Court File No.0}, [@1909] I73 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) FRANK STRONACH and ELFRIEDE STRONACH Plaintiffs ~and-I BELINDA STRONACH IN HER PERSONAL CAPACITY AND IN HER CAPACITY AS TRUSTEE OF THE BELINDA STRONACH 445 FAMILY TRUST, THE ANDREW STRONACH 445 FAMILY TRUST AND THE 445327 ALON OSSIP IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE OF THE ANDREW STRONACH 445 FAMILY TRUST AND THE 445327 FRANK WALKER IN HIS. CAPACITY AS TRUSTEE OF THE BELINDA STRONACH 445 FAMILY TRUST AND THE ANDREW STRONACH 445 FAMILY NICOLE WALKER IN HER CAPACITY AS TRUSTEE OF THE BELINDA STRONACH 445 FAMILY TRUST AND THE ANDREW STRONACH 445 FAMILY and STRONACH CONSULTING CORP. Defendants STATEMENT OF CLAIM TO THE DEFENDANTS IA LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the Plaintiff The claim made against you is set out In the following pages IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a Statement of Defence In Form 18A prescribed by the Rules of Civil Procedure, serve it on the Plaintiff?s lawyer or, where the Plaintiff does not have a lawyer, serve it on the Plaintiff, and file it, with- proof of service in this court office, WITHIN . TWENTY DAYS after'this Statement of Claim is served on you, if you are served in Ontario. If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your Statement of Defence is forty days. If you are served outside Canada and the United States of America, the period is sixty" days. Instead of serving and filing a Statement of Defence, you may serve and file a Notice of Intent to Defend in Form 188 prescribed by the Rules of Civil Procedure. This will entitle. you to ten more days within which to serve and. file your Statement of Defence. -2- IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED if it has not been set down for trial or terminated by any means within five years after the action was commenced unless otherwise ordered by the court. It Date TO: AND TO: AND TO: AND TO: AND TO: Sew Issued by Maggie Sawka Address of court office: BELINDA STRONACH c/o Blake, Cassels Graydon LLP Attn: Michael Barrack . 199 Bay Street Suite 4000, Commerce Court West Toronto, ON M5L 1A9 ALON OSSIP c/o The Stronach Group 455 Magna Drive Aurora, ON L4G 7A9 ALON OSSIP 305-2800 14th Avenue Markham, ON L3R 0E4 ALON OssuD 116 Highland Crescent Toronto, ON M2L 1H1 NICOLE WALKER c/o Goodmans LLP Attn: Benjamin Zarnett Bay Adelaide Centre West Tower 333 Bay Street, Suite 3400 Toronto, ON M5H 287 Local Registrar Superior Court of ice 393 Unive Avenue, 10th Floor Toro ON MSG 1E6 n?r'zil?az COUET 0F Ems CGUE 9E JETECE ENE: WEE SEE leiEEFi?tTi/ AVEMUE 7TH ELEQE 1:3?ch MEG 1E7 AND TO: AND TO: FRANK WALKER c/o Goodmans LLP Attn: Benjamin Zarnett Bay Adelaide Centre West Tower 333 Bay Street, Suite 3400 Toronto, ON M5H 287 STRONACH CONSULTING CORP. 0/0 The Stronach Group 455 Magna Drive Aurora, ON L4G 7A9 -4- CLAIM The Plaintiffs, Frank Stronach (?Frank?) and Elfriede Stronach (?Elfrie?de?), claim against the Defendants, Belinda Stronach (?Belinda?), Alon Ossip Nicole Walker (?Nicole?), Frank Walker (?Frankie?) and Stronach Consulting Corp, for the following relief: (C) - a declaration confirming that Frank is a Trustee of the Belinda Stronach 445 Family Trust (the ?Belinda 445 Trust?) and the Andrew Stronach 445 Family Trust (the ?Andrew 445 Trust?, and referred to together with the Belinda 445 Trust as the ?Belinda and Andrew 445 Trusts?); to the extent necessary, an Order reappointing Frank as a Trustee of the Belinda and Andrew 445 Trusts pursuant to section 5(1) of the Trustee Act, R.S.O. 1990, C. an Order removing Belinda as a Trustee of each of the Belinda 445 Trust, the Andrew 445 Trust and the 445327 Trust (referred to collectively as the ?445 Trusts?); an Order removing Alon as Trustee of the Andrew 445 Trust and the 445327 Trust; an Order removing Nicole and Frankie as Trustees of the Belinda and Andrew 445 Trusts; (9) -5- to the extent necessary or appropriate, an Order appointing one or more Trustees who are independent of the Stronach family as Trustees of the 445 Trusts; an Order removing Belinda from, or alternatively requiring Belinda to resign from, all Trustee, director, officer, management and/or employment positions held with any or all of the Trusts, corporations or other entities referred to in this Claim and/or listed in Schedule hereto (referred to collectively hereafter as ?The Stronach Group?), including as President and CEO of Stronach Consulting Corp.; an Order amending or varying the terms of the Amended and Restated Unanimous Shareholders Agreement between the 445327 Trust, the Andrew 445 Trust, the Belinda 445 Trust, 445 TR Holdings lnc., ASFTR 445 Holdings Inc., 445 Holdings Inc. and 445327 Ontario Limited dated