Kingston -Gionfriddo - How to Pierce the corporate veil of a non paying load broker

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There is a lot of talk on this site about non paying load brokers. We all need to stick together and start taking these crooks to small claims court. You can sue their company and sue the directors personally (see the notes below). As for Kingston Logistics...your load sheet will say Kingston Logistics Inc. This company does not exist. Tony registered Kingston Logistics as a registered trade name not Kingston Logistics Inc. "Kingston Logistics" is not a corporation, it is a trade name. Tony incorporated "Kingston Transport Carrier Inc.", as such it can only operate under that name or its trade name, "Kingston Logistics". His paper work is incorrect by listing "Kingston Logistics Inc." since it was dissolved in 2006. Typically when someone is operating under a name that is not registered they are personally liable. Also read the case below...it has been held up in court many times since this original case. Tony owns a home at 444 Woodsmere in Pickering. If there are enough companies interested we can start a "Class Action Law Suit". Tony has shut down all of his own companies and is operating under Dun Rite at 7544 Airport Road Unit 208...

Enforcement of Trust Provisions

Another decision that is of interest in relation to the transportation industry, in particular, third-party intermediaries referred to as "load brokers" in the Ontario Truck Transportation Act, is the Ontario Superior Court of Justice decision in Sager Transport Ltd. v. Varga Trucking Ltd. [2004] O. J. No. 4923. By way of background, a load broker is generally defined as a person who arranges transportation for compensation using the services of a road carrier. The Truck Transportation Act prohibits the provision of "load brokerage" services unless, inter alia, the load broker establishes a trust account into which funds paid to the load broker by a shipper or consignee are to be held in trust for the benefit of carriers who provided the transportation services (except that portion of the funds received that are in excess of the transportation charges). As noted above, it is anticipated that the Truck Transportation Act will be repealed; however, amendments to the Highway Traffic Act once proclaimed in force will obligate any person who "arranges" for carriage of goods of another person for compensation to hold monies in a trust account, for the benefit of the carrier who provided the transportation services until the carrier is compensated.

The decision in Sager is significant because the Court decided to look beyond the corporate defendant and found the company’s two directors personally liable for monies owing to the plaintiff carrier for transportation services provided at the request of the defendant company. The Court found that even though the corporate defendant had not complied with the provisions of the Truck Transportation Act and was not licensed as a load broker, the nature of its services were such that they did in fact constitute load brokerage services. The company should have been licensed and should have complied with the provisions of the Act requiring that a trust account be established and funds be placed in trust for the benefit of carriers performing the transportation services at the request of the defendant company. The Court found that the personal defendants ultimately benefited from the funds received. The Court also found the two directors "were the directing minds of the conduct and they are not to be allowed to shield their negligence or commercial cheating behind the notion that there was no trust, and/or no deemed trust arising from the statute."

The decision is significant because it indicates the willingness of the Ontario Court to pierce the corporate veil in enforcing the statutory trust provisions. The statutory obligation to establish a trust account and to hold funds in trust for the benefit of carriers performing the transportation services will apply potentially to a broader class of persons involved in the transportation industry after amendments to the Ontario Highway Traffic Act are proclaimed in force. As such, the case will continue to have significant consequences for those involved in the transportation industry.
 
Section 191.0.1(3) of the Highway Traffic Act provides:

Section 191.0.1(3) of the Highway Traffic Act provides:

A person who arranges with an operator to carry the goods of another person, for compensation and by a commercial motor vehicle, shall hold any money received from the consignor or consignee of the goods in respect of the compensation owed to the operator in a trust account in trust for the operator until the money is paid to the operator

Fernandes Hearn LLP Barristers & Solicitors - Canadian Law Firm

scroll down to scetion 2 for cited cases
 
case from 2009

2. CIBC v. Nadiscorp Logistics Group Inc.: The Latest Chapter in the Prioritization of a Dispute Between a Secured Creditor and an Unpaid Carrier

This decision (2009 CanLII 50866) is the latest case installment pitting a secured creditor against unpaid carriers in a payment priority dispute arising from the financial failure of a transportation intermediary or broker.

The Facts

Nadiscorp Logistics Group Inc. ("Nadiscorp") was a logistics company providing services for shippers of goods. Nadiscorp engaged the services of third party carriers for its customers, who would pay freight to Nadiscorp, who in turn paid the freight charges to the carriers. In February of 2009 Nadiscorp entered into receivership. A. Farber & Partners Inc. was appointed the Receiver of all the property, assets and undertakings of Nadiscorp. The Receivership Order authorized the Receiver to deposit all funds received or collected by it "into one or more new accounts to be opened by the Receiver".

Accordingly, the Receiver opened a general trust account and began depositing into the same all the funds received or collected during the administration of the receivership. During this process the Receiver performed a detailed review of all accounts receivable it collected to determine whether Nadiscorp in turn had any liabilities due to third party carriers engaged by it for and on behalf of shippers of goods. The Receiver was aware that a "trust" may exist in favour of such third party carriers under the Highway Traffic Act R.S.O. 1999 c. H.8.

