Beruflich Dokumente
Kultur Dokumente
CV-18-606163-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
B E T W E E N:
- and -
OVERVIEW .............................................................................................................. 5
THE PARTIES AND BENEFICIARIES ..................................................................... 9
i. Belinda Stronach ............................................................................................ 9
ii. Alon Ossip .................................................................................................... 11
iii. Frank Walker and Nicole Walker .................................................................. 12
iv. Stronach Consulting Corp. ........................................................................... 13
v. Elfriede Stronach.......................................................................................... 13
vi. Frank Stronach............................................................................................. 14
vii. Andrew Stronach.......................................................................................... 17
viii. Selena Stronach........................................................................................... 17
THE STRONACH GROUP ..................................................................................... 18
i. Overview ...................................................................................................... 18
ii. TSG Business Segments ............................................................................. 19
iii. The 445 Group ............................................................................................. 21
a. The 445 Trusts .................................................................................. 22
1. 445327 Trust .......................................................................... 22
2. Belinda 445 Trust.................................................................... 23
3. Andrew 445 Trust ................................................................... 25
b. Key Corporate Entities ...................................................................... 25
1. 445 Limited ............................................................................. 26
2. Stronach Consulting Corp....................................................... 27
c. Distributions to Beneficiaries ............................................................. 27
iv. Other TSG Groups ....................................................................................... 30
a. Ocala Group ...................................................................................... 31
b. Triple Bell Group ............................................................................... 31
c. Other ................................................................................................. 32
CHRONOLOGY OF KEY EVENTS ........................................................................ 32
i. 1980s to 2011 .............................................................................................. 33
a. Frank’s Diversions from Magna’s Core Business .............................. 33
b. Magna on the Brink of Bankruptcy .................................................... 34
c. Establishment of the Stronach Trust ................................................. 35
d. Additional Diversions and Shareholder Opposition ........................... 35
e. Belinda’s Leadership at Magna ......................................................... 36
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12, 14, 17-18, 21, 23, 35, 41, 44 (except with respect the Stronach Trust having been the
entity that received the assets referred to in that paragraph), 53 (except with respect to
TSG being conceived of and implemented over a period of several decades), 54 (except
with respect to The Stronach Group (“TSG”) producing numerous Triple Crown champion
horses), 59, 86, 88, 91, 97 and 123 of the Statement of Claim.
Statement of Claim.
allegations contained in the Statement of Claim, and denies that the plaintiffs are entitled
to the relief sought in paragraph 1 of the Statement of Claim or to any relief whatsoever.
OVERVIEW
4. Belinda is the Chair and President of various entities within TSG. She has
dedicated herself to ensuring that the business and affairs of TSG are conducted in a
prudent and commercially sensible manner that safeguards and advances the rights and
interests of the Beneficiaries1 of the 445 Trusts2 in a fair, open and even-handed manner.
1The “Beneficiaries” refers to the beneficiaries of the 445 Trusts (as defined in footnote 2 below), namely
Elfriede Stronach, Belinda Stronach, Frank Walker, Nicole Walker, Andrew Stronach and Selena Stronach.
2The “445 Trusts” are the 445327 Trust, The Belinda Stronach 445 Family Trust (the “Belinda 445 Trust”),
and The Andrew Stronach 445 Family Trust (the “Andrew 445 Trust”), as described further below at
paragraphs 67 to 75.
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She has paid particular attention to ensuring that TSG is operated in a manner that is to
5. The conflict that underlies this lawsuit is a fundamental disagreement over the
proper test to be applied to managing the business and affairs of TSG. Frank Stronach
(“Frank”) firmly believes that, having been the principal creator of the family wealth, he
may direct the business and affairs of TSG as he sees fit. Belinda and other TSG
management firmly believe that their obligation is to manage the business and affairs of
TSG in a prudent manner that is in the best interests of TSG and its stakeholders.
6. While Frank had great success in creating one of the world’s largest automotive
suppliers, he has also experienced significant failures in nearly all of his other non-auto
parts business ventures and his political affairs. This lawsuit is an attempt to force TSG
to fund Frank’s imprudent and, in some cases, fanciful schemes to the detriment of TSG
7. TSG consists of a number of corporations, trusts and other entities that directly
and indirectly carry on the businesses of TSG. As described below, the 445 Trusts are
the principal owners of most of the other entities that comprise TSG.
8. Belinda has engaged in no unlawful conduct. To the contrary she has taken steps
to rectify the irregular affairs of TSG she inherited from Frank. These steps have included
profitability of TSG. Belinda has kept the other Beneficiaries and Frank, as well as their
9. All members of the Stronach family, and especially Frank, have been able to live
in a manner that reflects the family’s substantial wealth. Belinda has not treated herself
in a manner that has been more favourable than the treatment of other family members.
Prior to the commencement of this lawsuit, counsel for all members of the family were
given access to, among other information, the 445 Trusts’ foundational documents and
10. With Frank’s approval, Belinda assumed senior management roles at TSG. She
was appointed CEO and President of TSG in 2011, was President and Co-Chair from
February 2012 to November 2013, and has been Chair and President thereafter. Alon
Ossip (“Alon”) assumed the role of CEO of TSG in February 2012, also with Frank’s
approval. In late November 2013, Frank assumed the role of Honorary Chairman and
remained involved in some aspects of the business. Over time, however, Frank began to
engage in activities, many unauthorized, which placed the business and assets of TSG
at considerable risk. These activities escalated to a point where they became a significant
accommodate Frank’s desires with respect to his idiosyncratic business pursuits, but over
time this became increasingly difficult and detrimental to the financial condition of TSG.
Sound business strategies that were developed by external experts and TSG’s
conduct. His conduct ranged from causing TSG personnel disruptions and meeting with
third parties to attempt to negotiate business deals directly and contrary to the sound
dragon (one of which is at the TSG-owned Gulfstream Park in Florida; the other is in
storage in China). Most significantly, Frank became obsessed with building a farm-to-
table food business premised on the growth of the grass-fed beef industry. Independent
expert assessments of this proposed business have demonstrated that the farm-to-table
food business, as envisioned and structured by Frank, has no possibility of being viable
in the short or long-term and has the potential to significantly drain financial resources.
12. As Frank’s conduct became increasingly harmful to the interests of TSG and the
Beneficiaries, Belinda, along with Alon, sought to redirect and temper Frank’s activities.
Eventually a number of steps were required to contain the harm being caused by Frank’s
behaviour and desire to pursue his passion projects, often at a frenetic pace. In each case
several attempts were made to attempt to reason with Frank to restrain his activities. An
independent third party acceptable to Frank and his counsel was retained to assist in
these efforts. All such steps were taken with great respect for Frank and attempts were
13. At various times, Belinda proposed a division of the assets of TSG on a basis that
she and the TSG management team considered to be generous to Frank and Elfriede
Stronach (“Elfriede”), Belinda’s brother Andrew Stronach (“Andrew”) and his daughter
Selena Stronach (“Selena”), and consistent with Frank’s desire to pursue the agriculture
business and Andrew’s support of his father. Belinda’s proposal contemplated that as a
next step, and before any binding agreement with respect to a proposed division would
be entered into, an independent valuator acceptable to all parties would advise the
Beneficiaries and Frank as to whether the proposed division of assets was fair. The
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proposal was not accepted by the plaintiffs, without them even taking the step of testing
14. Rather than work constructively within the family, the plaintiffs have levelled
unfounded allegations at the defendants in this lawsuit. These allegations are known by
them to be entirely untrue. This lawsuit is a pressure tactic by Belinda’s father, intended
to cause her to accede to his wishes to pursue business ventures in a manner that is
imprudent and not in the best interests of TSG or the Beneficiaries. The time and expense
involved in this lawsuit are not in the interests of TSG or the Beneficiaries. However, given
the serious and personal nature of the allegations, Belinda has been given no choice but
i. Belinda Stronach
mother.
16. She is the Chair and President of Stronach Consulting Corp. (“SCC”), one of TSG’s
key operating companies, and other key entities within TSG. Belinda has been the
President of TSG since its inception in 2011, was CEO of TSG from 2011 to February
2012, was Co-Chair of TSG (with Frank) from February 2012 to November 2013, and has
17. TSG owns and operates businesses in four primary segments: racing and gaming
(“R&G”); real estate development; agriculture; and thoroughbred breeding, training and
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racing (“BTR”). As the real estate development business is closely connected to R&G,
the agriculture and BTR businesses are referred to herein as the “Non-R&G” businesses.
Most of the TSG entities are controlled by the 445 Trusts. The 445 Trusts indirectly own
100% of 445327 Ontario Limited (“445 Limited”) in varying proportions described below.
445 Limited is the corporate entity that directly or indirectly owns the substantial majority
of TSG’s assets, including the R&G businesses, related real estate, and certain of the
18. Belinda is a trustee of all three of the 445 Trusts and has the unilateral power to
appoint or remove other trustees of the Belinda 445 Trust and the Andrew 445 Trust. She
is also one of the primary beneficiaries of the 445327 Trust and the Belinda 445 Trust.
19. Belinda started her career at Magna International Inc. (“Magna”) in 1986. She
spent more than a decade advancing within the company, eventually becoming its CEO
in 2001. She stayed on as CEO until 2004 when she resigned to pursue a political career
in Canada. Magna realized record sales and profits during each year of Belinda’s tenure
as CEO.
