PROPER INFERENCES: THE TIMING ISSUE

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While the taped February, 1984 telephone conversation between Hirsh Kwinter (“HK”) and Aaron Gelber and the direct testimony of HK and Stephen Kwinter ( the “Kwinter Brothers”) at trial with respect to their confrontational meeting with Aaron Gelber provided compelling evidence of the duress that Aaron Gelber had openly employed to compel the Kwinter Brothers’ to accept the outstanding offer that had been made to purchase their late Mother’s interest in the Gelber Properties  (their “Mother’s Interest”), no such direct evidence existed that showed Aaron Gelber had used such duress or ‘leverage’ in his dealings with  David Kwinter to compel David Kwinter to accept the contested option agreement (the  "Contested Option Agreement") that was potentially so disadvantageous to David Kwinter.  It was the Kwinter Brothers’ position at trial that the timing of the Kwinter Brothers’ ongoing negotiations with respect to securing a reasonable buyout of their Mother’s Interest and the timing and circumstance of Aaron Gelber’s negotiations with David Kwinter with respect to the Contested Option Agreement and David Kwinter’s ultimate and abrupt acceptance of the terms of the Contested Option Agreement, without any of the changes requested by David Kwinter’s lawyer being incorporated into the final signed document, provided the circumstantial framework on which the Trial Judge was able draw the inferences and conclusions that led to his decision to strike down the Contested Option Agreement. The confluence of events leading up to the June 11, 1984 signing of the Contested Option Agreement that allowed the Trial Judge to conclude that Aaron Gelber had employed coercive behavior resulting in David Kwinter being compelled by fear to sign the Contested Option Agreement are as follows:

 

• In late December 1983, HK speaks to Eleazer Gelber and advises that if his late Mother, Laya Gelber Kwinter’s, estate (the “Laya Kwinter Estate”) is not settled in a reasonable manner, the Kwinter Brothers would be asking for the return of the $72,000 dividends that the Kwinter Brothers had previously signed over to Eleazer Gelber in reliance of Nathan Gelber and Eleazer Gelber's representations that the their Mother’s Interest would be bought out.

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• In late December, 1983, HK has a telephone conversation with Aaron Gelber wherein Aaron Gelber advised HK that monies owed to David Kwinter would not be released until David Kwinter provided Aaron Gelber and Norman Sternthal (the “Plaintiffs”) with a power of attorney with respect to the Plaintiffs’ and David Kwinter’s co-ownership interest in a residential property located in Beaconsfield, Quebec (the “Beacon Hill Villa Project”).  The Beacon Hill Villa Project formed no part of the Laya Kwinter Estate.

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• In late 1983 or early 1984 the Plaintiffs and David Kwinter (hereinafter collectively referred to as the "Co-Owners") negotiate a new mortgage  (the "Re-Financing Mortgage") on the Beacon Hill Villa Project.

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• By agreement dated January 1984, the Co-Owners agreed that any excess funds derived from the Re-Financing Mortgage would be distributed equally between the Co-Owners.

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• The Re-financing Mortgage was registered on title on January 31, 1984 with only the Plaintiffs receiving their share of the proceeds.

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• In late December 1983 or early January 1984 Eleazer Gelber called Aaron Gelber (his brother) all 'excited' that the Kwinter Brothers were threatening litigation over the settlement of their Mother's Interest and the return of the $72,000 dividends.

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• Shortly after Aaron Gelber receives Eleazer Gelber's call, Aaron Gelber speaks to David Kwinter and says that he is making his dealings with David Kwinter (with respect to the Beacon Hill Villa Project) and the resolution of the Laya Kwinter Estate, ‘joint and several’ and that unless the Kwinter Brothers agree to accept the buyout offer that Eleazer Gelber had made with respect to their Mother’s Interest or give up any right to litigate a resolution of their Mother’s Interest David Kwinter would not receive monies due him from the Beacon Hill Villa Project.  David Kwinter advises Aaron Gelber that his sons will accede to Aaron's demands.

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• David Kwinter calls HK and tells him that the Kwinter Brothers’ dealings with the settlement of their Mother’s Interest is causing him problems with his dealings with Aaron Gelber. David Kwinter further tells HK to expect a call from Aaron.

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• During the last two weeks of February 1984 Aaron calls HK by telephone and says that he (Aaron) had spoken to David Kwinter after receiving a call from Eleazer Gelber who was excited about the Kwinter Brothers potentially resorting to litigation over the resolution of their Mother's Interest.  Aaron further says that he is using leverage against David Kwinter through the holding back of monies due David Kwinter related to David Kwinter’s interest in the Beacon Hill Villa Project to compel the Kwinter Brothers to either accept Eleazer Gelber’s’ offer with respect to their Mother’s Interest or their agreement to settle their Mother's Interest without the resort to litigation. Though Aaron Gelber acknowledges what he is doing is unfair and that though David Kwinter is unhappy about it and that David Kwinter will have to take the good and the bad when dealing with him, Aaron Gelber states that he will do whatever is necessary to prevent litigation that would, by necessity, involve Aaron Gelber’s aged father.  When HK states that what Aaron is doing  is illegal and immoral, Aaron dismisses HK's opinion retorting rather arrogantly: 'that's what makes horse racing'.  Aaron Gelber and HK agree to have a further in person meeting at which Stephen Kwinter can attend. Unbeknownst to Aaron Gelber, his telephone conversation with HK was recorded.

