Professional Documents
Culture Documents
CV-18-606163-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
B E T W E E N:
1. Except as otherwise stated herein, the defendant Alon Ossip (“Alon”) admits the
allegations contained in paragraphs 3, 12, 14, 17-18, 41, 86, 88 and 97 of the statement of claim.
2. Alon has no knowledge in respect of the allegations contained in paragraphs 21, 30, 35,
95-96, 122, 123, 125-126, 139 and 140 of the statement of claim.
3. Except as otherwise stated herein, Alon denies the balance of the allegations contained in
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Introduction
4. Alon is a long-standing employee, executive, shareholder, director and trustee within The
Stronach Group (defined below), in which capacities he has worked tirelessly to create value for
the Stronach family. He worked for years alongside Frank Stronach (“Frank”) and Frank’s
daughter Belinda Stronach (“Belinda”) to help them grow The Stronach Group into a thriving
commercial enterprise. At all times, Alon has discharged his fiduciary and other duties to the
various trusts, companies and their stakeholders, all of whom have benefited tremendously from
5. Frank was, in his day, a giant of Canadian business, and Alon has tremendous respect for
what Frank achieved at Magna International Inc. (“Magna”) over many decades. Today, at 86
years of age, Frank’s business judgement is not at all what it once was. His refusal to let go of his
failing business ventures has become financially disastrous. These ventures, combined with his
excess spending, have eroded the net worth of both his family and Alon.
6. Over the past number of years, Frank’s behavior became increasingly erratic, as reflected
in part in his increasingly disruptive interventions in The Stronach Group’s racing and gaming
business (among others). Frank demonstrated a wholesale disregard for corporate decision-making
within The Stronach Group, diverted company assets to his projects without regard for their
economic viability, and made improper and unethical decisions in relation to third parties and
7. As these troubling transgressions escalated, Alon was increasingly called upon to intervene
on behalf of the family and The Stronach Group in an effort to curtail Frank’s improvident
spending and destructive interference. Initially, Frank was open to Alon’s feedback and responded
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accordingly, such that it was not necessary to strictly enforce the lines of corporate decision-
making. Over time, however, Frank began to view Alon’s interventions as a personal affront, with
the result that his relationship with Alon ultimately deteriorated. So too did Frank’s relationship
with others in The Stronach Group, including his daughter, resulting in a breakdown of Frank’s
8. It is against this backdrop that Alon now finds himself caught in the crossfire of a toxic
familial dispute. The statement of claim in this action contains deliberate falsehoods and
unsubstantiated allegations of wrongdoing, pleaded in a bad faith effort to publicly injure the
9. The suggestion that Alon has acted improperly – in any way – is without foundation. Alon
has been a faithful and valuable partner of the Stronach family for more than a decade. Contrary
to the false portrait in the statement of claim, Alon has never breached any form of duty or
Stronach Group (or otherwise). He has fulfilled his duties and obligations with honour and
rectitude, with enormous personal effort and skill. In doing so, he has built substantial additional
wealth for the Stronach family – for which Frank was formerly grateful.
Personal Background
10. Alon is the Chief Executive Officer of a number of companies within a network of
Stronach-related entities (collectively, “The Stronach Group”), such as Stronach Consulting Corp.
(“SCC”), 445 Family Holdings Inc., 446 Family Holdings Inc., Stronach Corporation, Stronach
GP Inc., TSG Developments Investments Inc., TSG Developments Land Holdings Inc.,
Gulfstream Park Racing Association, Inc. and TSG Technologies, LLC (among others).
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11. The Stronach Group consists of a complex network of trusts, corporations and other entities
which, collectively, comprise the businesses and assets of the Stronach family. As described more
fully below, Alon has been instrumental in developing these commercial and other interests. Alon
and his related family trust are also 5% shareholders in 2382399 Ontario Limited and 2280781
Ontario Inc. (holding companies which own a substantial portion of the assets included in The
Stronach Group).
12. Alon is a trustee of the 445327 Trust and the Andrew Stronach 445 Family Trust – positions
he assumed in or about October 2013 at the request of Frank and other members of the Stronach
family.
13. Independent of his work for The Stronach Group, Alon has a track record of exceptionally
successful domestic and international business ventures, dating back to the early 1990s. His
successes include real estate, software/technology and manufacturing ventures, among others.
