Armoyan v. Armoyan

Armoyan v. Armoyan Court Court of Appeal Date 2013-11-29 Citation 2013 NSCA 136 Docket 389169, CA 407024 Judge/Registrar/Adjudicator MacDonald, J. Michael (Honourable Chief Justice) (CA); Fichaud, Joel E. (Honourable Justice) (CA); Bryson, Peter M.S. (Honourable Justice) (CA) Document Type Decision Relations Library Sheet - Armoyan v. Armoyan - 2013 NSCA 136 - 2013-11-29 - Library Sheet Decision Content Nova Scotia Court of Appeal Citation: Armoyan v. Armoyan, 2013 NSCA 136 Date: 20131129 Docket: CA 407024 CA 389169 Registry: Halifax Between: Lisa Armoyan Appellant v. Vrege Sami Armoyan Respondent Corrected Decision: The text of the original judgment has been corrected according to the attached erratum dated October 31, 2019 Judges: MacDonald, C.J.N.S., Fichaud and Bryson, JJ.A. Appeal Heard: June 19-20, 2013, in Halifax, Nova Scotia. Written submissions on costs, filed between September 30, 2013 and October 22, 2013 Held: Costs of $306,000, all inclusive, awarded to the Appellant, per reasons for judgment of Fichaud, J.A.; MacDonald, C.J.N.S. and Bryson, J.A. concurring Counsel: Mary Jane McGinty and Christine J. Doucet for the Appellant Gordon R. Kelly and Noemi Westergard for the Respondent Reasons for judgment: [1] This Court’s Decision of September 10, 2013 (2013 NSCA 99) allowed Ms. Armoyan’s appeal from a condition imposed by the Supreme Court (Family Division) for an adjournment (“Adjournment Appeal” – CA 389169). The Decision also partially allowed Ms. Armoyan’s appeal from the Family Division’s ruling that Nova Scotia was the forum conveniens for all outstanding matrimonial issues (except custody) between the parties (“Forum Conveniens Appeal” – CA 407024). This Court ruled that Nova Scotia was the convenient forum only for the division of matrimonial property, but Florida was the convenient forum for the other issues, including the divorce, child support and spousal support. [2] The Decision awarded costs to Ms. Armoyan for the Adjournment Appeal in the Court of Appeal, but made no award of costs for the adjournment issue that was litigated in the Family Division. The Decision awarded costs to Ms. Armoyan for the forum conveniens issues in both the Court of Appeal and the Family Division. The Court reserved on the quantum of costs, and invited the parties to file written evidence and submissions on quantum. [3] These are the reasons on quantum of costs. [4] The background is set out in the principal Decision. [5] Ms. Armoyan filed three affidavits on costs. The deponents are Ms. McGinty and Ms. Doucet, both counsel for Ms. Armoyan, and Ms. LeBlanc, office manager of their law firm. There was no cross-examination. Counsel for Mr. and Ms. Armoyan each filed written submissions. [6] From these three affidavits, I extract the following facts: (a) In October 2011, shortly before the commencement of the forum conveniens hearing in the Family Division, counsel for Ms. Armoyan proposed terms of settlement to counsel for Mr. Armoyan. Those terms proposed: that the Florida court determine child support and that the Nova Scotia court determine spousal support and property division; that Ms. Armoyan have primary care of the three children; that Mr. Armoyan satisfy the outstanding amounts for support and costs under the Florida court’s order; and that Mr. Armoyan satisfy the Florida court’s order for ongoing child and spousal support until everything was resolved. (b) On October 14, 2011, Mr. Armoyan’s counsel rejected this offer. Mr. Armoyan insisted that all matters be litigated in Nova Scotia. (c) Ms. Armoyan’s Nova Scotia counsel have incurred time charges for legal fees of $636,683 with HST of $95,502.45 plus disbursements of $65,897.69 with HST of $9,884.65, for a total of $807,967.79 related to Ms. Armoyan’s matrimonial proceedings. (d) Of those amounts, Ms. Armoyan’s Nova Scotia counsel have incurred time charges for legal fees with HST of $422,866.51 and disbursements with HST of $54,972.79 related to the jurisdiction/forum conveniens and adjournment matters. (e) Of these latter amounts, fees with HST of $331,697.38 and disbursements with HST of $27,556.09 were incurred after October 14, 2011, pertaining to the jurisdiction/forum conveniens and adjournment matters. (f) These amounts represent the lawyers’ recorded fees for work in progress and recorded disbursements. The affidavits do not specify