The Business Development Bank of Canada is being forced to defend allegations it approved a six‑figure loan for political reasons after a Newfoundland and Labrador judge refused to strike a borrower’s counterclaim.Justice Alexander MacDonald of the Supreme Court of Newfoundland and Labrador ruled the pleadings filed by Lewis Lumber Group were clear enough for the Crown lender to answer, rejecting BDC’s argument that the allegations were too vague to stand. “The question is whether the pleading is so unclear, confusing or deficient it makes it impossible or unfair for the Bank to respond properly. I do not find this is so,” MacDonald wrote.The dispute centres on a $250,063 loan issued in 2018 to support construction of a wood pellet plant in rural Newfoundland. Lewis Lumber argues it was pushed into the project as part of a political effort to revive jobs after a 2003 fire destroyed Canada Bay Lumber Co., the only major employer in Roddickton. The uninsured loss wiped out 130 jobs and left $1.4 million in unsecured debts owed to the Atlantic Canada Opportunities Agency. Local officials at the time said then‑Liberal MP Gerry Byrne had contacted the town about potential assistance..According to court filings, Lewis Lumber claims both the Bank and the provincial government urged the company to prepare a business plan — paying for it themselves — and assembled a financing package despite repeated warnings the owners had no experience in the pellet industry. The company alleges BDC overlooked “weaknesses” in the proposal because of political pressure to stabilize the Northern Peninsula economy.Executives told the Court they had “no experience, expertise or foreknowledge” of the pellet sector and that BDC appeared “anxious to have employment replacement after the Canada Bay Lumber fire.” They further allege the Bank solicited their participation, downplayed risks, and rushed the financing despite concerns about limited markets for wood pellets and the scale of the required spending.MacDonald dismissed BDC’s attempt to strike the counterclaim, noting the Bank relied solely on an affidavit from its lawyer. “A litigant cannot base a summary judgment application solely on a solicitor’s affidavit,” he wrote.The case is scheduled to return to court in 2026.
