Director And Officers' Liability And The Load Brokers' Trust Obligation Under The Ontario Highway Traffic Act

• Published date: 14 November 2025
• Subject Matter: Litigation, Mediation & Arbitration, Transport, Rail, Road & Cycling, Trials & Appeals & Compensation
• Law Firm: Gardiner Roberts LLP
• Author: Kim E. Stoll

Ontario continues to be the only province in Canada requiring that persons who arrange for carriage, typically load brokers who are "load arrangers", must hold "in trust" any freight charges earmarked for the associated carriers.

Prior to the enactment of the current Highway Traffic Act ("HTA") ¹ provisions, rather familiarly even today, carriers were frequently at the mercy of unscrupulous or eventually insolvent load brokers that had already received freight payment from the shipper, but who then, unsurprisingly, failed to pay the carrier.

To attempt to combat this problem, the Load Brokers Regulation (Ontario Regulation 556/92) under the former Ontario Truck Transportation Act² was enacted to regulate the activities of load brokers. Regulation 556/92 required load brokers to register with the Ministry of Transportation, to obtain and maintain a surety bond and to hold "in trust" those funds that a load broker owed to carriers for freight charges. To most carriers, this regulation was ineffective, especially given the lack of enforcement by the Ministry of Transportation.

Deregulation efforts saw the repeal of the Ontario Truck Transportation Act and Regulation 556/92 as of January 1, 2006. One provision of the Load Brokers Regulation was reborn as part of the Highway Traffic Act, specifically, Section 191.0.1(3) for the trust fund requirement, applying to all "persons" (which arguably may include any carrier who sub-brokers a load). This section continues to be important as a tool for carriers to collect freight charges (particularly in bankruptcy and insolvency situations) though there continues to be no regulatory "teeth" to enforce such trust provisions in the normal everyday course of business. The trust protection afforded to carriers regarding freight owed by Ontario-based load brokers is based on an honour system. While not specifically enforced in any way, that provision has been a key factor in priority disputes where the load broker has declared bankruptcy or entered into voluntary receivership.

Case law continues to be limited regarding how the courts have dealt with carrier claims in priority disputes or whether the corporate veil will be lifted, allowing for personal liability of officers and directors, where funds are not held separately in trust.³

Outside of priority disputes, lack of enforcement and litigation regarding unpaid freight charges often leaves the carrier unpaid and opens the doors for legal creativity.

The Legislation - The Statutory Trust

Contracts of carriage

191.0.1 (1) Every contract of carriage for a person to carry the goods of another person by commercial motor vehicle for compensation shall contain the information required by the regulations and shall be deemed to include the terms and conditions set out in the regulations. 2002, c. 18, Sched. P, s. 34.

. . .

Money for contract of carriage held in trust

(3) A person who arranges with an operator to carry the goods of another person, for compensation and by 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. 2002, c. 18, Sched. P, s. 34.

Other rights unaffected

(4) Nothing in subsection (3) derogates from the contractual or other legal rights of the consignor, the consignee, the operator or the person who arranged for the carriage of the goods with respect to the money that is held in trust under that subsection. 2002, c. 18, Sched. P, s. 34.

(emphasis added)

Personal Liability of Directors and Officers for Freight Charges

There is an avenue that might assist when the carrier is left unpaid by an insolvent or unscrupulous load broker or such other person taking control of such arrangements. This involves consideration of the trust and the exposure of certain inpiduals to liability. Success will depend very much on the facts.

Personal liability of directors of closely held corporations for breach of trust by the corporation was considered by the Supreme Court of Canada in Air Canada v. M&L Travel Ltd., [1993] 3 SCR 787 ("Air Canada").

Iacobucci J. for the Court held, at page 26,

"...whether personal liability is imposed on a stranger to a trust depends on the basic question of whether the stranger's...