500-17-015893-038                                                                                                 PAGE: 2

​

[2]  On December 7, 2001 David Kwinter died in Toronto. Prior to his last illness he had lived for about 20 years in Florida. On May 1, 2002 Plaintiffs, invoking an agreement which had been signed by him on June 11, 1984 ("the Agreement"), notified his son Hirsh Kwinter that they were exercising their option to purchase the Estate's interest in the Property in accordance with the provisions of the Agreement for a price of $900,507, said to be calculated in conformity with the formula contained in it.

​

[3]  On June 4, 2003, by a notarial protest served upon Hirsh Kwinter, who by this time had been appointed Administrator of the Estate by a Court in Florida, Plaintiffs tendered the price of $900,507 and formally called upon him to sign a deed transferring the Estate's interest in the Property to them. He refused to do so and the present action in conveyance of title ("en passation de titre") was instituted almost immediately. Since that date Plaintiffs have ceased to pay Defendant on a quarterly basis its one-third share of the net revenues earned by the Property, taking the position that as of June 4, 2003 they were entitled to claim full ownership of the Property, and of the revenues which derive from it.

​

[4]  The action includes a claim for damages of $50,000 estimated to be the legal and notarial fees incurred by Plaintiffs due to Defendant's alleged failure to deliver title to them in accordance with the Agreement.

​

[5]  The proceedings are contested on various grounds. The main contestation is based on the allegation by the Defendant Estate that the Agreement was signed by the late David Kwinter under duress and without consideration. By Cross Demand Defendant asks the Court to declare the Agreement null and void for this reason. Subsidiarily, should the Court come to the conclusion that the Agreement is valid, Defendant asks it to declare Plaintiffs' tender to be insufficient and illegal, to set aside the calculation of the price made by Plaintiffs, and to substitute instead a condemnation for the payment of $1,303,731, alleged to be the correctly calculated price for the Estate's one-third share of the Property. Defendant/Cross Plaintiff also asks that Cross Defendants be condemned to pay it supplementary amounts of $123,134.22 and $48,162.[1] In other words, should the Agreement be found to be valid, Defendant concedes that a transfer of title should take place notwithstanding any deficiencies in Plaintiffs' tender and deposit, but asks in its Cross Demand that the price and any other amounts due to it by Plaintiffs be recalculated and paid.

​

[6]   The question of the circumstances under which David Kwinter signed the Agreement in 1984 is not easy to resolve due to the fact that no witness heard at the trial says that he or she was present when he signed it. His heirs, who are his sons Hirsh and Stephen, did not even know of the existence of the Agreement until one of them was told about it in 1996 in a chance conversation with a cousin.

​

__________________________  

1  The calculation of these amounts will be explained later to the extent necessary

​

________________________________________________________________________________________

 

500-17-015893-038                                                                                                 PAGE: 3

​

[7]  David Kwinter was the brother-in-law of Aaron Gelber by reason of his marriage to the latter's sister Laya Gelber. Aaron Gelber is therefore the uncle of Hirsh and Stephen Kwinter. Because a number of members of the Gelber family figure in the description that follows of the events that led up to the signature of the Agreement, they will sometimes be identified in these Reasons by their first names only, as will be the Kwinter brothers.

​

[8] The Defence pleads that the entire evidence, both as it was presented at the trial and at examinations out of court, permits presumptions to be inferred which lead to the conclusion that David Kwinter's consent to the Agreement signed in 1984 was vitiated by his fear of Plaintiff Aaron Gelber, and of the consequences if he did not sign. The Court must keep in mind that although evidence by way of presumptions is permitted 2, it may take them into consideration only if they are serious, precise and concordant ("graves, précises et concordantes").3 Plaintiffs argue that the evidence does not lead inescapably to the conclusion proposed by Defendant, and that in any event, David Kwinter's subsequent actions tacitly ratified and confirmed the Agreement.