20. Belinda was elected to the federal House of Commons as the Member of
Parliament for Newmarket-Aurora in 2004 and again in 2006. She also served as a
Federal Cabinet Minister responsible for three senior portfolios and as an Honourable
21. After deciding to leave federal politics, Belinda rejoined Magna as Executive Vice-
Chair in 2007. She maintained that position until 2010, when the Stronach family divested
itself of its controlling stake in Magna. She subsequently took on a leadership role at TSG,
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becoming CEO and President in 2011, President and Co-Chair (with Frank) in February
22. Under the leadership of Belinda and Alon, TSG has almost doubled its annual
revenue and is generating significant positive cash flow. The R&G segment in particular
has emerged from bankruptcy to become a highly profitable business and a dominant
23. Belinda has been involved in philanthropic activities for her entire career and has
Stronach Foundation in 2008 to provide educational opportunities for young women and
aboriginal youth and to improve the lives of young people in developing nations. She is
also the Co-Founder and Honorary Chair of Belinda’s Place, York Region’s first shelter
24. Alon is the CEO of TSG, SCC and other key entities within TSG. He also serves
as a director of several TSG entities. Alon was instrumental in transforming the R&G
to the professionally managed, profitable enterprise it is today. Alon’s duties as CEO were
suspended by TSG in January 2017 (as discussed further below). Alon previously served
25. Alon is a trustee of the 445327 Trust and the Andrew 445 Trust. He is not a
beneficiary of any of the 445 Trusts. He does, however, own a 5% stake in certain of
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26. Frank Walker (“Frank Jr.”) and Nicole Walker (“Nicole”) are Belinda’s adult
children. Both have several years of experience working on projects at TSG with senior
management.
27. Frank Jr. is a consultant to TSG and has been involved in various aspects of TSG’s
businesses in the agricultural, real estate and R&G segments. He also currently runs his
own entertainment business which involves music production, publishing, digital media
and international live performances. Frank Jr. holds an Honours Business Administration
is 27 years old.
28. Nicole is a Vice President at TSG and is particularly involved in TSG’s R&G
equestrian. Nicole holds a Bachelor of Arts degree from Wilfrid Laurier University, focused
29. Frank Jr. and Nicole are two of the primary beneficiaries of the 445327 Trust and
the Belinda 445 Trust. They are both trustees of the Belinda 445 Trust and the Andrew
445 Trust.
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30. SCC is one of TSG’s key operating companies. It directly or indirectly owns a
31. SCC is an Ontario corporation that is controlled by 445 Limited. 95% of the
common shares of SCC are indirectly owned by the 445 Trusts (as discussed in more
detail below). Frank holds preferred shares of SCC that are redeemable at the option of
32. Belinda is the Chair and President of SCC; Colin Chapin is SCC’s CFO; Greg
Harnish is its Chief Legal Officer; and Alon is its CEO (although, as noted above, his CEO
duties were suspended in January 2017). Belinda, Colin and Alon are also the directors
of SCC.
v. Elfriede Stronach
33. Elfriede is Frank’s wife, Belinda and Andrew’s mother, and the grandmother of
Frank Jr., Nicole and Selena. She married Frank in 1964 when she was 21 years old.
34. Elfriede is a trustee and one of the primary beneficiaries of the 445327 Trust. She
acts as a trustee of other Stronach family trusts and holds various positions in certain
TSG entities. She has never had an active role in the management of TSG but has played
35. Frank is Elfriede’s husband, Belinda and Andrew’s father, and the grandfather of
Frank Jr., Nicole and Selena. In addition to the matrimonial residences he shares with
any of the 445 Trusts. He is the holder of the preferred shares of SCC referred to in
paragraph 31 and is a director or officer of certain entities that carry on aspects of TSG’s
agricultural businesses. He holds the ceremonial title of Founder and Honorary Chairman
of TSG.
36. Frank immigrated to Canada from Austria in 1954 when he was 21 years old. He
opened a one-man tool and die shop in Toronto three years later, and together with
management grew that business over several decades into the company that is now
37. Frank served as the CEO of Magna until 1988 and Chairman until 2011. He
subsequently held the ceremonial title of Founder and Honorary Chairman of Magna.
38. Frank was an astute business leader who, together with management, grew
39. Frank’s success with auto-parts is clear. But for all his accomplishments in the
automotive industry, Frank has a long history of pursuing idiosyncratic business ventures
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and spending significant amounts of money on passion projects, contrary to the interests
of other stakeholders.
40. There are numerous examples of Frank pursuing imprudent passion projects with
company money, starting during his tenure at Magna and continuing at TSG. As
discussed in more detail below in paragraphs 100 to 110, Frank pursued non-automotive
businesses and investments during his time at Magna, including magazines and
41. Certain of these businesses were sold or shut down in 1990 when Magna faced a
near-bankruptcy situation. Others were invested in after Magna recovered from its
financial crisis but ultimately led to shareholder opposition in the late 1990s, which was
only subdued in 2000 when Magna entered into a forbearance agreement providing for a
“Forbearance Agreement”) and spun out its non-automotive, non-real estate assets into
3 MEC continued to be controlled by Magna at the time of the spin out. In 2003, Magna spun out its real
estate assets, as well as its controlling interest in MEC, into MI Developments Inc. (“MID”), a publicly-traded
real estate operating company that was initially controlled by the Stronach Trust.
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42. Frank was the Chairman of MEC, and later MID, 4 and devoted a substantial
amount of his time and attention to MEC’s R&G businesses. In 2009, after years of
43. Around the same time that MEC filed for bankruptcy, Frank began to increase his
Florida. Belinda, the family and TSG management were all initially supportive of Frank’s
vision. He began by acquiring farm land, followed by a cattle herd, and then a state-of-
the-art, pain-free slaughter facility. Since that time, Frank has directed the spending of
hundreds of millions of dollars on this venture but has yet to see his vision become
profitable.
44. Unfortunately, in the arc of Frank’s career, business failures and the pursuit of
idiosyncratic passion projects are just as pronounced as his success in the automotive
industry. In recent years Frank has publicly expressed views and behaved in a manner in
his personal and professional relationships that, if associated with TSG or any other
4 See footnote 3.
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45. Andrew is Belinda’s brother and the son of Frank and Elfriede. Andrew is
passionate about horses, cattle and agricultural pursuits. He owns and operates
numerous horse and cattle farms in Ontario and one farm in Ohio.
46. Andrew is not a party to this action. However, one month after this action was
commenced, Andrew initiated a separate action bearing Court File No. CV-18-00608051-
00CL against Belinda, Nicole, Frank Jr. and Alon in their capacities as trustees of the
47. Andrew is one of the primary beneficiaries of the 445327 Trust and the Andrew
445 Trust. He is not a trustee of any of the 445 Trusts. Andrew has never had an active
role in the management of TSG, aside from his involvement in the BTR operations.
48. From time to time, including recently, Andrew has turned to Belinda to assist him
with many significant financial, business and personal challenges. These challenges have
been present in various forms for most of Andrew’s adult life. It is for this reason that
49. Selena is Andrew’s daughter, Belinda’s niece and the granddaughter of Frank and
Elfriede. She is 18 years old and lives with her mother, Kathleen Stronach. Selena is not
a party to this action. She is, however, one of the primary beneficiaries of the 445327
Trust and the Andrew 445 Trust. She is not a trustee of any of the 445 Trusts.
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i. Overview
50. In order to understand the issues that underlie this proceeding, it is helpful to
understand the relationship between the various businesses and entities of which TSG is
comprised.
51. As previously noted, TSG operates in four primary business segments: R&G, real
52. TSG’s most profitable and cash-generating business segment is currently R&G.
The R&G and real estate development segments represent the source of TSG’s growth
and are the drivers of wealth creation and preservation for the Beneficiaries.
53. TSG’s businesses and assets are primarily held in five groups of entities, namely:
the 445 Group, the Ocala Group, the Triple Bell Group, the Alpen House Group, and the
Primel Group.
54. The majority of TSG’s assets and businesses are held in the 445 Group. The 445
Trusts indirectly own 445 Limited, which itself directly or indirectly owns 95% of the 445
Group’s assets (which constitutes the substantial majority of TSG’s assets). The Belinda
445 Trust controls the 445 Group by virtue of its 67.4% stake in 445 Limited, as set out
technology and entertainment properties with thoroughbred horse racing and pari-mutuel
wagering at its core. R&G owns and operates race track properties and training centres
across the United States, delivering best in class live and simulcast thoroughbred horse
racing. R&G also owns and operates several premier digital, technology and content
companies that provide the technology to power on-track and off-track betting and supply
horse racing content to a global audience. Its portfolio of racetrack assets includes Santa
Anita Park and Golden Gate Fields in California; Gulfstream Park in Florida; Pimlico Race
Course, Laurel Park and Rosecroft in Maryland; and world class training facilities such as
San Luis Rey Downs in California, Palm Meadows in Florida, and Bowie in Maryland.
56. R&G operates simulcasting venues at its tracks as well as a significant number of
off-track betting facilities. It is a leader in the digital and online wagering space and owns
several of the largest pari-mutuel wagering technologies and platforms, including AmTote
wagering platform that operates tote systems, terminals and multi-channel wagering
enterprise systems. It has been operating in the totalizer and wagering business for over
85 years and processes over US$7 billion annually. Xpressbet is an advance deposit
wagering service that offers a secure, online wagering platform with access to more than
57. R&G also runs large-scale festivals and premier horse racing events across its
facilities, including some of the biggest horse racing events in the world. Its events include
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the Preakness Stakes and InfieldFest, the Pegasus World Cup Invitational Series, the
Florida Derby and the Santa Anita Derby, and it frequently hosts the Breeder’s Cup, the
58. R&G is predominantly comprised of assets that were transferred to the 445 Group
in connection with the Magna and MID Transactions (as defined below). During the period
in which these assets were held by MEC, MEC posted cumulative losses of approximately
US$600 million before ultimately filing for Chapter 11 bankruptcy protection in 2009. The
assets were transferred to MID in connection with MEC’s bankruptcy proceedings, and
were virtually all money-losing businesses at the time they were subsequently transferred
to the 445 Group. Under Belinda and Alon’s leadership, TSG management has taken
these same R&G assets and turned them into TSG’s most profitable business segment.
Since 2013, R&G has more than doubled its revenue and is generating significant positive
cash flow.
