Académique Documents
Professionnel Documents
Culture Documents
CV-18-606163-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
B E T W E E N:
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STATEMENT OF DEFENCE OF
FRANK WALKER AND NICOLE WALKER
1. The Defendants, Frank Walker (“Frank W.”) and Nicole Walker (“Nicole”), admit the
(b) with respect to paragraph 9, that Frank Stronach (“Frank Sr.”) is the founder and
(f) with respect to paragraph 20, that Stronach Consulting Corp. is the business entity
that owns and operates a number of assets of The Stronach Group, either directly or
indirectly;
(h) with respect to paragraph 31, that Frank Sr. settled the Stronach Trust in February
1991, transferred his common shares of 445327 Ontario Limited (“445327 Co.”) to
that trust, and that the beneficiaries of the Stronach Trust were Frank Sr., his wife
(k) paragraph 54, other than the last sentence of that paragraph;
2. As this Statement of Defence will address only those factual allegations and claims which
are made against Frank W. and Nicole in their capacities as trustees, for purposes of this pleading,
Frank W. and Nicole have no knowledge in respect of the allegations contained in paragraphs 10,
11, 21-24, 26-28, 39-51, 70-71, 73 and 125 of the Statement of Claim.
3. Except as otherwise admitted herein, Frank W. and Nicole deny all other allegations
contained in the Statement of Claim and put the plaintiffs, Frank Sr. and his wife Elfriede, to the
strict proof of each of them. Frank W. and Nicole deny that the Plaintiffs are entitled to any of the
4. The Stronach Group is not a specific corporate entity but is a privately-owned group of
companies operating various businesses that are primarily divided into two main areas: racing and
gaming operations, and non-racing and gaming operations. The Stronach Group of companies was
5. The racing and gaming division is the core of The Stronach Group’s business. Through this
division, The Stronach Group owns and manages horse racetracks in the United States,
thoroughbred training centres and owns or operates various technologies relating to horseracing,
including pari-mutuel betting terminals, online and telephone wagering capabilities and a digital
6. The non-racing and gaming division is, or has recently been, comprised of, among other
things, an agricultural business, restaurants, real estate developments in Canada and the United
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States, the Adena Golf and Country Club located in Ocala, Florida, horse breeding operations,
horse retirement programs, an electronic bike business and a casino/racetrack and real estate in
Austria. The non-racing and gaming division represents the non-core assets of The Stronach
Group’s business and many elements of this division have been under-performing in recent years,
7. Adena Farms is the main component of The Stronach Group’s agricultural business. Adena
Farms is a “farm to table” food company with a focus on American grass-fed beef. As part of the
agricultural business, The Stronach Group owns, among other things, 90,000 acres of farm land in
Ocala, Florida where grass-fed cattle are raised and also owns a slaughter house and beef
distribution facility.
8. Frank Sr. was the principle advocate and promoter of the agricultural business and many of
the other underperforming businesses in the non-racing and gaming division of The Stronach
Group.
9. Following the establishment of The Stronach Group, Frank Sr. was given the title of
Founder and Honorary Chairman, but was not a director or officer of the company. Instead, Frank
Sr.’s daughter, Belinda Stronach (“Belinda”), was appointed as Chairman and President, while
10. The operation of The Stronach Group, particularly the racing and gaming division, has
been left to Belinda, Alon and the other directors and officers of The Stronach Group. Frank Sr.
has not had control over or otherwise been actively involved in the operations and decisions of The
Stronach Group’s core businesses. With respect to The Stronach Group’s food/restaurant and
agricultural business, any authority that Frank Sr. had in connection with these businesses was
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limited and at all times remained subject to the control that Belinda exerted over The Stronach
11. Andrew Stronach (“Andrew”), Frank Sr.’s son and Belinda’s brother, has not been
significantly involved in any of The Stronach Group’s businesses. Andrew is not a party to the
within action.
12. Frank W. is Belinda’s son and since his graduation from Wilfred Laurier University in
2013 with an Honours BBA International Business degree, he has been involved in The Stronach
Group. Frank W. is, or has been, a director, officer or trustee of various corporations and trusts
within The Stronach Group and has, at various times since 2013, been involved in the agricultural
business (including overall business strategy and concepts for retail stores), the restaurants at
Gulfstream Park, real estate development, the electronic bike business and racing and gaming.