​

[9]  During the trial Plaintiffs objected to testimony by Hirsh and Stephen Kwinter with respect to their late father's declarations about the Agreement and why he signed it, on the ground that such testimony is hearsay evidence. The objections were not immediately decided, and the testimony in question was heard under reserve. The Court now dismisses the objections, having come to the conclusion that the witnesses who testified about these declarations are generally credible, and that their testimony about what the deceased said is sufficiently reliable and necessary to overcome the general prohibition against hearsay evidence . 4

​

Validity of the Agreement

​

[10]    Laya Gelber, the wife of David Kwinter and the mother of Hirsh and Stephen, died in 1977 at a relatively young age, bequeathing her estate to her sons. The estate consisted primarily of shares of stock in what is referred to in the evidence as the "Gelber Entities," a term which includes the shares as well as real estate owned jointly with Laya's brothers and sisters. Laya was one of the seven children of her father Nathan Gelber, who had made a fortune in real estate. He had set up the Gelber Entities as an estate-planning vehicle, probably not anticipating that some of his children would predecease him.

​

[11]  Accordingly, Hirsh and Stephen inherited from their late mother a minority interest in private corporations having a considerable value, but which was unsaleable. Substantial taxes and succession duties were nevertheless due to the fiscal authorities on the assessed value of the estate, which included unrealized capital gains on the -

​

____________________________

2           Article 2811 C.C.Q.

3           Article 2849 C.C.Q.

4           R. v. Khelawon, J.E. 2007-28 (S.C.C.)

​

​

____________________________________________________________________________________________________________

​

500-17-015893-038                                                                                                 PAGE: 4

 

shares and on the property included in it. There were no liquid assets in Laya Gelber's estate with which to pay these assessments. The principal assets of the corporations included in the Gelber Entities consisted of real estate without a ready market. In other words, there was no way for the heirs to liquidate the estate and to pay the taxes and duties without the collaboration of the other members of the Gelber family, who also were shareholders in the Gelber Entities.

​

[12]  Hirsh and Stephen appealed first of all to their grandfather Nathan to resolve their dilemma. He was sympathetic but his attempts to find a solution were ultimately unsuccessful. The Gelber Entities were by then being administered by Eleazer Gelber, the youngest of the seven children, and a plan was conceived by Nathan and Eleazer to strip the corporations in the Gelber Entities of their undistributed surplus, which would generate enough cash to enable the corporations to buy back the shares in the hands of Laya's estate, together with other shares in the Gelber Entities which David Kwinter had bought and paid for ; all other shareholders of Laya's generation had received their shares by way of gift. This plan failed in 1980 due to the illness of one of the parties involved, which made it impossible to obtain her signature, and due also to the refusal of Aaron Gelber to agree.

​

[13]   In 1982, relying on certain representations and undertakings by Eleazer, Hirsh and Stephen endorsed over to a corporation owned by him a dividend cheque for $72,000, representing their share of the undistributed surplus. In doing so they expected that they would then receive an acceptable proposal from him to buy the assets of Laya Gelber's estate. However the offers they received were unacceptable, both as to the amount to be paid and the period of time over which the purchaser would pay the price. As time went on, the offers were made less and less attractive.

​

[14]  All of this had created bad feelings all around. Hirsh and Stephen were understandably frustrated by their inability to benefit from their inheritance, and were impatient with further delays, their mother having died nearly six years previously. Hirsh was also resentful that he had had to pay from his own resources some $30,000 in taxes and succession duties. In 1983 he was dismayed to receive a further tax assessment of $10,000, which he was not in a financial position to satisfy.

​

[15]   In an exchange in late 1983 between Stephen, who at that time was a practicing lawyer in Toronto, and his uncle Eleazer, Stephen intimated that if there was not to be a buy-out of the shares of his late mother's estate, he and his brother would ask for their $72,000 back. Whether or not he threatened to sue for recovery of this amount is unclear, but it is reasonable to infer from what transpired next that Eleazer believed that a lawsuit was threatened. He turned to his older brother Aaron and asked him to intervene, and to try to reason with the Kwinter sons. In the Gelber family there appears to have been a profound and exaggerated fear of litigation and its consequences, which is somewhat ironic in the light of the present legal proceedings.

​

​

​

________________________________________________________________________________________

​​

500-17-015893-038                                                                                                  PAGE: 5

​

[16]  Hirsh was in the habit of recording his telephone conversations, as, of course, by law he was entitled to do.5 He explains that he did this for business purposes, and because he wanted his brother to be aware of what had been said during conversations concerning their ongoing attempts to settle their mother's estate. When Aaron Gelber called him in early February 1984, Aaron did not know that the conversation was being recorded. Hirsh had been forewarned by his father that Aaron would be calling him, saying that he was having trouble with Aaron ; he quotes his father as saying "I cannot afford to get in a battle with these people, if we get Aaron mad he will hold back the money." On the basis of this concern, Hirsh was prepared to tape the telephone call when it was received. The conversation lasted about 45 minutes, and the Court has had the advantage of both listening to it and reading a transcript. No question has been raised with respect to the admissibility of this evidence.