59. TSG’s real estate development group is focused on developing TSG’s excess
lands. TSG owns over 1,000 acres of premier, urban real estate across the United States,
and in most cases, the real estate is connected directly with the R&G thoroughbred
racetracks. The real estate development group is undertaking to develop excess lands
into vibrant mixed use, “live-work-play” communities with thoroughbred horse racing at
their core. TSG is attracting premier hospitality, residential and commercial development
partners to undertake these projects, which will result in a more exciting, energized and
dynamic community surrounding TSG’s tracks. This redevelopment will both create new,
vibrant communities and help to ensure the excitement and sustainability of the sport of
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60. TSG’s agriculture segment is made up of various agricultural and other related
businesses, including Adena Farms (which consists primarily of Sleepy Creek Ranch, a
large grass-fed cattle ranch north of Ocala, Florida), FM Meat Products (a beef slaughter
and fabrication facility), and Adena Golf & Country Club (“Adena Golf”), although Adena
61. Finally, TSG’s BTR segment includes a number of thoroughbred horse breeding,
training and racing operations in various locations across the United States and in Aurora,
Ontario.
62. Both TSG’s agriculture and BTR segments were unprofitable under Frank’s
direction. They have been funded through intercompany debt and equity investments
provided by one or more entities in the 445 Group, and many of their operating companies
63. All of TSG’s R&G assets and its related real estate assets are held in the 445
Group. Many of the operating companies for TSG’s Non-R&G businesses are also held
in the 445 Group, which has facilitated the funding of the unprofitable Non-R&G
64. The 445 Group is managed by a team of experienced, professional managers with
expertise in the various business segments in which the 445 Group operates.
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65. The 445 Group as a whole is primarily owned by the 445 Trusts, which exist for
the primary benefit of one or more of Elfriede, Belinda, Frank Jr., Nicole, Andrew and
Selena. 95% of the common shares of SCC is indirectly owned by 445 Limited, which has
been indirectly wholly owned by the 445 Trusts in the following proportions since the
a. the 445327 Trust owns 9.5% of the common shares of 445 Limited (through
a holding company);
b. the Belinda 445 Trust owns 67.4% of the common shares of 445 Limited
c. the Andrew 445 Trust owns 23.1% of the common shares of 445 Limited
66. The context and rationale for this share allocation is described below in the section
1. 445327 Trust
67. The 445327 Trust is a discretionary trust that was settled on December 14, 2005
for the primary benefit of Elfriede and the issue of Frank (Belinda, Frank Jr., Nicole,
Andrew and Selena). Frank is not a beneficiary of the 445327 Trust and has never been
a trustee of the trust. Elfriede, Belinda and Alon are currently the trustees of the 445327
Trust.
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68. Elfriede was the sole original trustee of the 445327 Trust. Belinda later became a
trustee but resigned prior to the October 2013 Distributions. Elfriede was thereafter the
sole trustee until January 1, 2015 when she appointed Belinda and Alon to act as trustees
alongside of her.
69. The 445327 Trust owned all of the common shares of 445 Limited from December
2005 until the October 2013 Distributions. 5 The 445327 Trust was the only common
shareholder of 445 Limited (aside from Belinda, who held Class A Special Shares) from
the time of its settlement in December 20056 until the October 2013 Distributions.7 Since
the October 2013 Distributions, the 445327 Trust has indirectly owned 9.5% of 445
Limited.
70. The Belinda 445 Trust is a discretionary trust that was settled on October 29, 2013
for the primary benefit of Belinda and her children (Frank Jr. and Nicole) and their issue.8
5 In December 2005, the Stronach Trust’s common shares of 445 Limited were converted into preference
shares and new common shares were issued to the 445327 Trust. From December 2005 up until the
October 2013 Distributions, the 445327 Trust owned all of the common shares of 445 Limited, aside from
100 non-participating nominal value Class A Special shares (“Class A Special Shares”) held by Belinda.
In February 2012, the Stronach Trust’s preference shares (which had been re-frozen in 2008 and 2009)
were redeemed, making the 445327 Trust the sole shareholder of 445 Limited, aside from Belinda’s Class
A Special Shares, up until the October 2013 Distributions. As part of the October 2013 Distributions,
Belinda’s Class A Special Shares were redeemed for their $1,000 redemption price.
6In December 2005, 445 Limited held a controlling stake in Magna and MID by virtue of owning Class B
multiple voting shares (“Class B Shares”) of each company.
7In October 2013, 445 Limited held cash and various other assets that were transferred to it in connection
with the Magna and MID Transactions (and therefore a substantial majority of TSG’s assets).
8 Although the primary beneficiaries of the Belinda 445 Trust are Belinda and her children (Frank Jr. and
Nicole) and their issue, the trust indenture allows for distributions to non-primary beneficiaries, including a
trust for the benefit of Elfriede, Andrew and/or Andrew’s children (Selena), but only if Frank is a trustee.
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Frank is not a beneficiary of this trust, nor is he a trustee, contrary to the allegations in
paragraphs 111 and 116-117 of the Statement of Claim. Belinda, Frank Jr., Nicole and
Glen A. Huber are currently the trustees of the Belinda 445 Trust. The Belinda 445 Trust
has had control of 445 Limited since the October 2013 Distributions when it was
71. The original trustees of the Belinda 445 Trust were Frank, Belinda and Alon. Frank
resigned as trustee on November 29, 2013 and Frank Jr. and Nicole were appointed as
trustees on the same date as required by the trust indenture. Alon resigned as trustee on
January 1, 2015. Mr. Huber was appointed as a trustee on December 14, 2018.
72. As discussed in more detail below, Frank was a trustee of the Belinda 445 Trust
from October 29, 2013 to November 29, 2013. During this brief period, Frank had the
unilateral ability, but only while he himself was a trustee, to appoint or remove any trustee
including a trust for the benefit of Elfriede, Belinda, Andrew, Belinda’s children (Frank Jr.
and Nicole) and/or Andrew’s children (Selena). In circumstances where Frank is no longer
a trustee of the Belinda 445 Trust, the unilateral power to appoint or remove trustees falls
to Belinda for so long as she is a trustee. Accordingly, since November 29, 2013 when
73. The Andrew 445 Trust is a discretionary trust that was settled on October 29, 2013
for the primary benefit of Andrew and his children (Selena) and their issue.9 Frank is not
a beneficiary of the trust. Belinda, Elfriede, Alon, Frank Jr. and Nicole are currently the
trustees of the Andrew 445 Trust. The Andrew 445 Trust indirectly owns 23.1% of 445
Limited, which was transferred to it in connection with the October 2013 Distributions.
74. The original trustees of the Andrew 445 Trust were Frank, Belinda, Elfriede and
Alon. Frank resigned as trustee on November 29, 2013 and Frank Jr. and Nicole were
75. The Andrew 445 Trust contains identical provisions to those provisions of the
Belinda 445 Trust discussed above in paragraph 72 with respect to trustee power.
76. The 445 Trusts indirectly own 100% of 445 Limited, which in turn owns a 95%
interest in numerous corporate and other entities within the 445 Group, including SCC.
9 Although the primary beneficiaries of the Andrew 445 Trust are Andrew and his children (Selena) and
their issue, the trust indenture allows for distributions to non-primary beneficiaries, including a trust for the
benefit of Elfriede, Belinda and/or Belinda’s children (Frank Jr. and Nicole), but only if Frank is alive and a
trustee.
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1. 445 Limited
77. 445 Limited is the corporation that holds directly or indirectly a 95% interest in the
substantial majority of TSG’s assets, including the R&G business, related real estate, and
certain of the operating companies for the Non-R&G business. Belinda is the sole director
78. 445 Limited was incorporated by Frank in 1980. It held Class B Shares of Magna
(and the Class B Shares of MID after the spin out of MID from Magna in 2003) until such
shares were disposed of in the Magna and MID Transactions in 2010 and 2011,
respectively. As discussed in more detail below, Frank owned all of the common shares
of 445 Limited until February 1991 when, as part of an estate freeze, he settled the
Stronach Trust and gifted his shares of 445 Limited to the trust. The trustees of the
Stronach Trust were Frank, Elfriede, Belinda and Andrew, and the primary beneficiaries
of the trust were Frank and Elfriede and their issue. In connection with another estate
freeze in December 2005, the common shares of 445 Limited held by the Stronach Trust
were converted to preference shares and new common shares of 445 Limited were
issued to the 445327 Trust. 10 Following subsequent estate freezes, a portion of the
common shares of 445 Limited were transferred by the 445327 Trust in connection with
the October 2013 Distributions, and since that time 445 Limited has been wholly owned
10See footnotes 6 to 7 above for additional information on the Class B Shares and the assets that 445
Limited has held over the years.
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(through holding companies) by the 445 Trusts in the proportions discussed above in
paragraph 65.
79. As previously noted, SCC is one of TSG’s key operating companies. It is controlled
by 445 Limited and directly or indirectly owns a number of significant TSG assets. See
c. Distributions to Beneficiaries
80. The 445 Group has historically utilized a process devised by its professional
advisors for ensuring that the financial needs of the Beneficiaries and Frank are satisfied.
Since the October 2013 Distributions, this process has involved the declaration of capital
dividends by 445 Limited to intermediate holding companies (the “445 Trust Holdcos”),
each of which is held by one of the 445 Trusts, and dividends from each 445 Trust Holdco
to the 445 Trust that owns it. Each of these dividends was paid by the issuance of
promissory notes (“Capital Dividend Notes”), with the result that 445 Limited issued a
total of $331.2 million in Capital Dividend Notes to the 445 Trust Holdcos (proportionate
to the respective ownership interests of the 445 Trusts in the 445 Group), and the 445
Trust Holdcos in turn issued Capital Dividend Notes to the 445 Trusts, in total, as follows:
$31.5 million to the 445327 Trust, $223.2 million to the Belinda 445 Trust and $76.5 million
81. A portion of the Capital Dividend Notes have been repaid through the process
described below. Currently, the 445 Trusts hold unpaid Capital Dividend Notes as follows:
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the 445327 Trust – close to $6 million; the Belinda 445 Trust – more than $115 million;
82. Under the historical process, the Beneficiaries have submitted invoices for their
certain TSG entities have also provided the Beneficiaries with cash allowances from time
to time. These payments by TSG entities resulted in amounts owing from each
Beneficiary to such TSG entities (in respect of each Beneficiary, his or her “Expense
Debt”).
