Armoyan v. Armoyan, 2011 NSCA 92

NOVA SCOTIA COURT OF APPEAL Citation: Armoyan v. Armoyan , 2011 NSCA 92 Date: 20111013 Docket: CA 351722 Registry: Halifax Between: Lisa Armoyan Applicant/Appellant v. Vrege Armoyan Respondent Judge: The Honourable Mr. Justice Jamie W.S. Saunders Motion Heard: October 5, 2011, in Halifax, Nova Scotia, in Chambers Held: Motion for a stay dismissed.

Counsel: Mary Jane McGinty, for the appellant Gordon Kelly, for the respondent Decision : [ 1 ] This matter came before me in Chambers as a motion brought by the applicant/appellant Lisa Armoyan for an order staying the proceedings in the Supreme Court (Family Division) known as 1201-65036 in respect of which this appeal has been commenced, pending the outcome of this appeal. [ 2 ] Given the urgency of the matter, I thought it important for the parties to know the outcome and get on with their preparations.

Thus, after hearing their submissions, I advised counsel that the motion for a stay was denied and that I would file detailed reasons in due course. [ 3 ] These are my reasons.

[ 4 ] The parties are locked in extensive and complex matrimonial litigation in two jurisdictions, Nova Scotia and Florida. Justice Douglas C. Campbell of the Nova Scotia Supreme Court (Family Division) whose decision rendered June 17 is the subject of this appeal, did not exaggerate when he described the case as triggering “ a quagmire of procedural issues ” . [ 5 ] Campbell, J. ’ s decision was appealed by the applicant on July 4th.

The appeal is scheduled to be heard by a panel of this Court on December 1, 2011. [ 6 ] The appellant says the decision of this Court following the appeal on December 1 will impact on the motions now before Justice Campbell, and that it makes no sense to proceed with the October hearings before Campbell, J. if – as a consequence of her appeal being successful – those same matters would then have to be re-tried. [ 7 ] The appellant ’ s motion for a stay is strongly opposed by the respondent. [ 8 ] Each party filed extensive pre-hearing briefs, which were supplemented by counsels ’ comprehensive arguments in Chambers. [ 9 ] For the purposes of my decision on the motion, it is enough to simply chronicle a few salient facts.

The parties were married in October, 1993 and have been separated since October, 2009. They have three children. The appellant currently resides in Florida while the respondent lives in Halifax. [ 10 ] The parties executed a marriage contract in March, 2008 which includes a forum selection and governing law clause in favour of Nova Scotia. [ 11 ] There are ongoing proceedings between the parties in relation to the breakdown of their marriage in both Florida and Nova Scotia. The respondent, Mr. Armoyan, seeks to have the issues decided in Nova Scotia while the appellant, Ms.

Armoyan, seeks to have them dealt with in Florida. Neither jurisdiction has made a determination as to whether it will exercise or decline jurisdiction on the issues before it. [ 12 ] There are currently three proceedings before the Supreme Court of Nova Scotia (Family Division) in relation to the breakdown of the parties ’ marriage.

These deal with divorce; maintenance and custody; a civil action concerning their former matrimonial home; and matters surrounding the division of matrimonial property. [ 13 ] The appellant has challenged the respondent ’ s Nova Scotia proceedings on many fronts, raising a host of issues which include jurisdiction; choice of forum; and res judicata .

This has spawned claims and counterclaims of unlawful conduct, solicitor-client privilege, fraud, and abuse of process. [ 14 ] The case is further complicated by issues surrounding the admissibility of documents the appellant allegedly obtained from the respondent ’ s laptop computer without his consent or knowledge. [ 15 ] The appellant seeks leave to appeal and appeals the interlocutory decision of Campbell, J. dated June 17, 2011, wherein Justice Campbell dismissed the appellant ’ s motion requesting an order that the issues of privilege and/or exception to privilege over the laptop documents were res judicata because of a previous order of the Florida court rendered in December, 2010, and requesting that the hearings on the admissibility of the laptop documents and jurisdiction be adjourned pending decision of the Florida Court of Appeal on the appeal of that state ’ s lower court order. [ 16 ] The most recent “ further amended notice of application for leave to appeal and notice of appeal ” filed by the appellant on August 19, from the decision of Campbell, J. dated June 17, 2011, lists three pages of alleged errors.