Even prior to his initial introduction to Frank in 2006, Alon had achieved significant financial
success. At all times, Alon spoke openly with Frank and the rest of the Stronach family about these
various business interests. Frank’s assertion that he had no knowledge of Alon’s other ventures is
willfully false.
14. Alon is a member of the Law Society of Ontario. He joined the law firm of Goodman and
Carr LLP in 1988, where he eventually became one of the leading partners in the firm’s tax and
corporate practice groups. He maintained a highly successful legal practice until being recruited
to Magna by Frank. At all times, he has conducted himself in a manner that befits a member of the
Bar and has maintained an impeccable reputation. From the outset of his career, Alon was widely
regarded as a highly entrepreneurial practitioner who developed a deep familiarity with his clients’
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business operations, and was known to champion his clients’ interests with loyalty and integrity.
Alon’s business acumen, diligent work ethic and entrepreneurial aptitude garnered him – and
15. In or about August 2006, Alon was approached by Frank – with whom he had no prior
relationship – seeking advice with respect to a discrete tax issue. Frank offered Alon a position as
an Executive Vice President at Magna, and offered to teach him the business. Alon indicated that
16. Several days later, an employment contract (dated August 17, 2006 and executed by Frank)
was delivered to Alon, who was advised that the terms of the proposed contract could not be
altered. In other words, it was presented as a “take it or leave it” offer of employment, with no
opportunity for negotiation. After speaking further with Frank about the opportunity, and receiving
various assurances, Alon signed the agreement and verbally agreed to a two-year commitment. As
an express term of his employment, Alon was permitted to continue his legal practice (up to seven
hours per week), over and above his commitments to Magna. However, Alon spent virtually all of
17. During these early years, Alon worked closely with Frank on a number of disparate issues,
including Frank’s personal tax matters and major corporate transactions undertaken by Magna. He
was named Executive Vice President, and was also responsible for overseeing Magna’s
information technology initiatives. He devoted the vast majority of his time and efforts to Magna
and Frank, though he continued to maintain his external commercial interests and entrepreneurial
ventures – to the full knowledge of Frank and the other executives at Magna.
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18. Alon was instrumental in a number of Magna’s most significant corporate transactions
during that period, including the 2007 transaction involving Russian Machines and the 2010
transaction that eliminated Magna’s dual-class share structure by way of a court-approved plan of
arrangement in which the Stronach family received the equivalent of approximately US$863
19. Thereafter – at Frank’s request – Alon developed, structured, negotiated and implemented
others to solve the issues that surrounded MID, which was fraught with litigation, had failed. The
transaction proposed and ultimately implemented by Alon netted the Stronach family all of MID’s
racing and gaming assets, all of MID’s development lands, and more than US$50 million in cash.
Frank was elated when the MID transaction was concluded in June 2011, and made numerous
20. As consideration for Alon’s instrumental role in increasing the Stronach family’s wealth,
Alon ultimately received a 5% interest (or cash equivalent thereof) in substantially all of the
Stronach family’s non-personal assets other than the horse breeding and thoroughbred horse racing
assets. The specific details of the inclusions and exclusions are listed in a schedule to the
Unanimous Shareholders Agreements (as defined below) that were entered into between Alon and
the relevant corporate entities within The Stronach Group. These final agreements evidencing
Alon’s interest in The Stronach Group were concluded after two years of negotiation regarding the
precise nature and form of Alon’s entitlement, throughout which The Stronach Group had the
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21. Immediately after the signing of the definitive agreements concerning the MID transaction,
Alon started effectively directing the operations of the soon-to-be spun out assets. On the closing
of the MID transaction at the end of June 2011, Alon became an Executive Vice President of The
Stronach Group. At the time, The Stronach Group had no meaningful management structure in
place. It lacked a holding company infrastructure to effectively manage its newly acquired
22. Around November 2011, Frank and Belinda asked Alon to become the CEO of The
Stronach Group. Alon accepted the appointment, effective February 2012. However, in so doing,
Alon never concealed, or agreed to abandon, his other business interests. In fact, Frank gave Alon
23. From 2011, Alon’s primary focus was the revitalization of the ailing racing and gaming
operations (the “R&G Business”) acquired from MID, while Frank focused on his political
aspirations in Austria and on his “passion projects” in other arenas (for example, his various food
and agriculture-related businesses). Alon’s role outside the R&G Business was primarily one of
Nonetheless, the relationship between Frank and Alon remained mutually warm and respectful,
and the two spent much of their time together. Frank spoke highly of Alon in both public and
private circles, regularly referring to him as his “partner” and often referencing Alon’s ownership
24. In late 2011, Alon relocated himself – at his own expense – to Gulfstream Park in Florida,
one of the key racetrack properties acquired by The Stronach Group as part of the MID transaction.