13. Nicole is Belinda’s daughter and following her graduation from Wilfred Laurier University
in 2014 with a Bachelor of Arts degree (with a concentration in Business Administration and
Environmental Studies) she, too, became involved in The Stronach Group, particularly with
respect to the racing and gaming division of the business. Nicole is, or has been, a director, officer
or trustee of various corporations and trusts within The Stronach Group and in October 2017,
The 445327 Trust, The Andrew Family Trust and The Belinda Family Trust
14. 445327 Co., through its subsidiary Stronach Consulting Corp. (a defendant in this
proceeding), owns and operates The Stronach Group’s principal assets. Prior to October 31, 2013,
445327 Co. was controlled by the 445327 Trust (the “445327 Trust”).
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15. Elfriede was the original trustee of the 445327 Trust. Belinda was also appointed as a
trustee on February 14, 2012, resigned this position prior to the distributions that were done in
October 2013 as described in paragraphs 19 and 20 below, and was re-appointed as a trustee on
January 1, 2015 along with Alon. The beneficiaries of that trust are Elfriede, Belinda, Andrew,
16. Frank Sr. is neither a beneficiary nor a trustee of the 445327 Trust.
17. In or about 2011 and 2012, the trustees of the 445327 Trust and various Stronach family
members began considering how the assets held by 445327 Co. were to be allocated among
Elfriede, Belinda, Frank W., Nicole, Andrew and Selena. The trustees of the 445327 Trust
ultimately determined that the allocation was to be effected through a distribution of the shares of
445327 Co. currently held by the 445327 Trust to a new trust established for Belinda and her
family (the Belinda Stronach 445 Family Trust (the “Belinda Trust”)), a new trust established for
Andrew and his family (the Andrew Stronach 445 Family Trust (the “Andrew Trust”)) and
leaving some shares of 445327 Co. in the 445327 Trust for the benefit of Elfriede and her children.
18. The Belinda Trust and Andrew Trust are discretionary trusts that were settled on October
29, 2013 pursuant to Trust Indentures dated the same date (the “Trust Indentures”). The material
provisions of the Trust Indentures for the Belinda Trust and Andrew Trust are generally identical,
19. To avoid any potential conflict of interest, Belinda resigned as a trustee of the 445327 Trust
on October 30, 2013 before these distributions were made, leaving Elfriede as the sole trustee of
that trust. Elfriede obtained independent legal advice with respect to this distribution and after
conferring with family members and professional advisors, ultimately approved the distribution.
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20. Following the reorganization described in paragraph 17 above, which was effected on
October 31, 2013, the assets of the 445327 Trust are held in the following manner:
(a) 67.4% of the common shares in 445327 Co. are held indirectly by the newly created
(b) 23.1% of the common shares in 445327 Co. are held indirectly by the newly
(c) the remaining 9.5% of the common shares in 445327 Co. are held indirectly by the
(the Andrew Trust, Belinda Trust and 445327 Trust are collectively referred to herein as the “445
Trusts”.)
21. While further changes to the overall trust and corporate structure have occurred since 2013,
the 445 Trusts continue to hold the common shares of 445327 Co. in the manner described in
paragraph 20 above.
22. The beneficiaries of the Belinda Trust are Belinda, Frank W. and Nicole. Any trusts created
for the benefit of Elfriede, Andrew and Selena are also beneficiaries of the Belinda Trust (as are
any corporations the shares of which are owned by any such trust), but no income or capital
distributions can be made to these entities unless Frank Sr. is a trustee of the Belinda Trust at the
time of the distribution. The original trustees of the Belinda Trust were Frank Sr., Belinda and
Alon, but as described below, Frank Sr. ceased being a trustee of the Belinda Trust as at November
29, 2013.
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23. With respect to the Andrew Trust, the beneficiaries of that trust are Andrew and Selena.
Any trusts created for the benefit of Belinda, Frank W. and Nicole are also beneficiaries of the
Andrew Trust (as are any corporations the shares of which are owned by any such trust), but no
income or capital distributions can be made to these entities unless Frank Sr. is a trustee of the
Andrew Trust at the time of the distribution. The original trustees of the Andrew Trust were Frank
Sr., Belinda, Elfriede and Alon, but as described below, Frank Sr. ceased being a trustee of the
24. As a result of the distribution described in paragraphs 17 and 20 above, Belinda and her
children (Frank W. and Nicole) had, and continue to have, a controlling interest in 445327 Co.
