Court File and Parties

Citation: Serra v. Serra, 2009 ONCA 395 Date: 2009-05-12 Docket: C46745 Court of Appeal for Ontario Before: Moldaver, Armstrong and Blair JJ.A.

Between:

Barbara Anne Serra Respondent/Applicant

and

Harold Keen Serra Appellant/Respondent

Counsel: Philip M. Epstein Q.C. and Nancy J. Iadeluca, for the appellant James C. Morton and Victor Nikitine, for the respondent

Heard: September 24, 2008

Costs Endorsement

[1] Following the release of this Court’s decision on February 4, 2009, we have received and reviewed counsel’s submissions as to costs. This is our endorsement in that regard.

[2] Mr. Serra, the appellant, was substantially successful on the appeal and – as a result – at trial. Mr. Epstein seeks to have us fix costs for both the trial and the appeal. Mr. Morton has not opposed that suggestion.

[3] Sadly, Mr. Serra has died since the release of our decision. Neither counsel has submitted that this fact should alter our disposition as to costs, however.

[4] The appellant seeks costs of $412,034 in total. This amount is comprised of a sum of $377,343 for fees and disbursements plus GST at trial and the sum of $34,691 for fees, disbursements and GST on appeal – all on a partial indemnity basis.

[5] The trial lasted nine days, the appeal one. The appellant argues that the trial preparation and the trial itself were unduly prolonged by the respondent’s irrational belief that his company was worth $65 million and by her far-reaching trust and accounting claims. The trial judge found no evidence that the appellant was hiding assets and dismissed the respondent’s trust claims (which she had sought to withdraw on the eve of trial). The bulk of the trial was devoted to (a) the equalization of net family property issue – on which the appellant was ultimately substantially successful – and (b) the trust claim.

[6] The appellant made numerous offers to settle throughout the pre-trial period. The respondent made none. As Justice R.J. Spence noted in Husein v. Chatoor (2006), 2005 ONCJ 487, 24 R.F.L. (6th) 274 (Ont. Ct. J.), at para. 30:

[P]arties have an obligation to begin to assess their respective cases at the outset of the litigation – even before the litigation commences – and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it ehoves neither party simply to sit back and to roll the dice while those fees continue to mount. [Emphasis added.]

[7] Mr. Morton accepts “the timelines and underlying facts as set out” in the appellant’s materials and that the time docketed was in fact spent. He argues that the respondent’s conduct was not unreasonable or excessive, however, and that the results of both the trial and the appeal were mixed. He makes no submissions as to quantum either at trial or on appeal.

[8] Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.

[9] Rule 24(11) of the Family Law Rules, O. Reg. 114/99, provides that, in exercising its discretion to award costs, the court must consider the following factors:

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party’s behaviour in the case;

(c) the lawyer’s rates;

(d) the time properly spent on the case;

(e) expenses properly paid or payable; and

(f) any other relevant matter.

[10] Here, the issues at trial and the facts and evidence were complex and the primary issue on appeal was difficult and important. As noted above, the respondent’s approach to the trial prolonged both the preparation and trial period and she is not entitled to shield herself from the consequences of her refusal either to make or accept reasonable offers to settle.

[11] The appellant’s disbursements at trial totalled $195,000 including GST. Approximately one-quarter of those disbursements related to the appellant’s obligation to value his assets and are not being sought as costs. He seeks fees at trial of approximately $215,000 plus GST. On appeal, he seeks fees of 32,364.45 including GST, and disbursements of $2327.20 including GST.

[12] As this Court has observed, costs awards, at the end of the day, should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties”: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291, at para. 24. Here, having regard to all of the relevant factors and considerations outlined above, the appropriate order for costs in our view is as follows:

For trial – $275,000 to the appellant, inclusive of disbursements and GST

On appeal – $25,000 to the appellant, inclusive of disbursements and GST

[13] Costs of the appeal and at trial are fixed in the foregoing amounts.

[14] Mr. Serra was making spousal support payments through FRO. At the time of the costs submissions he was in arrears of approximately $140,000. The outstanding arrears may be offset against the foregoing costs award. The balance of the costs award may be offset against future spousal payments, so long as they are outstanding, but by an amount not to exceed one-half of the monthly spousal support payments.

“M.J. Moldaver J.A.”

“R.P. Armstrong J.A.”

“R.A. Blair J.A.”