​

[17]  The conversation started on an amicable tone, with Hirsh relating the attempts that had been made to settle his mother's estate, and the offers, that he believed were insufficient and unacceptable, that had been made by Eleazer. Aaron interjected on several occasions that his main objective in involving himself in the dispute was to avoid litigation, which he felt would be upsetting and distressful, especially to his father Nathan. He said that he had already discussed the problem with David Kwinter, and went on as follows:

​

And. I don't know if your father told you. I was supposed to give him some money. I got a call from Eleazer after he spoke to you. Eleazer was all excited that you threatened that you're going to sue, so I told your dad that I want to settle my affairs with him as well as the estate affairs jointly and severally.

​

This statement is a clear indication that Aaron had money on hand that he was supposed to give to David, and that he intended to create a relationship between the problem of settling Laya Gelber's estate, in which David Kwinter had no interest other than a father's interest in matters of concern to his children, and the Beacon Hills Villa property of which, with Norman Sternthal, they were joint owners.

​

[18]  Hirsh correctly saw that there was no logical reason to link the two matters and when he asked Aaron what he meant by "jointly," the latter replied as follows :

​

So he (referring to David Kwinter) says it was unfair for me to couple the two together. I says, 'you want to know something, Dave, you may be right, it may be unfair, but that's what I'd like to do. You have to take me for the good or the bad - and the bad I should say.' Your dad hasn't lost any money with me over the years, he's made a handsome profit, and if that's what I'm asking for, be good enough and go along with my thinking. I'm interested. You don't have to sell, you don't have to do anything. I want one — one thing, no litigation. As long as I am assured of that the rest you guys — you guys can do what the hell you want, it

​

__________________________________

5        Cadieux v. Service de gaz naturel Laval inc. J.E. 91-1502(C.A.).

​

​

​

_____________________________________________________________________________________________________________________

​

500-17-015893-038                                                                                                 PAGE: 6

​

doesn't make any difference to me, but that's one thing that I'm going to ask for. I want to be assured that there's no litigation.

​

Now, there's one of two ways it can be worked out. Either you give me some sort of document - you can prepare it, and I told him that - or make some sort of settlement with Eleazer. Either way is okay with me, but I want to be assured that there's not going to be any problems into the future, because in the end, you know, it's the lawyers that are going to get rich They can steam up cases, and they create cases, and they create — they - you know, they — they add to it constantly just to keep a file growing.

​

[19]  At a later stage in the conversation, Aaron Gelber was even more specific about the "leverage" that he said he had already exercised upon David Kwinter :

​

I want a letter from you and Stephen that - that is a meaningful letter - there'll be no litigation, and then 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 if it's unfair, well, you'll - as I told your father, you'll have to take me for the good or the bad. When there was bad and — or there was good, your dad was ready to accept it, and I went into business with him and he's going to make a couple of bucks with me, he's not going to lose any money, he didn't put 5 cents into it, so if you took me on the good, you got to take me with the bad. That's my feeling. It may be wrong, but - ...

​

[20]  The reference to "money...lying in the bank" is explained as follows. On January 31, 1984, only a short time before the telephone conversation, the three co-owners of the Property had signed a notarial deed hypothecating it in favour of an institutional lender as security for a mortgage loan of $1,250,000, which served to replace an existing loan of $950,000. David Kwinter, residing in Florida, had given a power of attorney to Aaron to sign the deed and to receive the proceeds of the loan on his behalf. The effect of the transaction was to generate a capital amount of $300,000, which the co-owners of the Property would share, by prior agreement, to the extent of $100,000 each. At the time of the telephone conversation the two Plaintiffs had already received their shares of their money, but the $100,000 due to David Kwinter had not yet been sent to him, and was either in the possession or under the control of Aaron Gelber. This must be the "money ... lying in the bank" to which Aaron made reference.

​

[21]   A little later in the conversation Aaron referred again to money which David Kwinter was to receive from him, describing it as "money sifting in accounts, not doing very much. A substantial amount of money," adding "I'd like to get it to him. In fact. I had a cheque, if I wouldn't have gotten a call from Eleazer when I was in Florida he would have had it, because when...Karen (Aaron's daughter) came down to Florida she brought the cheque with her. I asked her to bring it."