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One of Alon’s first initiatives as CEO was to immerse himself in the portfolios and to conduct a
thorough review of The Stronach Group’s holdings, including its extremely complex R&G
Business. In this regard, he consulted with Frank and others – both within and outside of the
organization – in an attempt to understand the issues surrounding the non-performing industry and
assets. Over time Alon developed an understanding of the business such that he could start making
25. Alon worked tirelessly to understand and improve the business. During this period, he
typically worked 70-hour work weeks, and took virtually no vacation days.
26. With Alon as CEO, the R&G Business saw a stellar improvement, both financially and
operationally. In particular, the EBITDA of the operations was increased by roughly US$70
million in six years, and revenue increased by over US$500 million during this same period.
27. Alon’s work commitments and relocation to Florida took an inordinate toll on his personal
life during this period, such that his wife eventually had to surrender her professional and other
commitments in Toronto in order to join him in Florida. Throughout this period, Alon covered all
of his own living expenses, as well as his family’s travel expenses, on the understanding that he
was a partner in The Stronach Group and was working to build the business as a whole for the
benefit of both the Stronach family and himself. Dealing with Frank’s increasingly irrational and
28. In 2011, Belinda and her mother Elfriede Stronach were the only trustees of the 445327
Trust, which controlled 445327 Ontario Limited at that time. 445327 Ontario Limited was – and
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remains – the parent corporation of all of the Stronach entities that hold the assets arising from the
29. In addition, Belinda (in her personal capacity) was a party to a unanimous shareholders
agreement with 445327 Ontario Limited, which provided that Belinda was the sole director of
30. Belinda has been the sole director of 445327 Ontario Limited since 2005. Accordingly,
throughout Alon’s tenure at The Stronach Group, Belinda has always been the sole director and
the individual to whom Alon primarily reported. While her operational role was more limited in
the early years, Belinda became progressively more involved with the R&G Business over time
and played an important role in its success. In later years, Belinda also played a key role in
mitigating the damage caused by her father’s projects and ill-advised interventions in the business.
31. While the relationship between Belinda and Frank was initially a warm and respectful one,
tensions between the two of them arose when Belinda started being more forceful in controlling
Frank’s relentless pursuit of his passion projects. This was compounded by the increase in her
public profile. Belinda increasingly became the “brand” of The Stronach Group, which appeared
32. While Alon managed the core businesses of The Stronach Group, Frank focused his
energies on various passion projects, most notably the Ocala Golf Course and the agricultural
business. In or around 2011, Frank decided to pursue a political career in Austria, although his
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33. In early 2014, Frank’s short-lived and disastrous political career – which ultimately cost in
excess of US$47 million, gave rise to an expansive tax audit and injured the corporate brand –
came to an end. Thereafter, his pursuit of his passion projects continued with greater intensity.