83. From time to time, each Beneficiary’s Expense Debt then outstanding has been
receives a capital distribution from the applicable 445 Trust in the form of a portion of the
445 Trust’s Capital Dividend Note, which is then used to settle the Beneficiary’s Expense
84. The original capital dividends paid to the 445 Trusts (in the form of Capital Dividend
Notes) were paid based upon each Trust’s percentage ownership of 445 Limited. As a
result, the repayment from time to time of each Beneficiary’s Expense Debt by way of a
distribution by the applicable 445 Trust of a portion of such Capital Dividend Notes to the
Beneficiary ensures that, in total, the Expense Debt of the Beneficiaries of each 445 Trust
repaid through such process will not exceed that trust’s percentage ownership interest in
445 Limited. The rate at which each 445 Trust has been distributing Capital Dividend
Notes to its Beneficiaries through this process has historically been determined by the
85. While Frank is not a beneficiary of any of the 445 Trusts, he has similarly submitted
personal expenditures to certain TSG entities for payment and received cash allowances
from TSG entities from time to time. The indebtedness of Frank resulting from such
payments by TSG entities has been satisfied from time to time in a manner similar to that
described in paragraph 83 above. Because Frank is not a beneficiary of any 445 Trust,
however, a capital distribution in the form of a Capital Dividend Note equal to the amount
of Frank’s indebtedness from time to time has been distributed by a 445 Trust to a
Beneficiary of such trust, and then such Capital Dividend Note has been gifted to Frank
from such Beneficiary and used to settle Frank’s indebtedness. At various times, various
Beneficiaries have made such gifts to Frank (or for his benefit) under this process.
86. For example, Elfriede was gifted approximately $38.4 million to permit her to repay
to 445 Limited funds it had loaned to her for use by Frank in his Austrian political
campaign. The Beneficiaries also gifted Frank approximately $27.5 million to permit him
to repay to SCC funds it had loaned to him for an Austrian tax settlement payment made
in 2018 on the basis of Frank’s representations about his need for these funds.
87. TSG’s process of having TSG entities pay the Beneficiaries’ expenses and be
repaid at least annually through the process described above was developed with the
assistance of experienced, professional advisors. At all relevant times there were controls
and procedures in place to ensure this process was appropriately accounted for and
recorded.
88. On December 13, 2018, Linda Plumpton of Torys LLP, counsel to TSG, wrote to
each of the Stronach family members advising of a change in the process by which family
30
members’ personal expenses and liabilities will be paid. Ms. Plumpton’s letter advised
that, after a transitional period from January 1, 2019 to June 30, 2019, family members
will be responsible for paying their personal expenses directly. Having regard to historical
expenditures by family members, TSG has budgeted for quarterly payments to be made
to the 445 Trusts, and these payments will then be available for distribution by the trustees
of each trust to its beneficiaries. As with the previous process, the new expense payment
89. During the transitional period from January 1, 2019 to June 30, 2019, the previous
process, under which TSG paid the personal expenses of family members, will continue,
subject to there being a maximum quarterly payment for each family member equal to his
or her quarterly distribution amount from the applicable 445 Trust. It is expected that the
Beneficiaries’ quarterly distribution amounts for 2019 will be determined by the trustees
90. On December 20, 2018, a meeting was held in which TSG management (Douglas
Tatters, TSG’s Interim CFO, and Michael Brooks, TSG’s Vice President, Finance)
provided information to counsel for all family members on the new approach outlined in
91. Most of TSG’s Non-R&G assets are held outside of the 445 Group in four other
trust-owned groups: the Ocala Group, the Triple Bell Group, the Alpen House Group, and
the Primel Group. These groups are funded by equity investments and inter-company
31
loans, including from entities in the 445 Group. In some cases, the companies that
operate or manage the Non-R&G assets held in these groups are 445 Group companies.
a. Ocala Group
92. The Ocala group is owned by the Ocala Settlement, a discretionary trust that was
established in 2008 for the primary benefit of Elfriede and the issue of Frank. The trustee
for the Ocala Settlement is Equiom Trust (South Dakota), LLC (“Equiom”), an
independent fiduciary service company. Belinda is a director and officer of the key
93. The Ocala Group’s main assets are the U.S. agricultural lands and other
agricultural-related assets for the Adena Farms business. These assets include the cattle
lands, equipment and cattle herd at the Sleepy Creek Ranch, as well as Adena Golf and
94. The Triple Bell group is owned by the Triple Bell Trust, a discretionary trust that
was established in 2009 for the primary benefit of Elfriede and the issue of Frank. Equiom
is the trustee for the Triple Bell Trust. Belinda is a director and officer of the key corporate
95. The Triple Bell group’s main assets are U.S. agricultural lands, predominantly
located in Florida (Williston Farm) and Kentucky (Paris Farm), and used for TSG’s BTR
businesses.
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c. Other
96. The Alpen House group owns land in Aurora, Ontario, including the Stronach
family homes and the family horse farm. It also directly or indirectly owns some United
States real estate (Midway Kentucky Farm). The group is indirectly owned by four trusts,
and by Frank, who holds preferred shares of an entity in the group. Elfriede and Belinda
are the trustees of two of the trusts which are for the primary benefit of Elfriede, Belinda
and her issue. Elfriede and Andrew are the trustees of the other two trusts which are for
97. The Primel group includes a number of European entities. The group’s main asset
98. This litigation was commenced in October 2018, but the factual underpinning for
99. Frank has always been a bold and passionate business leader. This contributed
to his successes at Magna. Frank also has a history of managing company affairs through
a founder-centric lens and a propensity for pursuing diversions into idiosyncratic and often
unprofitable projects. Belinda, Frank Jr. and Nicole have tremendous respect for Frank
and all of his accomplishments. Belinda has worked alongside him for years; however,
their visions of revitalizing and modernizing the horse racing industry differ. Since
becoming Chair and President of the key TSG entities, Belinda, together with Alon,
managed business that operates in accordance with sound business strategies and
management team and expert external advisors. This litigation is the result of a clash
and maintain wealth for future generations of the Stronach family, and Frank’s refusal to
accede to these sound business strategies in the context of projects that he cares deeply
about but that have proven to be non-viable or are underperforming. The key events that
led up to this litigation, or that otherwise help to contextualize the dispute, are set out in
i. 1980s to 2011
100. Frank together with management spent decades building Magna into an auto-parts
giant, but by the 1980s, his attention was diverted away from the company’s core
101. To list only a few examples of how Frank, as Chairman, CEO and controlling
shareholder of Magna, spent Magna’s funds in the 1980s: he founded a lifestyle magazine
called Focus on York and an “alternative business magazine” called Vista; bought a 45%
Belinda’s in York Region; and founded a tennis equipment company. As noted below, the
majority of these passion projects were closed or shut down by the spring of 1990 as part
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idiosyncratic projects Frank pursued with his own personal funds during this time period.
102. By the late 1980s, there was a growing view among Magna stakeholders that
Frank was distracted from his duties as CEO. This perception was validated in 1988 when
Frank stepped down as CEO of Magna to run for a seat in Canada’s federal Parliament.
His bid for the seat was ultimately unsuccessful. Frank did not resume his CEO position
103. Magna experienced enormous growth in the 1980s but amassed significant debt
in the process. When the automotive industry took a downturn in the late 1980s, Magna’s
profits started to plunge and by the beginning of 1990, its growing debt had pushed the
104. The company went on to engineer a successful turnaround and debt restructuring
plan over the course of 1990 and 1991. The majority of Frank’s passion projects from the
late 1980s were shut down or sold as part of this turnaround effort, including the
publishing and media operations, the ski resort development, and the restaurant in York
Region.
35
105. In February 1991, Frank settled the Stronach Trust for the benefit of Frank, Elfriede
and their issue. Frank, Elfriede, Belinda and Andrew were all named as trustees of the
106. Frank transferred all of the shares of 445 Limited (which owned Magna Class B
Shares) to the Stronach Trust at the time of its settlement, transferring legal control of
Magna from Frank to the trust. A provision in the trust indenture gave Frank the unilateral
facto control over Magna following the settlement of the Stronach Trust.
107. In the mid to late 1990s, following Magna’s successful re-emergence from near-
108. During this period, Frank caused Magna to buy television and marketing rights for
various Austrian soccer teams, and committed it to investing more than $100 million in
the soccer league (on the condition that he could become president of the league). He
also initiated Magna’s leap into racetrack ownership with the purchase of the Santa Anita
Park in California and the subsequent US$60 million renovation to the bar in the facility’s
Frontrunners restaurant, with no hope of financial return – the first of many R&G-related
109. Around the same time period, Frank proposed that Magna invest $800 million to
build a theme park called “World of Wonder” in Austria. He also proposed to build a
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transatlantic airline called “Magna Air” which would feature airplanes outfitted with beds
110. As noted above, these diversions from Magna’s core automotive-related business
led to significant shareholder dissatisfaction in the late 1990s, which was only subdued
when Magna entered into the Forbearance Agreement and spun out its non-automotive,
non-real estate assets into MEC. Shortly after the Forbearance Agreement expired in
2006, Magna launched an energy drink project (which was in development since 2001)
and proposed to sell a product called “Frank’s Energy Drink” in Canada, the United States
with the slogan “keeps you yodeling all night long”. The project was short-lived. Magna
shut it down after the initial market test phase indicated that it was not feasible.
111. Belinda was appointed Vice President of Magna in 1995 and an Executive Vice
112. Magna made significant gains during Belinda’s tenure as CEO. Magna’s sales
grew from US$11 billion in 2001 to US$21 billion in 2004, and its stock price nearly
doubled in value. Belinda also led the 2003 spin out of MID as a separate public company
that owned real estate properties and a controlling interest in MEC that had formerly been
owned by Magna.
