a special strong-arm tactic to collect money. ICBC doesn’t have to garnish your bank account nor haul you before a judge. They don’t have to take any active steps, which are specifically prohibited on bankruptcy initiation. They can simply refuse to issue you a driver’s license.
That special strong-arm tactic has allowed ICBC and other provincial insurance companies to collect debts owed to them even after a person has initiated a bankruptcy because, technically, the collection tactic does not involve the active collection steps prohibited by the Bankruptcy and Insolvency Act.
A recent case out of Ontario has successfully challenged this strong-arm tactic. Judge Goldstein, in an April 12th, 2013 decision, decided that the Ontario version of ICBC’s strong-arm tactic is in conflict with the Bankruptcy and Insolvency Act and therefore is inoperative to the extent of the inconsistency.
I am no authority on the matter, but it seems to me that that the reasoning of Judge Goldstein should apply equally in British Columbia.
Aside from legal technicalities, if we as a society decide that our citizens who become overwhelmed with debt should be given a fresh start, in my view that fresh start should include being able to get a driver’s license. A driver’s license is often absolutely necessary to earn a living and support yourself and your family.
Whether it is by a legal challenge, or simply “doing the right thing”, I wonder if ICBC’s use of this strong-arm tactic is likely to change any time soon. I invite anyone interested in challenging ICBC’s refusal to issue a driver’s license on initiating bankruptcy proceedings to e-mail me for a copy of the Ontario case.
Published December 12, 2013 in the Kelowna Capital News
Posted December 12, 2013 on Kelowna Capital News Online
Leo Busch
Hi
I found your artical extreamly interesting. I am in that very situation of being denied a license while in bankruptcy. I am a carpenter and can not find work without a license, being 60% of advertised jobs require that your have a drivers license. The end result has been the foreclosure of my house and a long stint on employment insurance. I could write at length on the emotional devistation that my family and I have endured not to mention the financial downword spiral. I would greatfully appreciate a copy of the case that you had mentioned. I am going to submit an appeal to the superintendant of moter vehicals.
Thanks Leo
Pat Skakun
I to would like a copy of that Ontario case
Nicole Fisher
Hi Pat, thank you for your interest. Here is a copy of the Ontario case – let us know if you have any questions.
http://www.canlii.org/en/on/onsc/doc/2013/2013onsc1920/2013onsc1920.html
abi
Tried the link above, could not locate the Ontario case. Can anyone assist to locate the case. Thank you.
Nicole Fisher
The link appears to be working from our end, but we’ve inserted an additional pdf copy of the case into the column for you. It is hyperlinked to “April 12th, 2013 decision.”
Let us know if you have any issues.
Frank
Maybe off topic a bit, but I had a substantial debt with ICBC from 1992 until they I think wrote it off. As I’ve had my licence back since 2005. I haven’t filed a claim with ICBC since getting my licence back. They’ve always renewed my licence, my insurance etc. My question is, if I submit a claim for a minor self inflicted bent fender could that possibly wake a sleeping bear?
Cheers.
Paul Hergott, Personal Injury Lawyer
In our civil justice system there are time deadlines within which a creditor (someone owed money) must take steps to collect on a debt. A lawsuit must be commenced within a certain period of time, so as to obtain a “judgment”, and even a judgment must be renewed from time to time. Those time lines can be extended if you acknowledge the debt, so DON’T ACKNOWLEDGE THE DEBT! My experience / expertise for most of my career has exclusively pursuing fair, financial compensation for innocent victims of car crashes so I encourage you to consult with another lawyer with expertise in this area, but I have a lot of trouble imagining how ICBC could go after you for a debt you’ve not heard about for over 20 years.
Brad
Hi Paul, what would “acknowledging the debt” as mentioned above entail? If ICBC doesn’t file a lawsuit and they aren’t paid or acknowledged for 7 years, as per the statute of limitations, is the debt forgiven…?
Paul Hergott, Personal Injury Lawyer
Brad – I’m sorry but I am not an expert in this area and I am not able to offer you a recommendation for a lawyer with this particular expertise. Perhaps take advantage of the incredible Lawyer Referral Service that can be found at this link: https://www.cbabc.org/For-the-Public/Lawyer-Referral-Service.
Dave
So what’s the time limitation that ICBC has to come after someone for money supposedly owed to them? When I called them back in 2006 they claimed I owed over 14000 for a years insurance and when I got pulled over a little less than a year later while WALKING, I was told by the police that ICBC requested I be given a 90 driving prohibition
Paul Hergott, Personal Injury Lawyer
I am sorry, Dave. I do not have the expertise to advise you on that point. For an incredibly inexpensive consultation with a lawyer, I suggest you try the Lawyer Referral Service offered through the Canadian Bar Association: https://www.cbabc.org/For-the-Public/Lawyer-Referral-Service.