Wellington West Capital Inc. has won a partial victory in a legal fight with BMO Nesbitt Burns Inc. over allegations of broker raiding.

The Court of Appeal for Ontario allowed one of the three aspects of an appeal that Wellington West raised in its suit with BMO Nesbitt Burns. BMO Nesbitt Burns is suing the firm and two of its senior officers for soliciting several other defendants to resign from Nesbitt Burns and join Wellington West.

On a pleadings motion brought by Nesbitt Burns, the motions judge struck out portions of Wellington West’s amended statements of defence and counterclaim. Specifically, the judge struck out the parts that made general allegations about Nesbitt Burns’ own recruiting practices. The judge also held that the defendants could not plead Nesbitt Burns’ recruiting practices as a defence to its claim for equitable relief or its claim for punitive damages.

Wellington West appealed three aspects of the judge’s order. The appeal court dismissed the firm’s appeal in two areas, but allowed that Wellington West is entitled to plead Nesbitt’s recruiting practices as a defence to the claim for punitive damages.

“I think the defendants should be able to argue that the conduct of which Nesbitt Burns now complains does not attract the kind of outrage associated with punitive damages because it is widely accepted in the industry and, indeed, has been employed by the plaintiff in its own recruitment of investment advisors,” the appeal court said. “Here the defendants contend that any outrage at their conduct will be diminished because the plaintiff itself has engaged in the very same conduct.”