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THE CASE OF THE ESTATE OF DAVID KWINTER
THE 40 YEAR SEARCH FOR JUSTICE
A 7 YEAR LEGAL BATTLE BETWEEN FAMILY MEMBERS RESOLVED
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Presiding in his final civil trial, famed Canadian jurist, Mr. Justice John H. Gomery, in April of 2007, dismissed an action instituted in the Superior Court of the District of Montreal by noted Montreal real estate developers Aaron Gelber and Norman Sternthal (the "Plaintiffs") against the Estate of the Late David Kwinter (the "Estate"). The Plaintiffs subsequently appealed Mr. Justice Gomery's judgment to the Quebec Court of Appeal who, in an unanimous judgment dated September 29, 2008, dismissed the appeal and upheld the trial judge's findings.
JUDGE GOMERY RULES DISPUTED OPTION AGREEMENT UNENFORCEABLE FOR BEING SECURED THROUGH COERCION
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The Plaintiffs had brought their action to enforce an option agreement that the Plaintiffs and the late David Kwinter (who was Aaron Gelber's brother-in-law) had signed in June of 1984 with respect to a large rental property ("Beacon Hill Villa") that David Kwinter and the Plaintiffs co-owned. The Plaintiffs were attempting to use the rights granted them under the option agreement to purchase David Kwinter's one-third interest in the Beacon Hill Villa property at a price that was significantly lower than the then fair market value of that interest. In his decision, Mr. Justice Gomery ruled that the option agreement was not enforceable as the Plaintiffs had used coercive tactics to secure David Kwinter's consent to the agreement. One of the most critical pieces of evidence introduced at trial was a February, 1984 taped telephone conversation between Aaron Gelber and David Kwinter's son, Hirsh Kwinter, wherein Aaron Gelber states that in an effort to apply leverage against David Kwinter to agree to a resolution of David Kwinter's late wife's estate, Aaron Gelber was withholding substantial monies that were legally owed to David Kwinter with respect to his ownership interest in the Beacon Hill Villa property. It was a tactic, that Aaron Gelber freely admitted on the tape, was unfair. At trial, Aaron Gelber testified that he was lying on the 1984 taped conversation and that he had never withheld monies from David Kwinter. Despite Aaron Gelber's repeated assertions that he was not telling the truth during the taped telephone conversation, on cross-examination at trial by the Estate's lawyer, Pierre Bourque, Aaron Gelber admitted that monies were in fact being withheld from David Kwinter and that such monies were only paid to David Kwinter after he signed the contested option agreement:
Me. Pierre Bourque:
My question to you was: In early February nineteen eighty-four (1984), there was an excess mortgage money of a hundred thousand dollars ($100,000.00) for each of the partners.
Aaron Gelber:
That is correct.
Me. Pierre Bourque:
When was that money paid to Mr. David Kwinter?
Aaron Gelber:
It was put into his account, sir, until his taxes, the confirmation that his taxes are paid. And that money earned interest by the way.
Me. Pierre Bourque:
And when was the confirmation received?
Aaron Gelber:
Never Received.
Me. Pierre Bourque:
Never Received?
Aaron Gelber:
I never got a copy and Mr. Rejean Roy tells me he has nothing in his file. And I have nothing in my file.
Me. Pierre Bourque:
Are you telling this Court that this amount of a hundred thousand dollars ($100,000.00) was never paid to David Kwinter?
Aaron Gelber:
I never said that.
Me. Pierre Bourque:
I’m asking you.
Aaron Gelber:
No, it was paid to him.
Me. Pierre Bourque:
When was it paid?
Aaron Gelber:
It was paid to him in June of that year.
Me. Pierre Bourque:
I see. After the option agreement P-2 was executed, Mr. Gelber?
Aaron Gelber:
That’s what happened, exactly.
Me. Pierre Bourque:
That’s what happened, exactly.
