Vous êtes sur la page 1sur 78

Court File No.

CV-18-606163-00CL

ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST

B E T W E E N:

FRANK STRONACH and ELFRIEDE STRONACH


Plaintiffs

- and -

BELINDA STRONACH IN HER PERSONAL CAPACITY AND IN HER


CAPACITY AS TRUSTEE OF THE BELINDA STRONACH 445 FAMILY
TRUST, THE ANDREW STRONACH 445 FAMILY TRUST AND THE
445327 TRUST, ALON OSSIP IN HIS PERSONAL CAPACITY AND IN
HIS CAPACITY AS TRUSTEE OF THE ANDREW STRONACH 445
FAMILY TRUST AND THE 445327 TRUST, FRANK WALKER IN HIS
CAPACITY AS TRUSTEE OF THE BELINDA STRONACH 445 FAMILY
TRUST AND THE ANDREW STRONACH 445 FAMILY TRUST, NICOLE
WALKER IN HER CAPACITY AS TRUSTEE OF THE BELINDA
STRONACH 445 FAMILY TRUST AND THE ANDREW STRONACH 445
FAMILY TRUST and STRONACH CONSULTING CORP.
Defendants

STATEMENT OF DEFENCE AND COUNTERCLAIM OF BELINDA STRONACH


2

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
3

f. Establishment of the 445327 Trust .................................................... 37


g. Magna and MID Transactions ........................................................... 37
ii. 2011-2017 .................................................................................................... 38
a. Establishment of TSG ....................................................................... 38
b. Belinda and Alon Lead TSG .............................................................. 39
c. 2012 Distribution from the Stronach Trust ......................................... 39
d. Alon’s 5% Equity Interest................................................................... 40
e. Transfer of Control from the 445327 Trust to the Belinda 445 Trust:
the October 2013 Distributions .......................................................... 40
f. Frank Resigns from All Positions as a Result of Austrian Political
Ambitions; Frank Jr. and Nicole are Appointed as Trustees .............. 43
g. Blank-Dated Trustee Documents ...................................................... 44
h. Frank’s Departure from Austrian Politics ........................................... 47
BELINDA’S AND ALON’S LEADERSHIP OF TSG ............................................... 48
i. Improved Performance and Professionalization of TSG .............................. 49
ii. Family Meetings ........................................................................................... 52
FRANK’S MISMANAGEMENT AND EXCESSIVE SPENDING ............................. 53
i. Agricultural Businesses ................................................................................ 53
a. Adena Golf & Country Club ............................................................... 55
ii. Breeding, Training and Racing ..................................................................... 56
iii. Other Non-Performing Businesses and Unprofitable Projects ..................... 57
ESCALATION OF DISPUTE BY FRANK............................................................... 58
i. TSG Management Takes Steps to Reduce Losses Stemming from Frank’s
Mismanagement........................................................................................... 58
ii. Frank Responds with Hostility to TSG Attempts to Restrain Spending ........ 58
iii. TSG Management Continues to Address Unprofitable Non-R&G Businesses
and Attempts to Work with Frank to Reduce Agriculture Losses ................. 61
iv. Strategic Reviews of Underperforming and Non-Core Assets ..................... 62
v. Frank’s Disruptions at TSG .......................................................................... 64
vi. Proposal for Division of Family Assets ......................................................... 65
vii. Provision of Information to Beneficiaries ...................................................... 66
NO BASIS FOR THE PLAINTIFFS’ CLAIMS OR REQUESTS FOR RELIEF ....... 66
i. No Oppression ............................................................................................. 67
ii. No Breach of Fiduciary Duty or Breach of Trust ........................................... 67
4

iii. No Unlawful Means Conspiracy ................................................................... 68


iv. No Fraudulent Concealment ........................................................................ 68
v. No Breach of Contract.................................................................................. 69
vi. No Unjust Enrichment .................................................................................. 69
vii. No Losses, Damages or Harm ..................................................................... 70
viii. Historical Claims are Statute-Barred ............................................................ 70
COUNTERCLAIM ......................................................................................................... 71
A. FUNDS GIFTED TO FRANK FOR HIS AUSTRIAN POLITICAL CAMPAIGN ....... 72
B. FUNDS GIFTED TO FRANK FOR HIS AUSTRIAN TAX SETTLEMENT .............. 73
5

1. Belinda Stronach (“Belinda”) admits the allegations contained in paragraphs 2-3,

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.