25. Contrary to the Plaintiffs’ suggestion at paragraphs 80 and 92 of the Statement of Claim,
this distribution of assets as between the 445327 Trust, the Belinda Trust and the Andrew Trust
was not intended to be conditional, temporary or revocable in any manner. Having transferred
control of 445327 Co. to the Belinda Trust, there was never any intention, agreement or
expectation that the shares of 445327 Co. would be, or could be, distributed any differently as
between the Belinda Trust, the Andrew Trust and the 445327 Trust or that such distribution
remained subject to the exercise by Frank Sr., in his sole and absolute discretion, of a
“redistribution power”.
26. The Trust Indentures do not confer on Frank Sr. the ability to redistribute some or all of the
assets of 445327 Co. as between the Belinda Trust, the Andrew Trust and the 445327 Trust.
27. Sections 4.1 and 4.3 of the Trust Indentures provide that the trustees of the Belinda Trust
and Andrew Trust are entitled to make income and/or capital distributions to the respective
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beneficiaries of each trust in such proportion as the trustees see fit. At its highest, these provisions
enable Frank Sr., during only that period when he is a trustee (which he has not been since
November 29, 2013), to determine the amount distributed from each of the Belinda Trust and the
Andrew Trust to each trust’s respective beneficiaries. This power only applies to the distribution of
assets within each trust itself; it does not contemplate the transfer of assets between the Belinda
Frank Sr.’s Resignation as Trustee and Appointment of Frank W. and Nicole as Trustees
28. As set out at paragraph 95 of the Statement of Claim, in pursuit of his desire to run for
office in Austria, Frank Sr. was elected as a member of the Austrian legislature in September 2013.
Following his election, Frank Sr. was advised by his Austrian lawyers and other advisors to resign
as a trustee of the Belinda Trust and Andrew Trust so as to comply with Austrian laws applicable
to members of the Austrian legislature and to minimize the extent of the disclosure that he would
have had to make to the Austrian government. There was no connection between the October 2013
distributions from the 445327 Trust to the Andrew Trust and Belinda Trust on the one hand, and
Frank’s resignation as trustee in November 2013 on the other hand. The resignations were as a
result of Frank’s election to the Austrian legislature and the need to comply with Austrian laws.
29. Although John Campbell from Miller Thomson LLP, counsel to The Stronach Group at
that time, suggested that Frank Sr. may not want to resign as a trustee of the Belinda Trust or
Andrew Trust since these trusts held most of the shares in 445327 Co., on November 29, 2013,
Frank Sr. did in fact resign as trustees of these trusts (as well as various other trusts within The
Stronach Group) so as to limit the amount of disclosure required to be made to the Austrian
government. Frank Sr. resigned with full knowledge and acceptance of the consequences thereof.
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30. Pursuant to section 9.7(b) of the Trust Indentures, where Frank Sr. ceases to be a trustee of
the Belinda Trust or Andrew Trust, Frank W. and Nicole are to be appointed as trustees in his
place. Accordingly, immediately following Frank Sr.’s resignation, Frank W. and Nicole were
appointed as trustees of the Belinda Trust and Andrew Trust on November 29, 2013.
31. Contrary to the Plaintiffs’ assertion at paragraph 19 of the Statement of Claim, there was
nothing temporary about the appointment of Frank W. and Nicole as trustees. Instead, as a result of
Frank Sr.’s decision to pursue his political ambitions, Frank W. and Nicole were appointed as
trustees of the Belinda Trust and Andrew Trust indefinitely. As of the date of this pleading, Frank
W. and Nicole remain trustees of the Belinda Trust and Andrew Trust and continue to act in their
32. Contrary to the allegations at paragraph 98 of the Statement of Claim, at the time Frank Sr.
resigned as trustee and Frank W. and Nicole were appointed as trustees in his place, there was no
agreement, intention or understanding among the parties that during his resignation, Frank Sr.
would maintain de facto control of The Stronach Group on an informal basis, or that Frank Sr.
would be able to formally resume his role as trustee of the Belinda Trust and Andrew Trust when
he chose to do so or that the family would assist him in resuming this role. Frank Sr. understood
that his obligation and decision to resign was not a mere formality and would result in his loss of
influence as a trustee.
