SUPREME COURT OF Nova Scotia
FAMILY DIVISION
Citation: Armoyan v. Armoyan, 2014 NSSC 403
Date: 2014-11-24
Docket: Halifax No. SFHISOA-080027
Registry: Halifax
Between:
Lisa Armoyan
Applicant/Respondent
V.
Vrege Armoyan
Respondent/Applicant
DECISION ON COSTS
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Judge: |
The Honourable Justice Theresa Forgeron |
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Submissions Received: |
June 6, 10, and 12, 2014 |
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Written Release: |
November 24, 2014 |
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Counsel: |
Mary Jane McGinty, then counsel, for Lisa Armoyan Harold Niman, current counsel, for Lisa Armoyan Gordon Kelly, for Vrege Armoyan Megan Farquhar, for the Designated Authority
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By the Court:
[1] Introduction
[2] Lisa Armoyan, the successful litigant, seeks substantial costs from Vrege Armoyan. Mr. Armoyan resists the claim advanced by Ms. Armoyan.
[3] Issue
[4] What is the appropriate award of costs?
[5] Background Information
[6] Lisa and Vrege Armoyan are former spouses who separated in October 2009. They were living in Florida at the time of separation. Many court proceedings were held in both Florida and Nova Scotia following the parties’ bitter separation. The current request for costs concerns the proceedings surrounding the registration of a Florida support order in Nova Scotia.
[7] On August 11, 2011, Ms. Armoyan obtained a temporary order for child and spousal support from the Florida courts. Although Mr. Armoyan initially honoured the order, he eventually stopped payments. Because of his default, Ms. Armoyan took steps to enforce the maintenance order in Nova Scotia. On March 21, 2012, a notice of registration of an order, made outside of Canada, was filed.
[8] Mr. Armoyan did not consent to the enforcement of the order in Nova Scotia. On May 25, 2012, Mr. Armoyan filed a notice to set aside the registration of the Florida support order. The objections cited were as follows: that he lacked notice or an opportunity to be heard; that the order was contrary to public policy; and that the Florida court lacked jurisdiction.
[9] Two other support orders issued from the Florida courts, a consolidation order of September 5, 2012, and a divorce order of October 26, 2012. When granting the parties’ divorce, a permanent order for spousal and child support issued.
[10] Mr. Armoyan continued to disregard the provisions of the Florida support orders. Ms. Armoyan therefore pursued enforcement. A notice of registration of an order, made outside Canada, was filed on February 25, 2013. This notice referenced the Florida support orders of September 5, 2012 and October 26, 2012. In response, Mr. Armoyan filed a notice to set aside the registration of the 2012 Florida orders on March 11, 2013. The objections mirrored those previously referenced on May 25, 2012.
[11] Mr. Armoyan’s applications to set aside the registration of the Florida support orders were not scheduled for hearing until May 20, 21, 26, 27, 28, and 29, 2014.
[12] On September 10, 2013, the Nova Scotia Court of Appeal released its decision on the jurisdictional issues, as reported at Armoyan v. Armoyan, 2013 NSCA 99. The decision produced a number of rulings, including the determination that Florida had jurisdiction to decide maintenance issues. Leave to appeal to the Supreme Court of Canada was denied.
[13] Given the appeal decision, on September 25, 2013, Ms. Armoyan filed a motion to immediately register and enforce the Florida support orders. Mr. Armoyan objected. This notice of motion was scheduled to be heard on November 4, 2013. The motion was not heard because the trial judge recused himself on that date.
[14] Ms. Armoyan subsequently amended the motion of September 25, 2013 on three occasions. The final amendment, dated February 28, 2014, was contested; this amendment specifically referenced the summary judgement rule. The court granted the motion to amend. The summary judgement motion was heard on April 11, 2014.
[15] Ms. Armoyan was successful; the motion for summary judgment was granted, as reported at Armoyan v. Armoyan, 2014 NSSC 174. Mr. Armoyan’s application to set aside the registration of the Florida support orders was dismissed. All issues surrounding the registration of the Florida support orders were “disposed of” within the meaning of s. 19(7) of the Interjurisdictional Supports Orders Act. Mr. Armoyan’s requests to fix arrears and vary the support orders were likewise denied.
[16] Ms. Armoyan now seeks costs. She provided cost submissions on June 10, 2014. Mr. Armoyan filed costs submissions on June 10 and June 12, 2014. The designated authority confirmed on June 6, 2014, that it was neither seeking costs, nor taking a position on the issue.