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COURT FINDS AARON GELBER TO BE AN UNTRUTHFUL WITNESS
In reaching his decision to completely dismiss the Plaintiffs' civil action, Mr. Justice Gomery held that Aaron Gelber was not a credible witness:
"The inescapable conclusion is that Aaron Gelber was not a truthful witness at the trial. He was generally evasive during his examination by Defendant's attorney, sometimes taking refuge from difficult questions by pleading that he could not remember certain meetings and conversations with David Kwinter. He contradicted himself on other details. The Court is of the opinion that he was not lying for tactical purposes during the telephone conversation, that the statements he made on that occasion were factual, and that his testimony on discovery and at trial is not an honest reflection of what occurred and was said in 1984, but is calculated to refute the allegations of the defence to the effect that he put pressure upon David Kwinter to agree to something by threatening to illegally withhold from him money to which he was entitled. As a general conclusion, all of Aaron Gelber's testimony must be viewed with suspicion."
TRIAL JUDGE HOLDS THAT CONTESTED OPTION AGREEMENT SIGNED OUT OF FEAR
After carefully reviewing the evidence the trial judge was able to reach the conclusion that the option agreement was unenforceable in that there was no rationale for David Kwinter to have signed the agreement other than his fear of Aaron Gelber and the consequences of his failing to agree to the terms of the option agreement:
“The Agreement is completely one-sided and provides no protection or consideration to David Kwinter. By signing it he exposed himself throughout the life of the Agreement to the possibility that Aaron and Sternthal would choose to disagree with him at a moment in time chosen by them with respect to the administration of the Property, which would trigger the option provisions granted in their favour.
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It is impossible to imagine what benefit David Kwinter would realize by the signature of the agreement, except to satisfy the desire of Aaron Gelber that he do so.
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Although David Kwinter was close to his sons, trusted them, and gave each of them in turn a power of attorney to handle his financial affairs, he did not tell them that he had signed the Agreement. It was only in 1996, twelve years later, that Hirsh was told by Neil Gelber, Aaron's son, that Aaron had "taken care" of him so that he would not have to deal with him "down the road." This aroused Hirsh's curiosity and concern, since he was then acting generally for his father under a power of attorney signed in 1994, and he asked his accountant to obtain a copy of the Agreement from Fairway. When it was received, he called his father and asked him why he had signed such a disadvantageous document. His father's reply, of which Hirsh is certain, was: "I did not want to sign it, but I had no choice".
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The evidence, and the presumptions that can reasonably be inferred from the established facts, enable the Court to come to the following conclusions:
a. at the time the Agreement was signed, David Kwinter feared the consequences if he or his sons caused Aaron Gelber to become angry, or "get mad;"
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b. Aaron Gelber deliberately played upon this fear by retaining Kwinter's share of the mortgage money until after the Agreement was signed;
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c. the Agreement was disadvantageous to David Kwinter to such an extent that it must be presumed that his main reason for signing it was a direct consequence of his fear of Aaron, and the latter's reaction if he did not sign it;
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d. the Agreement caused a serious prejudice to the economic interests of David Kwinter and his Estate;
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e. the fear which inspired David Kwinter to sign the Agreement, although subjective, was not unreasonable, considering his state of economic dependence on the sums of money he received as his share of the revenues of Beacon Hill Villa.
The Court concludes that David Kwinter's consent to the Agreement was a direct result of his fear, and was not freely given. As he said to his son, he felt he had no choice.”
THE QUEBEC COURT OF APPEAL UPHOLDS
JUDGE GOMERY'S JUDGMENT
The Quebec Court of Appeal in reaching its unanimous decision in upholding Mr. Justice Gomery's judgment held:
​" The evidence before the trial judge made it clear that Aaron Gelber knew, in effect, that the issues related to his sister's estate had nothing to do with the money owing to David Kwinter relating to the Beaconsfield property, but that he acted in this way as he considered it a legitimate negotiating tactic to take advantage of the leverage he enjoyed over David Kwinter. Indeed, with respect to Aaron Gelber's explanations as to his conduct, trial judge found he was not a truthful witness."