the dates and amounts of invoices issued to Ms. Armoyan. It is unclear, from these affidavits, what amounts of these recorded fees and disbursements have been invoiced to Ms. Armoyan. (g) Ms. LeBlanc’s affidavit says that: Ms. Armoyan has paid $272,775.36 to the law firm since July 2009, the last payment toward fees was received on August 22, 2011, and the last payment toward disbursements was received on September 23, 2013. (h) The affidavits do not specify totals for fees and disbursements that apply to the appeals in the Court of Appeal. Ms. Armoyan filed her notice of appeal in the Adjournment Appeal on March 27, 2012, and filed her notice of appeal in the Forum Conveniens Appeal on September 18, 2012. It is difficult, from the ledger material attached to Ms. LeBlanc’s affidavit, to isolate precise totals of fees and disbursements that relate to these appeals. But it can be inferred from the ledger that recorded fees and disbursements related to the appeals well exceed $100,000. [7] Ms. Armoyan asks that the Court not apply the Tariffs appended to Civil Procedure Rule 77. Her brief requested, instead, a lump sum award of $331,697.38, plus disbursements, as full indemnity for her costs after the rejected settlement offer of mid-October 2011. She says that the settlement offer was more advantageous to Mr. Armoyan than was the Court of Appeal’s decision of September 10, 2013. She also requests 75 % indemnification for her fees of $91,169.13 incurred before the October 2011 settlement offer, plus disbursements. Her requested total award, including disbursements, was $455,047.01. After the exchange of written submissions, Ms. Armoyan’s reply brief acknowledged that $2,112.50 of legal fees were unrelated to the adjournment and jurisdictional/forum conveniens, issues, and should be deducted. [8] Mr. Armoyan says that the costs should be quantified following Tariffs B and C, and not as a lump sum. He submits that the adjournment matter and the forum conveniens proceeding were “motions” before Justice Campbell, and engaged Tariff C, not the more onerous Tariff A. The forum conveniens matter involved ten days before Justice Campbell, to which Mr. Armoyan applies $2,000 per day under Tariff C for a total of $20,000. Mr. Armoyan notes that the adjournment motion before Justice Campbell was not the subject of a costs award by the Court of Appeal. On the appeal costs, Mr. Armoyan applies the 40% default percentage of Tariff B, for $8,000 on the Forum Conveniens Appeal. He adds minor amounts, calculated under the Tariffs, for interlocutory motions and the Adjournment Appeal, for an additional $2,800. This totals $30,800 ($20,000 + $8,000 + $2,800). Tariff C(4) permits this amount to be multiplied by 2, 3 or 4, depending on complexity, importance and effort. Mr. Armoyan suggests a multiple of 3, for a total award of $92,400, plus reasonable disbursements. He calculates reasonable disbursements as $25,314.64, and suggests a total costs award of $117,714.64. [9] Justice Campbell did not quantify costs for Ms. Armoyan. So there is no issue of appellate deference to the trial judge’s exercise of discretion on quantification. The Court of Appeal is calculating costs at first instance for both the forum conveniens proceeding in the Family Division and the two appeals in this Court. [10] The Court’s overall mandate, under Rule 77.02(1), is to “do justice between the parties”. [11] Solicitor and client costs are engaged in “rare and exceptional circumstances as when misconduct has occurred in the conduct of or related to the litigation”. Williamson v. Williams, 1998 NSCA 195, [1998] N.S.J. 498, per Freeman, J.A.. This Court rejected most of Mr. Armoyan’s submissions on the merits. But there has been no litigation misconduct in the Nova Scotia proceedings that would support an award of solicitor and client costs. So these are party and party costs. [12] Rule 77.06 says that, unless ordered otherwise, party and party costs are quantified according to the tariffs, reproduced in Rule 77. These are costs of a trial or an application in court under Tariff A, a motion or application in chambers under Tariff C (see also Rule 77.05), and an appeal under Tariff B. Tariff B prescribes appeal costs of 40% trial costs “unless a different amount is set by the Nova Scotia Court of Appeal”. [13] By Rule 77.07(1), the court has discretion to raise or lower the