No DefaultNo default until 407 adjudicator says so: JudgeCourt...

No Default
No default until 407 adjudicator says so: Judge
Court decides 60-day deadline to contract termination can't begin yet


FROM CANADIAN PRESS

An Ontario judge has bought the owners of Ontario's only toll road some time in their ongoing dispute with the province over whether they can raise Highway 407 tolls without government approval.
Superior Court Justice Ian Nordheimer ruled today that the clock won't start ticking on 407 ETR, the highway's operator, until an adjudicator has a chance to decide whether in fact it broke its contract.

The Ontario government issued a notice of default against the company early last week, claiming it breached its contract by hiking tolls by a cent a kilometre without the province's approval.

That default notice is supposed to trigger a 60-day "cure period," after which time, if the breach hasn't been rectified, the government could effectively terminate the contract and take back the highway.

Lawyers for the company argued it's not fair to impose the cure period until an impartial third party can determine that a contract breach actually occurred.

Nordheimer agreed, saying the default process can't begin until ``a default by (407 ETR) is determined to have occurred in accordance with the dispute resolution process" set out in the contract.

"We think this is fair and we are happy," 407 ETR spokesman Dale Albers said in a statement.

"We received exactly what we were looking for: a declaration that the government's default notice is not appropriate."

Albers said the two sides will now turn their attention to the dispute resolution process, which the government had always planned to follow, said Transportation Minister Harinder Takhar.

"We're going to follow the dispute resolution process; that's what the court wants to do," he said, adding that Nordheimer has not yet ruled on the larger issue of whether a certain clause of the contract prevents 407 ETR from acting unilaterally on tolls.

"The court has not ruled one way or another, and in fact the court has said there are serious and live issues with regards to that clause between both parties."

Takhar was also insisting Monday that the ruling wasn't a setback. "It doesn't give them anything extra that they don't have in the contract . . .the fight is about toll increases; it's not about the cure period."

Premier Dalton McGuinty promised repeatedly during his successful election bid last fall that a Liberal government would roll back 407 tolls.

But the company has insisted that its lease, a 99-year deal signed in 1999 by the former Conservative government, allows it to raise tolls in accordance with higher traffic volumes.