While Belinda was the ultimate decision-maker for The Stronach Group, Frank was the head of
the Stronach family. The Stronach Group executives and advisors – including Alon – accorded
Frank a great deal of respect, and allowed him to serve as Honorary Chairman and to pursue his
passion projects. While he was granted this honorary position as a gesture of respect, at no point
was Frank a director of any of the core businesses of The Stronach Group nor did he exercise any
34. In the sphere of the R&G Business, while Frank acted as an advisor and mentor to Alon,
Alon handled all of the strategy, deal-making and day-to-day operations. Certain limited
exceptions included matters such as “Miss Racing Queen” and “The Horse Racing League”, in
35. Over time, however, Frank’s pursuit of his passion projects expanded. His expenditures,
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Total ~US$680,000,000
The above expenditures have an estimated residual value of less than US$300 million, resulting in
36. Together with Frank’s over US$47 million of sunk costs in an unsuccessful Austrian
political career and his losses since 2010 in the thoroughbred breeding and racing business of over
US$150 million, Frank’s improvident spending and unsound business decisions have reduced the
37. In addition to the foregoing expenditures, by the end of 2016 Frank’s proposed passion
projects would require more than US$250 million of further capital, plus additional commitments
for start-up costs. These proposed projects included the following: four new food
stores/restaurants, a commissary, a bakery, a pork slaughter and processing facility, a dairy farm,
a creamery, a chicken slaughtering and processing facility, a spring water facility, a greenhouse
38. In light of Alon and Belinda’s obligations as directors, officers and trustees of The Stronach
Group, they sought to manage Frank’s expenditures. Alon, Belinda and the CFO of The Stronach
Group had countless meetings with Frank in a coordinated effort to communicate and discuss
financial issues with him, and Frank was at all times fully informed of the financial status of The
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Stronach Group. He knew that his various projects represented a significant drain on the corporate
assets.
39. To the extent that Frank’s passion projects had potential and were manageable, Alon and
Belinda allowed them to proceed and supported them. To the extent that a project proposed by
Frank made no commercial sense, Alon, Belinda and the CFO of The Stronach Group (among
others) tried – sometimes in vain – to stop such projects. Over time, however, Frank proved to be
intransigent and refused to accept that his projects constituted commercial failures, even when
there was incontrovertible proof in this regard. Frank’s behavior represented a departure from his
prior philosophy of acknowledging when commercial ventures were failures and “amputating”
them accordingly. Alon would repeatedly remind Frank that the only person who was not heeding
the advice espoused in his own book, Magna Man, was Frank himself. Rather than acknowledging
a failure and trying to formulate a rational way to address it, Frank began unilaterally and without
legal authority “firing” individuals – even those who reported directly to Alon (such as Christopher
Wood and Jamie Cartwright) – whenever they attempted to advise Alon, Belinda or Frank as to
how to stem the flow of losses from Frank’s passion projects. During this period, Frank also started
blaming subordinates for failures emanating from his own explicit directions.
41. Frank’s declining mental state and lack of judgement became increasingly evident and
challenging for those charged with running a profitable business. Moreover, the scope and pace of
his passion ventures increased. The issue of “scope-creep” was particularly problematic: Frank’s
projects would often start out as seemingly manageable from a cost perspective, but would become
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increasingly onerous. For example, the Pegasus statues that Frank commissioned to be installed at
Gulfstream Park was initially proposed as a US$6 million project; only later was it discovered that
the initial figure represented a mere fraction of the overall cost of approximately US$55 million,
as stated above.
42. Wherever Frank turned his attention, chaos often ensued and management was left to pick
up the pieces. At the same time, he increasingly demanded more money from both the R&G
Business (which was itself underfunded) and various land sales in order to support his passion
projects.
43. Frank’s tendency to make unilateral commitments to third parties on behalf of The
Stronach Group, without consulting Alon or Belinda and without legal signing authority (which
authority Frank specifically knew he did not have), also became increasingly problematic. Frank
knew that Alon and Belinda were loath to openly embarrass him, as he was Belinda’s father and
an important part of The Stronach Group brand. In deference to Frank’s prior reputation and
accomplishments, therefore, Alon and Belinda did their utmost to allow sufficient time for Frank’s
existing projects to prove themselves before making a decision to terminate them. Throughout this
period, Alon and Belinda strove to achieve a delicate balance between doing what was in the best
interests of the companies, while sparing Frank any embarrassment and not damaging The
44. As Frank’s demeanor started to change (as described above), Alon’s relationship with
Frank started to show signs of strain, largely due to Alon’s efforts to curtail Frank’s improvident
spending.