Here again the appellant ’ s principal complaints challenge Justice Campbell ’ s jurisdiction; his application of the law concerning estoppel and res judicata ; pre-judging the matter; and making certain findings prejudicial to the appellant which were neither required nor supported on the record.

[ 17 ] At present there are two hearings scheduled for October before Justice Campbell. The first hearing is set to be heard October 11-14 to decide the admissibility of documents in the Nova Scotia proceedings which the appellant is said to have obtained from the respondent ’ s computer without his consent or knowledge. The appellant seeks to use these documents in proceedings here. She maintains they were not taken from her husband ’ s computer but rather, were retrieved from their “ household computer ” .

The second hearing is scheduled for October 24-27 to decide whether the respondent has been ordinarily resident for one year prior to the filing of the petition for divorce on December 22, 2010 as well as the appellant ’ s forum non conveniens claims in relation to all of the Nova Scotia proceedings. [ 18 ] On August 18, 2011, the appellant filed a motion in the Family Division to adjourn the October hearings. [ 19 ] That motion was heard by Justice Campbell on September 16, in a full day hearing where both counsel made submissions and both parties gave viva voce evidence.

At the same time, the appellant made a separate motion seeking injunctive relief to restrain the respondent from removing or disposing of any assets in Nova Scotia. Campbell, J. reserved decision on both motions. [ 20 ] On September 20, 2011 Campbell, J. rendered an oral decision dismissing the motion to adjourn. He reserved decision on the motion for injunctive relief until a determination on the jurisdiction issues has been made. As noted earlier, a hearing on those jurisdictional issues will be conducted by Justice Campbell October 24-27.

I will set out the operative parts of his decision here: This matter involves Vrege Armoyan and Lisa Armoyan. It’s a motion for both an adjournment of certain dates coming up in the month of October and also for an injunction restraining Mr. Armoyan from removing assets from the Province of Nova Scotia. This matter may eventually involve various matrimonial issues between the parties, including division of assets pursuant to the Matrimonial Property Act , custodial issues pursuant to the Maintenance and Custody Act , and spousal and child support pursuant to the Divorce Act .

So far, the case has been engaged in a quagmire of procedural issues because the parties are currently residing in different jurisdictions, the wife living in Florida in the United States, and the husband living mainly in Halifax, Nova Scotia. Complicating the situation is the fact that there is a dispute as to whether a marriage contract entered by the parties is valid. Before the Court can deal with the final issues in dispute, it must first deal with that question of the validity of the marriage contract, which may govern the outcome on the merits of the case.

Before that issue is resolved, it must decide whether to exercise its admitted jurisdiction as opposed to conceding that the Florida Courts should do so. Before that can be done, there is an issue to be decided as to whether certain documents copied by the wife from the husband’s computer are admissible in evidence. A Florida Court determined that such documents were admissible and that the usual privilege against admissibility was either waived or did not apply because of alleged fraudulent acts by the husband in respect of disclosure in other ways.

In the previous hearing before me, it was argued that the Florida decision to admit the documents invokes the doctrine of res judicata such that I much also admit the documents when it comes to the hearing with respect to the exercise by this Court of its jurisdiction and ultimately at the hearing on the merits, if there is one. I decided in that previous decision that the doctrine did not apply. That decision is under review in our Court of Appeal, set to be heard in early December of 2011. If the appeal is not granted, I may yet have to decide whether to admit the documents.

As it turns out, the decision to admit the documents in Florida was appealed in its Court of Appeal, which quashed the decision of the Trial Court and remanded the matter back for retrial, which has not yet occurred. Accordingly there is no decision in Florida outstanding that might potentially bind me under the doctrine of res judicata at this time. That may change because the Trial Court on the remand may reach the same conclusion that it reached the first time. I’ll deal first with the request for -- well, let me correct myself. There are two sets of dates before me in the month of October.