37
113. By the time Belinda became Magna’s CEO in 2001, Frank was no longer involved
114. During this time, Belinda was widely recognized and lauded by global media and
publications, including Fortune and TIME magazines, for her business leadership and
global influence.
115. As noted above, the 445327 Trust was established in December 2005. At that time,
the Stronach Trust’s common shares of 445 Limited (which owned Class B Shares of
each of Magna and MID) were converted to preference shares and new common shares
116. Additional information on the beneficiaries and trustees of the 445327 Trust is set
out above in paragraphs 67 to 69. Notably, (1) the beneficiaries of the 445327 Trust are
Elfriede, Belinda, Frank Jr., Nicole, Andrew and Selena; and (2) Frank is not a beneficiary
of the 445327 Trust and has never been a trustee of the trust.
117. 445 Limited divested its controlling stakes in Magna and MID in transactions
completed in 2010 and 2011, respectively (the “Magna and MID Transactions”). In
exchange for its controlling interests in Magna and MID, 445 Limited (the common shares
38
of which were owned by the 445327 Trust11) received directly or indirectly cash and other
assets valued at approximately US$1.45 to US$1.6 billion, including the MEC racing and
gaming assets and related real estate assets that had been owned by MID immediately
ii. 2011-2017
a. Establishment of TSG
118. Following the Magna and MID Transactions, Belinda and Frank stepped down from
their respective positions as Executive Vice-Chair and Chairman of Magna and together
established TSG in 2011. At the time of its founding, Frank was Chairman of TSG and
Belinda was CEO and President. At Frank and Belinda’s request, Alon was also involved
in TSG from its inception, and took on the role of leading the transformation of R&G in
those early years. Although Frank initially and from time to time gave broad strategic
advice with respect to the R&G businesses, this has been the extent of his involvement
in TSG’s R&G segment. Frank has instead focused his energy on his agricultural pursuits.
119. As noted above, TSG’s R&G segment is predominantly comprised of the R&G and
related real estate assets that were previously owned by MEC and subsequently MID.
See paragraphs 50 to 62 above for an overview of TSG and its business segments.
11At this time, the 445327 Trust owned all of the common shares of 445 Limited, except for Belinda’s Class
A Special Shares. The Stronach Trust owned preference shares in 445 Limited. See footnote 5 and
paragraph 65 for additional information on the history of the ownership and control of 445 Limited.
39
120. Alon and Belinda have held senior management roles at TSG since 2011. As noted
above, although Frank occasionally provided broad strategic advice with respect to the
R&G segment, he was largely preoccupied with his agricultural pursuits and left day-to-
day management to Belinda and Alon. Frank stepped down as Co-Chair and assumed
the title of Founder and Honorary Chairman in November 2013, reflecting these
leadership and management realities. Belinda became the sole Chair (in addition to
continuing on as President).
121. In February 2012, just prior to the 21st anniversary of the Stronach Trust, 445
Limited redeemed the 445 Limited preference shares owned by the Stronach Trust in
exchange for the issuance of promissory notes. These promissory notes were then
distributed in equal amounts to three sub-trusts established for the benefit of Elfriede,
Belinda and her children (Frank Jr. and Nicole), and Andrew and his child (Selena),
respectively. Substantially all of these promissory notes were repaid by 445 Limited and
applied for the benefit of the Beneficiaries in 2012 and 2013 (prior to the October 2013
process similar to that which has been used since the October 2013 Distributions, as
122. The redemption of the Stronach Trust’s preference shares resulted in the 445327
Trust being the sole shareholder of 445 Limited, aside from Belinda, who held Class A
40
Special Shares. Accordingly, at this time, Frank ceased to have any legal or beneficial
123. In July 2013, at Frank’s initiative, a term sheet was entered into granting Alon a
direct or indirect 5% equity interest in certain TSG assets. Frank initiated this agreement
to compensate Alon for his instrumental role in the Magna and MID Transactions. The
transactions giving effect to Alon’s 5% equity interest were completed in October 2013.
124. Starting in about 2011, various Stronach family members, including Frank, began
to discuss how they would like the Stronach family’s assets to ultimately be allocated
among Elfriede, Belinda, Frank Jr., Nicole, Andrew and Selena. With the assistance of
external advisors, several different allocation plans were considered over the years,
125. By the spring of 2013, these discussions had shifted towards an allocation of the
May 2013, Frank, Belinda, Frank Jr., Alon and legal counsel met to discuss the allocation
of family assets. This included discussion of the future management of TSG, and it was
12As noted at paragraphs 72 and 74, Frank was briefly a trustee of the Belinda 445 Trust and the Andrew
445 Trust from October 29, 2013 to November 29, 2013 and therefore had an indirect legal interest in 445
Limited for that brief period of time.
41
contemplated, including by Frank, that Belinda would control TSG, which would be
126. In August 2013, after various allocations of the 445 Limited shares were
considered and discussed with legal counsel and/or other advisors, various family
members, including Frank, indicated a desire for the shares of 445 Limited to be held in
the following proportions after an anticipated distribution from the 445327 Trust (which at
that point held all of the outstanding shares of 445 Limited, save for Belinda’s Class A
Special Shares13):
a. Belinda and her two children (Frank Jr. and Nicole) – 67.4%
c. Elfriede – 9.5%
127. This allocation reflected the desire for the three grandchildren to be treated equally
in the long run, but also for Belinda to have a higher stake than Andrew so that she could
manage and control TSG’s business, recognizing that Belinda is a strong business leader
128. Belinda resigned as a trustee of the 445327 Trust, leaving Elfriede as the sole
trustee of that trust. After conferring with family members (including Frank) and
13 See footnote 5 for additional information on the history of the ownership and control of 445 Limited.
42
distribute portions of the 445 Limited shares from the 445327 Trust.
129. In advance of the anticipated distributions, two new trusts (the Belinda 445 Trust
and the Andrew 445 Trust) and three new holding companies were created. On October
31, 2013, the 445327 Trust made capital distributions of a portion of the shares of 445
Limited to the holding company owned by the Belinda 445 Trust and a holding company
owned by the Andrew 445 Trust (the “October 2013 Distributions”). Following the
October 2013 Distributions, the shares of 445 Limited were owned, and continue to be
owned, in the following proportions (in each case through a wholly owned holding
company):
130. Accordingly, since the October 2013 Distributions, the Belinda 445 Trust has
131. For approximately one month following the October 2013 Distributions, Frank was
a trustee of the Belinda 445 Trust (along with Belinda and Alon) and a trustee of the
Andrew 445 Trust (along with Elfriede, Belinda and Alon). However, this was short-lived,
132. On November 29, 2013, approximately one month after the October 2013
Distributions, Frank resigned from all the corporate positions he held at TSG and as a
trustee of the Belinda 445 Trust and the Andrew 455 Trust (among other trusts). Frank
made this decision, on the advice of Austrian counsel and tax advisors, for tax purposes
and in view of certain public disclosure requirements that would apply to him as a result
133. Since November 29, 2013, Frank has not had a legal or beneficial interest in 445
Limited, contrary to the allegations in paragraphs 111 and 116-117 of the Statement of
Claim. Frank Jr. and Nicole were appointed as trustees of the Belinda 445 Trust and the
Andrew 445 Trust on the same day that Frank resigned. They continue to validly hold
these positions and act as trustees of the Belinda 445 Trust and the Andrew 445 Trust,
contrary to the allegations in paragraphs 112 and 117 of the Statement of Claim. 14
Additionally, since November 2013 Frank has only held the ceremonial title of Founder
14See paragraphs 70 and 73 for a list of the current trustees of the Belinda 445 Trust and the Andrew 445
Trust.
44
Team Stronach for Austria, a populist right-wing anti-Euro political party, in September
2012 and began campaigning for a spot in the Austrian legislature at that time.
135. In addition to Frank investing significant time to pursue his Austrian political
ambitions, approximately $50 million was gifted to his benefit by the Beneficiaries to be
intended his resignations as trustee of the Belinda 445 Trust and the Andrew 445 Trust
to be permanent. Although his decision to resign as trustee of the Belinda 445 Trust and
the Andrew 445 Trust was driven by disclosure requirements and tax considerations (not
the October 2013 Distributions), the decision was consistent with Frank’s expressed
desire for the Belinda 445 Trust to have control of TSG, as was discussed leading up to
137. Frank’s decision to resign from all officer, director and trustee positions was made
fall of 2013. It came as a surprise to Belinda and Alon, who were not part of the
discussions surrounding this decision. Alon had committed to the CEO position at TSG in
part because of his close working relationship with Frank up to that time. In light of Frank’s
decision to resign and Belinda’s health situation (she was a recent breast cancer
survivor), Alon was concerned about being a trustee of the 445 Trusts that controlled TSG
with only Frank Jr. and Nicole if something were to happen to Belinda. Frank Jr. and
45
Nicole were in their late teens or early 20s, and Alon did not have a working relationship
138. As a result, on the same day that Frank made the decision to resign as trustee,
Alon directed legal counsel for the Stronach family to prepare undated documents
providing for the resignation of Frank Jr. and Nicole as trustees of the Belinda 445 Trust
and the Andrew 445 Trust (the “Blank-Dated Resignations”), and the reappointment of
Frank as trustee of those trusts by the existing trustees, including Belinda (the “Blank-
Dated Reappointments” and together with the Blank-Dated Resignations, the “Blank-
Dated Trustee Documents”). The Blank-Dated Trustee Documents were signed by all
relevant parties but were not dated, per Alon’s directions. They were not intended to be,
providing him with some assurance that Frank could resume his trustee positions in the
event of Belinda’s death or incapacity, the Blank-Dated Trustee Documents were not
successful in accomplishing that goal. They do not purport to record a current series of
events, but rather a future series of events. There is no provision for, or agreement by the
signatories on, the circumstances in which the Blank-Dated Trustee Documents would
140. Alon maintained possession of the Blank-Dated Trustee Documents for a period
of time, but eventually gave them to the Stronach family’s legal counsel for safekeeping.