[17] Analysis
[18] What is the appropriate award of costs?
[19] Position of Ms. Armoyan
[20] Ms. Armoyan seeks costs of $53,511.35. She asks that costs be paid from the $400,000 which was posted as security in the MPA proceeding. In support of her position, Ms. Armoyan relies upon a number of factors, including the following:
• Tariff C is not applicable; costs should be assessed on a solicitor and client basis or by accessing Tariff A.
• The amount involved, for the purposes of determining costs, is substantial. Ms. Armoyan relies upon para 48 of the security for costs decision, reported at Armoyan v. Armoyan, 2014 NSSC 143, which states in part as follows:
The amount involved in the ISO proceeding is significant. Maintenance arrears, as of October 26, 2012, were set by the Florida court at $441,105, for child maintenance; and $261,962 for spousal maintenance. Total maintenance arrears of $703,067 are outstanding as of October, 2012, together with arrears which have accumulated since that time. Mr. Armoyan states that he generally pays $10,000 per month towards the $25,000 monthly maintenance order, together with payment of some third party medical and educational obligations stipulated in the order. Mr. Armoyan states that he pays other money to the children which should also be included as maintenance payments. Ms. Armoyan disputes some of his calculations. Had Mr. Armoyan followed the payment direction of the Florida order, there would be no dispute as to arrears. Mr. Armoyan chose not to pay support as ordered; he did not direct payments to the applicable maintenance enforcement agency. He did so at his own peril. For the purposes of the arrears calculation, assuming, without deciding, that Mr. Armoyan was in arrears $15,000 per month, an additional $285,000 is outstanding for the intervening 19 month period. Thus, total maintenance arrears are $988,067, as of May, 2014. Assigning this figure as the amount involved, costs for arrears alone, under Tariff A, would arguably amount to $64,750. The amount involved, however, should also include the enforcement of ongoing maintenance of $25,000 per month, together with the third party payments, such as medical expenses. Five years of maintenance payments would increase the amount involved by another $1.5 million, for a total amount of $2,488,067. Such would arguably equate to a cost award of $161,724.35 under Tariff A.
• Ms. Armoyan’s litigation conduct substantially reduced the cost of litigation. Because she filed a summary judgement motion, the six day hearing scheduled for May 2014 became redundant.
• Mr. Armoyan’s litigation conduct was inappropriate. His position was unsustainable and vexatious.
• Mr. Armoyan was not compliant with procedural requirements in that he did not post the $100,000 security for costs by May 12, 2014 as ordered.
• Mr. Armoyan thwarted the payment of maintenance by aggressively engaging in tactics designed to delay hearings and shelter his financial position.
• Mr. Armoyan filed voluminous and irrelevant materials, including a late affidavit.
• Mr. Armoyan’s position was not based on fact and principle, but, was rather a blatant exploitation of a system already congested by bona fide proceedings, in an attempt to avoid the obvious and inevitable.
• Mr. Armoyan’s conduct must not be condoned, but rather penalized by an award of costs which fully indemnifies Ms. Armoyan.
[21] Position of Mr. Armoyan
[22] Mr. Armoyan argues that costs should not be awarded to Ms. Armoyan, or in the alternative, costs of $1,500 are suitable. In support of his position, he relies upon a number of factors, including the following:
• Solicitor and client costs are not appropriate in that no exceptional circumstances as contemplated by Rules 77.01(1)(b) or 77.03(2) are present.
• Tariff C should be applied because of the nature of the proceeding and because Rule 77.18 (4)(c) states that Tariff C applies to summary judgment motions where the motion is determinative of the entire matter in issue. $2,000 costs should be awarded for a hearing that was less than one day.
• Any costs awarded to Ms. Armoyan must be set-off against the costs that are owed to Mr. Armoyan pursuant to Rule 77.11. The court awarded costs to Mr. Armoyan because of the delay caused by Ms. Armoyan’s late amendment motion. Costs should also be payable because Ms. Armoyan was unsuccessful in the motion to strike his affidavit. These motions consumed less than one hour; costs to Mr. Armoyan of $500 should be payable. Therefore, the set-off amount due to Ms. Armoyan is $1,500.
• Costs should not be increased based upon the allegation that Mr. Armoyan engaged in obstructive behaviour. He did not. Mr. Armoyan was not responsible for the litigation delay. The court set the hearing dates; he did not. Further, Ms. Armoyan was responsible for some of the delay because she kept amending her motion.