One is to deal with the admissibility of these documents, and the other is to deal with the question of whether this Court should exercise its jurisdiction under some or all of the statutes that have been pleaded. Before me today is a request by the wife to adjourn those two sets of dates until a date when the Court of Appeal will have rendered its decision. There are a number of technical and legal arguments presented by counsel for the husband as to why that adjournment is not appropriate, and there is a response on the record from counsel for the wife.

It is abundantly clear that it is not uncommon to adjourn a case when an issue is under appeal, which if reversed or affirmed, would affect the conduct of the case at the trial. It’s also fairly clear from the case law presented to me that one fundamental principle is that I should ordinarily grant the adjournment unless it can be shown that there’s a special circumstance that would make that inappropriate. There is no doubt in my mind that an appeal that could affect the Trial Court’s conduct of the proceeding is something worth waiting for and would be a very good reason for an adjournment.

The question, therefore, is whether there is some reason to deny it. I spoke of a quagmire earlier. That’s the best word I can think of to describe the process that the parties are facing. There are many moving targets. I can foresee, for example, that it might even be possible for our Court of Appeal to defer the rendering of its decision on the appeal of my decision while it waits to see what the Florida trial judge does on the remand, which in turn might not be the end of that matter because it also might be the subject of an appeal in Florida.

Therefore, it’s not clear to me whether or not the Appeal Court is likely to render a decision in the very short term or in the longer term. I, of course, have no way of knowing whether the Court of Appeal would render an oral or a reserved and written decision, and therefore cannot assess accurately the timing. There have been many applications in more than one court in Florida and many applications either before this Court or pending before this Court in order to get a resolution. While there are some interim orders in place in Florida, the one with respect to support is under appeal.

There are issues with respect to implementation of whatever parenting time the husband should have with the children. And it’s evident to me through the mounds of paperwork that I’ve been provided so far, that the parties are spending tens of thousands, if not hundreds of thousands of dollars in trying to get to a resolution in this case. I’m keenly aware of the fact that any failure on my part to grant the adjournment could create a serious problem as well.

Counsel for the wife argues that the admissibility of the documents in question will bear not only on the outcome of the merits of the case, but also on the question of whether or not I should exercise jurisdiction on various issues.

If the Court of Appeal reverses my decision, and in the meantime I have conducted the October cases and excluded those documents, I would be required to then reverse that decision, but by then I would have already made a decision on the exercise of jurisdiction, which might have been dealt with in an opposite way had I had the benefit of the reversal by the Court of Appeal of my earlier decision. That would be the main reason for granting an adjournment.

I had the benefit of the weekend to reread the legal arguments and the briefs of the counsel on both sides, and each of them have presented legal and technical arguments as to why I should decide the adjournment issue in one way or the other. I have taken all of those arguments into account. I’ve also considered that the issue of an adjournment is very discretionary and that the propriety of granting or denying an adjournment will vary from case to case according to its facts.

In this case, I have decided that the overriding factor is the need to move this case along in light of many roadblocks that it has faced so far and that I have referred to above. That, in my view, trumps the very valid argument about having to reverse myself if the Court of Appeal overrules my earlier decision. It was a difficult judgement call. Both of those competing reasons for in the one case granting and in the other case denying the adjournment are valid and were presented by counsel with great earnest.

To repeat myself, I have decided, though, that the urgency of the case requires me to take the chance that I will not need to reverse myself later and that I will not need to retry or rehear anything later, which will be the case if the Court of Appeal denies the appeal, and bear the consequences of the opposite if my decision is in fact reversed. Therefore, the adjournment request is denied. The matter will go ahead in October as planned. The second issue before me is to grant an injunction, which would restrain the Respondent from removing assets from Nova Scotia.

The facts that are the background to that application relate to the removal by the husband of substantial assets from Nova Scotia and Canada and to invest them in the Middle East, largely through a bank in Lebanon, which in turn purchased investment vehicles in Syria. I’m told that it was approximately twenty million dollars in the first instance. There was a subsequent removal of money in a much lesser amount.

In addition to that, the husband is the trustee of a trust in favour of the wife, which was set up in accordance with the terms of the disputed marriage contract, and a large portion of that fund was also invested in the Middle East by the husband. He points out that the terms of the trust permit him to do so. His explanation for all of this investing is that he feels the market is not good in this country, that he has had a history of investing in emerging markets, and that he made a business decision to do so with a substantial portion of his net worth.