​

[22]  The Court interprets the foregoing extracts as clear evidence of an unequivocal intention on the part of Aaron Gelber to retain sums of money due to David Kwinter as -

​

​

​

_________________________________________________________________________________________

​

500-17-015893-038                                                                                                   PAGE: 7

​

an inducement to the latter's sons to forego any possibility of taking legal proceedings against Eleazer Gelber or the Gelber Entities, or of attempting to recover the $72,000 they had been induced to sign over to Eleazer. The threat to hold back the money was acknowledged by Aaron Gelber to be wrongful and unfair.

​

[23]  At the trial, confronted with the taped conversation, Aaron tried to convince the Court that in fact he had not made any threat to David Kwinter to hold back the money, and that when he recounted to Hirsh what had been said to David, he was lying. He attempted to justify the lie by saying that it was a bargaining tactic.

​

[24]  As for the "money...lying in the bank," he testified that in fact there was no such money, and that his reference to it was also a lie. He added that he had lied again when he told Hirsh that a cheque had been prepared and brought to Florida by Karen, affirming that no such cheque had been prepared, and that Karen did not bring a cheque to him in Florida. Karen, who was present in Court throughout the trial, was not called as a witness to corroborate her father's testimony.

​

[25]  These affirmations to the effect that Aaron lied to Hirsh at various times during their telephone conversation are contradicted by other evidence and are simply not credible. Aaron Gelber did not give the Court the impression that he was telling the truth. They are not the only instances of false testimony by him. When questioned out of court prior to the trial he testified that when he talked to Hirsh in February 1984, there was no money on hand, and that the mortgage deed had not yet been signed. This was later admitted to be what Aaron calls a "white lie." A notarial deed dated January 31, 1984 is conclusive proof that about $100,000 due to David Kwinter was received by Aaron on that date. There is uncontradicted evidence that that money was only paid to him in or about June 1984, after the signature of the Agreement.

​

[26]   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, someti-mes 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.

​

[27]  A few days later Aaron had a long meeting at Hirsh's apartment in Montreal with Hirsh and Stephen during which, according to the versions of the meeting given by the latter, which the Court accepts, Aaron repeated his threat to exert pressure on their father, saying "if you sue my father. I'll make it difficult for your father." He specifically threatened to hold back money due to David Kwinter.

​

​

​

_________________________________________________________________________________________

 

500-17-015893-038                                                                                   PAGE: 8

​

[28]  The meeting ended on an angry tone, when Aaron swore at Stephen and left the premises, slamming the door.

​

[29]  In 1984 David Kwinter was dependent upon the money generated from the Property for his basic living expenses. He was concerned and distressed about the prospect of any interruption of the flow of cash he was receiving every three months from Fairway. His personal circumstances were complicated by marital difficulties with his second wife and health problems. He is described by Stephen as a kind and gentle man who did not like confrontations. Although he maintained an amicable relationship with Aaron, it was fundamentally for business reasons. David Kwinter generally acquiesced to the wishes of his partners. Hirsh testifies that after 1984, his father's friendship with Aaron deteriorated.

​

[30]   Shortly after the stormy meeting with their uncle, both Hirsh and Stephen talked to their father, who begged them to accept the settlement of their mother's estate that was being offered by Eleazer, saying that he did not want any problems. Stephen quotes his father as saying : "Don't rock the boat, we're not in a position to fight with Aaron ... you're going to cause me all sorts of trouble."

​

[31]   The only possible conclusion to be drawn from this evidence is that David Kwinter was afraid of Aaron Gelber, and feared the latter's reaction should his sons "rock the boat" by exerting pressure to improve the pending offers to settle their mother's estate.

​

[32]  The Kwinter sons, in consideration of their father's wishes and his reaction to the threatened withholding of money due to him, capitulated and agreed to accept a settlement of the claims of the estate of their late mother, basically in accordance with the terms offered to them by Eleazer Gelber. The necessary papers were signed on May 3, 1984. At the time the settlement was concluded they did not know that an agreement was in the process of being negotiated by which their father would grant to Plaintiffs an option to purchase his undivided interest in the Property.