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45. Belinda was at all times front and centre in the efforts to curtail Frank’s erratic business
activities, but Alon – as one of the few people with the ability and financial independence to stand
up to Frank – was also seen as a messenger of “bad news” (i.e., admonitions to Frank related to
his increasingly erratic business and financial decisions). As a result, Frank became progressively
46. The events described above escalated the tensions between Alon and Frank. It had become
clear to Alon that the profitable R&G Business would be harmed due to the cash drain caused by
the accelerating pace of Frank’s passion projects. Alon and Belinda understood that ultimately, the
entire Stronach empire was at risk if the cash drain wasn’t stemmed. Unfortunately, Alon and
Belinda underestimated how dogmatic and obstructive Frank would become even in the face of
47. The situation ultimately came to a head during a December 2016 telephone call between
Alon and Frank. Following a heated discussion regarding Frank’s spending, Alon told Frank that
he would have to take the matter up with Belinda, as she was the one who was ultimately in charge
of The Stronach Group. Frank took this comment as a personal affront and betrayal, which then
48. In an effort to clarify matters, Alon – with the assistance of counsel to The Stronach Group
– prepared a written summary of the history of control of The Stronach Group, which was
communicated to Frank along with a respectful letter inviting him to meet. This meeting never
happened, and Frank immediately started taking steps to undermine Alon within The Stronach
Group and beyond. Alon was later advised that Frank no longer wished to deal directly with him.
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49. In January 2017, Alon was told by Belinda that he was to be put “on leave” from The
Stronach Group (although he was to remain as Chief Executive Officer in the background), in an
effort to appease Frank. It was agreed that Alon would have no day-to-day duties in relation to The
Stronach Group, and that he would be free to undertake other engagements outside of The Stronach
Group. Importantly, there was never any suggestion of wrongdoing on the part of Alon. Rather,
the “leave” was proposed by Belinda simply as a means of appeasing her father’s increasing
50. At that time, Alon proposed to simply exercise his exit rights in respect of his 5%
ownership interest and part ways with The Stronach Group. Initial steps in this regard were
undertaken and correspondence was exchanged in furtherance of this anticipated exit. However,
Belinda later approached Alon and asked him to defer his exercise of rights in order to give her
time to deal with her father. It was agreed that Alon’s ultimate role within The Stronach Group
would be discussed at a later date, and until such time he would continue to be entitled to his
distributions from The Stronach Group in accordance with the Unanimous Shareholders
Agreements. Accordingly, Alon has continued to act as CEO of The Stronach Group in an advisory
capacity, and retains the formal title. In particular, Alon provides ongoing strategic and business
advice to Belinda and members of management, and provides guidance in respect of the ongoing
business operations of The Stronach Group. He continues to be a vital resource to The Stronach
Group.
51. Alon has no desire to interfere in the obviously fractured relationship between Frank and
Belinda, and he has never had any incentive – financial or otherwise – to have committed any of
the alleged wrongs that are set out in the statement of claim. To the contrary, Alon has duly
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discharged his duties and obligations, at all times. Alon categorically denies all of the allegations
52. In addition to his roles as an executive of various entities within The Stronach Group, Alon
also currently serves as a Trustee of the 445327 Trust and the Andrew Stronach 445 Family Trust.
Alon receives no financial benefit from his commitments in this regard. He was specifically asked
53. As described above, the 445327 Trust controlled the 445327 group of companies prior to
October 2013. Historically, Elfriede and Belinda – not Frank – were the trustees of the 445327
Trust. Belinda eventually resigned as trustee, leaving Elfriede as the sole trustee.
54. In or about October 2013, the 445327 Trust distributed most of its shares in 445327 Ontario
Limited to the Belinda Stronach 445 Family Trust and the Andrew Stronach 445 Family Trust.
This distribution was carried out by Stronach family members and advisors, in direct consultation
with Frank. While Alon was a trustee of both of the latter trusts at the time (as was Frank), the
decision to distribute the 445327 Trust assets to these trusts was not made by Alon. Rather, Elfriede
– then the sole trustee of the 445327 Trust – conferred with family members (including Frank) and
professional advisors, and sought independent legal advice with respect to the transfers.
55. The constating documents of the Belinda Stronach 445 Family Trust and the Andrew
Stronach 445 Family Trust appointed Frank as a trustee of each of these trusts, and provided that
Frank – so long as he was a trustee – would be entitled to appoint additional trustees and to remove
any trustee. In the event that Frank ceased to be a trustee, the right to appoint or remove trustees
passed to Belinda. In a sense, therefore, Frank’s right to appoint or remove trustees granted him
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partial control of the trusts at the time. This right, however, was conditional upon him remaining
a trustee. Moreover, he would always be only one of at least three trustees of each trust, all of
56. After the October 2013 transactions, the trusts were organized as follows: Alon, Frank and
Belinda were the trustees of the Belinda Stronach 445 Family Trust, and Alon, Frank, Belinda and
Elfriede were the trustees of the Andrew Stronach 445 Family Trust. The Belinda Stronach 445
Family Trust, being the largest shareholder of the 445327 group of companies, effectively
57. In late November 2013, on the advice of his legal and financial advisors, Frank decided to
resign as trustee of the various trusts in light of his election to the Austrian Parliament.
