A British Columbia appeals court has denied an appeal by an investor suing his RRSP trustee, and a lawyer, over his losses in the Eron Mortgage Corp. debacle.

The court denied an appeal by David Patriquin, who lost his suit against Laurentian Trust Canada Inc., and Eron lawyer Douglas Jackie. Both were sued for breach of duties Patriquin said they owed to him.

The trial judge found that Laurentian did not breach any duty, and that it acted in accordance with an established practice in advancing the plaintiff’s funds for a mortgage on the authority of a term sheet signed by the plaintiff. The judge also found that Jackie acted only for Eron and the plaintiff had his own lawyer. Jackie owed no duty of care to look out for the plaintiff in the deal. The appeals court upheld those findings.

The trial court gave Laurentian ordinary costs, but because the claim against Jackie involved allegations of a breach of fiduciary duty and professional ethics, he awarded Jackie special costs. The appeals court has reversed the decision to allow special costs.

“On the matter of costs I think that the trial judge erred in principle in awarding special costs,” the appeals court wrote. “He held that the allegations against Mr. Jackie went to his professional reputation and were unfounded, and so it was reprehensible of the plaintiff to make those allegations. With respect, I do not regard the claim against Mr. Jackie to involve anything of the sort likely to damage his reputation. The plaintiff did not accuse him of fraud or other morally opprobrious conduct. The case against Mr. Jackie was always weak but as the trial judge acknowledged, that is not a ground for special costs.”

The appeals court set aside the award of special costs and substituted an award of costs at scale.