33. At the time of Frank Sr.’s resignation as a trustee of the Belinda Trust and Andrew Trust,
Alon considered that in the event that something should happen to Belinda which might prevent
her from continuing as trustee of these trusts, he wanted to be able to re-appoint Frank Sr. in place
of Belinda as one of the trustees of these trusts given his close working relationship with Frank Sr..
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34. Accordingly, in or about December 2013, Frank W. and Nicole executed, but did not date,
instruments purporting to resign their positions as trustees of the Belinda Trust and Andrew Trust.
Belinda, Elfriede and Alon also executed, but did not date, an instrument providing for the
appointment of Frank Sr. as co-trustee of the Andrew Trust and Belinda Trust in the place of Frank
W. and Nicole.
35. The Plaintiffs are entirely incorrect in their suggestion that the purpose of executing these
resignation and re-appointment instruments was for the benefit of Frank Sr. to be used by him in
his sole discretion to resume his role as trustee whenever he chose to do so.
36. Upon their execution, these undated resignation and re-appointment documents were held
by Alon pending the following conditions: 1) the resignation of Belinda as a trustee or an inability
or incapacity on the part of Belinda to continue as a trustee; and 2) upon Belinda’s resignation or
37. Alon transferred the undated resignation and re-appointment documents to John Campbell
to hold under the same conditions and until authorized by Alon to release. As of the date of this
pleading, John Campbell continues to hold these documents. Alon has not authorized John
Campbell to release these documents and none of the conditions for releasing them have occurred.
Frank Sr. Returns to The Stronach Group, But Is Not a Trustee of the Belinda Trust or
Andrew Trust
38. In January 2014, Frank Sr. gave up his seat in the Austrian Parliament. At this time,
contrary to the Plaintiffs’ assertions at paragraphs 102 and 103 of the Statement of Claim, Frank
did not exercise de facto control over The Stronach Group business, nor was there any
understanding or reasonable expectations among Frank Sr., Elfriede, Belinda, Nicole or Frank W.
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that the undated documents that were prepared in November 2013 were somehow automatically
effective upon Frank Sr.’s return to The Stronach Group. At no time did Nicole or Frank W. lead
Frank Sr. to believe that he was a trustee of the Belinda Trust or Andrew Trust following his
39. Instead, Belinda and her children (Frank W. and Nicole) controlled The Stronach Group
through the Belinda Trust’s controlling interest in 445327 Co.. Frank Sr.’s involvement in The
40. The Plaintiffs assert that that the undated trustee resignation and appointment documents
were effective upon Frank Sr.’s return to the Stronach Group in January 2014, or alternatively,
were effective as at January 9, 2017, when, in their assertion, Frank Sr. formally re-appointed
himself as trustee by unilaterally dating the instruments that provided for his re-appointment as
trustee of the Belinda Trust and Andrew Trust. Frank W. and Nicole expressly deny that the
undated trustee resignation and appointment documents were effective upon Frank Sr.’s return to
the Stronach Group in January 2014, as at January 9, 2017 or at any time at all.
41. First, the undated trustee resignation and appointment instruments are currently held by
John Campbell pending authorization from Alon to release the documents and the occurrence of
the conditions noted in paragraph 36 above. As these conditions have not occurred, Frank Sr.’s
unilateral attempt to purportedly activate these documents for his own benefit has no legal effect
whatsoever.
42. Second, there is no basis in law or in fact to support the assertion that these undated
documents were somehow automatically effective upon Frank Sr.’s return to The Stronach Group
in January 2014. As the Plaintiffs acknowledge at paragraph 103 of the Statement of Claim, Frank
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Sr. did not take any steps at this time to formally effect Frank W. and Nicole’s resignation or his
43. Third, on December 23, 2016, Belinda unconditionally revoked the undated instrument
re-appointing Frank Sr. as a trustee in respect of both the Andrew Trust and Belinda Trust and thus
these re-appointments were no longer effective as of January 9, 2017 when Frank Sr. attempted to
accept them.
