Court orders double costs after investors reject settlement offer

The couple sued the firm alleging breach of duty of care and breach of fiduciary duty, claiming that it failed to inform them of a margin call, and then sold a number of their bonds at less than market value to satisfy the margin call.

The court rejected the Edwards’ claim at trial and granted the firm the opportunity to speak to the issue of costs.

The court decision states that the firm then sought an award of special costs of the entire proceedings against the plaintiffs, or double costs for costs incurred after its offer to settle, and a hearing was held to consider the issue.

Ultimately, the court concluded that special costs — which may be awarded to chastise reprehensible conduct in the course of litigation — are not warranted in this case. The judge ruled, “there was no scandalous or outrageous conduct of the plaintiffs in these proceedings and no misbehaviour nor any other conduct deserving of reproof or rebuke.”

The court also rejected the firm’s argument that it was entitled to special costs because it was sued for breach of fiduciary duties including duties of good faith and fair dealing.

“The defendant is an investment dealer and must expect these kinds of claims anytime it is sued for its investment advice or lack thereof,” the decision states. “The relationship between a client and investment dealer is almost always going to be a fiduciary relationship because of the nature of the business relationship and the claims are almost always going to involve claims of breach of fiduciary duty.”

However, the judge did rule that the firm is entitled to double costs following its offer to settle. “The offer to settle here was one that ought reasonably to have been accepted by the plaintiffs and the relationship between the terms of settlement offered and the final judgment of the court confirmed that,” the decision states.