tariff costs, applying factors such as those listed in Rule 77.07(2). These factors include an unaccepted written settlement offer, whether or not the offer was made formally under Rule 10, and the parties’ conduct that affected the speed or expense of the proceeding. [14] Rule 77.08 permits the court to award lump sum costs. The Rule does not specify the circumstances when the Court should depart from tariff costs for a lump sum. Tariff or Lump Sum? [15] The tariffs are the norm, and there must be a reason to consider a lump sum. [16] The basic principle is that a costs award should afford substantial contribution to the party’s reasonable fees and expenses. In Williamson, while discussing the 1989 tariffs, Justice Freeman adopted Justice Saunders’ statement from Landymore v. Hardy (1992), 112 N.S.R. (2d) 410: The underlying principle by which costs ought to be measured was expressed by the Statutory Costs and Fees Committee in these words: “… the recovery of costs should represent a substantial contribution towards the parties’ reasonable expenses in presenting or defending the proceeding, but should not amount to a complete indemnity.” Justice Freeman continued: In my view a reasonable interpretation of this language suggests that a “substantial contribution” not amounting to a complete indemnity must initially have been intended to mean more than fifty and less than one hundred per cent of a lawyer’s reasonable bill for the services involved. A range for party and party costs between two-thirds and three-quarters of solicitor and client costs, objectively determined, might have seemed reasonable. There has been considerable slippage since 1989 because of escalating legal fees, and costs awards representing a much lower proportion of legal fees actually paid appear to have become standard and accepted practice in cases not involving misconduct or other special circumstances. [17] The tariffs deliver the benefit of predictability by limiting the use of subjective discretion. This works well in a conventional case whose circumstances conform generally to the parameters assumed by the tariffs. The remaining discretion is a mechanism for constructive adjustment that tailors the tariffs’ model to the features of the case. [18] But some cases bear no resemblance to the tariffs’ assumptions. A proceeding begun nominally as a chambers motion, signalling Tariff C, may assume trial functions, contemplated by Tariff A. A Tariff A case may have no “amount involved”, other important issues being at stake. Sometimes the effort is substantially lessened by the efficiencies of capable counsel, or handicapped by obstructionism. The amount claimed may vary widely from the amount awarded. The case may assume a complexity, with a corresponding workload, that is far disproportionate to the court time, by which costs are assessed under provisions of the Tariffs. Conversely, a substantial sum may turn on a concisely presented issue. There may be a rejected settlement offer, formal or informal, that would have saved everyone significant expense. These are just examples. Some cases may combine several such factors to the degree that the reflexive use of the tariffs may inject a heavy dose of the very subjectivity – e.g. to define an artificial “amount involved” as Justice Freeman noted in Williamson – that the tariffs aim to avoid. When this subjectivity exceeds a critical level, the tariff may be more distracting than useful. Then it is more realistic to circumvent the tariffs, and channel that discretion directly to the principled calculation of a lump sum. A principled calculation should turn on the objective criteria that are accepted by the Rules or case law. [19] In my view, this is such a case for a lump sum award. I say this for the following reasons. [20] Justices of the Family Division have stated that trial-like hearings in matrimonial matters are more appropriate for Tariff A than Tariff C: Hopkie v. Hopkie, 2010 NSSC 345, para 7, per Gass, J.; MacLean v. Boylan, 2011 NSSC 406, paras 29-30, per Jollimore, J.; Kozma v. Kozma, 2013 NSSC 20, para 2, per MacDonald, J.; Robinson v. Robinson, 2009 NSSC 409, para 10, per Campbell, J.. [21] The forum conveniens proceeding was brought by Ms. Armoyan’s “Notice of Motion” that, as Mr. Armoyan’s counsel points out, literally would engage Tariff C. But the proceeding ripened with the features of