I must comment that it seems to be somewhat of a strange decision to make in light of the unrest that exists in various parts of the

Middle East. One of my difficulties is the prospect of giving an order in the form of an injunction when I have not yet decided whether to accept jurisdiction with respect to the merits of some or all of the points of relief being sought. It is true that the party looking for that injunction is the party who is seeking to have me defer the Court’s jurisdiction in favour of Florida.

One of the reasons why that presents a dilemma to me is that, until I decide the question of jurisdiction and know that I’m going to be dealing with the -- know whether or not I’m going to be dealing with the merits of the case, is that I don’t feel that this preliminary level gave me sufficient opportunity to assess whether there was any impropriety in the moving of the money.

Counsel for the wife points out that only a small fraction of the Respondent’s net worth is left here, but his evidence was that that fraction, nonetheless, amounts to about 3.2 million dollars in the form of an investment with the National Bank, some of which are RRSPs, some of which are outside, and another 2.2 million as either a promissory note or an account payable by his mother to him, which money is invested by her and is owed by her to him. So that amounts to about 5.5 million, and in addition to that, there are some other non-liquid assets such as vehicles and boats.

I would say to the Respondent -- to the husband that the perception that he leaves me with in taking the money to countries that have some stability problems is not the best perception. It does beg the question of whether or not he’s attempting to get the money out of reach of the wife for any ultimate judgement that she may get in either these proceedings or the Florida proceedings. And it would have been better for him not to have done that. Having said that, I have made a decision that I will defer a final decision on the question of the injunction until I deal with the question of jurisdiction.

I may then defer it again until I deal with some other issues that are coming up. But I think it would be premature for me to do this now. I’m motivated in large measure by -- in coming to that by a couple of factors. One is that the freezing of one’s assets, even though he would be free to continue to trade in them with the assets that are in Nova Scotia, or Canada generally, it would be an extreme remedy in my view to tell a person that they are not allowed to deal with their own assets as they see fit.

We will do it and I have done it, but I have to take into account just how intrusive such an order would be on a person’s financial life. The fact that the husband has left approximately five to six million dollars of assets here is of some comfort to me. I appreciate that some of those monies are tied up in terms of -- let me start again. The actual gross amount of his assets is significantly more than that, but they are the subject of a margin account and therefore the values that I’m working with are net values.

I am having difficulty understanding how the margin accounts could completely tie up the equity given that when he received the twenty million dollars from the sale of his company, that money was net of income tax and was free and clear of any debt or any margin accounts of any kind of liens or encumbrances.

It seems to me that the onus -- if I am to deal with this further at the end of the jurisdiction question, there will be an onus on the husband to bring better documentation to show what the margin accounts are, what the margin percentage limit is, and to prove to me that there is no net equity in those accounts. I’m simply left with insufficient evidence about his point of view in that regard.

And frankly, it came up more in relation to an unrelated issue, which is the collection on a judgement from Florida for some two hundred and ninety-four thousand dollars ($294,000), which is not an issue before me at this point in time. So, in

summary, the matters will go ahead in October. The decision on the injunction is reserved, and I will finalize my decision after I decide what I’m doing about the exercise of jurisdiction. Quite frankly, if I decide not to exercise jurisdiction, it would seem to me to be very odd to then grant an injunction,. If I decide that I will exercise jurisdiction, I will hear -- if there is any new -- are any new facts that I need to hear about between now and then, I’ll hear about them then.

For example, while I’m not directing the husband to do anything with his Far East monies, the perception that he has raised with me would be largely reversed if he were to bring some money home to Nova Scotia. That would be up to him. So that is my decision, counsel. If you want it to be transcribed, I can have that done, or either of you are free to get the CD and look after that.

[21] Having lost her motion to adjourn those proceedings, the appellant now seeks my order staying the proceedings in the FamilyDivision, pending the outcome of her appeal. [22] She says that if I were to deny the stay she would suffer irreparable harm and that the balance of convenience is in her favour. Further, she argues that there are exceptional circumstances warranting a stay. [23] The respondent submits that the motion should be dismissed for two principal reasons.

