The province's auto insurance company, SGI, has been ordered to accept the licence application of a man who declared bankruptcy with an unpaid debt to the insurer.

The court order, contained in a recently published decision, concerned a man who owed SGI $9,400.

The debt arose because the man had forgotten to renew his insurance and was involved in an accident.

SGI paid for the other driver's damages and then demanded the uninsured man cover that expense in October of 2003. Five months later, the uninsured driver declared personal bankruptcy.

Among his debts, he said he owed SGI $9,400.

At the end of the bankruptcy proceedings, SGI was told it could recover $123 from the man and the company did receive that amount.

Then, in 2007, the man applied to renew his driver's licence.

Overruled by judge

But SGI refused, saying it would not renew the licence until the man's $9,400 debt was fully paid.

The issue went to court and the judge said the insurer's position was valid, except for the fact that bankruptcy proceedings, which fall under federal law, override the provincial legislation governing SGI.

Since the federal bankruptcy proceedings essentially wiped out the man's debts, he can not be forced to pay SGI.

"While SGI may follow its normal procedure otherwise in determining whether to renew [the man's] licence, SGI may not require [him] to provide the undertaking to pay the debt," the judge on the case said.