44. Fourth, in the alternative, even if Belinda’s revocation of the undated re-appointment
instrument was invalid (which is denied), Frank Sr.’s attempt to effect his own re-appointment by
dating the re-appointment instruments on January 9, 2017 was nonetheless ineffective for the
following reasons:
(a) The instruments which provided for the resignation of Frank W. and Nicole as
trustees remained undated and thus ineffective. There is no basis in law or in fact
for the Plaintiffs’ assertion at paragraph 112 of the Statement of Claim that Frank
Sr.’s execution of his re-appointment documents somehow also had the purpose
and Frank W. as trustees. Furthermore, if the Plaintiffs’ position was correct, then
Belinda and Frank Sr. would have been the only trustees of the Belinda Trust,
which is contrary to section 9.6 of the Trust Indentures which requires at least three
(b) Frank Sr. also failed to comply with the express terms of the re-appointment
all the trustees of the Belinda Trust and Andrew Trust, which not only include
Belinda and Elfriede, but also include Alon, Frank W. and Nicole.
45. Finally, in the further alternative, even if Frank Sr.’s re-appointment as a trustee of the
Belinda Trust and Andrew Trust was effective as at January 9, 2017 (which is expressly denied),
then he resigned as trustee of those trusts effective as at January 15, 2017. Pursuant to Section 9.3
of the Trust Indentures, the trustees may request the resignation of a trustee at any time and the
trustee shall be deemed to have resigned on the date on which the request states that the resignation
is to be effective. On or about January 15, 2017, Belinda, Frank W. and Nicole, as the trustees of
the Belinda Trust, delivered to Frank Sr. a resignation request in accordance with Section 9.3 of
the Trust Indenture, which resignation was stated to be effective as at January 15, 2017.
46. Accordingly, there is no basis for the Plaintiffs’ assertions that from and after January 9,
2017, Nicole and Frank W. ceased being trustees of the Belinda Trust and Andrew Trust and that,
in their place, Frank Sr. had resumed his role as trustee. At no time since Frank Sr.’s resignation as
a trustee of the Andrew Trust and the Belinda Trust has Frank Sr. been held out as a trustee of these
trusts, been asked to execute documents as a trustee of these trusts or been considered to be a
47. The current trustees of the Belinda Trust are Belinda, Frank W., Nicole and Glen A. Huber.
(Mr. Huber was appointed as a trustee of the Belinda Trust as at December 14, 2018.) The current
trustees of the Andrew Trust are Elfriede, Belinda, Alon, Frank W. and Nicole.
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48. The Plaintiffs’ claims against Frank W. and Nicole are only in respect of their roles as
trustees of the Belinda Trust and the Andrew Trust. The primary beneficiaries of these trusts are
Belinda, Frank W. and Nicole (in respect of the Belinda Trust) and Andrew and Selena (in respect
of the Andrew Trust). None of these beneficiaries are plaintiffs in this claim.
49. Frank Sr. is not a beneficiary of either the Belinda Trust or the Andrew Trust, and thus has
no standing to assert any claims, including claims for breach of trust, unjust enrichment or
fraudulent concealment as against Frank W. or Nicole as trustees of those trusts. Frank W. and
Nicole deny that they owe any duties at all to Frank Sr..
50. As for Elfriede, for the reasons set out below, there is no basis in law or in fact for any
claims by her against Nicole or Frank W. for breach of trust or breach of fiduciary duty.
51. Although the Plaintiffs (at paragraphs 153 and 154 of the Statement of Claim) make
various allegations regarding the endangerment of trust property, the presence of potential and
actual conflicts of interests, the failure to maintain proper financial controls and the failure to
provide information relating to the business and financial affairs of The Stronach Group and the
445 Trusts, no such allegations are made as against Frank W. and Nicole.
52. Instead, as set out at paragraph 156 of the Statement of Claim, the claims for breach of trust
as against Frank W. and Nicole are grounded in allegations that Nicole and Frank W. left the
handling of trust property to the discretion of Alon and Belinda and that Frank W. and Nicole did
not prevent any breaches of fiduciary duty or breaches of trust committed by Alon and Belinda.
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Nicole and Frank W. expressly deny the occurrence of any breach of trust or breach of fiduciary
duty.