​

[33]  As a result of the meeting at Hirsh's apartment it may be presumed that Aaron was not happy at the prospect of having to negotiate with his Kwinter nephews over the value of the Property, in the event of David Kwinter's demise. He therefore spoke to David by telephone a short time later and proposed that the three owners should sign an agreement which would provide a formula for determining the value of the Property should one of them die. In his testimony on this subject at the examination on discovery, he states that he told David an agreement was needed "so at least we know where we stand in case something happens to you or me" (the Courts emphasis). At trial he affirms that in fact what was proposed was an option to purchase to be given by David, not a reciprocal buy-sell agreement. This is another contradiction in his testimony. As will be seen from what follows, it is more probable that in fact a buy-sell agreement was initially proposed.

​

​

​

_________________________________________________________________________________________

 

500-17-015893-038                                                                                                  PAGE: 9

​

[34]   It was understood that the proposed agreement would be negotiated and prepared by lawyers representing David Kwinter on one side and the Plaintiffs on the other. Aaron appointed Me. Avram Fishman of Montreal to act on behalf of himself and Sternthal, and David Kwinter engaged the services of a Florida attorney with the intriguing name of James Bond.

​

[35]  Mr. Bond was examined by consent out of court and the transcript reveals that he has very little recollection of the matter, after an interval of more than 20 years. Fortunately, some of the correspondence exchanged between Bond and Fishman has survived and been put into evidence. It provides insight into what preceded the signature of the Agreement that was concluded as of June 11, 1984.

​

[36]  In a letter written by Bond to Fishman dated April 10, 1984, a copy of which was forwarded to Aaron on April 27th, the writer begins as follows :

​

While Mr. Aaron Gelber was in Florida this last week, he met with Mr. David Kwinter, his co-partner in the Beacon Hill Villa Partnership. During the conversation, it was decided that the attorneys for the partners would be tasked to coordinate an effective agreement providing for the contingencies of death of one partner or such substantive matters that mandate an adjustment in the ownership of the partnership.

​

Aaron testifies that he has no recollection of a meeting with David Kwinter in Florida in early April.

​

[37]   Bond continues his letter by referring to a draft agreement that had been received from Fishman, which he had obviously reviewed with his client, and suggests that "it would be in the best interests of all partners if the agreement would be based not only on the contingency of Mr. Kwinter's death, but the death of any partner." He goes on to suggest that other contingencies could trigger a sale by one partner to the others, and comments on the pricing formula which had been proposed by Fishman. The letter is conciliatory in tone, but it makes it clear that what Bond and his client were seeking was a buy-sell agreement, not an option in favour of Aaron and Sternthal.

​

[38]  By a letter dated May 7, 1984, Fishman replies in detail to Bond's letter of April 10th, which he says had been reviewed "in depth" with his client ; Aaron testified initially that he had not had a meeting with Fishman and that he had not participated in the negotiation of the agreement, but he later modified this testimony, saying that he had no recollection of a review "in depth" of the Bond letter. Fishman says in his letter that his draft agreement contemplates only the acquisition of David Kwinter's interest in the property, and argues why that would be appropriate in view of Kwinter's residence in Florida. A copy of the letter was sent to Aaron.

​

[39]  On May 18th, Bond replies to the Fishman letter, which he says he has "discussed in great detail with Mr. Kwinter." He adds that "He and Mr. Gelber discussed -

​

​

​

_________________________________________________________________________________________

 

500-17-015893-038                                                                                                PAGE: 10

​

this matter this morning," although Aaron testifies that he has no clear recollection of any such discussion. Bond goes on to say :

​

At the outset let me state it is Mr. Kwinter's position that in the event of a death of Mr. Gelber or Mr. Sternthal, because of his position outside the province of Quebec, that he will be, in all likelihood, unable to directly consider the purchase of any partner's interest in the partnership. It is also Mr. Kwinter's position that when Beacon Hill Villa was constructed he placed a great amount of effort and expertise into the construction into the project and is most desirous of retaining his interest in the project.

​

He continues by describing a formula for determining the price of a deceased partner's share to be funded by life insurance to be purchased by the partnership, adding other suggested mechanisms to deal with the possibility of a major disagreement regarding the administration of the property. The letter concludes with the following paragraphs :

​

This letter then is an attempt on my part to try to reach a position that is comfortable to all of the partners, that would allow the partnership to effectively purchase a deceased partner's share, provide the mechanism for purchase of a partner's share upon disagreement from which there is no apparent solution forthcoming and a means to equitably and effectively manage their partnership.

