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Significant Punitive Award in Bank Fraud Case

Overview

In Business Development Bank of Canada v. 11518801 Canada Inc., 2025 ONSC 5636, Ian Klaiman and Elina Fish successfully obtained various punitive and remedial orders against the defendants in connection with a credit facility obtained through fraud.

The plaintiff, Business Development Bank of Canada (the “Bank”), was awarded default judgment against the defendants in the principal amount of $276,079.08, punitive damages in the amount of $125,000.00 – being approximately 50% of the principal loss, and full-indemnity costs in the amount of $60,147.80. The defendants were also ordered to account for the Loan proceeds until the judgment is fully satisfied.

The defendant company had applied to the Bank for a $250,000.00 loan (the “Loan”) under the Black Entrepreneurship Loan Fund, a program established in partnership with the Federation of African Canadian Economics to support Black business owners and entrepreneurs. To secure the Loan, the defendants provided documentation and made express and implied representations that it would be used to purchase a 2025 Freightliner Cascadia Truck (the “Truck”). Instead of purchasing the Truck, the defendants misappropriated the Loan for their own personal use and benefit. 

In her endorsement, Justice Brownstone emphasized the “egregious” nature of the defendants’ conduct, including exploiting a fund designed to support Black business owners, refusing to respond to the Bank, and knowingly engaging in fraudulent activity. Punitive damages were therefore found necessary to achieve the objectives of punishment, deterrence, and denunciation. Similarly, full indemnity costs were appropriate given that the defendants: (1) had contractually agreed to pay full legal and professional fees in the loan agreement; (2) engaged in unlawful conduct; and (3) avoided the plaintiff both pre- and post- litigation.

This decision highlights the importance of pursuing punitive and remedial orders in cases involving bank fraud.

Written by: Nicole Demirov

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