53. In discharging their duties as trustees, Frank W. and Nicole acted in accordance with their
obligations under the Trust Indentures. They acted in accordance with any duty of loyalty and
acted honestly, in good faith and with ordinary care, skill and prudence in accordance with the
54. Frank W. and Nicole did not abdicate their responsibilities as trustees or blindly and
passively acquiesce in Alon and Belinda’s handling of trust property. Instead, Frank W. and Nicole
were actively involved in the affairs and decisions of the administration of the Andrew Trust and
Belinda Trust, made reasonable inquiries and took steps to inform themselves of decisions made
55. In making decisions with respect to the administration of the trust property, Frank W. and
Nicole at all times acted prudently, honestly and in good faith on the advice and information
obtained from qualified professional advisors. They received advice in relation to the investment
of trust property and were permitted to rely on this advice as a prudent investor would have done in
comparable circumstances. In this regard, Nicole and Frank W. plead and rely on sections 27(7)
and (8) of the Trustee Act which preclude a claim for breach of trust arising out of reliance on such
advice in these circumstances. The terms of the Trust Indentures also expressly protect Frank W.
and Nicole from any liability for these decisions. As set out in section 7.11 of the Trust Indentures:
56. Moreover, there are express exoneration clauses contained in the Trust Indentures which
relieve Frank W. and Nicole from any liability, all of which Nicole and Frank W. rely on herein.
“The Trustees shall not be liable for any loss that may happen to the
Trust Property or be suffered by any Beneficiary hereunder
resulting from the exercise by the Trustee of any discretion given to
them by this Trust or law which is exercised honestly and in good
faith. […] [T]he Settlor acknowledges that the Trust Property
comprises or may comprise assets that are subject to significant
business risk, and therefore directs that this Trust shall be
interpreted so as to prevent the Trustees from, in effect, becoming
insurers of the Trust Property. So long as the Trustees have acted in
good faith, the risk of the loss or diminution in value of all or any
part of the Trust Property shall belong solely to the Beneficiaries. In
particular, the Settlor directs that the provisions of this Trust shall
not be interpreted so as in effect to second guess the propriety of any
act or omission of the Trustees without there being a wilfully
dishonest or wrongful act or default on their part.” (emphasis added)
“No Trustee shall be liable for [….] any loss occasioned by error in
judgment or oversight on the part of the Trustee, or for any other
loss, damage or misfortune which may happen in the execution of
the duties of the office of the Trustee, or in relation thereto, unless
the same shall happen by or through the Trustee’s own wilfully
dishonest or wrongful act or default.”
58. These provisions, taken together, foreclose any liability being imposed on Frank W. or
Nicole for any losses in trust property as a result of decisions that were made honestly and in good
faith. The Statement of Claim does not assert that either Nicole or Frank W. have acted dishonestly
or in bad faith, and there in fact has not been any bad faith or dishonest conduct by either of them in
59. In addition, Frank W. and Nicole expressly plead and rely on section 35(1) of the Trustee
Act which relieves them from any liability in connection with actions undertaken in respect of trust
property (to the extent those actions are not related to the investment of trust property) because
they acted honestly and reasonably and ought fairly to be excused for any breach of trust.
Frank W. and Nicole Are Not Liable for Any Misconduct of Co-Trustees
60. Frank W. and Nicole deny that Alon or Belinda committed any breaches of trust or
breaches of fiduciary duty. Alon and Belinda at all times acted honestly, in good faith and in
accordance with the standard of care expected of them in the circumstances. With respect to the
allegations at paragraphs 138-140 of the Statement of Claim that Belinda engaged in a pattern of
self-dealing transactions, Nicole and Frank W. expressly deny that Belinda wrongfully
appropriated funds from The Stronach Group for her personal benefit or for the benefit of Frank
W. or Nicole.
61. Even if Alon or Belinda committed breaches (which is expressly denied), neither Frank W.
nor Nicole is personally responsible or bears any fault for the actions committed by Alon or
Belinda. Those actions (or inactions) which are the basis of any misconduct or breaches are
independent actions by Belinda and Alon for which Frank W. and Nicole are not responsible. No
action or inaction on the part of either Frank W. or Nicole was the direct or indirect cause of any
62. Nicole and Frank W. rely on section 8.14 of the Trust Indentures which expressly provides
that:
“No Trustee shall be liable for the acts, omissions, receipts, neglects
or defaults of any other Trustee [….] Without limiting the generality
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63. In addition, for any decisions made by a majority of the trustees in which Nicole and Frank
W. did not participate, Nicole and Frank W. expressly rely on the terms of section 8.10(b) of the
Trust Indentures which provides that “[a]ny trustee who acts in good faith and does not form part
of any majority decision shall not be personally liable for any loss suffered by this Trust by reason
Frank W. and Nicole, as Trustees, Are Not Responsible for the Management of Stronach
Consulting Corp.