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In assessing the appellants' grounds of appeal, it is first appropriate to mention that it does not belong to this Court to re-try the case as if the judgment at trial had never been rendered. The findings of fact of the trial judge are amply supported by the evidence, including in particular the transcript of a lengthy telephone conversation between Aaron Gelber and Hirsh Kwinter in February of 1984. The trial judge drew inferences from that evidence that were well within his discretion. To the extent that the appellants' position in this Court depends upon the variation of any of these findings of fact, the Court must take the facts as determined by the trial judge in the absence of a palpable and overriding error. No such error has been shown.
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The issues to be resolved by the trial judge were whether David Kwinter had given his consent under duress, whether he had reason to fear that monies would be withheld, and whether there was economic dependency that had the effect of vitiating his consent. The answer to these questions is fact driven, and the appellants have not satisfied the Court that there is a proper basis to interfere with the trial judge's findings."
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"The evidence is clear that Aaron Gelber was mixing apples and oranges in relating problems with the estate of his sister to monies he owed David Kwinter. As Aaron acknowledged having told David Kwinter during his telephone conversation with Hirsh Kwinter in February of 1984, 'I was supposed to give him some money' and, 'So I told your dad that I want to settle my affairs with him as well as the estate affairs jointly and severally'. Later in the conversation, he said this: '.... I'd like to settle with your father because the money is lying in the bank, and it's true, it has nothing to do, one thing has nothing to do with the other, but I'm using this as leverage and it's unfair, well, you'll, as I told your father, you'll have to take me for the good or the bad. Such circumstances remove what Aaron Gelber did from the simple exercise of legitimate economic leverage by one contracting party against another. His attempts to explain what he meant during this conversation did not impress the trial judge, who found him to be evasive, self-contradicting and affected by a defective memory."
HOW DID IT EVER GET TO THIS?
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At the beginning of his testimony at trial, Stephen Kwinter, David Kwinter’s younger son, pointed at the many interested and affected people present in the courtroom and the stacks of legal documents piled high on the respective counsels’ desks and then turned to the Trial Judge and asked a simple question: How was it possible that members of a prominent and supposedly close family could be engaged in a decades long, bitter legal dispute that the Trial Judge was now being called upon to adjudicate? After requesting and receiving the Trial Court’s indulgence, Mr. Kwinter proceeded to provide the Court with an overview of his family’s history, the role that each of the main actors played in the matters now long in dispute and how this unfortunate dispute had all too predictably adversely affected his family’s comity and harmony. It was, in Mr. Kwinter’s view, a modern, but often repeated, tragedy. That overview provided the Trial Judge with the needed background and roadmap to navigate and understand what was, on its face, a complicated and sorry tale of unfair business practices, bullying, personal avarice and overreaching. It is hoped that this website will provide the reader with a similar level of insight and understanding of the facts leading up to the trial, the evidence adduced and relied on, the strategies adopted by opposing counsels and the unexpected twists and turns of events that allowed the Estate of David Kwinter to win a most unexpected legal victory. This website attempts to not only memorialize the apex of a 40 years long intra-family dispute but to address the background, motivations and actions that led to an extraordinary trial before one of Canada's most famous jurists and a confirmatory decision from the Quebec Court of Appeal.
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To paraphrase the words of the great Abraham Lincoln, the world will little note, nor long remember, the issues and matters in dispute in this unfortunate family-based legal saga. But to the sons of David Kwinter, who had been compelled to give away their Mother’s estate for a “pittance” in the face of unfair pressures that were exerted by the very same family members who were now using similar tactics in an effort to acquire the main asset of their Father’s estate at a price significantly lower than that asset's fair market value, this was now a matter of inter-generational principle and presented a challenge that had to be met: at whatever the cost. This website provides the compelling story as to how that challenge was successfully met. Of equal importance, this website provides a cautionary tale as to how unrestrained greed and arrogance can undermine, if not destroy, even the closest of family structures.