a complex trial that spanned ten days of hearing over eleven months. It was not remotely equivalent to a conventional chambers motion, and its natural home would be Tariff A. [22] But this proceeding had no “amount involved” within Tariff A. The issue was whether the Courts of Nova Scotia or Florida would take jurisdiction. That matter involved broad consideration of comparative comity, fairness and efficiency in the administration of justice. The “amounts” are for the separate matrimonial proceedings in Florida and this province. In Williamson Justice Freeman noted that the artificiality of a notional “amount involved” supported the use of a lump sum award: Any attempt to adjust the amount involved to factor in the special circumstances of the present appeal to arrive at a more just result would require the arbitrary determination of a fictitious “amount involved” bearing no real relationship to the matters in issue. [23] Rule 77.07(2)(e) permits an adjustment based on “conduct of a party affecting the speed or expense of the proceeding”. The supervening criterion is that the costs award “do justice between the parties” under Rule 77.02(1). [24] This Court’s Decision of September 10, 2013 described Mr. Armoyan’s conduct: [285] Ms. Armoyan filed her Florida divorce petition in October 2009. Mr. Armoyan responded with strategies that included: (1) his spurious Hague Convention Application and (2) his rejected Disqualification Motion, (3) his resistance to disclosure, (4) his stipulation to the Florida Court to avoid disclosure, (5) his motions for stays or adjournments related to the above, (6) his refusal to abide by the Interim Support Order notwithstanding his stipulation, (7) his disobedience of the Florida costs orders and (8) his Florida motion for a forum non conveniens ruling followed by (9) his successful request for a condition in the Nova Scotia Court’s February 24 and March 13, 2012 order that restrained Ms. Armoyan from responding to his Florida forum non conveniens motion. The Florida Circuit Court received 722 pleadings, apart from the appeal pleadings. In the Florida Divorce Judgment (above, para 79) Judge Martz said: 15. It is now understood by this Court, that the Husband’s actions were solely to plummet the Wife and children to financial oblivion, and to deprive her of access to legal counsel. Ms. Armoyan has accumulated staggering legal accounts, responding to Mr. Armoyan’s initiatives, while Mr. Armoyan has defaulted in his court-ordered reimbursement of her costs after his initiatives were rejected. Meanwhile, the stays and delays that accompanied his Florida initiatives have well served Mr. Armoyan, who has used the time to avoid support payments, convey assets to relatives and move tens of millions of dollars from Nova Scotia to the Middle East. [286] Despite the obstacles, the Florida process reached a conclusion with an Order for child support and spousal support in the Divorce Judgment of October 26, 2012. [287] Mr. Armoyan now says that Florida’s slate should be wiped clean, and everyone should start again in Nova Scotia, like hitting a mulligan off the first tee. Mr. Armoyan has the multi-million dollar capital to pay for this. Ms. Armoyan is in financial tatters, with no resources for a replay. [288] Had Mr. Armoyan complied with his Florida court-ordered interim support payments and with the Florida Court’s orders that he reimburse Ms. Armoyan’s costs, then the significance of this factor might recede somewhat. But that is not his position. Having bled Ms. Armoyan financially with litigious shenanigans, he seeks to disregard the resultant costs awards against him and the Interim Support Order, then take advantage of the financial disparity in a fresh proceeding. [25] Mr. Armoyan submits that these comments relate only to Florida matters, for which costs have been ordered by the Florida courts, and should not affect costs in the Nova Scotia proceeding. With respect, that submission misses the point. As this Court noted (paras 287- 288): “Ms. Armoyan is in financial tatters, with no resources for a replay”, and “[h]aving bled Ms. Armoyan financially with litigious shenanigans, he seeks to disregard the resultant costs awards against him and the Interim Support Order, then take advantage of the financial disparity in a fresh proceeding.” The “replay” and “fresh proceeding” cited in these passages