58. On November 29, 2013, Frank voluntarily resigned as a trustee of both the Belinda
Stronach 445 Family Trust (which indirectly controls 445327 Ontario Limited) and the Andrew
Stronach 445 Family Trust. Frank was replaced as trustee of the Belinda Stronach 445 Family
Trust by Belinda’s children, Frank Walker and Nicole Walker. It was this decision – undertaken
voluntarily by Frank for his own deliberate and strategic reasons – that ultimately granted Belinda
the power that Frank previously held in respect of the Belinda Stronach 445 Family Trust and its
corresponding assets.
59. Alon was not pleased by Frank’s decision to resign as trustee, nor did he benefit from this
decision. Alon continued to fulfill his ongoing duties as a trustee of the Belinda Stronach 445
Family Trust until his voluntary resignation in January 2015, which came at the request of Belinda.
Alon continues to discharge his duties as a trustee of the Andrew Stronach 445 Family Trust.
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60. Contrary to the allegation in paragraph 83 of the statement of claim, Alon’s role as trustee
was never governed by the terms of his employment contract or any other agreements outside of
61. Contrary to the allegations in paragraphs 80 and 98 of the statement of claim (among
others), Alon never understood or believed that Frank’s resignations as a trustee of the Belinda
Stronach 445 Family Trust and the Andrew Stronach 445 Family Trust were “not intended to be
permanent in nature or irrevocable”. The suggestion that these were somehow “temporary”
decisions is inconsistent with the underlying rationale for the resignations, inconsistent with the
steps taken, and directly contrary to the public disclosure filings made by Frank in Austria at the
time.
62. Contrary to the allegations in paragraphs 99-100 of the statement of claim, the
insistence and without Frank’s input. In fact, Frank was unaware of the documents until Alon
presented them to him for execution. Alon instructed counsel to the trusts to prepare these
documents with a view to protecting himself against the eventuality that Belinda might become
incapacitated, in which case the trust assets would be controlled by her children, Frank Walker and
Nicole Walker. Given that Alon had no relationship with either of them, and at this time his
relationship with Frank was very close, Alon wanted some measure of security with respect to his
interest in, and ongoing role at, The Stronach Group (an enterprise to which he had devoted
countless hours and personal resources). His concerns were warranted, given that Belinda had
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63. Accordingly, the reappointment instruments – which contemplated the future resignation
of Frank Walker and Nicole Walker and the reappointment of Frank, if and when Belinda became
unwilling or unable to serve as trustee – were drawn up at Alon’s request, and presented by Alon
to both Frank and Belinda for execution (though undated). It was contemplated that the documents
would be held by Alon pending any future incapacity on the part of Belinda. Although Alon
initially kept the executed documents on his desk at the Aurora offices of The Stronach Group, he
was spending more time at the Gulfstream Park (Florida) office of The Stronach Group.
Accordingly, he instructed his assistant to forward the documents to Miller Thomson LLP, counsel
for the trusts, where they were to be held for safekeeping. These instruments were never intended
to be for the benefit of Frank, or to be used at his unilateral whim. It is Alon’s understanding that
the documents remain in the possession of Miller Thomson LLP, and have not been properly
released.
64. Contrary to the allegations in the statement of claim, Alon did not commit any “unlawful
actions … to appropriate Stronach family assets for [his] own personal benefit”. These allegations,
which are both unparticularized and unsubstantiated, are egregious pleadings designed solely to
65. Furthermore, Alon never “conspired” with Belinda – or anyone else – to conceal his actions
or intentions. Frank was aware at all times of Alon’s actions, both in respect of Magna and The
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66. At all times, Alon fully and properly discharged his duties as trustee, fiduciary, executive
and employee, and all suggestions to the contrary in the statement of claim are wholly without
merit.