2. Belinda has no knowledge of the allegations contained in paragraphs 95-96 of the

Statement of Claim.

3. Except as otherwise expressly admitted herein, Belinda denies the remaining

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.
6

She has paid particular attention to ensuring that TSG is operated in a manner that is to

the benefit, rather than the detriment, of future generations.

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

and its stakeholders.

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

establishing a strong management team comprised of subject matter experts and

implementing a business rationalization plan, all in an effort to ensure the sustained

profitability of TSG. Belinda has kept the other Beneficiaries and Frank, as well as their

respective counsel, informed of these activities.


7

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

an accounting of the flow of funds to family members.

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

distraction for the management of TSG.

11. Belinda, Alon, and other members of TSG management attempted to

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

experienced, professional management team were frequently undermined by Frank’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

strategy developed by management, to pursing personal vanity projects such as the


8

commissioning of two bronze statues of a 12-storey high Pegasus horse defeating a

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

made to protect his reputation and the TSG brand.

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
9

proposal was not accepted by the plaintiffs, without them even taking the step of testing

its fairness with an independent valuator.

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

to defend against them vigorously.

THE PARTIES AND BENEFICIARIES

i. Belinda Stronach

15. Belinda is a business leader, philanthropist, former public officer-holder and

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

been Chair and President of TSG thereafter.

17. TSG owns and operates businesses in four primary segments: racing and gaming

(“R&G”); real estate development; agriculture; and thoroughbred breeding, training and
10

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

operating companies for the Non-R&G businesses.

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

Member of the Privy Council of Canada.

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,
11

becoming CEO and President in 2011, President and Co-Chair (with Frank) in February

2012, and Chair and President thereafter.

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

force in North American thoroughbred racing and pari-mutuel wagering.

23. Belinda has been involved in philanthropic activities for her entire career and has

served on numerous boards of non-profit organizations. She established The Belinda

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

for women experiencing homelessness.

ii. Alon Ossip

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

segment from a poorly managed, founder-centric business in a negative financial situation

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

as the Executive Vice President of Magna from 2006 to 2013.

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
12

TSG’s assets as a result of an October 2013 agreement initiated by Frank, as discussed

further below at paragraph 123.

iii. Frank Walker and Nicole Walker

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

degree from Wilfrid Laurier University with a specialization in International Business. He

is 27 years old.

28. Nicole is a Vice President at TSG and is particularly involved in TSG’s R&G

businesses. She is also an award-winning athlete who competes internationally as an

equestrian. Nicole holds a Bachelor of Arts degree from Wilfrid Laurier University, focused

on Environmental Studies and Business Management. She is 25 years old.

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.
13

iv. Stronach Consulting Corp.

30. SCC is one of TSG’s key operating companies. It directly or indirectly owns a

number of significant TSG assets.

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

SCC. Alon indirectly holds a 5% stake in SCC.

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

a limited role in BTR.


14

vi. Frank Stronach

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

Elfriede, Frank maintains several other residences. He is not a beneficiary or a trustee of

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

Magna, one of the world’s largest auto-parts manufacturers.

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

Magna into a multi-billion dollar company that produced a number of first-to-market

automotive technologies and manufacturing processes. He is also credited with

introducing Magna’s pioneering employee profit and equity participation plan.

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
15

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

multimedia operations; a restaurant; a residential development at a ski resort; a tennis

equipment company; thoroughbred racetracks; an energy drink company; and Austrian

soccer league television and marketing rights.

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

seven-year moratorium on any spending by Magna on non-automotive businesses (the

“Forbearance Agreement”) and spun out its non-automotive, non-real estate assets into

a separate publicly-traded company, Magna Entertainment Corporation (“MEC”).3

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.
16

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

posting significant losses, MEC filed for bankruptcy.

43. Around the same time that MEC filed for bankruptcy, Frank began to increase his

focus on his dream of building an all-natural, farm-to-table, grass-fed beef business in

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

modern enterprise, would impair the goodwill of its businesses.

4 See footnote 3.
17

vii. Andrew Stronach

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

Andrew 445 Trust.

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

Andrew’s role in Magna, MEC and TSG has been limited.

viii. Selena Stronach

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.
18

THE STRONACH GROUP

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

estate development, agriculture, and BTR.

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

further below at paragraphs 65 and 124 to 131.


