Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Tania Hagopian, Applicant
AND:
Kevork Kechichian, Respondent
BEFORE: M. Kraft, J.
COUNSEL: James S. Marks, for the Applicant
Susan Harris, for the Respondent
HEARD: September 15, 2022
Endorsement
Nature of the Motion
1The primary focus of this motion is to determine whether Mr. Kechichian ought to provide additional disclosure requested by Ms. Hagopian, much of which is to provide her with information about how he spends his income.
2This motion became necessary because Mr. Kechichian was in breach of two court orders for almost 4 months. Specifically, he did not pay the court ordered child and spousal support for the months of June, July, August, and he failed to pay a costs order of $17,500. After Ms. Hagopian brought this motion, Mr. Kechichian rectified his breach and paid the arrears to her on September 6, 2022.
3Mr. Kechichian submits that he was unable to pay the ordered child and support because he was restricted from selling his vested Restricted Stock Units (“RSUs”) during a black-out period because he is considered in an “insider” of the company that employs him. As soon as the blackout period ended, he sold his vested RSUs and paid the child and spousal support arrears that had accumulated.
4The disclosure sought by Ms. Hagopian will supposedly provide her with answers as to why Mr. Kechichian, after earning $2,224,303 by August 20, 2022, was not able to pay her the court ordered child and spousal support. Ms. Hagopian is concerned that in the future Mr. Kechichian will simply cease paying her support in the future, using this same excuse, and believes that he ought to be required to disclose the documents she seeks and sign an Authorization and Direction for NXP to provide her with further documents.
5The issue to be determined on this motion is whether Mr. Kechichian ought to produce the disclosure sought by Ms. Hagopian.
Background
6The parties were married on September 1, 1996. They separated on October 25, 2015.
7They have two children of their marriage, two boys, ages 23 and 17 respectively.
8In 2012, Ms. Hagopian moved back to Canada and Mr. Kechichian remained in San Diego, where the family had been living.
9Mr. Kechichian resides and works in Austin, TX and is a W2 employee of NXP Semiconductors (“NXP”). In 2021, he earned $2,195,946 CAD. He began working as an employee of NXP in 2019. He earns a salary of $255,00 annually, along with a bonus that is paid to him every April and RSUs/PSUs that vest throughout the year.
10Ms. Hagopian earned $10,407 in 2021 working for Air Canada.
Litigation History
11On September 26, 2018, Jarvis, J. ordered Mr. Kechichian to pay table child support of $14,000 a month commencing September 1, 2018; section 7 expenses of $36,000 per year, at the rate of $3,000 a month; and spousal support of $32,000 a month. This support order totals $49,000 a month.
12According to Mr. Kechichian, in addition to the child and spousal support ordered, he makes voluntary payments to Ms. Hagopian for the children’s benefit of at least an additional $5,000 a month.
13When the parties’ youngest child began university, the total monthly payments increased to $54,000 a month on consent.
14On July 18, 2019, Paisley, J. ordered Mr. Kechichian to produce a great deal of documentation, including bank statements, credit card statements, E*TRADE statements, income tax returns and IRS documents within 60 days. He did not fully comply with this disclosure order.
15On December 2, 2021, Papageorgiou, J. ordered Mr. Kechichian to comply with the paragraphs of the Paisley order that had not been produced and she ordered him provide a significant amount of basic disclosure, including his U.S. income tax returns for 2018, 2019 and 2020. He did not comply with the order.
16As a result, on May 17, 2022, Ms. Hagopian brought a motion to strike Mr. Kechichian’s pleadings. Diamond, J. adjourned the motion to June 30, 2022; found that Mr. Kechichian remained in breach of 9 paragraphs of Papageorgiou, J.’s order; ordered him to fulfill those paragraphs by June 17, 2022; and to pay a monetary fine of $700 USD a day for each day of non-compliance after June 17, 2022. Mr. Kechichian was also ordered to pay Ms. Hagopian costs in the sum of $17,500 forthwith.
17On May 27, 2022, Mr. Kechichian paid the May child and spousal support to Ms. Hagopian, 27 days late.
18On June 1, 2022, and July 1, 2022, Mr. Kechichian failed to pay the ordered child and spousal support to Ms. Hagopian.
