A B.C. court has rejected a claim for special costs by RBC Dominion Securities Inc. in its successful lawsuit against Merrill Lynch Canada Inc. and several former employees.

An order for special costs is available as a punitive sanction in a case where conduct is “reprehensible,” whether “scandalous or outrageous” or one of the “milder forms of misconduct deserving of reproof or rebuke,” the judgment explains.

The Honourable Madam Justice H. Holmes recounts that in the original case, “I found the defendants responsible for numerous contractual and tortious breaches associated with the departure of most of the investment sales staff from DS’s Cranbrook office.”

And, the decision notes that DS argues, “. . .that the defendants behaved reprehensibly in their wholesale conversion of DS’s documents and their fundamental and prolonged breaches of duty, carried out with full knowledge that the conduct was improper and unlawful.”

However, the judge finds, “In my view, an award of special costs would amount to double punishment.”

“The conduct on which DS relies as supporting an award of special costs is the same conduct that grounded substantial awards of punitive damages,” the judgment says. “There may be cases where both punitive damages and special costs may be awarded; however, those cases generally involve reprehensible conduct in the litigation process, such as duplicitous behaviour aimed at preventing fact finding or otherwise disrupting the trial process for ulterior purposes, or where the conduct that gave rise to the cause of action continued through the litigation.”

It notes that in this case the defendants’ misconduct ended long before the litigation, and is reflected in the substantial awards of punitive damages. “The court’s ‘reproof or rebuke’ has already been expressed,” it says.

DS also argues that if ordinary costs are to be awarded, they should reflect the substantial number of witnesses, the significant number of issues of fact and of law, and the importance of the case for employment in the securities industry and employment law generally.

However, the court finds, “I am not persuaded that the issues of law and fact in this case were of more than ordinary difficulty or that the time for which the case was before the court was out of accord with the time expectations of modern commercial litigation. . . Although the reasons express conclusions which will undoubtedly have implications beyond this case, the evidence and submissions did not provide a basis for the expression of universal principles or rules of conduct applicable generally to the securities industry.”