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THE FEBRUARY 1984 TAPED TELEPHONE CONVERSATION BETWEEN AARON GELBER AND HIRSH KWINTER
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BACKGROUND
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In October of 1977, Laya Kwinter, the wife of David Kwinter and the Mother of Hirsh and Stephen Kwinter passed away. At the time of her death, Laya Kwinter left an estate (the “Estate of Laya Kwinter”) that was largely comprised of shares and partnership interests in her family’s real estate business enterprises (the “Gelber Entities”). Shortly after their Mother’s death, Hirsh and Stephen Kwinter (the “Kwinter Brothers”) commenced a process of negotiations with their grandfather, Nathan Gelber, the titular head of both the Gelber Entities and the Gelber family, to arrange a buy-out of the Estate of Laya Kwinter’s interest in the Gelber Entities. These negotiations continued amicably over the ensuing years with various offers being proposed and accepted by the Kwinter Brothers. Regrettably, and for no reason or fault of the Kwinter Brothers, none of proposed buy - outs were finalized and the Estate of Laya Kwinter remained unresolved. As the years passed, Nathan Gelber’s health began to fail and negotiations on behalf of the Gelber Entities with respect to the resolution of the Estate of Laya Kwinter’s request for a fair and reasonable buy-out of the estate’s interest and position in the Gelber Entities was assumed by Elieazer Gelber, Nathan Gelber’s youngest son and the uncle of the Kwinter Brothers.
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THE KWINTER BROTHERS ARE INDUCED TO SIGN OVER DIVIDENDS IN THE GELBER ENTITIES TO ELIEAZER GELBER
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In 1982, and in complete reliance on Nathan and Elieazer Gelber’s representations and assurances that the long promised buy-out of the Estate of Laya Kwinter’s interest in the Gelber Entities would shortly occur, the Kwinter Brothers agreed to sign over to Elieazer Gelber $72,000 of accumulate dividends (the “Dividends”) that were owed and payable by the Gelber Entities to the Estate of Laya Kwinter. The only consideration for the Kwinter Brothers agreeing to the transferring of the declared and outstanding Dividends was the assurances they received from Nathan and Elieazer Gelber that these monies would be used to effect the long outstanding buy-out of the Estate of Laya Kwinter's interest in the Gelber Entities and their effort to accommodate trusted family members who they believed were at all times acting honorably, fairly and in the best interests of the Kwinter Brothers. Regrettably, those assurances proved false and their trust misplaced. When the promised buy-out never materialized, in late December of 1983, Hirsh Kwinter spoke to Elieazer Gelber and advised him that if the long sought after fair resolution of his Mother’s interest in the Gelber Entities could not be reached in a timely manner, it would be his and his brother’s intention to request the return of the Dividends and that the Kwinter Brothers would just retain their late Mother’s interest in the Gelber Entities.
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ELIEAZER GELBER REACHES OUT TO AARON GELBER
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Elieazer Gelber interpreted Hirsh Kwinter’s advice that the Kwinter Brother’s would be asking for the return of the Dividends as an indication of the Kwinter Brother’s willingness to resort to litigation to secure either a settlement of their Mother’s estate’s rights to the Gelber Entities or a return of the Dividends. Fueled by this concern, Elieazer Gelber approached his brother, Aaron Gelber, to see if Aaron Gelber could provide some assistance in what Elieazer Gelber saw as his increasingly confrontational dealings with the Kwinter Brothers with respect to the resolution of their late Mother’s estate.
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At the time that Elieazer Gelber first sought Aaron Gelber’s assistance in his dealings with the Kwinter Brothers, regarding the resolution of the Estate of Laya Kwinter, Aaron Gelber, Norman Sternthal and the Kwinter Brothers’ father, David Kwinter, were each one third co-owners of a major rental property located in Beaconsfield, Quebec, known as Beacon Hill Villa (the “Beacon Hill Villa Project”). As was found by the Trial Judge, and later confirmed by the Quebec Court of Appeal, Aaron Gelber agreed to intercede in the ongoing dispute with respect the settlement of the Estate of Laya Kwinter and threatened David Kwinter that unless he, David Kwinter, could obtain the agreement of his sons to settling their mother’s estate or agreed to forego any right to use litigation to effect such a settlement, Aaron Gelber was going to withhold a substantial amount of money that was otherwise payable to David Kwinter with respect to David Kwinter's interest in the Beacon Hill Villa Project. Aaron Gelber advised David Kwinter that he had decided to make the settlement of the settlement of the Estate of Laya Kwinter and his dealings with David Kwinter regarding the Beacon Hill Villa Project ‘joint and several’ and that he was doing this in a calculated effort to place ‘leverage’ on David Kwinter in order to extract the results that Aaron Gelber was seeking: a settlement of the Estate of Laya Kwinter that was financially favorable to his brother Elieazer Gelber and clearly unfavorable to the Kwinter Brothers. Though Aaron Gelber openly acknowledged to David Kwinter that what he was doing (withholding monies that were otherwise legally due to David Kwinter) was unfair to David Kwinter, it was Aaron Gelber’s position that David Kwinter had no choice but to take Aaron Gelber and his conduct “for the good and bad.”