19

ii. TSG Business Segments

55. R&G is TSG’s largest business segment. It consists of a group of world-class

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

International and Xpressbet. AmTote International is a fully-integrated and fixed odds

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

300 United States and international tracks.

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
20

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

Caribbean Classic, and the Maryland Million.

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
21

thoroughbred horse racing by driving a more dynamic and entertaining environment

around TSG tracks.

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

Golf is currently listed for sale.

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

are held in the 445 Group to facilitate this funding.

iii. The 445 Group

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

businesses by the profitable R&G businesses.

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.
22

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

October 2013 Distributions (as defined below):

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

(through a holding company); and

c. the Andrew 445 Trust owns 23.1% of the common shares of 445 Limited

(through a holding company).

66. The context and rationale for this share allocation is described below in the section

on the October 2013 Distributions, at paragraphs 124 to 131.

a. The 445 Trusts

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.
23

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.

2. Belinda 445 Trust

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.
24

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

transferred a 67.4% stake in 445 Limited.

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

and to make discretionary distributions of capital or income to non-primary beneficiaries,

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

Frank resigned as trustee, Belinda has had that power.


25

3. Andrew 445 Trust

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

appointed as trustees on the same date, as required by the trust indenture.

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.

b. Key Corporate Entities

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.
26

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

of 445 Limited, as well as its President and Secretary.

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.
27

(through holding companies) by the 445 Trusts in the proportions discussed above in

paragraph 65.

2. Stronach Consulting Corp.

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

paragraphs 30 to 32 above for additional information about SCC.

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

to the Andrew 445 Trust.

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:
28

the 445327 Trust – close to $6 million; the Belinda 445 Trust – more than $115 million;

and the Andrew 445 Trust – close to $39 million.

82. Under the historical process, the Beneficiaries have submitted invoices for their

personal expenditures to certain TSG entities for payment or reimbursement. In addition,

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

repaid by the Beneficiary through a series of transactions whereby the Beneficiary

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

Debt then outstanding in satisfaction of such Expense Debt.

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

personal spending of the Beneficiaries of the trust.


29

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

process was developed with the assistance of experienced professional advisors.

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

of the 445 Trusts in January or February of 2019.

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

Ms. Plumpton’s letter.

iv. Other TSG Groups

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

corporate entities in the Ocala group.

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

surrounding residential property.

b. Triple Bell Group

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

entities in Triple Bell group.

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.
32

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

the primary benefit of Elfriede, Andrew and his issue.

97. The Primel group includes a number of European entities. The group’s main asset

is the Magna Racino property in Austria.

CHRONOLOGY OF KEY EVENTS

98. This litigation was commenced in October 2018, but the factual underpinning for

the current dispute began much earlier.

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,

actively worked to transform TSG from a founder-led enterprise to a professionally-


33

managed business that operates in accordance with sound business strategies and

principles of good governance developed by TSG’s experienced, professional

management team and expert external advisors. This litigation is the result of a clash

between TSG’s professionally-developed, sound business strategies intended to create

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

the section below.

i. 1980s to 2011

a. Frank’s Diversions from Magna’s Core Business

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

business and towards other more personal pursuits.

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%

stake in a Newmarket radio station; funded a television-production facility in Vaughan;

built a residential development at a ski resort in Colorado; opened a restaurant called

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
34

of Magna’s effort to avoid bankruptcy. These projects were in addition to other

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

after the election although he did continue to serve as Chairman.

b. Magna on the Brink of Bankruptcy

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

company to the brink of financial collapse.

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

c. Establishment of the Stronach Trust

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

Stronach Trust, which was a discretionary trust.

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

power to appoint or remove trustees at his discretion, and he continued to exercise de

facto control over Magna following the settlement of the Stronach Trust.

d. Additional Diversions and Shareholder Opposition

107. In the mid to late 1990s, following Magna’s successful re-emergence from near-

bankruptcy, Frank once again embarked on a new round of idiosyncratic spending.

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

acquisitions and investments in the span of a few years.

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
36

transatlantic airline called “Magna Air” which would feature airplanes outfitted with beds

and electronic devices for business travelers.

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

and Austria, which included an advertising campaign featuring lederhosen-clad women

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.

e. Belinda’s Leadership at Magna

111. Belinda was appointed Vice President of Magna in 1995 and an Executive Vice

President in 1999. In 2001, the board of directors appointed Belinda CEO.