would be the Nova Scotia matrimonial trial that Mr. Armoyan sought in this forum conveniens proceeding. Mr. Armoyan’s outright disobedience of the Florida Court’s costs orders has handicapped Ms. Armoyan’s capacity to afford the Nova Scotia litigation. [26] Ms. Armoyan’s Florida legal accounts exceed $1,000,000 (para 127 of Decision of Septemeber 10, 2013). Ms. Armoyan’s last payment toward the fees of her Nova Scotia counsel was in August 2011. The entire Nova Scotia forum conveniens trial, from October 2011 to September 2012, and its appeal, was conducted by Ms. Armoyan’s counsel without payment of fees. As is apparent from the breadth of this Court’s principal Decision of September 10, 2013, the Nova Scotia litigation was extraordinarily complex and time-consuming. Mr. Armoyan sought to take advantage, in the Nova Scotia litigation, of his opponent’s financial stress that Mr. Armoyan had inflicted mainly with the Florida litigation. To “do justice between the parties” under Rule 77.02(1), and as contemplated by Rule 77.07(2)(e), the mercenary use of costs attrition warrants a costs consequence. [27] Rule 77.07(2)(b) permits the adjustment of a costs award based on an unaccepted written settlement offer, whether made formally under Rule 10 “or otherwise”. Rule 59.39(7) excludes Rules 10.05 to 10.10 (formal offers to settle in the Supreme Court - General Division) from family proceedings. But Rule 77.07(2)(b) is not excluded, and unaccepted offers of settlement may impact costs in family proceedings: e.g. Fermin v. Yang, 2009 NSSC 222, para 3, # 12, per MacDonald, J.. I agree with Justice Campbell’s sentiments in Kennedy-Dowell v. Dowell (2002), 209 N.S.R. (2d) 392 (S.C.), under the former Rules: [12] In my opinion, the reasonableness of both the trial position and the bargaining position (including the timing of concessions made) is a very important factor in deciding whether an order for costs should be made. This is especially true in family law matters because the parties are often of limited resources and can often face legal fees after a trial which make the process uneconomical and devastating to the family including children. Family law disputes are capable of out of court resolution in many cases and the policy of the court regarding costs should promote compromise and reasonableness in the negotiating process. For that reason, the court should measure each party’s bargaining position against the court’s adjudication to measure the reasonableness of each position. … To similar effect - Justice Campbell’s comments in Robinson, paras 13-15. [28] In October 2011, Ms. Armoyan made an informal offer to settle on terms that were more advantageous to Mr. Armoyan’s position than is the result from this Court’s Decision. The offer would have had spousal support and property division calculated by the Nova Scotia Court. This Court has assigned property division to the Nova Scotia Court, but left spousal support for the Florida Court. Had Mr. Armoyan accepted that omnibus offer, Ms. Armoyan would have saved over $350,000 just in Nova Scotia legal fees and disbursements, in addition to substantial savings in the Florida legal expense that she incurred after October 2011. [29] The propriety of a lump sum award may be tested by comparing the proposed tariff award to the actual legal fees and expenses. Mr. Armoyan’s calculation under the tariffs is $117,714.64. Even after the adjustments that I will discuss later, Ms. Armoyan’s legal fees and disbursements exceed $450,000 for the Nova Scotia forum conveniens proceeding and both appeals. A recovery of about 27% does not approach the “substantial contribution” that Justice Freeman contemplated in Williamson. [30] In my view, a lump sum is appropriate. Amount of Lump Sum [31] Next is the calculation of the lump sum. [32] Ms. Armoyan’s Nova Scotia counsel were involved in aspects of the matrimonial litigation other than the Nova Scotia forum conveniens hearing. Some of the entries on the accounting records are imprecise as to the subject matter of the work. But Ms. Armoyan’s counsel has filed affidavits that attest to the dollar value of the workload for the jurisdiction/forum conveniens and adjournment matters. [33] According to the affidavits, Ms. Armoyan’s Nova Scotia counsel have incurred time charges for legal fees with HST of $422,866.51 and disbursements with HST of $54,972.79 