64. The heart of the Plaintiffs’ complaint relates to the manner in which Belinda, as Chairman
and President of Stronach Consulting Corp., and Alon, as CEO of Stronach Consulting Corp., ran
and managed The Stronach Group business which forms part of the property of the Belinda Trust
65. Frank W. and Nicole are not directors or officers of Stronach Consulting Corp.. They are
being sued in this proceeding only in their capacities as trustees of the Belinda Trust and Andrew
Trust. In their roles as trustees, Frank W. and Nicole had no obligations to oversee Belinda and
Alon’s management of Stronach Consulting Corp. – which management was selected by Frank Sr.
66. Indeed, section 8.9 of the Trust Indentures, upon which Nicole and Frank W. rely,
At no time were Nicole or Frank W. aware of any dishonesty or misappropriation of funds by the
67. Similarly, since neither Nicole or Frank W. are directors, officers or employees of 445327
Co., section 7.22 of the Trust Indentures expressly state that they are not “required directly or
indirectly to oversee or account for the part of the Trust Property that is invested in such
68. The Plaintiffs’ claims in paragraphs 136, 137, 141 and 154 of the Statement of Claim
relating to Belinda and Alon’s conduct are not claims which impose any liability on Frank W. or
69. Pursuant to Section 3.2 of the Trust Indentures, the trustees of the Belinda Trust and
Andrew Trust were required to accept the shares of 445327 Co. as an investment of the trust
property. As set out at paragraph 157 of the Statement of Claim, the harm which the Plaintiffs
claim that they suffered as a result of the alleged breaches is the diminished value of The Stronach
Group business (through the shares in 445327 Co.). Having been expressly required to invest the
trust property in 445327 Co. under the terms of the Trust Indentures, neither Frank W. nor Nicole
are liable for any losses that ensued as a consequence of this authorized investment.
70. In addition, pursuant to Section 7.6(a) and (d) of the Trust Indentures, Frank W. and Nicole
are granted wide authority to make any investments as they consider advisable and, in accordance
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with those provisions, as the investment in 445327 Co. was made by them honestly and in good
faith, neither Frank W. nor Nicole can be liable for any loss that may happen to the trust property in
connection with any such investment. Frank W. and Nicole also expressly plead and rely on
section 28 of the Trustee Act to relieve them of liability for any losses to the trusts arising from the
71. Even if the Plaintiffs’ allegations were true that the affairs of The Stronach Group were
conducted in a manner which benefited Belinda and her family to the detriment of Elfriede,
Andrew and Selena (which is expressly denied), section 7.7 of the Trust Indenture provides that
trustees are not required to maintain an even hand between the beneficiaries, provided that all
decisions made by the Trustees with respect to the trust property are made by them honestly and in
good faith. As there has not been any bad faith or dishonest conduct by either Frank W. or Nicole
in the course of exercising their duties as trustees, and the Statement of Claim does not allege
otherwise, there can be no liability imposed on Frank W. or Nicole for any investments or other
decisions with respect to the trust property that were not equal as among the beneficiaries of the
Elfriede Has Consented To Actions of the Trustees Or is Otherwise Estopped From Alleging Any
Breach of Trust
72. Elfriede brings her claims against Nicole and Frank W. in her capacity as a beneficiary of
the Andrew Trust and, indirectly, a beneficiary of the Belinda Trust. However, in her role as a
director or officer of certain entities within The Stronach Group, including as an officer of 445327
Co., and as a trustee of the Andrew Trust, Elfriede has explicitly or implicitly consented to, or
acquiesced to:
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(a) decisions made by the trustees of the Andrew Trust in respect of the trust property;
and/or
(b) certain decisions made by Belinda or Alon in respect of The Stronach Group
business,
and thus, she has released Nicole and Frank W. for any liability in respect of those decisions and/or
The Plaintiffs Have Not Suffered Any Damages and Are Not Entitled to the Accounting or Tracing
Order Requested
73. Frank Stronach is not a beneficiary of either the Andrew Trust or the Belinda Trust and
thus cannot assert a claim for damages for breach of trust against either Nicole or Frank W. in their
capacities as trustees.