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

in Magna’s day-to-day automotive business. He was focused instead on his personal

interests and on managing MEC’s R&G investments.

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.

f. Establishment of the 445327 Trust

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

of 445 Limited were issued to the 445327 Trust.

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.

g. Magna and MID Transactions

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

prior to the Magna and MID Transactions.

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

b. Belinda and Alon Lead TSG

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).

c. 2012 Distribution from the Stronach Trust

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

Distributions). Such repayment occurred through an expense payment and repayment

process similar to that which has been used since the October 2013 Distributions, as

described above in paragraphs 82 and 83.

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

interest in 445 Limited.12

d. Alon’s 5% Equity Interest

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.

e. Transfer of Control from the 445327 Trust to the Belinda


445 Trust: the October 2013 Distributions

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,

including an allocation of specific percentage interests in particular businesses or assets.

125. By the spring of 2013, these discussions had shifted towards an allocation of the

shares of 445 Limited, as opposed to particular businesses or assets. In this regard, in

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

managed with the involvement of professional managers.

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%

b. Andrew and his one child (Selena) – 23.1%

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

and that Andrew’s strengths lie elsewhere.

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

professional advisors and receiving independent legal advice, Elfriede decided to

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):

a. The 445327 Trust owns 9.5% of 445 Limited;

b. The Belinda 445 Trust owns 67.4% of 445 Limited; and

c. The Andrew 445 Trust owns 23.1% of 445 Limited.

130. Accordingly, since the October 2013 Distributions, the Belinda 445 Trust has

controlled 445 Limited and thereby TSG.

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,

as set out in the next section.


43

f. Frank Resigns from All Positions as a Result of Austrian


Political Ambitions; Frank Jr. and Nicole are Appointed as
Trustees

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

of his recent election to the Austrian legislature.

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

and Honorary Chairman.

14See paragraphs 70 and 73 for a list of the current trustees of the Belinda 445 Trust and the Andrew 445
Trust.
44

134. Frank’s involvement in Austrian politics began in or around 2011. He founded

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

used for his election campaign.

136. Contrary to the allegations in paragraph 98 of the Statement of Claim, Frank

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

the October 2013 Distributions.

g. Blank-Dated Trustee Documents

137. Frank’s decision to resign from all officer, director and trustee positions was made

quickly in light of a fast-approaching deadline for Austrian parliamentary disclosure in the

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

with either of them at that time.

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,

and were not, effective at that time.

139. While Alon conceived of the Blank-Dated Trustee Documents as a means of

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

become effective in the future.

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

Frank the ability to resume his trustee positions at his discretion.

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

to improperly avoid Austrian public disclosure requirements and potential tax

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

would assist in an evasion of Austrian parliamentary disclosure and tax requirements.

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

Documents on behalf of the parties that signed these documents or otherwise.

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

Reappointments were unconditionally revoked by Belinda on December 23, 2016,

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

are discussed further below in paragraphs 182 to 183.

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.

h. Frank’s Departure from Austrian Politics

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

not have any signing authority.


48

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

businesses. By 2017, however, the excessive spending forecasted by Frank necessitated

greater oversight and control by TSG management. This ultimately led to the May 2017

MOU (as defined below).

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

agreement was legally binding.

BELINDA’S AND ALON’S LEADERSHIP OF TSG

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

a professionally-managed enterprise with a formal governance structure and business-

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-

R&G businesses where TSG management wanted specialized expertise.

i. Improved Performance and Professionalization of TSG

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

more than US$5.4 million in daily wagering.

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

feverish acquisition spree, a corresponding increase in debt, and high management

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

and subject-matter experts and experienced, professional management, such as Timothy

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

in the professionalization of the business, including by introducing human resources

policies and employee engagement initiatives. These steps combined have led to R&G’s

newfound professionalization and profitability, and are in stark contrast to Frank’s

management of R&G at MEC, where experienced managers and expert advice were

routinely rejected by him.

155. TSG management also established TSG’s real estate development segment,

including the hiring of qualified executive management.

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

always conducted themselves as committed, professional and responsive officers and

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

members and Beneficiaries. Contrary to allegations in the Statement of Claim, Belinda

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

in the fall of 2017.

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

in place to review and approve corporate expenses.

