Court of Appeal for Ontario

Date: 2017-11-08 Docket: C61923

Judges: Sharpe, Rouleau and Fairburn JJ.A.

Between

The Estate of Albert J. Latner (Deceased) by its Estate Trustees Steven David Latner and Michael Elliot Latner

Plaintiffs (Respondents)

and

Joshua I. Latner and JILCO Realty Group Ltd.

Defendants (Appellants)

And Between

The Estate of Albert J. Latner (Deceased) by its Estate Trustees Steven David Latner and Michael Elliot Latner

Plaintiffs (Appellants by way of cross-appeal)

and

Joshua I. Latner and Clariden Leu AG

Defendants (Respondent by way of cross-appeal)

Counsel

David Chernos and Andrew Finkelstein, for the appellants/respondent by way of cross-appeal

Ronald B. Moldaver, Q.C., for the respondents/appellants by way of cross-appeal

Heard: October 30, 2017

On appeal from: the judgment of Justice Thomas J. McEwen of the Superior Court of Justice, dated March 1, 2016, with reasons reported at 2016 ONSC 364, 129 O.R. (3d) 283

Reasons for Decision

[1] On February 22, 2007, the late Albert Latner, his four children, Steven, Elise, Michael and Joshua and various related corporations entered into an agreement by which Albert relinquished control over his companies. In exchange, the children and their respective corporations agreed to make certain payments to Albert (the Latner Family Agreement).

[2] Albert brought claims against Joshua seeking payment of the sums owed to him pursuant to the Latner Family Agreement. The claims also sought repayment of a $13 million payment Albert made to Joshua in April 2007.

[3] Prior to trial, Albert passed away and the claims were continued by his estate.

[4] Joshua maintains that nothing was owed by him pursuant to the Latner Family Agreement because he had reached an oral agreement with Albert. Pursuant to that oral agreement, Albert would not require the payments stipulated in the Latner Family Agreement to be made. Albert also gave Joshua a one million dollar promissory note as part of the oral agreement. As for the claim for the return of the $13 million payment, Joshua maintains that it was a gift that was properly documented. There is simply no basis for requiring it to be returned.

[5] At trial, the judge agreed with Joshua that the $13 million was a gift and he rejected the claim for its return. There was nothing in the Latner Family Agreement that would limit Albert's ability to gift money, even in such a large amount, to any of his children.

[6] However, the trial judge determined that the alleged oral agreement to the effect that Joshua would not be required to make the payments provided for in the Latner Family Agreement was unenforceable. He also found that the one million dollar promissory note could not be set off against the sums found to be owing under the Latner Family Agreement because it was part of the unenforceable oral agreement.

[7] According to the trial judge, the oral agreement was entered into before the Latner Family Agreement was concluded and ran afoul of ss. 1.2 and 9.6 of that agreement. Section 1.2 provides that:

(a) This Agreement shall, without further act or formality on the date of execution and delivery of the Agreement by all parties hereto, (i) constitute the entire agreement among the parties hereto with respect to the subject matter hereof as the Effective Date and (ii) supersede the 2003 Family Agreement and all other prior agreements, understandings, negotiations and representations, whether written or oral, among the parties hereto with respect to the subject matter hereof. For greater certainty, the 2003 Family Agreement shall, without further act or formality on the date of execution and delivery of this Agreement by all of the parties hereto, be of no further force and effect as of and from such date.

(b) For further certainty, in the event of any conflict between the provisions of this Agreement and the provisions of any agreement entered into with any person, firm or corporation who are not members of a Group, the provisions of this Agreement shall, as amongst the parties hereto, prevail.

Section 9.6 states that:

No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by all the parties bound thereby.

[8] As a result, the trial judge found Joshua liable under the Latner Family Agreement and gave judgment in the amount of $2,776,895.00.

[9] Joshua has appealed the finding of liability against him. Albert's Estate has cross-appealed the dismissal of its claim for the return of the $13 million payment.

[10] In our view, both the appeal and the cross-appeal must be dismissed. With respect to Joshua's appeal, he argues that the trial judge erred in finding that the oral agreement was made before the Latner Family Agreement was signed. He argues that a legally binding agreement was not reached until April 2007, some two months after the Latner Family Agreement was entered into. That is when Albert undertook not to enforce the Latner Family Agreement in exchange for Joshua cancelling the promissory note. Based on this court's decision in Shelanu Inc. v. Print Three Franchising Corp., [2003] O.J. No. 1919 (C.A.) the trial judge ought to have found the oral agreement to be enforceable despite the exclusionary clauses in the Latner Family Agreement.

[11] We disagree. We see no basis to interfere with the trial judge's conclusion that the oral agreement between Albert and Joshua was entered into before the parties concluded the Latner Family Agreement. Contrary to Joshua's submission, the record fully supports the trial judge's factual conclusion in this regard.

[12] As Joshua himself testified, the oral agreement was that, in exchange for Joshua agreeing to sign the Latner Family Agreement, Albert would not seek payments from him. He would also give Joshua a one million dollar promissory note in the event that Albert, because of pressure from his other children, may call upon Joshua to make some payments. In our view the further steps taken in April 2007, do not alter the fact that the agreement Joshua seeks to enforce was reached before the Latner Family Agreement was entered into.

[13] By its terms, the Latner Family Agreement terminated any prior written or oral agreement. In fact, it was designed to achieve finality with respect to the financial arrangements among Albert and his children. As the oral agreement preceded the Latner Family Agreement, it was superseded. Enforcing the oral agreement and the promissory note would undermine the purpose and intent of the Latner Family Agreement, and do so unbeknown to the other signatories.

[14] On the cross-appeal, Albert's estate argues that because the $13 million was a gift to one of Albert's children, there is a presumption of a resulting trust in favour of Albert. In its view, the record is insufficient to rebut the presumption. Further, the record does not support the suggestion that the gift was somehow intended to compensate Joshua for having received less than his share of Albert's assets when those were allocated pursuant to the Latner Family Agreement and prior agreements.

[15] We disagree. There was ample support for the trial judge's finding that the $13 million was a gift and that any presumption to the contrary had been rebutted. The gift was fully documented and Albert's intention that it be a gift was confirmed by testimony of witnesses independent of Joshua.

[16] Proof of Albert's reason for making the gift is not required. In any event, wills prepared by Albert show that he believed the distribution of his assets was less than fair to Joshua. This was his belief even though he had not calculated a precise amount.

[17] For these reasons, the appeal and cross-appeal are dismissed. As agreed by the parties, in the event of such an outcome, there should be no award of costs.

"Robert J. Sharpe J.A."

"Paul Rouleau J.A."

"Fairburn J.A."