As the situation that the Blank-Dated Trustee Documents were intended to address –
46
Belinda’s death or incapacity – did not come to pass, Alon never attempted to make them
effective.
141. The Blank-Dated Trustee Documents were never intended to – and do not – give
142. It could not have been and was not the case that the Blank-Dated Trustee
Documents were intended to give Frank the discretion to resume his trustee positions at
will, as such an intention would mean that his original resignations were a sham designed
consequences. At no time was any such sham intention of Frank’s ever discussed by him
with Belinda, Frank Jr. or Nicole – three of the signatories of these documents. If that had
been the intention, the Blank-Dated Trustee Documents would be ineffective and invalid
for public policy reasons, as if Frank were permitted to activate them at his discretion, it
143. In any event, the Blank-Dated Trustee Documents are not and have never been
valid or effective legal instruments. The Blank-Dated Trustee Documents are void ab
initio. They are deficient on their face. There is no – and has never been any – agreement
that gives any person the authority to date and deliver the Blank-Dated Trustee
144. In the alternative, if the Blank-Dated Trustee Documents were valid legal
instruments, they were never made effective while they were valid. The Blank-Dated
pursuant to her powers as trustee, when she unconditionally revoked and withdrew all
47
previously made appointments of trustees of the Belinda 445 Trust and Andrew 445 Trust
that purported to take effect as of a future date, including in draft form. These revocations
145. In the further alternative, if the Blank-Dated Trustee Documents were ever made
effective notwithstanding the December 23, 2016 revocations, Frank was deemed to have
resigned as a trustee of the Belinda 445 Trust on January 15, 2017 as a result of Belinda,
Frank Jr. and Nicole having delivered to Frank an instrument requesting his resignation
as trustee from the Belinda 445 Trust effective that date pursuant to section 9.3 of the
trust indenture. This resignation request is discussed further below in paragraph 185.
146. Frank’s foray into Austrian politics was brief. He was elected to Parliament in
September 2013 and decided to step down from his position by January 2014.
147. Contrary to the allegations in paragraphs 102 to 104 of the Statement of Claim,
Frank did not assume legal or de facto control of TSG upon his departure from Austrian
politics. However, due to his passion for the agricultural and BTR businesses and
Belinda’s respect for her father, as well as Alon’s long-standing relationship with Frank,
Frank was initially supported in his pursuits in the agricultural and BTR segments of TSG,
as well as certain of the related real estate development ventures in Florida. The
understanding was that Frank would be involved in high level strategic planning but would
148. On a limited number of non-R&G projects, TSG management gave Frank the
ability to direct and commit resources in the early stage of his “vision” for the agricultural
greater oversight and control by TSG management. This ultimately led to the May 2017
149. Much of Frank’s time and energy in that regard has been spent on the Adena
Farms business, including by expanding the cattle farm to chickens, pigs and organic
vegetables, developing Adena Golf, and developing the retail and restaurant ventures in
Florida to feature Adena Farms products. He has not had any significant involvement in
TSG’s R&G segment. As to the allegations in paragraph 135 of the Statement of Claim,
Belinda has no knowledge of the alleged “slip-sheeting” (i.e. the replacement of Frank’s
signature in legal agreements with that of Belinda, Alon or others at TSG). However, to
the extent that Frank entered into agreements purporting to bind TSG when he did not
have legal authority to do so, where TSG nevertheless determined to enter into any such
agreement, it would have been required to take appropriate steps to ensure that such
150. Since assuming leadership of TSG, Alon (from the outset) and Belinda
(increasingly over time) have taken active steps to take it from a founder-led business to
planning process. Among other things, they have recruited experienced management
from around the world to lead and grow the core R&G businesses. They have also
49
engaged expert advisors to evaluate strategic initiatives proposed by Frank for the Non-
151. TSG’s R&G segment has thrived under Belinda and Alon’s leadership. Its revenue
doubled in a five-year period, increasing from US$555 million in 2012 to over US$1.1
billion in 2017. Its market share of handle (i.e. bets) increased from 15% in 2012 to 28%
in 2017. TSG now hosts over 2 million guests a year at its R&G properties, and processes
152. The R&G segment is currently the primary source of TSG’s growth and driver of
wealth creation and preservation for the current and future generations of Stronach family
beneficiaries. However, these R&G businesses were not always so profitable. As noted
above at paragraph 58, while the R&G businesses were still owned by MEC and managed
by Frank, they were virtually all money-losing enterprises, which eventually resulted in
MEC filing for Chapter 11 bankruptcy. Frank’s tenure as CEO of MEC was marked by a
turnover.
153. Since assuming leadership of R&G, Belinda and Alon, together with other
professional management, have taken steps to turn R&G into a highly profitable and cash-
generating segment. Among other things, robust business plans have been put in place
Ritvo, the Chief Operating Officer of the R&G segment, have been hired.
50
154. Together, TSG management has made horse racing attractive to a new generation
of fans, modernized facilities, and enhanced guest experiences into a more expansive
entertainment and hospitality experience. Management has also taken significant steps
policies and employee engagement initiatives. These steps combined have led to R&G’s
management of R&G at MEC, where experienced managers and expert advice were
155. TSG management also established TSG’s real estate development segment,
156. Belinda strongly denies the various allegations directed toward her and Alon’s
management of TSG in the Statement of Claim. There is simply no basis for them. In
particular, Belinda denies that there is any basis for the allegations in paragraph 136,
asserting without foundation that Belinda and Alon did not conduct themselves as diligent
and prudent corporate executives. Contrary to these allegations, Belinda and Alon have
directors. Indeed, Belinda has been focused and committed to developing TSG for the
good of all stakeholders and the current and future benefit of the Stronach family
and other members of management have hired experienced and qualified personnel with
appropriate compensation.
51
157. Belinda denies that there is any basis for the allegations in paragraph 137 of the
Statement of Claim. TSG has rigorous financial and operating controls and procedures in
place and maintains proper records and internal control systems for its business and
affairs. Similarly, appropriate controls and procedures have been put in place and records
have been maintained for the trusts where Belinda acts as trustee. The R&G segment
operates in a highly-regulated industry and has always had audited financial statements
prepared on a timely basis. Belinda and other management also initiated the lengthy
process of obtaining unqualified audited financial statements for TSG’s other businesses
158. Belinda denies the allegations in paragraphs 138 and 139 of the Statement of
Claim. She has not engaged in self-dealing transactions or placed herself in positions of
potential or actual conflict. The plaintiffs’ allegations of misappropriation of TSG and trust
assets are also entirely without basis. Belinda is vigilant in ensuring that her personal and
business expenses are properly separated, and TSG has appropriate corporate controls
159. As to paragraph 140 of the Statement of Claim, TSG purchased an office in the
investment. TSG has had an office in the Yorkville area since June 2012. The Prince
Arthur Avenue property was purchased in 2017 when the lease on the previous office
expired. While Frank was still Chairman of TSG, he made attempts to acquire two different
properties in the Yorkville area, one for a potential office/steakhouse and the other for an
office/residence/health facility.
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160. Contrary to the allegations at paragraphs 132-133 of the Statement of Claim, the
Beneficiaries, and gifts to Frank) in January 2018 (the “January 2018 Distribution”) were
entirely appropriate and approved by John Simonetti, TSG’s CFO at the time, after careful
consideration of TSG’s financial position and cash requirements and availability. The
proposed January 2018 Distribution was also discussed in the fall of 2017 with all family
members, including during multiple discussions with Frank who had no issue with the
intended distributions. The decision to make the January 2018 Distribution was entirely
unrelated to the purchase of the Stellwagen Group from Acasta by a group that included
sharing and transparency with the Beneficiaries and Frank, Belinda convened business
review meetings for the family members on September 27, 2017 and March 20, 2018.
financial performance and strategic initiatives. Related material was also provided to
counsel for all family members. Particular focus was given to the unprofitable segments
in which Frank was most engaged, namely the agricultural and BTR businesses.
162. In addition to the family meetings, on May 28, 2018 and September 5, 2018,
meetings were convened by counsel for TSG to provide information to counsel for the
i. Agricultural Businesses
163. Belinda and her family supported Frank’s overall vision for an all-natural, grass-fed
beef business. However, Frank’s inability to create a profitable business eventually led to
the need for greater intervention by Belinda and other members of TSG management in
order to rationalize the business. Frank’s entrepreneurial approach to the business was
ultimately out of synch with market demand and his hiring choices and attempts to “spend
to success” were not fruitful. In addition, Frank was completely dismissive of TSG
by utilizing more methodical planning, appropriate human capital, better budgeting and
164. As at late 2018, TSG’s cumulative investment in the agriculture business was
approximately US$320 million and its cumulative losses and potentially unrecoverable
capital expenditures exceeded US$100 million. Most of these losses stemmed from the
Adena Farms business (i.e. the cattle farm operations and slaughterhouse). However,
following independent expert advice and restructuring efforts in 2018 led by Belinda and
other members of TSG management, the forecasted budget for 2019 shows a turnaround
165. Starting in about 2008, Frank initiated the investment of hundreds of millions of
dollars in land, farming and cattle operations on the 90,000-acre Sleepy Creek Ranch in
Florida, including to purchase land, clear and convert the land into pasture, acquire
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livestock (including cattle, chickens and pigs) and build a beef slaughter facility. These
166. Despite the many requests from Belinda, Alon and other TSG management, no
business plan or budgets were developed prior to the initiation of these investments, other
than a general quote for the cost of the slaughterhouse (which was initially quoted as
US$23 million and over time grew to more than US$55 million, albeit including chicken
167. In 2014, Frank opened two restaurants at the Village at Gulfstream Park: a
steakhouse called Adena Grill with a 450-person capacity, and a sports bar called
Frankey’s, to feature Adena Farms beef and other Adena Farms products. He then
restaurant businesses, including by wanting to fire top talent that had been brought in by
TSG leadership with significant restaurant operations experience and micromanaging the
significant losses as a result. Adena Grill was recently shut down as part of TSG’s
business rationalization plan, and Frankey’s has been further integrated into the
168. Despite the agricultural business’ substantial losses under Frank’s leadership, and
contrary to repeated requests and direction from Belinda, Alon and other TSG
management, Frank continued his attempts to aggressively expand the business and
make significant capital expenditures. For example, at various times he enlisted the
Adena Golf, as well as the restaurants and Pegasus Park, and hired a food formulation
2017, he had initiated plans for a greenhouse project, a spring water acquisition, the
acquisition of dairy lands, a dairy business and creamery, a commissary, a pet food
169. Outside experts were retained to assist TSG management to assess the viability
of Frank’s vision for the agricultural business. All of these experts confirmed
management’s assessment that Frank’s vision for the agriculture business, and Adena
Farms in particular, would result in continuing losses. This would lead to diminished
assets being available for the Beneficiaries. Frank was dismissive of all third party expert
170. Despite Frank’s attempts to disrupt TSG management’s efforts to reduce losses
and implement a restructuring plan, TSG management took steps to restructure the
rationalizing others. As a result, budget forecasts for 2019 show a profit in this segment
171. In 2008, Frank directed the purchase of 1,275 acres of land in an area north of
Ocala, Florida for approximately US$17.7 million and, at Frank’s initiative, TSG invested
construction of Adena Golf – a luxury golf and country club with an 18-hole golf course, a
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club house, a swimming pool and tennis courts – and two model homes (with plans to
172. Adena Golf opened in the summer of 2015 and carried on operations until its
closure in July 2018 (as discussed below). Approximately US$118 million has been
invested in the Adena Golf business, which includes US$22.2 million in operational losses
since inception.