74. Neither of the Plaintiffs suffered any losses or damages caused by any breach of trust
committed by Nicole or Frank W. and moreover, the amount of damages claimed by the Plaintiffs
75. Furthermore, the Plaintiffs have no basis for their request in paragraph 1(x)-(z) in the
Statement of Claim for an accounting and tracing order with respect to “all trusts, corporations or
76. The Plaintiffs (through their counsel) have already received significant information
relating to the Belinda Trust, the Andrew Trust and other entities within The Stronach Group,
including, among other things, summaries of historical trust distributions, financial statements, tax
returns and various trust documents. Moreover, the Plaintiffs’ request for an accounting in respect
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of all of the entities that comprise The Stronach Group is not trust information which Frank W. and
Nicole, as trustees of the Belinda Trust or the Andrew Trust, are required to provide to the
Plaintiffs.
77. Contrary to the allegations at paragraph 162 of the Statement of Claim, Nicole and Frank
W. expressly deny that they took steps to fraudulently conceal the existence of a cause of action or
that they aided the other Defendants in perpetuating any deceit. Indeed, nowhere in the Statement
of Claim do the Plaintiffs even allege that Nicole or Frank W. engaged in such fraudulent
activities.
No Unjust Enrichment
78. Contrary to the allegations contained at paragraphs 164 and 165 of the Statement of Claim,
Frank W. and Nicole specifically deny that either or both of them were unjustly enriched at the
expense of the Plaintiffs, deny that they obtained any “ill-gotten gains” and deny that the Plaintiffs
79. As Frank Sr. is not a beneficiary of either the Belinda Trust or the Andrew Trust, he did not
suffer any deprivation and there was no enrichment that occurred at his expense. He cannot
complain about the use and investment of trust property that he has no entitlement to. In fact, if
anyone has been enriched at the expense of others, it has been Frank Sr.. The beneficiaries of the
Belinda Trust – Belinda, Frank W. and Nicole – have historically gifted or loaned substantial
amounts of money to Frank Sr. to repay expenses and advances that Frank Sr. incurred personally.
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80. As for Elfriede Stronach, she did not suffer any deprivation nor were Frank W. and Nicole
enriched at her expense. As set out above, Frank W. and Nicole, as trustees of the Belinda Trust
and Andrew Trust, have at all times used and invested the trust property in a manner consistent
with the terms of the Trust Indentures. Any benefits which Nicole and Frank W. may have
received as beneficiaries of the Belinda Trust resulted from valid rights in the Trust Indentures,
which provide a juristic reason for any benefit which they may have received.
81. The Plaintiffs seek various relief against Frank and Nicole W. in capacities other than as
(a) requiring that Frank W. and Nicole be removed as trustees, directors, officers,
(b) seeking a declaration that Nicole and Frank W. have breached their duties in their
corporations and other entities that comprise The Stronach Group (paragraph 1(m)
82. Nicole and Frank W. submit that this relief is not available to the Plaintiffs as they have
commenced this action against Nicole and Frank W. solely in their capacities as trustees of the
Andrew Trust and Belinda Trust and not in their capacities as trustees, directors, officers or
employees of any other entities within The Stronach Group. In any event, for all the reasons noted
above, Nicole and Frank W. have not breached any duties in their capacities as trustees, directors,
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officers or employees of any of the entities with The Stronach Group, nor is there any basis
justifying the removal of Nicole and Frank W. from any such positions.
83. Nicole and Frank W. plead and rely upon the Ontario Limitations Act, 2002 with respect to
any and all allegations of historical wrongdoing related to the performance of their duties as
trustees prior to October 2016 on the basis that any such claims are statute-barred.
84. Frank W. and Nicole ask that this action be dismissed with costs on a full indemnity basis.
Tel: 416.597.4204
Fax: 416.979.1234
Michael Barrack
Tel: 416.863.5280
Fax: 416.863.2653
michael.barrack@blakes.com
Mark Gelowitz
mgelowitz@osler.com
Craig Lockwood
clockwood@osler.com
Tel: 416.862.4743
Fax: 416.862.6666
Linda Plumpton
lplumpton@torys.com
Leora Jackson
ljackson@torys.com
Tel: 416.865.8193
Fax: 416.865.7380
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
STATEMENT OF DEFENCE
GOODMANS LLP
Barristers & Solicitors
Bay Adelaide Centre
333 Bay Street, Suite 3400
Toronto, ON M5H 2S7
Tel: 416.597.4264
Fax: 416.979.1234
6871394