159. As to paragraph 140 of the Statement of Claim, TSG purchased an office in the

Yorkville area of Toronto in September 2017 as a rational and sound business

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.
52

160. Contrary to the allegations at paragraphs 132-133 of the Statement of Claim, the

repayment of notes to the 445 Trusts (and corresponding distributions to 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

Belinda and Alon.

ii. Family Meetings

161. As part of Belinda’s initiative to professionalize TSG and facilitate information

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.

These meetings included presentations by TSG senior leadership on TSG’s businesses,

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

family members on historical distributions to the Beneficiaries and gifts to Frank.


53

FRANK’S MISMANAGEMENT AND EXCESSIVE SPENDING

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

management’s attempts to make necessary improvements in the agricultural businesses

by utilizing more methodical planning, appropriate human capital, better budgeting and

efficient cost-cutting strategies. Unfortunately, TSG’s agriculture segment under Frank’s

direction was never profitable and incurred substantial losses.

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

and profit – for the first time – in the agriculture business.

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
54

livestock (including cattle, chickens and pigs) and build a beef slaughter facility. These

investments marked the beginning of the Adena Farms business.

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

slaughter and related meat processing).

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

disrupted attempts by TSG leadership to bring in experienced managers to run the

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

menu items against management’s recommendations. These restaurants experienced

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

Gulfstream Park food and beverage operations.

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

services of a full-time architectural and design team in relation to the development of


55

Adena Golf, as well as the restaurants and Pegasus Park, and hired a food formulation

group consisting of chefs, bakers, a professional sausage maker and a nutritionist. By

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

business and multiple retail locations.

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

recommendations that were not in agreement with his approach.

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

agriculture segment, including closing unprofitable businesses and projects and

rationalizing others. As a result, budget forecasts for 2019 show a profit in this segment

for the first time.

a. Adena Golf & Country Club

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

significant amounts of money on development and infrastructure work, including the

construction of Adena Golf – a luxury golf and country club with an 18-hole golf course, a
56

club house, a swimming pool and tennis courts – and two model homes (with plans to

build 119 additional luxury single family homes).

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

with a qualified broker.

ii. Breeding, Training and Racing

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

incurred US$156.9 million in operating losses.


57

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.

iii. Other Non-Performing Businesses and Unprofitable Projects

176. TSG obtained majority ownership of BionX (a manufacturer of electric bicycle

components) in late 2010. At Frank’s insistence on developing an E-Mobility business

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

TSG’s business rationalization plan. TSG’s aggregate unrecovered investment in BionX

and Elby is US$90.7 million.

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

lavish pony barn, horse museum and multi-purpose exhibition arena.


58

ESCALATION OF DISPUTE BY FRANK

i. TSG Management Takes Steps to Reduce Losses Stemming from


Frank’s Mismanagement

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

fix the problems.

179. In 2016 Belinda, in her capacity as trustee and together with the rest of TSG

management, became increasingly concerned about cash management and long-term

value creation for the Beneficiaries, given Frank’s imprudent expenditures in non-

performing businesses.

ii. Frank Responds with Hostility to TSG Attempts to Restrain Spending

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

requests for funding to TSG management.

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
59

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

hostility and refused to acknowledge an issue with the non-performing businesses or to

accept restructuring efforts.

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

unconditionally revoked the Blank-Dated Reappointments (discussed above at paragraph

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

any appointment of a trustee or be accepted by any person. These revocation documents

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

reappoint himself as trustee were not effective.


60

185. In addition, in light of Frank’s purported attempt to date the Blank-Dated

Reappointments, and again out of an abundance of caution, on or about January 15,

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,

excessive spending and pursuit of idiosyncratic and unprofitable projects, demonstrates

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

other underperforming businesses and cut down on excessive spending. As a result,

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
61

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

certain of these funds because he had remained a co-signatory on certain accounts.

iii. TSG Management Continues to Address Unprofitable Non-R&G


Businesses and Attempts to Work with Frank to Reduce Agriculture
Losses

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

strategic reviews, along with subsequent restructuring, of underperforming businesses.

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

counsel in March 2017.

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

funding would be required.


62

192. Belinda, Frank and other family members signed a non-binding memorandum of

understanding in May 2017 regarding Frank’s management of Adena Farms, with a

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

would be required for any expenditure in excess of US$1 million.

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

that further funding was not appropriate.

iv. Strategic Reviews of Underperforming and Non-Core Assets

194. As part of the plan to improve TSG’s cash position and rationalize its business

operations, TSG management initiated strategic reviews of underperforming and non-

core assets starting in about February 2017, with the assistance of external experts.