173. Frank’s vision for Adena Golf ultimately could not be realized. Despite the effort
that went into its concept and grand design, the luxury golf course in a remote location
failed to attract consumer interest or excitement. As noted by third party experts later
retained by TSG to review the property, its leadership team lacked a strong sense of the
club’s overall direction, the exclusive and elite golf club was not compelling to the market,
and the pricing and size of the lot plotting for the proposed residential development was
not in line with likely demand. As a result, TSG management took steps to reduce ongoing
losses. The property was listed for sale as a going concern, but management ultimately
closed the facility to further reduce losses. This property remains for sale and is listed
174. The majority of TSG’s BTR businesses have also been under Frank’s guidance.
He has overseen the acquisition of an unnecessarily large horse inventory and allowed
the BTR businesses to incur significant losses. Since 2010, the BTR businesses have
175. In 2018, TSG management replaced the general manager for the BTR business
and is now working through a restructuring plan to reduce losses and horse inventory.
segment, regular operating losses were funded for a time, including significant losses
relating to a manufacturing quality issue. TSG management took action to stem losses
and BionX entered into receivership in February 2018. Elby, which was a related electric
bicycle venture initiated by Frank and wholly owned by TSG, also incurred significant
operating losses and substantially all of its assets were sold in December 2018 as part of
177. As noted above, in or around 2012 Frank spent tens of millions of dollars to design
and build two 12-storey high bronze statues of a Pegasus horse defeating a dragon,
purporting to be a representation of the struggle between the forces of good and evil. The
first statue stands at Gulfstream Park in Florida and is the second tallest statue in the
United States after the Statue of Liberty. The second Pegasus statue, identical to the first,
is in pieces in a storage facility in China. Despite an initial budget of US$6 million, Frank
has spent over US$55 million of TSG funds to build these statues as part of his vision for
Pegasus Park. Belinda and other members of TSG management stopped Frank’s further
expansion plans for Pegasus Park, which was to include a roller coaster, a carousel, a
178. Members of TSG management, including Belinda and Alon, have run the
businesses in a professional manner in order to preserve and grow the family wealth for
the benefit of all TSG stakeholders, including the Beneficiaries. On numerous occasions
Frank has taken steps, both internally and externally, that have undermined these efforts
and has refused to work with management and the experts that have been engaged to
179. In 2016 Belinda, in her capacity as trustee and together with the rest of TSG
value creation for the Beneficiaries, given Frank’s imprudent expenditures in non-
performing businesses.
180. Notwithstanding the fact that the Adena Farms businesses were losing substantial
amounts of money under Frank’s direction, in the summer of 2016, Frank began to make
plans for an aggressive expansion of the business (including in relation to dairy, pork, a
water spring, a commissary, pet food, and multiple retail operations) and made significant
181. As these funding requests were not based on any viable business plan, Belinda
together with TSG management did not grant Frank’s requests and instead asked that he
work with management to minimize the losses that the Adena Farms business was
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already incurring. Belinda and Alon also offered to work with Frank to see if a viable
business plan could be developed. Frank responded to this management view with
182. In light of Frank’s threats and notwithstanding her understanding that the Blank-
Dated Trustee Documents were not effective, out of an abundance of caution, Belinda
144) pursuant to powers bestowed upon her as a trustee of the Belinda 445 Trust and
the Andrew 445 Trust. She did so on December 23, 2016 by executing written documents
for both trusts which unconditionally revoked any trustee appointment she made that
purported to take effect as of a future date and unconditionally withdrew any form,
including draft form, of trustee appointment, which could thereafter not be used to effect
appoint Frank as trustee in the event of Belinda’s death, subject to certain conditions and
contingent on being revocable at any time in Belinda’s sole and absolute discretion.
183. As to paragraphs 111 to 114 of the Statement of Claim, while Frank purports to
have dated the Blank-Dated Reappointments on January 9, 2017, this was following their
revocation by Belinda, and any such dating could not have had and did not have any legal
effect.
184. On January 10, 2017, Belinda wrote to Frank to advise him that his attempts to
2017, Belinda, Frank Jr. and Nicole delivered an instrument to Frank requesting his
resignation as trustee of the Belinda 445 Trust effective January 15, 2017. Pursuant to
section 9.3 of the trust indenture of the Belinda 445 Trust, this resignation request had
the effect of deeming Frank to have resigned as trustee on January 15, 2017 in the event
that his purported attempts to reappoint himself as trustee were somehow effective.
186. While Frank now desires to be a trustee of the Belinda 445 Trust and Andrew 445
Trust, his conduct, including his mismanagement of the agriculture and BTR businesses,
that he has not and will not act as a fiduciary is required to do – in the best interests of
the Beneficiaries.
187. By January 2017, Frank had repudiated his long-standing close relationship with
Alon, with whom he had worked closely since the Magna days. Frank took offence at
attempts by TSG management, including Alon, to rationalize the agricultural business and
without any valid basis, Frank sought to have Alon terminated from his position as CEO.
As an attempt to temper the heated rhetoric from Frank, Belinda agreed to suspend Alon,
but refused to terminate him. Understanding the situation and Frank’s volatility, Alon was
agreeable with this approach, and on January 18, 2017, his duties as CEO were formally
suspended. Contrary to the allegations in paragraph 109 of the Statement of Claim, Alon
has not had any role in managing or directing the business or affairs of TSG since that
time but has continued to act as an advisor and resource to Belinda and TSG
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management given his deep knowledge of the R&G business. Frank was at all times
aware of this.
188. As a more recent example of Frank’s interference, he took steps to reach out to
certain banks that held substantial cash balances in an attempt to block the release of
funds needed by TSG for working capital. Frank was successful in blocking access to
189. TSG management has been working diligently to develop and implement a plan
for improving its cash position and addressing the issues in the non-R&G businesses that
led to liquidity concerns. This has included consultations with expert advisors and
190. As part of this effort, TSG management made several further, good faith attempts
to work with Frank to develop a sound business plan and budget for the agriculture
businesses, and primarily Adena Farms, including by developing a detailed “Fix-It List”
with restructuring recommendations for agriculture. This was given to Frank and his
191. In May 2017, Frank approached Belinda with a request of a total of US$40 million
over three years to fund the agricultural businesses, with the understanding that no further
192. Belinda, Frank and other family members signed a non-binding memorandum of
budget for its capital expenditures and operational costs (the “MOU”). As a condition to
receiving the funding contemplated by the MOU, Frank agreed to provide a detailed
business plan to TSG management for its approval and limit his use of the corporate
aircraft to North American flights on most occasions. He further assured Belinda and other
members of management that no additional funding was required for Adena Farms aside
from what was budgeted in the MOU. The MOU contemplated that Belinda’s sign-off
193. Following the signing of the MOU, Frank agreed to specific employee terminations
and restructuring steps, but failed to produce a detailed business plan. He also purported
to commit to expenditures for the Adena Farms business that would quickly put the
business in the position of far exceeding the budget contemplated by the MOU. In light of
this, Belinda, TSG’s CFO, and other members of TSG senior management determined
194. As part of the plan to improve TSG’s cash position and rationalize its business
core assets starting in about February 2017, with the assistance of external experts.
assets, including TSG’s E-Mobility business, Adena Golf, Adena Grill restaurant and
195. With respect to Adena Farms, following attempts by Belinda and others within TSG
management to try to work with Frank to develop a viable business plan for Adena Farms,
Each of these concluded that the Adena Farms business, as envisioned by Frank, was
not viable in the near, medium or even long-term. TSG management continues to
evaluate and restructure this business, and under these plans the 2019 budget forecasts
a profit.
196. With respect to Adena Golf, due to its continued operating losses and low
considered the viability of the golf course with assistance from external experts with
expertise in golf course operations and sales over a period of 10 months. When it was
determined that operation of the golf course was not viable from a business perspective,
TSG engaged a leading real estate brokerage firm to market the property for sale.
Subsequently, the decision was made to shut down Adena Golf’s operations in July 2018
to cap its operating losses. TSG has continued to market the property for sale.
197. With respect to the TSG corporate aircraft, TSG management made the decision
to sell it following a strategic review of the aircraft’s high financing and operational costs.
Frank and the other members of the Stronach family were given notice in the summer of
2018 of the intention to sell the aircraft as part of TSG’s business rationalization plan. The
aircraft was listed for sale in June 2018, grounded in September 2018, and sold in October
2018.