19On June 30, 2022, Diamond, J. heard the return of Ms. Hagopian’s motion to strike Mr. Kechician’s pleadings. Mr. Kechichian argued that he was unable to sell his vested RSU’s due to a blackout period imposed on his by NXP given that they were in the process of a design win with a major car company, and he is considered an “insider”. The blackout period began in May 2022 and lasted until August 24, 2022. This meant Mr. Kechichian could not access over $3 million in his E*TRADE account ending 5864 which is where his RSU compensation is deposited. Mr. Kechichian relies on selling his RSUs to pay the court ordered child and spousal support.
20On July 4, 2022, Diamond, J. released an Endorsement after hearing the return of Ms. Hagopian’s motion to strike on June 30, 2022. He granted Mr. Kechichian an additional 7 business days from the receipt of the Bank of America statements that were in Ms. Hagopian’s possession to deliver updated answers to the outstanding disclosure. Mr. Kechichian was further ordered to cure any other outstanding breaches of court orders including outstanding support obligations and/or costs orders within 5 days of the release of Diamond, J.’s endorsement, which would have been July 11, 2022. Diamond, J. also found that as at the date of the motion, the total fine owing by Mr. Kechichian to Ms. Hagopian amounted to $9,100 USD, which climbs by $700 USD every day of further non-compliance.
21Mr. Kechichian did not comply with this order.
22Mr. Kechichian swore an updated financial statement, dated May 9, 2022. His most recent paystub from NXP demonstrates that as of August 20, 2022, he earned a salary of $290,461 USD; restricted stock of $909,702 USD; and received incentive pay (bonus) of $537,537 USD. This adds up to Mr. Kechichian earning $1,737,701 USD or $2,224,203 CAD, using an exchange rate of 1.2847, by August 20, 2022.
23Mr. Kechichian has given evidence that he receives his incentive pay/bonus every April. Ms. Hagopian argues that Mr. Kechichian received a bonus of $537,537 USD in April but was still 27 days late paying the May child and spousal support to her, and completely failed to pay child and spousal support to her for the months of June through to September 6, 2022.
24Ms. Hagopian does not believe that Mr. Kechichian did not have the funds to pay her child and spousal support. Rather, she believes that he used the blackout period of his vested RSUs as an excuse and intentionally breached court orders. Mr. Kechichian disputes this.
25On August 19, 2022, Ms. Hagopian brought this motion for disclosure, since as of that date, Mr. Kechichian was in breach of two court orders. Her motion was returnable on September 15, 2022.
26As outlined above, on September 6, 2022, Mr. Kechichian cured his breach. He paid all the outstanding child and spousal support and the costs order of $17,500.
27Mr. Kechichian acknowledges that he has breached the court orders. He deposes that he rectified the breach as soon as he was able to do so. However, he argues that the disclosure Ms. Hagopian is seeking is overreaching, not proportional or relevant to the issues before the court.
The Parties’ Positions
28Ms. Hagopian argues that the disclosure she seeks is relevant to (a) whether Mr. Kechichian had the means to pay child and spousal support to her for the period June 1, 2022, until September 6, 2022; (b) Mr. Kechichian’s conduct and whether he wilfully breached two court orders and willfully withheld his child and spousal support; and (c) Mr. Kechician’s continuing means given that his excuse of a blackout period may arise again in the future.
29The disclosure Ms. Hagopian seeks is aimed at providing her with information about Mr. Kechician’s assets and cashflow during the period January 1, 2021, to September 6, 2022, and the RSUs he received from NXP from February 1, 2019, to present.
30Mr. Kechichian’s position is that he has demonstrated herculean efforts in trying to comply with the disclosure orders. He submits he has provided significant disclosure to date and the additional disclosure requests by Ms. Hagopian are irrelevant to the issues in the case in relation to the pleadings. He argues that this latest disclosure request is a fishing expedition and does not relate to information that will advance any of the claims made in the pleadings.
Analysis
31It is clear, based on the above, that Mr. Kechichian has a history of not complying with court orders. His disclosure was seriously delayed, so much so, that Diamond, J. felt it was necessary to impose a daily fine of $700 USD on Mr. Kechichian for every day of his non-compliance with disclosure orders.
32It is, therefore, completely understandable that when Mr. Kechichian ceased paying the ordered child and spousal support in June of 2022, that Ms. Hagopian brought a motion to strike his pleadings at the end of August 2022.