respecting the jurisdiction/forum conveniens and adjournment matters. From this should be deducted $2,112.50 in fees that Ms. Armoyan’s reply brief acknowledged were unrelated. [34] These numbers include fees and expenses for the adjournment motion in the Family Division. Ms. Armoyan was not awarded costs for the adjournment motion in the Family Division. The result of this Court’s ruling was that each party should bear his or her own costs for that motion, but Ms. Armoyan would have costs for the adjournment appeal in this Court. So a deduction is appropriate for the fees and expenses of the adjournment motion. [35] Some of counsel’s effort and expense on the forum conveniens matter would relate to the division of matrimonial property, an issue where Ms. Armoyan relented as the proceedings matured, and Mr. Armoyan succeeded in the Court of Appeal. The Court has not awarded costs specifically per issue, just for the outcome. But the parties’ respective degrees of success may affect the calculation of the lump sum to Ms. Armoyan. I will make an adjustment - albeit somewhat subjective in the absence of specific evidence of lawyering time for this issue - to reduce the base sum. [36] With adjustments for the factors I have mentioned, I will assume: (a) $100,000 up to the settlement offer of October 2011, plus (b) $200,000 after the settlement offer for the forum conveniens proceeding in the Family Division, plus (c) $100,000 in the Court of Appeal for both appeals, as the base sums that are subject to the costs award in this Court’s Decision of September 10, 2013. These amounts include disbursements. I conclude that these are reasonable expenses of litigation, objectively determined from the evidence, as contemplated by Landymore and Williamson, against which the appropriate percentage of recovery should be applied to quantify the lump sum costs award. [37] As noted in Williamson, with which I agree, generally speaking the “substantial contribution” should exceed fifty percent of the appropriate base sum, but should not approach the full indemnity of a solicitor and client award. The percentage should vary, in a principled manner, according to the circumstances of the case. Considering Mr. Armoyan’s conduct, as discussed, and the rejected settlement offer of October 2011, a substantial contribution here should represent: (a) 66% of the $100,000 base sum before the settlement offer of October 2011 for the forum conveniens proceeding in the Family Division (i.e. $66,000); plus (b) 80% of the $200,000 base sum after that settlement offer for the forum conveniens proceeding in the Family Division (i.e. $160,000); plus (c) 80% of the $100,000 base sum in the Court of Appeal for both appeals (i.e. $80,000). This totals $306,000, including disbursements. [38] Of the $80,000 for the two appeals, I would allocate $10,000 to the Adjournment Appeal and $70,000 to the Forum Conveniens Appeal. Conclusion [39] I would order that Mr. Armoyan pay forthwith to Ms. Armoyan costs in the amounts of $226,000 for the forum conveniens proceeding in the Family Division, plus $10,000 for the Adjournment Appeal in this Court, plus $70,000 for the Forum Conveniens Appeal in this Court, for a total award of $306,000, which includes disbursements. Fichaud, J.A. Concurred: MacDonald, C.J.N.S. Bryson, J.A. Nova Scotia Court of Appeal Citation: Armoyan v. Armoyan, 2013 NSCA 136 Date: 20131129 Docket: CA 407024 CA 389169 Registry: Halifax Between: Lisa Armoyan Appellant v. Vrege Sami Armoyan Respondent Corrected Decision: The text of the original judgment has been corrected according to this erratum dated October 31, 2019 Judges: MacDonald, C.J.N.S., Fichaud and Bryson, JJ.A. Appeal Heard: June 19-20, 2013, in Halifax, Nova Scotia. Written submissions on costs, filed between September 30, 2013 and October 22, 2013 Held: Costs of $306,000, all inclusive, awarded to the Appellant, per reasons for judgment of Fichaud, J.A.; MacDonald, C.J.N.S. and Bryson, J.A. concurring Counsel: Mary Jane McGinty and Christine J. Doucet for the Appellant Gordon R. Kelly and Noemi Westergard for the Respondent Erratum: [40] Page 5, para. [14] add “not” after the word “does” on the first line. The paragraph should read: “Rule 77.08 permits the court to award lump sum costs. The Rule does not specify the circumstances when the Court should depart from tariff costs for a lump sum.”