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198. Frank’s disruptive behaviour and improper conduct at TSG have only increased
since the initiation of TSG management’s strategic reviews and, in particular, its decision
to sell underperforming and non-core assets. The following are examples of this conduct:
Frank Jr. and Nicole and attempted to pressure them into signing
for payment to the 445 Trusts for further distribution to the Beneficiaries;
c. Frank has engaged in bullying, verbal abuse and made threats toward TSG
ultimately did not do so and the offices were shut down). In addition, Frank
d. Frank has taken steps to preclude SCC from accessing funds in one or
199. By mid-2018, it was clear that Frank (with the support of Elfriede and Andrew) had
a very different view from Belinda and other TSG management as to how the business
should be operated. In an attempt to create family peace and respond to their wishes, in
August 2018, Belinda – who was and is focused on ensuring the operation of the business
for the long-term benefit of the family members – presented a proposal to all family
members for the division of family assets. The proposal contemplated a split of the family
assets based on the current proportional equity interest in the family assets, and the
businesses the family members are most involved in, and was designed to allow various
family members to operate their businesses without the involvement of others. Pursuant
to the proposal, the assets would be split into three separate groups: mainly non-R&G
assets, including the agriculture business, to be held by the Andrew Stronach Group (i.e.
trusts for the benefit of Andrew, Selena and Elfriede), mainly R&G assets to be held by
the Belinda Stronach Group (i.e. trusts for the benefit of Belinda, Frank Jr. and Nicole),
and limited assets to be held jointly by both groups. The proposal also contemplated a
significant amount of cash being paid by the Belinda Stronach Group to the Andrew
200. Belinda also proposed that as a next step in determining whether to proceed with
the proposal, the family obtain an independent valuation of the assets to assist family
members in determining whether the proposal was fair. Despite the fact that this valuation
201. In 2018, Belinda, the other trustees of the 445 Trusts and TSG received various
requests for information relating to the 445 Trusts and TSG corporate entities from certain
202. Contrary to the allegations in paragraphs 137, 154 and 162 of the Statement of
Claim, significant information has been provided to all family members and their counsel
and family spending over the past decade; gifts to Frank; trust documents, including
trustee resolutions; and financial statements and tax returns for various TSG entities. As
noted above, in 2018 TSG counsel has also held meetings with counsel for all family
members and made TSG senior leadership available to explain the material provided and
203. There is no basis for any of the plaintiffs’ claims or requests for relief. The
Statement of Claim is entirely devoid of material facts and sufficient particulars to give
rise to any of the claims alleged in the Statement of Claim. While the plaintiffs have baldly
asserted claims such as breach of trust and fraudulent concealment, they have failed to
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provide the particulars required by Rule 25.06(8) of the Rules of Civil Procedure, RRO
i. No Oppression
204. Belinda denies that the plaintiffs are entitled to an oppression remedy under s. 248
of the Business Corporations Act, RSO 1990, c B.16. She has not engaged in any conduct
that was oppressive or unfairly prejudicial to or that unfairly disregarded the interests of
the plaintiffs, nor has she engaged in any conduct that constitutes an abuse of her position
paragraphs 143 to 151 of the Statement of Claim, and denies that the relief claimed in
205. At all material times Belinda has fulfilled any fiduciary or other duty owed to one or
both of the plaintiffs. However, she denies that she owes any fiduciary duty to Frank, as
he is not a beneficiary of any of the 445 Trusts. Belinda further and specifically denies the
allegations contained in paragraphs 152 to 158, and denies that the relief claim in
206. At all material times Belinda has met her fiduciary duty, and all other applicable
duties, as a trustee of each of the 445 Trusts. She has at all material times acted in
accordance with the terms of each 445 Trust, for the benefit of the applicable Beneficiaries
and to preserve the trust property. She has at all material times acted honestly,
maintained proper accounts and records relating to the trust property and administration,
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the 445327 Trust and the Andrew 445 Trust, Elfriede explicitly or implicitly consented to
or acquiesced in decisions made by the trustees of those trusts, has released Belinda
and the other trustees from any liability in respect of those decisions and/or is otherwise
207. Belinda pleads and relies on the Trustee Act, RSO 1990, c T.23 and the trust
208. Belinda denies that she has engaged in a conspiracy with Alon or anyone else,
and further denies that she engaged in any conduct directed at, and certain to harm,
members of the Stronach family, including the plaintiffs, as alleged. Belinda further and
209. Belinda has never conducted herself in any unlawful manner directed at causing
210. Belinda denies that she has engaged in fraudulent concealment and further denies
that she has taken any steps to intentionally conceal any right of action of the plaintiffs.
Belinda further and specifically denies the allegations in paragraph 162 of the Statement
of Claim.
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v. No Breach of Contract
211. Belinda denies that she breached any contract or agreement with the plaintiffs.
She further and specifically denies the allegations in paragraph 163 of the Statement of
212. The May 2017 MOU was not a legally binding agreement. It is not capable of
grounding a breach of contract claim. Further, and in the alternative, if it was legally
binding, it was conditional upon, among other things, Frank’s agreement to provide a
detailed business plan to TSG management for its approval, which was never done.
Further, contrary to the MOU, Frank continued to frequently use the corporate aircraft for
costly European flights. Finally, if the MOU was legally binding, it was not breached by
Belinda, whose approval was required for any expenditures exceeding US$1 million, but
rather was breached by Frank. Contrary to the MOU, and shortly after entering into it,
Frank purported to enter into financial commitments on behalf of Adena Farms that would
quickly put the business in the position of far exceeding the budget contemplated by the
MOU.
213. Belinda denies that she has been unjustly enriched at the expense of the plaintiffs.
She further and specifically denies the allegations in paragraphs 164 to 165 of the
Statement of Claim, and denies that the relief sought in paragraph 165 is appropriate or
otherwise justified.
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214. Belinda denies that the plaintiffs suffered any losses, damages or harm as alleged
in the Statement of Claim, or at all, and puts the plaintiffs to the strict proof thereof.
215. In the alternative, if the plaintiffs did suffer any losses, damages or harm (which is
expressly denied), such losses, damages or harm were not caused by Belinda. The
amounts claimed by the plaintiffs are also excessive and remote and not recoverable in
216. Belinda denies that the plaintiffs are entitled to any amount of aggravated,
217. Belinda pleads and relies on the Limitations Act, 2002, SO 2002, c 24, Sched B
with respect to any and all allegations of historical wrongdoing related to any alleged acts
or omissions by Belinda.
COUNTERCLAIM
million from Frank, together with any interest that may have accrued on that
amount;
million from Frank, together with any interest that may have accrued on that
amount;
above;
f. the costs of this proceeding, plus all applicable taxes, on a scale that is just;
and
g. such further and other relief as this Honourable Court deems just.
220. Belinda repeats and relies upon the allegations in the Statement of Defence in
221. At Frank’s request, in 2012 and 2013, 445 Limited loaned approximately $50
million (the “Campaign Funds”) to Elfriede, who in turn gave the Campaign Funds to
Frank in order to fund his political campaign in Austria for the 2013 parliamentary election.
222. To enable Elfriede to repay approximately $42.4 million of the Campaign Funds to
445 Limited, in 2014 Belinda gifted to Elfriede a Capital Dividend Note in the approximate
amount of $28.6 million (representing 67.4% of the amount being repaid by Elfriede) on
the basis of Frank’s representation that the Campaign Funds had been used for his
Austrian political campaign. Elfriede then used the Capital Dividend Note to settle a
portion of the Campaign Funds loan that had been made to her by 445 Limited.
223. However, it was recently discovered that Frank only used approximately $38
million of the Campaign Funds for his campaign and received an Austrian election rebate
of approximately $13 million of the funds that were spent on his campaign, meaning that
approximately $25 million (or 50%) of the Campaign Funds were not used for Frank’s
Austrian political campaign, and continue to be held or were otherwise used by Frank.
224. Accordingly, Frank is liable to Belinda for the return of, or in the alternative
damages in the approximate amount of, $14.3 million (being 50% of the amount Belinda
gifted to Elfriede to permit repayment of the Campaign Funds loan), plus interest, for his
misrepresentation that the full amount of the Campaign Funds had been used for the
Austrian political campaign, upon which Belinda relied in making such gift.
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225. In December 2017, following an audit of Frank by the Austrian tax authorities, the
Beneficiaries were advised that the Austrian tax authorities were proposing to issue tax
assessments to Frank for approximately €70 million ($96 million) and were considering
the possibility of initiating related criminal proceedings against Frank if a settlement was
not reached. The Beneficiaries were also advised at this time that the Austrian tax
million).
226. Frank represented to the Beneficiaries that he did not have access to sufficient
funds to pay the proposed settlement of $27.5 million and requested such funds in order
227. In January 2018, SCC loaned Frank $27.5 million (the “Tax Settlement Funds”)
to permit Frank to pay the settlement amount. To permit Frank to repay to SCC the Tax
Settlement Funds loan, Belinda gifted to Frank approximately $18.5 million (representing
67.4% of the amount being repaid to SCC by Frank) in the form of a Capital Dividend
Note on the basis of and in reliance on Frank’s representation that he did not otherwise
have access to sufficient funds to repay the Tax Settlement Funds loan to SCC. Frank
then used the Capital Dividend Note to settle a portion of the Tax Settlement Funds loan
228. At the time that Frank requested and accepted the Tax Settlement Funds loan from
SCC, he had access to more than sufficient funds to pay the settlement. Similarly, at the
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time that Frank accepted the $18.5 million Capital Dividend Note from Belinda, he had
access to more than sufficient funds to repay to SCC the Tax Settlement Funds loan.
229. Accordingly, Frank had no entitlement to the $18.5 million Capital Dividend Note
Belinda gave him and is obligated to pay such approximate amount to Belinda, together
with any interest which may have accrued thereon. In the alternative, Frank is liable to
Belinda for damages of approximately $18.5 million, plus interest, for his
230. Belinda requests that this counterclaim be heard together with or immediately after
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)