33The evidence on record confirms Mr. Kechichian’s story, namely, that he was under a blackout period for four months making it impossible for him to sell his unvested RSUs. However, that blackout period does not explain why Mr. Kechichian did not arrange his financial affairs in such a way that he had available liquid assets to satisfy his child and spousal support obligations. Mr. Kechichian does not dispute in the evidence that he received a significant bonus in April 2022. If he had organized his affairs to ensure that he was able to comply with the child and spousal support order, Ms. Hagopian and the children would not have had to go without child and spousal support for close to four months.
34In addition to not being paid the court ordered child and spousal support, Ms. Hagopian was put to the expense of having legal counsel prepare additional motion materials seeking financial disclosure from Mr. Kechichian to try and make sense of how he was not able to comply with the child and spousal support order or Jarvis, J. and the costs order of Diamond, J. notwithstanding the significant sums of money he has earned to date.
35Mr. Kechichian argues that Ms. Hagopian receives as much as 70% of his after-tax income and that the disclosure she is now seeking is a fishing expedition because she wants to know where and how he spends his money.
36Mr. Kechichian swore an updated financial statement on May 9, 2022. Ms. Hagopian has not filed an updated sworn financial statement, even though rule 13(12) requires her to do so.
37Mr. Kechichian further argues that Ms. Hagopian received all the outstanding child and spousal support, along with the costs on or before September 7, 2022, yet she refused to vacate her motion for disclosure, all of which he claims is irrelevant to the claims before the court.
38Ms. Hagopian’s materials clarify that she is requesting this disclosure from Mr. Kechichian to “discover whether [he] had the means to pay support for June, July, and August and if not, why not”. M.s Hagopian has now received the support for June, July, August and September and the issue is whether the disclosure she seeks is relevant to the claims that are before the court.
39I agree with the statements made in Tonogai v. Tonogai, 2021 ONSC 2366, at paragraph 34:
“A party seeking to have the other party produce information not automatically required by the Rules must, as a preliminary issue, establish that there is a probative connection between the information requested and the issues to be determined at trial”
40The outstanding claims are Mr. Kechichian’s income for support purposes; child and spousal support; and property division. In accordance with the Family Law Rules, Mr. Kechichian has filed an updated sworn financial statement, along with all the supporting documents for all current values. In addition, Mr. Kechichian is a W2 employee and, accordingly, all the income he earns is set out in his W2 and his U.S. income tax returns, all of which have been provided to Ms. Hagopian. Further, Mr. Kechichian has provided Ms. Hagopian with a current paystub to verify his earnings thus far in 2022.
41The disclosure sought by Ms. Hagopian from Mr. Kechichian is as follows:
a. Monthly statements for all his bank accounts and investment accounts, including ETRADE accounts, from January 1, 2021, to present and continuing until he cures all breaches of child support and spousal support orders, costs orders and agreements, and monetary fine orders.
b. Copies of all his paystubs from January 21, 2022, to present and continuing until he cures all breaches of child support and spousal support orders, costs orders and agreements, and monetary fine orders.
c. Monthly statements of all his E*TRADE Accounts from February 1, 2019, to present and continuing on an ongoing basis.
d. Copies of all documents and communications related to the Respondent’s efforts to obtain a bridge loan or other financing to pay for his support obligations for June 2022 onwards, including copies of any loan applications, from May 1, 2022, to present and continuing, until the Respondent cures breaches of child support and spousal support orders, costs orders, costs agreements, and monetary
42Now that Mr. Kechichian has cured his support and costs obligations, I do not find that the production sought above is relevant. Ms. Hagopian has the most recent paystub for Mr. Kechichian. She will be entitled to a copy of the income tax return that Mr. Kechichian files for 2022. I find that it is relevant for her to receive a copy of Mr. Kechichian’s year-end paystub for the month of December 2022.