These reviews resulted in decisions to sell or close underperforming and/or non-strategic

assets, including TSG’s E-Mobility business, Adena Golf, Adena Grill restaurant and

TSG’s corporate aircraft.


63

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,

external experts were commissioned to perform independent reviews of the business.

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

membership, TSG management initiated a strategic review in July 2017. Management

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.
64

v. Frank’s Disruptions at TSG

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:

a. in the summer of 2017 and/or at subsequent times, Frank approached

Frank Jr. and Nicole and attempted to pressure them into signing

documentation supporting his appointment as a trustee;

b. in the summer of 2018, without proper legal authority, Frank improperly

made changes to the board of directors of an entity in the Primel group,

Magnolia Projektenwicklungs GmbH, resulting in funds held by that entity

and in another TSG bank account becoming unavailable to TSG, including

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

employees, including in November 2018 when TSG closed its offices

outside of Vienna and continued the wind-down of its Austrian operations.

As this was contrary to Frank’s personal wishes, he attempted to prevent

employee terminations by threatening the experienced, management-

designated individual charged with implementing the closure and wind-

down, saying that he would contact police if it proceeded (though he

ultimately did not do so and the offices were shut down). In addition, Frank

has regularly attempted to direct TSG employees contrary to their

instructions from TSG management, often exploiting long-standing personal


65

relationships to do so. This has created uncertainty and confusion among

employees and has had a negative effect on morale; and

d. Frank has taken steps to preclude SCC from accessing funds in one or

more of its bank accounts.

vi. Proposal for Division of Family Assets

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

Stronach Group over a period of time.


66

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

process was proposed as non-binding, the proposal went unanswered.

vii. Provision of Information to Beneficiaries

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

family members, including Andrew.

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

in response to these requests, including information on distributions to family members

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

respond to questions from counsel to the family members.

NO BASIS FOR THE PLAINTIFFS’ CLAIMS OR REQUESTS FOR RELIEF

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
67

provide the particulars required by Rule 25.06(8) of the Rules of Civil Procedure, RRO

1990, Reg 194.

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

of authority. Belinda further and specifically denies the allegations contained in

paragraphs 143 to 151 of the Statement of Claim, and denies that the relief claimed in

paragraphs 148 to 151 is justified or otherwise appropriate.

ii. No Breach of Fiduciary Duty or Breach of Trust

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

paragraph 158 is justified or otherwise appropriate.

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,
68

and has disclosed material information to the Beneficiaries. Furthermore, as a trustee of

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

estopped from asserting any claims in respect of those decisions.

207. Belinda pleads and relies on the Trustee Act, RSO 1990, c T.23 and the trust

indentures of the 445 Trusts.

iii. No Unlawful Means Conspiracy

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

specifically denies the allegations contained in paragraphs 159 to 161.

209. Belinda has never conducted herself in any unlawful manner directed at causing

harm to the plaintiffs.

iv. No Fraudulent Concealment

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.
69

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

Claim, relating to the MOU.

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.

vi. No Unjust Enrichment

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.
70

vii. No Losses, Damages or Harm

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

law, and the plaintiffs failed to mitigate their damages.

216. Belinda denies that the plaintiffs are entitled to any amount of aggravated,

exemplary or punitive damages. There is no basis whatsoever for such damages.

viii. Historical Claims are Statute-Barred

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.

218. Belinda asks that this action be dismissed with costs.


71

COUNTERCLAIM

219. Belinda, in her personal capacity, claims against Frank for:

a. a declaration that Belinda is entitled to the return of approximately $14.3

million from Frank, together with any interest that may have accrued on that

amount;

b. a declaration that Belinda is entitled to the return of approximately $18.5

million from Frank, together with any interest that may have accrued on that

amount;

c. an Order requiring Frank to pay the amounts in subparagraphs a. and b.

above;

d. in the alternative, damages in the approximate amounts of $14.3 million and

$18.5 million, plus interest at a commercial rate, for misrepresentation;

e. pre-judgment interest (in the alternative to interest at a commercial rate) and

post-judgment interest in accordance with sections 128 and 129 of the

Courts of Justice Act, RSO 1990, c 0.43, as amended;

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

support of this Counterclaim.