​

I would be, therefore, most pleased to receive your comments and thoughts on this proposal at your earliest opportunity. I would look forward with anticipation to continuing our dialogue leading to the preparation of an effective agreement for all.

​

[40]  The copy of the letter filed as a court exhibit bears a stamp indicating that it was received at Fairway's offices on May 25, 1984.

​

[41]  There was apparently no further correspondence with Bond. Without receiving a reply to his lawyer's letter of May 18th, on June 11th David Kwinter signed the Agreement which Plaintiffs now invoke. There is no evidence that Bond was consulted by him after May 18th or that he was present at the signature of the agreement by David Kwinter. None of the signatures on the Agreement are witnessed.

​

[42]  The relevant paragraphs of the Agreement, which describes Gelber, Sternthal and Kwinter as "the Partners," read as follows :

​

2.  Since KWINTER resides outside the Province of Quebec and is unable to participate in the day-to-day management of the PROPERTY, the PARTNERS unanimously concur and agree to enter into a management agreement with Fairway Management Corporation Ltd. *or its nominee. KWINTER acknowledges that GELBER AND STERNTHAL both have a direct and/or indirect financial interest in Fairway Management Corporation, Ltd.

​

​

​

_________________________________________________________________________________________

 

500-17-015893-038                                                                                                PAGE: 11

​

3.  The PARTNERS unanimously undertake and agree that it is their intention and desire to provide for a mechanism to provide for the sale by KWINTER to GELBER and STERNTHAL jointly of his undivided One-Third interest in the PROPERTY in the event of the death of KWINTER or his disagreement with GELBER and/or STERNTHAL regarding the administration and/or disposition of the PROPERTY. In the event of the death of KWINTER or in the event of any disagreement between KWINTER on the one hand and GELBER and STERNTHAL on the other hand regarding the administration of the PROPERTY, the disposition of the PROPERTY, or any major disagreement between them relating to the conduct of the business of the PROPERTY, the following shall prevail.

​

a. Established Price shall mean the product obtained by taking the average of the last three business years, to include the current year, of the net cash flow derived from the PROPERTY, and multiplying such average by eight (8) and dividing such result by three (3).

​

b. Subject to the terms of paragraph 3(e) hereof, the Established Price may be paid in cash, within eight (8) months of the death of KWINTER or disagreement between KWINTER and GELBER and/or STERNTHAL, in full and final payment of the undivided One-Third interest of KWINTER in the PROPERTY.

​

c. In any of the events referred to in paragraph 3 hereof, GELBER and STERNTHAL shall jointly have the option of acquiring the share of KWINTER and/or his heirs and assigns in the PROPERTY for the established price by notifying KWINTER and/or his heirs and assigns in writing of their intention to do so.

​

d. All rights and obligations accruing by virtue of the present paragraph shall be assigned to the heirs, successors, assigns, executors and personal representatives of each PARTNER.

​

e. Nothing herein shall be deemed to impose any obligation upon GELBER and/or STERNTHAL to purchase the interest of KWINTER in the PROPERTY in the event of the death of and/or disagreement with KWINTER. The present paragraph and its sub-paragraphs shall avail solely as an option in favour of GELBER and STERNTHAL, the whole without prejudice to and under reserve of any other rights and recourses which may avail in favour of GELBER and/or STERNTHAL.

​

f.         In the event that either GELBER or STERNTHAL, and/or their respective heirs and assigns, is unwilling to exercise the option provided in the present paragraph, the other of them may exercise his option to acquire the entire undivided interest of KWINTER in the PROPERTY as fully and as effectually as if same was being -

​

​

​

_________________________________________________________________________________________

 

500-17-015893-038                                                                                                 PAGE: 12

 

acquired by GELBER and STERNTHAL jointly in accordance with the present paragraph.

​

[43]  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.

​

{44]  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.

​

[45]  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. 6

​

The law on consent initiated by fear

​

[46]  Articles 1402 and 1403 C.C.Q. define the circumstances under which fears vitiates a person's consent to a contract. They read as follows :

​

1402 - Fear of serious injury to the person or property of one of the parties vitiates consent given by that party where the fear is induced by violence or threats exerted or made by or known to the other party.

Apprehended injury may also relate to another person or his property and is appraised according to the circumstances.

​

_______________________

6  The Civil Code does not employ the word "duress," which is a common law concept, but it may safely be taken for granted that Defendant's Contestation is based upon the civil law respecting fear as a ground for annulling a contract.