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• Several days later HK, Stephen Kwinter and Aaron Gelber hold a meeting at HK's apartment in Montreal. The meeting is long and at the end of the meeting Stephen Kwinter, who is a practicing Toronto based lawyer, confronts Aaron about his holding back monies that were otherwise payable to David Kwinter stating that such actions were  was illegal and if such conduct continued, he, Stephen Kwinter, would advise his Father of his rights including, if necessary, having the Beacon Hill Villa project sold.

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• Stephen Kwinter calls David Kwinter after the meeting and advises him that the meeting with Aaron Gelber did not go well.  David Kwinter  tells Stephen Kwinter that 'we can't afford to get into a fight with Aaron Gelber and pleads with his son to settle his mother's estate as soon as possible.

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• Shortly after his meeting with the Kwinter Brothers, Aaron Gelber contacts David Kwinter and says that they need an agreement between the Co-Owners, as he, Aaron Gelber had agreed to go into business with David Kwinter and not his sons.  David Kwinter warily agrees and the parties then agree that matter of drafting an agreement between the Co-Owners should be turned over to their respective lawyers.

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• On March 16, 1984, Stephen Kwinter sends Aaron Gelber a letter offering 4 options to settle a buyout of their Mother’s Interest. The letter is largely a negotiating tactic: a last gasp effort to secure a buyout of their Mother’s Interest on the best terms possible.  Following their father's wishes, the Kwinter Brothers had agreed in the event that Aaron Gelber and Eleazer Gelber refused to accept any of the options set out in Stephen Kwinter's letter, the Kwinter Brothers would, however unfair, accept Eleazer Gelber’s last buyout offer.

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• Through the months of March and May, 1984, the Plaintiffs and David Kwinter's lawyers exchange various letters with respect to the finalizing of an agreement between the Co-owners. David Kwinter's lawyer, James Bond, rejects the format of the original draft of an agreement that was prepared by Plaintiff’s lawyers. Bond suggests that any agreement between the Co-Owners should have mutual obligations between the parties and not be merely one-sided as the Plaintiffs lawyers had proposed.

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• On May 3, 1984, HK and SK agree to settle the buyout of their Mother's Interest on terms that were only marginally more favorable than the terms offered by Eleazer Gelber in his last offer.  HK testified at both his discovery and at trial that he would not have accepted the buyout offer   his mother's estate but for the pressure that Aaron was exerting on David Kwinter. To assist in the final resolution and buyout the Mother’s Interest, David Kwinter agreed to give up his 75 common shares in the Gelber Properties for no additional consideration.

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• On May 18, 1984, Bond writes his final correspondence to the Plaintiffs’ lawyers confirming David Kwinter's continued and strong desire to retain his interest in the Beacon Hill Villa Project and again requesting an amendment to the proposed form of the Contested Option Agreement that would grant mutual or equal rights to all the Co­ Owners.

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• On June 11, 1984 David Kwinter signs the disputed option agreement in a form that is substantially the same as the form of agreement initially prepared by the Plaintiffs’ lawyers and which signed agreement contained none of the requested changes or amendments made by Bond with respect to the granting of mutual and equal rights to each of the Co-Owners. The Trial Judge and the Quebec Court of Appeal both found the Contested Option Agreement grievously disadvantageous to David Kwinter with the Court of Appeal stating: “The Agreement is completely one-sided and provides no protection or consideration to David Kwinter”.

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• Aaron Gelber testified and acknowledged that it was only after David Kwinter signed the Contested Option Agreement, that the Plaintiffs paid David Kwinter the substantial monies ($100,000) that were being withheld with respect to David Kwinter’s ownership interest in the Beacon Hill Villa Project.

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The timing of the execution of the Contested Option Agreement, occurring almost contemporaneously with the flare up and ultimate settlement of the buyout of the Kwinter Brothers’ Mother’s Interest, coupled with the confirmation of Aaron Gelber’s propensity to use ‘leverage’ to gain whatever result he was seeking and the fact that David Kwinter received no consideration for entering into an agreement allowing the Plaintiffs to purchase his interest in the Beacon Hill Villa Project only 23 days after David Kwinter’s lawyer had written to the Plaintiffs’ lawyers stating that his client “was most desirous of retaining his interest in the project,” allowed the Courts to find that an irresistible inference could justly be concluded that David Kwinter only signed the Contested Option Agreement as a direct result of his fear of the Plaintiffs’ ongoing, coercive actions.

 

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