67. Contrary to the allegations in the statement of claim that Alon failed to “devote his full
time, care and attention to the business and affairs of [The Stronach Group]”, Alon worked
tirelessly for The Stronach Group even though the Unanimous Shareholders Agreement governing
Alon’s management obligations only required that he “devote sufficient working time and
attention to the businesses and affairs of the Stronach Companies in order to properly fulfill his
duties.” As described above, however, Alon’s commitment to the Stronach enterprise over the
68. The actions taken by Frank with respect to The Stronach Group – including his resignation
as trustee and his appointment of Belinda as his successor – were undertaken by Frank of his own
accord, for his own reasons, and with the benefit of legal and other professional advice. These
69. The very fact that Frank was named the “Founder and Honorary Chairman” of The
Stronach Group, as acknowledged at paragraph 55 of the statement of claim, confirms the fact that
Frank’s status within the organization was purely honorary. It was not an operational role.
70. Frank’s allegations about the purported effect of his resignations and his ability to
unilaterally unwind them imply, perhaps unintentionally, that Frank intended to mislead the
Austrian Parliament and tax authorities by superficially surrendering his control of assets in name
only while maintaining de facto control in the background. In reality, however, Frank maintained
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71. Before, during and after his foray into politics, Frank’s role in The Stronach Group was
limited primarily to his passion projects, though he was kept fully abreast of all important business
respect of the core enterprise, nor was he a director or officer of any material operating entities
within The Stronach Group during Alon’s tenure. Frank’s position and title were purely honorary
(with the exception of executive positions that he held at various times in respect of certain minor
72. While Frank was accorded a great deal of respect and deference by Alon, Belinda and
others, as was appropriate in the circumstances, he never exercised any de facto or legal control of
The Stronach Group during Alon’s tenure. Frank was fully aware of the fact that he did not have
the legal right to bind The Stronach Group entities or execute documents on their behalf, and he
often tried to pressure those with signing authority (including Alon and the CFO, among others)
73. The broader assertions in the statement of claim of wrongdoing by Alon are
unsubstantiated, demonstrably false, and are not borne out on the plaintiffs’ own pleading.
time has Alon placed himself in a position of conflict, favoured his own interests over those of the
75. Alon has consistently discharged his duties as a director, executive, fiduciary and trustee,
and has never acted contrary to the interests of those to whom he owes such duties. Alon expressly
pleads and relies on the Ontario Trustee Act and relevant trust documents in respect of the
plaintiffs’ unfounded allegations of breach of trust and fiduciary duty. At all times, Alon’s prudent,
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honest and good faith efforts have been directed towards the creation of value for The Stronach
76. Contrary to the allegation at paragraph 108 of the statement of claim, at no point did Alon
“threaten to fire employees of The Stronach Group who took instructions from or even spoke to
Frank”. Rather, Alon’s heightened concerns about Frank’s increasingly erratic conduct forced him
to caution employees of The Stronach Group on a number of occasions that they would be
sanctioned if they unilaterally acted on any of Frank’s “directions” which they knew or suspected
to be improper without first consulting with Alon, Belinda or others with appropriate authority. He
communicated this message in an effort to preserve the proper lines of corporate decision-making
and prevent any further erosion of corporate value arising from Frank’s improvident schemes.
77. To the extent that the plaintiffs seek to rely on the oppression provisions of the Ontario
Business Corporations Act (the “OBCA”), Alon contests their standing to do so. More specifically,
the plaintiffs do not have the legal capacity to seek the relief sought in subparagraphs 1(k), (aa)
and (jj) of the statement of claim, and cannot avail themselves of sections 245 or 248 of the OBCA.
78. Alon further pleads and relies upon the Ontario Limitations Act, 2002 with respect to any
and all allegations of historical wrongdoing related to any alleged acts or omissions by Alon
relating to: (i) Alon’s Employment Agreement, (ii) Alon’s equity interest in The Stronach Group
under the Unanimous Shareholders Agreements, (iii) the 2013 Trust Reorganizations, and (iv)
79. As noted above, and acknowledged by the plaintiffs, Alon holds what amounts to a 5%
interest in the totality of The Stronach Group, subject to the exclusion of certain “family assets”.