Section 191.0.1(3) of the Highway Traffic Act provides:

A person who arranges with an operator to carry the goods of another person, for compensation and by a commercial motor vehicle, shall hold any money received from the consignor or consignee of the goods in respect of the compensation owed to the operator in a trust account in trust for the operator until the money is paid to the operator.

This is the oft-quoted provision in Ontario law whereby freight brokers and other intermediaries are required to hold monies received from shippers (earmarked as payments to carriers) in a trust account. Based on its analysis as to the nature of the accounts receivable, the Receiver determined that some $300,000.00 were monies owing to carriers. The Receiver accordingly transferred this amount into a separate trust account opened specifically to fund potential carrier "trust claims".

During the course of the administration of the receivership of Nadiscorp certain thorny issues arose.

The first concerned whether certain of the unpaid carriers had a claim to the funds held in the "carriers trust account" in priority to the claim of a secured creditor of Nadiscorp, being the Hospitals of Ontario Pension Plan ("HOOPP").

The second issue turned on it being determined that the unpaid carriers did have a priority claim over the secured creditor. If they did, was such a "priority position" - premised on the application of the above provision of the Ontario Highway Traffic Act- thereby limited to a carrier resident in Ontario, or performing the carriage of goods into or out of Ontario? Or did such a priority position extend to other carriers who provided services in Canadian jurisdictions other than Ontario? This issue was raised as there is no statutory equivalent in the other provinces to the aforementioned provision of Section 191.0.1(3) of the Highway Traffic Act.

The First Issue: Who had priority to the funds set aside by the Receiver in the "carriers trust account"?

Citing well-established case law in the GMAC Commercial Credit Corporation Canada v. TST Logistics Inc. and the Norame Inc. decisions, counsel for HOOPP submitted that the Receiver had not complied with the requirements of Section 191.0.1 (3) of the Highway Traffic Act in the collection of the receivables so as to retain the monies earmarked for the carriers as a trust fund. In particular, it was argued that the Receiver had not demonstrated that the receivables, as collected as earmarked for the carriers, were segregated when received and kept in a separate trust account for the carriers. Rather, the assertion was that all monies were "co-mingled" by being placed into the general trust account upon initial receipt by the Receiver.

On the basis of the aforementioned decisions, counsel for HOOPP argued that the "co-mingled funds" had lost their status as trust funds and that the carriers could therefore not claim the benefit of any special priority accorded to them in the Highway Traffic Act. It was argued that the aforementioned precedents held that in order for carriers to obtain priority to funds collected by a Receiver over the interest of a secured creditor, that a trust account must conform to general trust principles. In particular, the trust property must be identified as being held in trust, segregated in a trust account, and not co-mingled with other property and that once the purported trust funds are co-mingled with other funds, they no longer constitute a "trust". If deprived of the nature of a "trust fund", the carriers would then lose the trust protection in the aforementioned Section 191.0.1 (3) and, accordingly, the carriers would then lose a priority battle to HOOPP as the secured creditor on a conventional priority adjudication.

The Ontario Superior Court, adjudicating the dispute, determined that the Receiver had to comply with both the aforementioned provision of the Highway Traffic Act as well as the relevant receivership appointment Order. The Court found that the Receiver in fact did comply with these requirements. The Court ruled that the funds in the Receiver's account are and were always funds held in trust for the creditors of Nadiscorp. There was nothing wrong with the Receiver taking in all initial monies into a general trust account, thereafter transferring the amount of $300,000.00 into a separate trust account to fund potential carrier trust claims. Accordingly the funds earmarked for the carriers had not lost their status as trust funds. As such the carriers enjoyed priority over the secured creditor. But …. exactly which carriers?

The Second Issue: How far does the "Carrier Priority Protection" Go?

As to the second question this raises a very important point as to the scope of or "reach" of the priority protection afforded by Section 191.0.1.(3) to carriers. Counsel for the Receiver took the position that any carrier who did not carry goods into or out of Ontario was not entitled to the benefit of Section 191.0.1.(3). Just what is the scope of, or reach of this provision of the Ontario Highway Traffic Act? The carrier litigants involved in the dispute did not carry goods for Nadiscorp into or out of Ontario. Nor were they resident in Ontario. As such they were not directly under the legislative rubric of the Highway Traffic Act of Ontario. Having carried goods for Nadiscorp in other Canadian jurisdictions (but into or out of Ontario) counsel for these carriers argued that the analysis as to the "reach" of the legislation should be whether or not Nadiscorp itself was bound by the Highway Traffic Act, as opposed to concerning an analysis as to where the carriers happened to undertake their mandate.

The Court ruled that the applicability of Section 191.0.1(3) did not depend on an analysis of the contracts as between the broker and the carrier. That is, there is no particular magic as to the geographic routing of the carrier for any shipment in question. Rather, the question was whether the operations of Nadiscorp are governed by the Highway Traffic Act. The Court found that on a plain reading the above section imposed an obligation on a person who arranges with an operator to carry the goods of another person. Nadiscorp conducted its business in Ontario and it engaged the services of various operators or carriers to transport various loads both interprovincially and intraprovincially. Counsel for the "outside of Ontario" carriers submitted that it followed that Nadiscorp's arrangement of the carriage of the goods in question therefore took place in Ontario, (with Nadiscorp being based there) and therefore insofar as the orders to carry goods originated or were arranged from Ontario, the "out of Ontario" carriers should get the protection of Section 191.0.1 (3).