​

​

​

_______________________________________________________________________________________________________________________

 

500-17-015893-038                                                                                               PAGE: 13

​

1403 - Fear induced by the abusive exercise of a right or power or by the threat of such exercise vitiates consent.

​

[47]  These articles replace Articles 994, 995 and 996 C.c.B.-C., which stated the law in effect at the time the Agreement was signed, but the revision of the Civil Code in 1994 did not purport to change the law in any relevant aspect.

​

[48]  Professor Jobin 7 identifies the conditions under which fear is admitted as a cause of nullity of contracts : it must be the determining or decisive factor in the consent, it must cause a serious prejudice to the contracting party in question, and the fear must be reasonable, and not the result of imagination or an undue sensibility.

​

[49]  Article 1402 specifically provides that the fear can relate to the property of the contracting party, and need not be fear of physical violence or personal injury. Professor Karim notes, citing jurisprudence that supports his opinion, that moral violence such as undue or improper pressure may produce the kind of fear that vitiates consent, as appears from the following passage 8 (citations omitted) :

La violence, constitutive d'un vice de consentement, peut se traduire tant sous un aspect physique que moral, bien qu'une décision de la Cour supérieure ait précisé que la violence prévue à l'article 994 C.c.B.-C. ne peut concerner que la contrainte psychique et non la contrainte physique, puisque dans ce cas, il n'y aurait aucun consentement et par conséquent, absence totale d'acte juridique. Nous croyons toutefois que la violence physique, même si elle est rare en pratique, est incluse dans la règle de l'article 1402 C.c.Q. et permet la nullité du contrat. Elle peut se présenter sous diverses formes, telles que des menaces de mort ou de blessures, privation de liberté, enlèvement, etc. La violence morale, beaucoup plus fréquente en matière contractuelle, peut se manifester de diverses façons : chantage, menace d'atteinte à l'honneur et à la réputation, menace de divulgation d'une information confidentielle ou d'exercice abusif de recours légaux, (Article 1403 C.c.Q.), toute forme de pression illégitime...

​

(Emphasis added)

​

[50]  Economic dependency, financial need, and the contracting party's fear of their consequences are not in themselves causes of. nullity, but the improper utilisation of threats to a person in a state of economic dependency, or to cause harm to that person's property or revenues is another matter, as Jobin points out as follows: 9: 

L'état de nécessité proprement dit est à rapprocher de l'état de dépendance économique qui peut pousser une personne à contracter. En dehors des espèces où un tel contrat est lésionnaire et sous réserve de ce qui a été dit pour -

​

____________________________

7           Pierre Gabriel Jobin, Les Obligations, 6th ed. Cowansville, Éditions Yvon Blais, 2005 at pps. 310 and ff.

8           Vincent Karim, Les Obligations, Vol. I, Montreal, Wilson & Lafleur, 2002, pp. 205-206.

9          Jobin, op. cit. p. 310, citations omitted.

​

​

​

______________________________________________________________________________________________________________________

 

500-17-015893-038                                                                                                PAGE: 14

 

l'état de nécessité, l'état de dépendance économique seul ne justifie pas l'annulation des contrats.

...

La situation est différente quand une partie menace de pénaliser son cocontractant dans ses relations d'affaires avec ce dernier. Si la partie utilise un moyen illégitime (comme le refus d'exécuter un autre contrat entre les mêmes parties), alors il y a matière à nullité ou révision du contrat conclu dans la crainte. Il s'agit de violence économique, un concept différent de la simple dépendance économique.

​

(Emphasis added)

​

Analysis

​

[51]  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" ;

​

b.         Aaron Gelber deliberately played upon this fear by retaining Kwinter's share of the mortgage money until after the Agreement was signed ;

​

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 ;

​

d.         the Agreement caused a serious prejudice to the economic interests of David Kwinter and his Estate ;

​

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.

​

[52]  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.

​

[53]  Plaintiffs argue, citing Article 1423 C.C.Q.10, that even if David Kwinter's consent to the Agreement was vitiated by fear, he subsequently ratified and confirmed it by - 

​

______________________________

 

10     Article 1423 C.C.C. reads : The confirmation of a contract results from the express or tacit will to renounce the invocation of its nullity. It results only if the will to confirm is certain and evident."

​

​

_________________________________________________________________________________________

​

​

​

​

​

​

​

​

​

​

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​