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More specifically, pursuant to a term sheet dated July 30, 2013 (the “Term Sheet”), Alon was
of most of the non-racing and gaming business assets) and new shares in 2280781 Ontario Inc.
(representing 5% of the racing and gaming business)”, as well as a 5% interest in a group of other
assets held by The Stronach Group which were enumerated in the schedules to the Term Sheet (the
“Other Subject Entities”). This issuance of shares and related rights was memorialized in a series
of heavily negotiated corporate transactions and related documents that were executed in late 2013.
80. Contrary to the allegation at paragraph 62 of the statement of claim to the effect that Alon’s
equity interest was granted for “no consideration”, this 5% interest in The Stronach Group was
expressly granted to Alon in or about 2013 in recognition of his past successes in generating
unprecedented value for the Stronach entities (most notably in relation to the MID transaction),
and as a tangible incentive to continue to grow The Stronach Group businesses (which he did,
turning an unprofitable enterprise into a lucrative business in the span of less than five years). The
alternative narrative suggested by Frank, namely that Alon was simply “gifted” equity for no
reason, is wholly inconsistent with both the factual record and the plaintiffs’ own pleadings.
81. As part of the 2013 corporate transactions which documented the above grant, Alon and
certain entities within The Stronach Group entered into two parallel unanimous shareholders
agreements dated October 31, 2013 (“the Unanimous Shareholders Agreements”). These
Agreements govern Alon’s entitlements in relation to his interests in 2382399 Ontario Inc. and
2280781 Ontario Inc., including his exit rights. Notably, the Unanimous Shareholders Agreements
did not impose any hold period or other limitations on Alon’s ability to exercise such exit rights.
Accordingly, he could have done so the day after the original grant.
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82. With respect to the relief sought at subparagraphs 1(p) to 1(t) of the statement of claim
regarding the Unanimous Shareholders Agreements, and specifically the attempt to negate or
otherwise interfere with the equity interest granted to Alon thereunder, Alon states that the
plaintiffs have no standing to seek any such relief. Neither plaintiff is a party to the Unanimous
Shareholders Agreements and, as such, neither has any ability to vary or otherwise suspend the
83. In any event, Frank has been aware of the terms of the Unanimous Shareholders
Agreements since their inception, and has never attempted to dispute their validity. Accordingly,
to the extent that the plaintiffs now seek to revisit these agreements in the context of this litigation
and assert claims in respect thereof, all such claims are necessarily statute-barred. In this regard,
84. Alon is unaware of many of the allegations and assertions outlined in the statement of
claim, particularly insofar as they relate to alleged acts or omissions by other defendants in this
action.
85. Alon denies that he had any involvement in the May 2017 Agreement referenced at
paragraph 125 and following of the statement of claim, nor did he have any involvement in any
decision to terminate it. More specifically, contrary to the allegation at paragraph 127 of the
statement of claim, Alon neither “collaborated with” nor “urged” Belinda in respect of any
86. Moreover, Alon is the only party who has yet to receive his pro rata entitlement to the
distribution of assets that took place in January 2018, referenced at paragraph 132 of the statement
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of claim, notwithstanding his clear contractual rights under the Unanimous Shareholders
Agreements. In other words, not only did Alon not instigate the decisions that he is now being
accused by the plaintiffs of having made (or conspiring to make), he also has not received his own
contractual entitlements which necessarily flow from such decisions. Although he has not yet made
a formal demand on The Stronach Group for distribution of such payments – primarily in the hope
that the Stronach family members can resolve their differences – Alon expressly reserves any and
87. In summary, Alon has committed no wrongdoing or breach of duty. In fact, Frank’s attitude
towards Alon is a direct result of Alon’s efforts to honour his fiduciary duties as a director, officer,
and trustee of The Stronach Group by curtailing Frank’s appetite for costly passion projects and
stemming the losses when such projects were seen to hold no prospect of success. Alon has never
been privy to a conspiracy of any kind, and is now the victim of a revisionist history which seeks
to distance its author from his improvident decision-making, while laying claim to successes that
88. Alon asks that this action be dismissed with costs on a full indemnity basis.
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FRANK STRONACH ET AL. -and- BELINDA STRONACH ET AL.
Plaintiffs Defendants
Court File No. CV-18-606163-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
PROCEEDING COMMENCED AT TORONTO