72

A. FUNDS GIFTED TO FRANK FOR HIS AUSTRIAN POLITICAL CAMPAIGN

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.
73

B. FUNDS GIFTED TO FRANK FOR HIS AUSTRIAN TAX SETTLEMENT

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

authorities were prepared to accept a settlement of approximately €20 million ($27.5

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

to accept and pay the settlement.

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

that had been made to him by SCC.

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
74

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

misrepresentation, upon which she relied in making the gift.

230. Belinda requests that this counterclaim be heard together with or immediately after

the main action.

January 21, 2019 BLAKE, CASSELS & GRAYDON LLP


Barristers & Solicitors
199 Bay Street
Suite 4000, Commerce Court West
Toronto ON M5L 1A9

Michael Barrack LSO #21941W


Tel: 416-863-5280
michael.barrack@blakes.com

Jeffrey R. Lloyd LSO #32341I


Tel: 416-863-5848
jeff.lloyd@blakes.com

Iris Fischer LSO #52762M


Tel: 416-863-2408
iris.fischer@blakes.com

Brittany Shamess LSO #70745E


Tel: 416-863-2591
Fax: 416-863-2653
brittany.shamess@blakes.com

Lawyers for the defendant Belinda Stronach


75

TO: DAVIES WARD PHILLIPS & VINEBERG LLP


Barristers and Solicitors
155 Wellington Street West
37th Floor
Toronto ON M5V 3J7

Kent Thomson LSO #24264J


Tel: 416-863-5566
kentthomson@dwpv.com

James Doris LSO #33236P


Tel: 416-367-6919
jdoris@dwpv.com

Chantelle Cseh LSO #60620Q


Tel: 416-367-7552
Fax: 416-863-0871
ccseh@dwpv.com

LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP


Barristers and Solicitors
130 Adelaide Street West
Suite 2600
Toronto ON M5H 3P5

Tom Curry LSO #25740V


Tel: 416-865-3096
tcurry@litigate.com

Paul-Erik Veel LSO #58167D


Tel: 416-865-2542
Fax: 416-865-9010
pveel@litigate.com

Lawyers for the plaintiffs Frank Stronach and Elfriede Stronach


76

AND TO: OSLER, HOSKIN & HARCOURT LLP


Barristers & Solicitors
100 King Street West
1 First Canadian Place
Suite 6200, P.O. Box 50
Toronto ON M5X 1B8

Mark Gelowitz LSO #31857J


Tel: 416-862-4743
mgelowitz@osler.com

Craig T. Lockwood LSO #46668M


Tel: 416-862-5988
Fax: 416-862-6666
clockwood@osler.com

Lawyers for the defendant Alon Ossip

AND TO: GOODMANS LLP


Barristers & Solicitors
Bay Adelaide Centre
333 Bay Street
Suite 3400
Toronto ON M5H 2S7

Alan Mark LSO #21772U


Tel: 416-597-4264
amark@goodmans.ca

Melanie Ouanounou LSO #55336S


Tel: 416-849-6919
Fax: 416-979-1234
mouanounou@goodmans.ca

Lawyers for the defendants Frank Walker and Nicole Walker


77

AND TO: TORYS LLP


Barristers & Solicitors
79 Wellington Street West
30th Floor
Box 270, TD South Tower
Toronto ON M5K 1N2

Linda Plumpton LSO #38400A


Tel: 416-865-8193
lplumpton@torys.com

Leora Jackson LSO #68448L


Tel: 416-865-7547
Fax: 416-865-7380
lplumpton@torys.com

Lawyers for the defendant Stronach Consulting Corp.


FRANK STRONACH et al. - and - BELINDA STRONACH et al. Court File No. CV-18-606163-00CL
Plaintiffs Defendants

ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)

Proceeding commenced at Toronto

STATEMENT OF DEFENCE AND COUNTERCLAIM


OF BELINDA STRONACH

BLAKE, CASSELS & GRAYDON LLP


Barristers & Solicitors
199 Bay Street
Suite 4000, Commerce Court West
Toronto ON M5L 1A9

Michael Barrack LSO #21941W


Tel: 416-863-5280
michael.barrack@blakes.com

Jeffrey R. Lloyd LSO #32341I


Tel: 416-863-5848
jeff.lloyd@blakes.com

Iris Fischer LSO #52762M


Tel: 416-863-2408
iris.fischer@blakes.com

Brittany Shamess LSO #70745E


Tel: 416-863-2591
Fax: 416-863-2653
brittany.shamess@blakes.com

Lawyers for the defendant Belinda Stronach