43In addition, Ms. Hagopian sought an order that Mr. Kechichian sign an Authorization and Direction to be sent to his employer NPX, and for NPX to provide her counsel with the following production. In the below chart I set out each item of disclosure sought from NPX and my findings as to what items are relevant:
| Item requested | Findings |
|---|---|
| All Employment Agreements between Kevork Kechichian and NXP since October 1, 2019; | This is relevant for income purposes and support and shall be produced. |
| Kevork Kechichian paystubs for 2021 and 2022 | Monthly paystubs are not necessary. Mr. Kechichian shall provide his end of year paystub for the month of December 2022 when available. |
| All documents evidencing any and all salary, wages, commissions, benefits, stocks, or other compensation paid to Kevork Kechichian since October 1, 2019 | This is relevant for income purposes and support and shall be produced. |
| All Stock Purchase Agreements between Kevork Kechichian and NXP Semiconductors (“NXP”) since October 1, 2019. | This is reflected in Mr. Kechichian’s income tax returns, produced already. |
| All documents evidencing all payments made pursuant to any Stock Purchase Agreement between Kevork Kechichian and NXP since October 1, 2019. | This is reflected in Mr. Kechichian’s income tax returns, produced already. |
| All stock option agreements between Kevork Kechichian and NXP since October 1, 2019 | This is relevant for income purposes and support and shall be produced. |
| All restricted stock agreements between Kevork Kechichian and NXP since October 1, 2019. | This is relevant for income purposes and support and shall be produced. |
| All performance share-based unit agreements between Kevork Kechichian and NXP since October 1, 2019. | This is relevant for income purposes and support and shall be produced. |
| All NXP employee share purchase plans available to Kevork Kechichian since October 1, 2019 | This is relevant for income purposes and support and shall be produced. |
| All NXP shares purchased by Kevork Kechichian pursuant to any NXP share purchase plans since October 1, 2019, together with the price paid by Kevork Kechichian and any discounts for purchase of said shares | This is relevant for income purposes and support and shall be produced. |
| All documents related to and/or evidencing all bonuses paid to or due to be paid to Kevork Kechichian since October 1, 2019. | This information is already contained in Mr. Kechician’s W2 forms and income tax returns. |
| All documents regarding Kevork Kechichian’s participation in any NXP Annual or Long- Term Incentive Plan or Performance Share-based Units and/or Share Award Program since October 1, 2019. | This information is already contained in Kr. Kechichian’s income tax returns. |
| All documents evidencing any payments received by Kevork Kechichian as a result of participation in any NXP Annual or Long-Term Incentive Plan or Performance Share-based Units and/or Share Award programs since October 1, 2019. | This information is already contained in Kr. Kechichian’s income tax returns. |
| All documents regarding Kevork Kechichian’s participation in NXP’s Vested and Unvested RSU’s since October 1, 2019. | This information is already contained in Kr. Kechichian’s income tax returns. |
| All documents regarding Kevork Kechichian’s participation in NXP’s Vested and Unvested PSU’s since October 1, 2019. | This information is already contained in Kr. Kechichian’s income tax returns. |
| All documents regarding Kevork Kechichian’s participation in NXP’s Equity Compensation Plan including documents evidencing payments made to Kevork Kechichian as a result of Kevork Kechichian’s participation therein since October 1, 2019. All stock options, restricted stock, performance share-based units, granted and/or vested since October 1, 2019 as well as all the underlying plan documents. |
This information has already been produced. |
| All statements of employee benefits provided by NXP, or expected to be provided, to Kevork Kechichian from October 1, 2019 onwards (including but not limited to all payments of long-term incentive plan compensation), as well as the underlying plan documents including summaries and prospectuses. | This information is relevant for income purposes and shall be produced. |
| All 401-K statements regarding Kevork Kechichian since October 1, 2019. | This information is contained in the disclosure received to date. |
| All documents evidencing all 401-K distributions paid to or on behalf of Kevork Kechichian since October 1, 2019. | This information is contained in the disclosure received to date |
| Kevork Kechichian’s Pension Plan – Summary Plan Description and projected benefit. | This information is relevant to future income and shall be disclosed. |
| Copies of all expense reimbursements since October 1, 2019. | This information is irrelevant. Mr. Kechichian is an employee. |
| Copies of all Work Credit Card Expenses Reports for Kevork Kechichian since October 1, 2019. | This information is irrelevant. Mr. Kechichian is an employee. |
| All documentation relating to Kevork Kechichian’s executive health care plan. | This information is irrelevant to the issues before the court. |
| All documentation related to Kevork Kechichian’s Health Savings Account. | This information is irrelevant to the issues before the court. |
| Kevork Kechichian’s Healthcare Benefits Summary Plan Description. | This information is irrelevant to the issues before the court. |
| Kevork Kechichian’s listing of all checking and savings accounts to which a deposit was made from NXP since October 1, 2019. | This information is irrelevant to the issues before the court. |
44In addition to relevance, I am obliged to consider the concept of proportionality. Mr. Kechichian has been put to tremendous time and expense in producing the financial disclosure in this matter. He changed counsel and done his best to comply with the disclosure ordered. Some of the disclosure requests made by Ms. Hagopian are simply not relevant to the issues left to be determined at trial. Instead, they are about how Mr. Kechichian is spending his income, information to which Ms. Hagopian is not entitled. Similarly, Mr. Kechichian is not entitled to ask Ms. Hagopian how she is spending her child and spousal support.