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AARON GELBER CALLS HIRSH KWINTER TO SECURE A SETTLEMENT OF THE ESTATE OF LAYA KWINTER
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Immediately following his conversation with Aaron Gelber, David Kwinter called his son, Hirsh Kwinter, to advise his son as to the aggressive and threatening position that Aaron Gelber had assumed and alerted his son to expect a call from Aaron Gelber with respect to the now, increasingly confrontational nature of the efforts to settle his Mother’s estate. In February of 1984, Aaron Gelber did in fact telephone his nephew, Hirsh Kwinter regarding the outstanding status of the Estate of Laya Kwinter. During this telephone call Aaron Gelber, after probing the possibility of settling the Estate of Laya Kwinter repeated the overt threats that he had earlier made directly to David Kwinter: that unless the Kwinter Brothers settled their Mother’s estate on whatever terms that would be offered by Elieazer Gelber or they agreed to give up their right to resort to litigation to compel or secure the resolution of their Mother’s estate, Aaron Gelber would continue to withhold a substantial amount of monies that were then owed and payable to David Kwinter with respect to David Kwinter’s ownership in Beacon Hill Villa Project. Unbeknownst to Aaron Gelber, this telephone conversation was tape recorded in its entirety by Hirsh Kwinter.
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AARON GELBER MEETS THE KWINTER BROTHERS IN AN EFFORT TO RESOLVE THE ESTATE OF LAYA KWINTER
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During their lengthy telephone conversation, Hirsh Kwinter and Aaron Gelber agreed that an in-person meeting should be arranged between Aaron Gelber and the Kwinter Brothers where a final settlement of the Estate of Laya Kwinter could be discussed. Several days later, a lengthy meeting between Aaron Gelber and the Kwinter Brothers was held in Hirsh Kwinter’s Montreal apartment. During this meeting, Stephen Kwinter, a Toronto based lawyer, advised his uncle that he, Aaron Gelber, was both legally and morally wrong in withholding monies from David Kwinter for any reason related to the settlement of the Estate of Laya Kwinter. Stephen Kwinter further informed Aaron Gelber that if he continued to improperly withhold David Kwinter’s monies related to the Beacon Hill Villa Project, he would be advising his Father to seek legal advice as to what remedies David Kwinter could resort to in order to recover monies that were rightfully due him with respect to David Kwinter’s ownership interest in the Beacon Hill Villa Project. When Aaron Gelber recognized that the Kwinter Brothers were not intimidated by Aaron Gelber’s direct threats, he stormed out of Hirsh Kwinter’s apartment.
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AARON GELBER SECURES AN OPTION AGREEMENT THAT GRANTED AARON GELBER THE RIGHT TO PURCHASE DAVID KWINTER'S INTEREST IN THE BEACON HILL VILLA PROJECT ON TERMS HUGELY FAVOVORABLE TO AARON GELBER
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Immediately following his confrontational meeting with the Kwinter brothers, Aaron Gelber called David Kwinter and informed him that he wanted a form of option purchase agreement with respect to Beacon Hill Villa project that would govern the co-owners’ interests and rights upon the death of David Kwinter or a disagreement arising from the management of the Beacon Hill Villa project. Draft option and management agreements prepared by Aaron Gelber’s lawyers were ultimately sent to David Kwinter for his acceptance and signature in early March of 1984. All efforts made by David Kwinter and his lawyer to suggest and secure changes to the draft option purchase agreement that would serve to reduce the completely one-sidedness of the proposed option agreement that favored Aaron Gelber and Norman Sternthal, were rejected by Aaron Gelber. These efforts included a May 18, 1984 letter sent from David Kwinter’s lawyer to Aaron Gelber’s lawyer which underscored and confirmed David Kwinter’s continuing reluctance to enter into any form of agreement wherein he would be compelled to sell his interest in the Beacon Hill Villa project stating that David Kwinter had: ‘placed a great amount of effort and expertise into the construction of [the Beacon Hill Villa Project] and is most desirous of retaining his interest in the project’. Notwithstanding David Kwinter’s expressed reluctance and opposition to the terms set out in the proposed option purchase agreement, on June 11, 1984, a mere 23 days after David Kwinter’s lawyer had sent Aaron Gelber’s lawyer a letter advising of David Kwinter’s opposition to signing the proposed option purchase agreement, David Kwinter signed the proposed option agreement which granted Aaron Gelber and Norman Sternthal a one-way option and right to buy David Kwinter’s interest in the Beacon Hill Villa project at a potentially highly favorable price upon David Kwinter’s death or a disagreement among the co-owners as to the management of the property. In his ruling at trial, Mr. Justice Gomery found:
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It is apparent that in signing this document David Kwinter abandoned all of the advice, proposals and suggestions that had been made on his. behalf by his lawyer, and accepted totally the terms and conditions that had been proposed by Aaron's lawyer. 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. Plaintiffs argue that the Agreement was signed by him with the benefit of advice from counsel, but the correspondence between the lawyers indicates exactly the contrary ; it is most probable that David Kwinter did not obtain or follow his lawyer's advice and signed the draft agreement which had been prepared by Fishman without modification. Like his sons had done on May 3rd, he capitulated.
At trial, Aaron Gelber admitted under cross-examination that the substantial amount of monies that he had been withholding from David Kwinter was only paid to David Kwinter after David Kwinter had signed the contested option agreement.
The February 1984 tape recorded telephone conversation between Hirsh Kwinter and Aaron Gelber proved to be one of most critical pieces of evidence at the trial and was extensively referred to and relied upon by the Trial Judge in reaching his determination that the contested option agreement was unenforceable against the Estate of David Kwinter as the agreement had been secured through the coercive actions and conduct of the Plaintiffs, Aaron Gelber and Norman Sternthal.
The most salient portions of the infamous February, 1984 taped telephone conversation between Hirsh Kwinter and Aaron Gelber can be listened to below:
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