The Court accepted this submission, ruling that insofar as Nadiscorp arranged the carriage of goods of another person while being a resident in Ontario, that there was no basis in upon which the Receiver could discriminate between carriers who are resident in Ontario and those who are not, or as concerns where they happened to undertake their services once mandated by Nadiscorp. The Court also noted that there is nothing in the definition of "operator" in the Highway Traffic Act to suggest that the term is limited to a carrier resident in Ontario.

Conclusion

Having found that the monies claimed by the unpaid carriers retained their nature as trust funds, the Court ruled that the deemed trust provision contained in Section 191.0.1 (3) applied to any carrier engaged by Nadiscorp.

Gordon Hearn
 
Kingston Transport

Yet another story of Tony and Kingston Transport.

I (freight broker) gave him a number of loads which went well as far as I was aware. Untill now....

I gave them a load which they then double brokered for more than I was paying them, which I wasn't aware of. I paid their invoice and he didn't pay the carrier they hired.

Needless to say they are going after my customer....who will in turn come after me.

I have emailed Tony (tony@kingstontransport.com - still working) and called (he won't answer)

Can anyone help?
 
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Kingston

I do not understand how so many of you have clear proof of fraud regarding this person under various corporate guises, and he is not pursued criminally.

Several years ago I had a situation with a well known Montreal character doing the same thing. I pulled up my pants, tightened my belt and went after him criminally.

I did not sue him in civil court. Instead put together a large file proving fraud. It took around 5 years to get a result but the state won!!!

If you can prove that he sold loads for more than he got paid and was not listed as a charity, your case is made.

Simply do not accept the the police comment that this is a civil matter. Fraud is a criminal act and the prosecution costs are on the Crown.

This will cost you nothing, but your time!!!
 
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ALX.....seriously? You pay KINGSTON OR DUNRITE OR TONY for that matter because he gave his word that the load moved on his truck/equipment his drivers etc.....to later find out after you PAID that the actual carrier that was contracted by KINGSTON OR DUNRITE OR TONY is no where to be found for payment.....SO what was your question HOW DO WE KNOW THAT THIS WAS CLEAR PROOF FRAUD...OMG really?
 
Gem Stone said:
Yet another story of Tony and Kingston Transport.
I (freight broker) gave him a number of loads which went well as far as i was aware. Untill now.
I gave them a load which they then double brokered for more than I was paying them, which i wasnt aware of .. I paid their invoice and he didnt pay the carrier they hired.

Needless to say they are going after my customer.... who will in turn come after me.

I have emailed tony (tony@kingstontransport.com) still working and called (he wont answer)

can anyone help?
Click to expand...

You've been a member of this forum for over a year and recently gave Tony freight (willingly)??

I just don't understand...

He cost us $8400 and I'll never forget it (nor willingly work with him again).

I hope you can force him to pay the transporting carrier, there's nothing worse than paying twice (for a broker or for a shipper) while guys like this squirrel away the bucks...

Mike
 
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Baily

You clearly missed my point.

There is clearly no doubt that there is fraud.

You can prove he sold the load for more than he was getting paid. Therefore he was either going to pay the carrier that actually moved the freight more than what he got and this out of pocket. Or, conversely there was never intent to pay.
This is no longer bad business, it is fraud and therefore a crime.

Simply contact the appropriate authorities and have him charged.
 
(mike)This happened in 2010, this is how I found the posts on this guy and this site. (thankfully) I just didnt post anything till now.

I do have proof, I have copies of all the paperwork as well as copies of the bill from the acutal carrier that did the work and have no problem spending time on it.

Have no dought I will ... and will let you know what happens.


Follow up, he did end up answering my emial today and said nothing he can, will do about it..... (tony@kingstontransport.com)
 
As I've mentioned before, even if he did not double broker your load ... it's quite possible the owner-operator he was using didn't get paid either.
 
I'm ready to share cost and time.

Hi everyone, I'm battling against Ghk is Small Claims and I have evidence of fraud as well. Everyone who wants to join send me an email sokil_trucking@rogers.com We don't need guys like Tony in our market.
 
2000 International Tractor

Hi everyone,

I know its a little off topic but has anybody seen or know the whereabouts of a white 2000 International tractor owned by Tony (Kingston)??

I'm currently looking for it and any help/leads would be appreciated!

Thanks,

TheTruckDoc
 
You should get in touch with Constable D Linker Port Hope Police Service....He is currently investigating for the REAL Dunrite Logistics. He can be reached at 905 885 8123, or email him at dlinker@phps.on.ca.

Further more anybody having dealings with this clown should be contacting their local police of the situation.
 
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While you are actively looking for your white 2000 International tractor. We're looking for a 1998 Black Freightliner FDL 120. Tony has this one too.
 
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