First, he says it is procedurally flawedand is nothing more than an attempt to retry or appeal Justice Campbell’s decision dressed up as a request for a stay; second, he says itfails to meet any of the requisite criteria for a stay. [24] After carefully considering the record and counsels’ submissions I would dismiss the motion for a stay. [25] First, I observe that a stay is a discretionary remedy, not granted routinely in Nova Scotia.

The applicant has a heavy burden tomeet in seeking such relief. [26] Further, the appellant’s motion for an adjournment before Justice Campbell also called for his exercise of discretion. Inreviewing his reasons it appears to me that he thought long and hard about all of the issues canvassed by counsel before concluding thathe would not grant the requested adjournment. That exercise of discretion by Justice Campbell, especially in an interlocutory matter,deserves considerable deference. Chief Justice MacKeigan’s statement of the standard of review almost 30 years ago in ExcoCorporation Limited v.

Nova Scotia Savings and Loan et al. (1983), (NS SC), 59 N.S.R. 92d) 331 at p. 333: This court is an appeal court which will not interfere with a discretionary order, especially in an interlocutory one such as this that is nowbefore us, unless wrong principles of law have been applied or a patent injustice would result. has been applied consistently by this Court ever since. [27] When pressed at the hearing, counsel for the appellant was unable to articulate any wrong principles of law or patent injustice. [28] Turning to the necessary steps any applicant must satisfy in order to obtain a stay, the law is well-known and I need not repeatit here.

Purdy v. Fulton Insurance Agencies Ltd. (1991), (NS CA), 100 N.S.R. (2d) 341 (C.A.). As for the three-part primary test, I will assume the appellant has raised arguable issues. [29] But she fails on the other prerequisites for the granting of a stay. [30] She has not persuaded me that if I were to refuse to grant the stay and she were ultimately successful with her appeal inDecember , she would suffer irreparable harm that could not be compensated in damages. [31] I see no evidence of irreparable harm. The record here would remain in tact. No evidence would be lost or placed at risk.

Thevery worst that could happen is that whatever this Court “might” order, “might” then impact on earlier rulings of Justice Campbell suchthat some issues “might” have to be reheard, or “might” have some bearing on proceedings currently before the courts in Florida.

[ 32 ] That is a constellation of “ mights ” , maybes, and possibilities; nothing more than speculation and hardly the stuff of harm that would be considered irreparable. Any such occurrence could easily be rectified by costs and/or damages to the appellant. [ 33 ] Having failed to show irreparable harm, I need not go on to consider the balance of convenience. As I said in Reid v. Halifax Regional School Board , 2006 NSCA 35 : [29] The last inquiry in the analysis is the so-called balance of convenience.

This third essential step of the primary test in Fulton requires me to consider whether the appellant will suffer greater harm if the stay were refused, than would the respondent if the stay were granted. This last issue is generally only considered if the appellant has established irreparable harm. As Lord Diplock said in American Cyanamid v. Ethicon Ltd. , [1975] 1 All E.R. 504 at p. 511 : It is where there is doubt as to the adequacy of the respective remedies and damages available to either party or to both, that the question of balance of convenience arises.

If the court is satisfied that the applicant has not proven irreparable harm, the balance of convenience need not be considered . (Italics mine) [ 34 ] As to the secondary test, the appellant has failed to identify any circumstances which I would consider exceptional, or produce any evidence to support such an assertion. While the phrase “ exceptional circumstances ” can never be exhaustively defined, it has been interpreted by this Court to at least mean factors that would make it plainly unjust to refuse the stay.

In other words, it is intended to catch the rare case when a court would wish to avoid a clear injustice in circumstances that did not meet the three requirements of the primary test. [ 35 ] In conclusion, I see no injustice to either party in declining to interfere with Justice Campbell ’ s interlocutory rulings in an ongoing proceeding with which he is intimately familiar, and thereby enable him to move this difficult litigation forward on the sensible timetable he has set to dispose of these issues. [ 36 ] The motion for a stay is dismissed.

I will issue an order accordingly. [ 37 ] I award costs for today ’ s hearing to the respondent in the amount of $1,200 inclusive of disbursements, in any event of the cause. Saunders, J.A.