45Accordingly, I have only ordered Mr. Kechichian to produce documentation that may prove to be relevant to his income for support purposes.
46These parties have been separated for 8 years. This proceeding was commenced in 2018. It is now four years later, and the case has not advanced. Questioning has not taken place. There has been no Settlement Conference or Trial Management Conference scheduled. It is time for this matter to be brought to a conclusion.
Costs
47At the hearing of the motion, I asked the parties to provide me with their bills of costs, and suggested that, after I wrote my reasons on the merits, I would review the bills of costs and determine costs without submissions. The parties each indicated they were agreeable to my proposal.
48Modern family costs rules are designed to foster four fundamental purposes: to indemnify successful litigants for the cost of litigation, to encourage settlements, to discourage and sanction inappropriate behaviour by litigants, and to ensure that cases are dealt with justly: Mattina v. Mattina, 2018 ONCA 867, at para. 10. The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840, at para. 12. The reasonable expectations of the unsuccessful party are a relevant consideration: Delellis v. Delellis, [2005] O.J. No. 4345.
49Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. By r. 24(10)(a) of the Family Law Rules, O. Reg. 114/99, the court is directed to make a decision on the costs of a step in the case promptly after dealing with the step, in a summary manner.
50Pursuant to r. 24 of the Family Law Rules, the successful party is presumptively entitled to costs, subject to the factors set out in r. 24: Beaver, at para. 10. In setting the amount of costs, the court must consider the reasonableness and proportionality the factors listed in r. 24(12) as they relate to the importance and complexity of the issues. These factors include each party’s behaviour, the time spent by each party, any written offers to settle, including those that do not meet the requirements of r. 18, any legal fees and any other expenses, and any other relevant matter.
51There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. Rather, full recovery is only warranted in certain circumstances, such as bad faith under r. 24(8), or beating an offer to settle under r. 18(14): Beaver, at para. 13.
52Ms. Hagopian is the more successful party and is presumptively entitled to some of her costs. Her bill of costs discloses total fees and HST of $11,367.802. Mr. Kechician’s full indemnity costs, after disbursements and HST is $11,333.90.
53In considering the quantum of costs in this case, I note the following factors:
a. Neither party made an offer to settle;
b. As the more successful party, Ms. Hagopian is entitled to some measure of recovery;
c. There was divided success and the court may apportion costs as appropriate;
d. The issues involved were important to the parties;
e. The issues were not factually complex, but the materials were detailed, and well-prepared.
f. Both party’s costs are almost the same, suggesting that Ms. Hagopian’s costs are within Mr. Kechichian’s reasonable expectations;
g. The time spent by Ms. Hagopian’s counsel, and the hourly rates charged, were reasonable in the circumstances.
h. Mr. Kechichian was in breach of the orders for several months.
i. Mr. Kechichian is not required to produce all the disclosure sought by Ms. Hagopian.
54In my view, in the circumstances of this case, Ms. Hagopian’s costs are fair and reasonable, and within the reasonable expectations of Mr. Kechichian. However, Ms. Hagopian was not entirely successful in obtaining an order that Mr. Kechichian produce all the disclosure she sought. I thus order that Mr. Kechichian pay Ms. Hagopian costs in the fixed sum of $6,500, within ten days.
Order
55This court makes the following order:
a. Mr. Kechichian shall produce the disclosure referred to in the chart in paragraph 43 above within 45 days.
b. The parties shall immediately contact the Family Law Trial Office and schedule a combined Settlement Conference/Trial Management Conference, for which they shall complete Trial Scheduling Endorsement Forms, exchange comprehensive offers to settle and comparative net family property statements;
c. The parties shall arrange for the questioning of each party to be completed by the end of December 2022;
d. The parties have leave to bring motions prior to the SC/TMC;
e. Mr. Kechichian shall pay Ms. Hagopian’s costs in the fixed sum of $6,500, payable within ten days.
September 16, 2022 M. Kraft, J.
