Court Takes Judicial Notice of Fraud, Awards Significant Punitive Damages

Since the COVID-19 pandemic, a rising number of cases involving fraudulent CSBFA loan applications have made their way before the courts. As lawyers for some of the largest financial institutions across Canada and small business owners alike, we see these fraud cases frequently.

In a recent decision of the Honourable Justice F.L. Myers, the court expressed a zero-tolerance policy concerning bank fraud. In BMO v. 9993525 Canada Inc. et al., the plaintiff bank, represented by SZK’s Sean N. Zeitz and Randy Schliemann, sought, among other relief, repayment of a CSBFA loan, a tracing order, and punitive damages. The court granted the plaintiff’s motion for judgment and ordered the fraudster to pay punitive damages of $150,000.

Not only did the court award punitive damages, but it went a step further and took judicial notice of the fact that “this type of fraud on banks, including brazen forgery of invoices, has become increasingly common in recent years. The court sees an ever-increasing number of cases with this type of fraud. It is important to send a message that this is not conduct that is acceptable. It cannot be the case that under the civil law, someone who plans and executes a deliberate fraudulent scheme is just required to pay back the stolen funds if he is caught some day. Punitive damages are required to deter and dissuade fraudulent misconduct. The amount needs to be significant so as not to amount to a token license fee.”

If you have encountered fraud and are considering your legal options, we are here to help. Let SZK’s team of experienced commercial litigators take the next step for you.

Written by: Randy Schliemann