• Mr. Armoyan was entitled to rely upon the jurisdiction decision of Campbell, J.
• It was appropriate to advance all relevant legal arguments in the face of the request being advanced by Ms. Armoyan. Mr. Armoyan had to defend the motion for summary judgement.
• The court should not award costs for the security of costs motion because Ms. Armoyan did not file her submissions in a timely manner. Ms. Armoyan did not offer an explanation as to why costs were not requested in a timely fashion, nor did she seek an extension.
• The fees and disbursements claimed by Ms. Armoyan are overstated and not reliable. Ms. Leblanc’s affidavit is not detailed. The solicitor’s account includes fees and disbursements related to non-ISO litigation. The solicitor’s account cannot be used to determine costs.
[23] Mr. Armoyan questions the court’s jurisdiction to apply the MPA security for costs award to satisfy a cost award in the ISO proceeding.
[24] Law
[25] Rule 77 governs awards of costs. In Armoyan v. Armoyan, supra, Fichaud, J.A., reviewed principles to be applied when determining costs. The following relevant points stem from that decision:
• The court's overall mandate is to "do justice between the parties": para. 10.
• 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": para. 11.
• Unless otherwise ordered, party and party costs are quantified according to the Tariffs. The court has discretion to raise or lower the Tariffs by applying listed factors, which include unaccepted written settlement offers, and the conduct of the parties insofar as it affects the speed or expense of the proceeding: paras. 12 and 13.
• The Rule permits the court to award lump sum costs and depart from the Tariffs in specified circumstances. Tariffs are the norm and there must be a reason to consider a lump sum: paras. 14 and 15.
• The basic principle is that a cost award should afford a substantial contribution to the parties' reasonable fees and expenses which means not a complete indemnity, but rather more than 50% and less than 100% of a lawyer's reasonable bill for services: para. 16.
• 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. Some cases, however, bear no resemblance to the Tariffs' assumptions. For example, a proceeding begun nominally as a chambers motion may assume trial functions; a case may have no "amount involved"; efforts may be 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 work load that is far disproportionate to the court time by which costs are assessed under the Tariffs; there may be rejected settlement offers, formal or informal, that would have saved everyone significant expense: paras. 17 and 18.
• When subjectivity exceeds a critical level, the Tariffs may be more distracting than useful. In such a situation, it is more realistic to circumvent the Tariffs and channel that discretion directly to the calculation of a lump sum. A principled calculation should turn on the objective criteria that are accepted by the Rules or case law: para. 18.
[26] In Armoyan v. Armoyan, supra, the Court of Appeal held that a lump sum cost award was appropriate in that the proceeding ripened with features of a complex trial that consumed 10 days of hearing over 11 months; the matter was not remotely equivalent to a conventional chambers motion; there was no amount involved; the conduct of Mr. Armoyan affected both the speed and expense of the proceeding; and a lump sum award was necessary to do justice between the parties.
[27] In calculating the appropriate lump sum, the Court of Appeal employed percentages based upon a rejected settlement offer. The Court of Appeal applied a percentage rate of 66%, as representative of the substantial contribution for legal fees and disbursements incurred before the settlement offer, and 80% after the settlement offer. $306,000, which included disbursements, was awarded in total.
[28] Decision
[29] Solicitor and Client Costs
[30] I reject the request for solicitor and client costs because rare and exceptional circumstances have not been proven.
[31] Tariff C
[32] Tariff C is ordinarily employed for chambers motions. I reject Mr. Armoyan’s submission that Tariff C must be applied in this case.
[33] The circumstances connected with the ISO proceeding and associated motions do not mirror the assumptions upon which Tariff C is based. For example, the summary judgement motion was a lengthy and complicated motion. In addition to each party providing viva voce evidence, many exhibits were entered, the voluminous contents of which filled an entire banker’s box. The multiple submissions were detailed and lengthy. The volume of material filed and scrutinized far exceeded that which one ordinarily expects to review during a one day contested motion.
[34] Further, the application of Tariff C, including the multiplier permitted under Rule 77.18(4), would yield a cost award on the summary judgement motion, of a maximum of $8,000, and on the security for costs motion of $2,000. The court appearances of June 12 and September 17, 2012; August 23 and November 4, 2013; and January 15 and 16, 2014 were not protracted. They would produce a cost award of about $3,000. A total award of $13,000, plus disbursements, is inordinately low, in the context of this case.
[35] Ms. Armoyan, the successful and impoverished litigant, would not receive a substantial contribution towards her reasonable fees and expenses if Tariff C was employed. Justice would not be done. Tariff C cannot be engaged where its application would produce a manifestly unjust result.
[36] Tariff A
[37] Tariff A is often used as the basis for costs following the conclusion of a trial. Tariff A can be employed to family motions if motions assume trial-like features.
[38] I reject the application of Tariff A because the amount involved would arguably produce a cost award in excess of $160,000, which exceeds that actually incurred by Ms. Armoyan. Cost awards should not produce a windfall.
[39] Lump Sum
[40] I am thus left to a lump sum to ensure justice between the parties, a lump sum that is tailored to meet the special circumstances of this case. A lump sum will ensure “justice between the parties”: Rules 77.02 (1) and (2); and 77.08.
[41] In calculating the appropriate lump sum, I reject Mr. Armoyan’s submission that costs cannot be awarded for the security for costs motion. Ms. Armoyan was successful in her efforts on this motion and is entitled to compensation.
[42] In reaching a principled lump sum, I must first review the amount claimed by Ms. Armoyan. She states that her reasonable fees and disbursements total $53,511.35. I am reducing this amount by 10% because some of the claimed fees and disbursements are overstated. Further, duplication and unnecessary work was expended because of the various amendments and the unsuccessful motion to strike. These negative factors are somewhat mitigated by Ms. Armoyan’s litigation conduct, which for the most part, reduced litigation expenses. In particular, the one day, successful summary judgement motion, freed up six days of trial scheduled in May 2014. I find that reasonable fees and disbursements total $48,000.
[43] I must now determine the share of this amount that Mr. Armoyan must bear, as representative of his substantial contribution to Ms. Armoyan’s reasonable legal costs. The September 10, 2013 jurisdiction decision from the Court of Appeal is central to this determination. After the Court of Appeal decision was released, it should have been apparent that Mr. Armoyan’s application to set aside the registration of the Florida support order was unsustainable and devoid of merit. Mr. Armoyan should have abandoned his claim at that time. He did not. Unfortunately, and despite the appeal decision, Mr. Armoyan refused to discontinue his objections, even on the jurisdictional issue. As a result, Mr. Armoyan’s substantial contribution must extend closer to full indemnity post September 10, 2013.
[44] Other factors relevant to the substantial indemnity calculation, include the following:
• In excess of 80% of the claimed legal costs were incurred after the Court of Appeal decision was released.
• The ISO proceeding began on March 21, 2012 when Ms. Armoyan sought to register a Florida support order. Ms. Armoyan’s efforts were contested by Mr. Armoyan when he filed a notice to set aside on May 25, 2012. The ISO proceeding was thus before the courts for about two years.
• This proceeding involved matters of grave importance – the registration of a maintenance order so that enforcement steps could begin. The registration and enforcement of a maintenance order are not only vital to recipients, but, are also critical to the administration of justice and society as a whole.
• Ms. Armoyan undertook significant efforts in order to persevere and ultimately be successful in her bid to dismiss the applications of Mr. Armoyan to set aside the registration of a foreign support order.
• Much of the evidence relied upon by Mr. Armoyan in the summary judgement motion was irrelevant, including evidence related to Mr. Armoyan’s attempt to fix arrears and vary the support order. The inclusion of this evidence unnecessarily increased litigation expenses.
• Mr. Armoyan’s evidence and submissions on the security of cost motion were likewise unfocused, including his objection to the court’s jurisdiction to entertain such relief. Mr. Armoyan’s approach on this motion unnecessarily increased litigation expenses.
• The ISO application included court attendances on June 20 and September 17, 2012; August 22 and November 4, 2013; January 15 and 16; March 13 and 14; and April 11, 2014. Some of the court appearances in 2014 also referenced the MPA litigation as well.
[45] In all of the circumstances, a lump sum cost award of $41,000 is granted. This amount is approximately derived by applying a percentage of 67% towards the reasonable legal expenses incurred before the Court of Appeal decision, and applying a percentage rate of 90% after the issuance of the Court of Appeal decision.
[46] Conclusion
[47] Mr. Armoyan must pay costs to Ms. Armoyan in the amount of $41,000, which are payable by December 15, 2014. I do not have the authority to order their payment from the $400,000 posted as security in the MPA proceeding. Ms. Armoyan’s counsel is to draft the order.
Forgeron, J.