October 31, 2013, and/or the terms of anyfurther amended and/or restated versions of that Unanimous Shareholders Agreement, to give effect to any relief that may be granted to the Plaintiffs, including without limitation to remove Belinda in her capacity as the sole director of 445327 Ontario Limited and to appoint Frank, or another person designated by the Court, as the sole director of 445327 Ontario Limited; an Order removing Alon from, or alternatively requiring Alon to resign from, all Trustee, director, officer, management and/or employment positions held with any or all of the Trusts, corporations or other entities that comprise The Stronach Group, as defined herein; 00 (H) -5- an Order removing Nicole and Frankie from, or alternatively requiring Nicole and Frankie to resign from, all Trustee, director, officer, management and/or employment positions held with any or all of the Trusts, corporations or other entities that comprise The Stronach Group, as defined herein; an Order under section 248 of the Ontario Business Corporations Act, R.S.O. 1990, 8.16 declaring that the conduct of Belinda and Alon has been oppressive, unfairly prejudicial to and/or has unfairly disregarded the interests of the Plaintiffs; to the extent necessary, an Order pursuant to sections 245 and 248 of the OBCA constituting the Plaintiffs as complainants for the purposes of the oppression provisions of the a declaration that the Defendants have breached their legal, equitable and fiduciary duties in their capacities as Trustees, directors, officers, members of management and/or employees of the Trusts, corporations and other entities that comprise The Stronach Group, as defined herein; to the extent necessary, an interim, interlocutory and permanent injunction prohibiting any and~ all of the Defendants from acting or serving asTrustees, directors, officers, members of management and/or employees of, any and all of the Trusts, corporations or other entities that comprise The Stronach Group, as defined herein, and prohibiting them from interfering in any way with, or exercising any power or authority in their capacities as, Trustees, -7- directors, officers, members of management and/or employees of any of those entities; to the extent necessary, an Order varying or amending the deeds, articles of incorporation, by-laws, resolutions, other constating documents and/or agreements pertaining to the various entities that comprise The Stronach Group, as defined herein, to give effect to the relief sought in this Claim; a deClaration that the Unanimous Shareholders Agreements of October 2013, and/organy other agreements or documents purporting to confer upon or transfer to Alon any interest in The Stronach Group, as defined herein, including but not limited to any further amended and/or restated versions of those Unanimous Shareholders Agreements, are void ab initio or otherwise unenforceable; in the alternative, an Order amending or varying the terms of the Unanimous SharehOlders Agreements of October 2013, and/or any other. agreements or documents purporting to confer upon or transfer to Alon any interest in The Stronach Group, as defined herein, includingbut not limited to any further amended and/or restated versions of those Unanimous Shareholders Agreements, to delete any. and all provisions of those Agreements that purport to confer upon Alon an equity interest in The Stronach Group; (F) (V) (W) in the alternative, an Order nullifying, reducing or valuing Alon?s purported interest in The Stronach Group, and requiring Alon to surrender any such interest on terms to be determined and imposed by the Court; an interim, interlocutory and permanent Order prohibiting Belinda, Nicole and Frankie, or any of them, from dealing in any way, directly or indirectly, with any Claim that Alon might assert to an equity interest in The Stronach Group, as defined herein; to the extent necessary, an interim, interlocutory and permanent Order conferring all necessary authority on the Plaintiffs to determine the value of any claim that Alon might assert to an equity interest in The Stronach Group, as defined herein; a declaration that Belinda and Stronach Consulting Corp. have breached the terms of the written agreement entered into with Frank on May 23, 2017 (the ?May 2017 Agreement?), as described more, fully below; an interim, interlocutory and permanent injunction restraining the Defendants from interfering with or disposing of any assets owned or held by any of the Trusts, corporations or other entities that comprise The Stronach Group, as defined herein, absent the consent of a majority of Frank, Elfriede, Andrew and Belinda, or until further order of this Court; to the extent necessary, an interim, interlocutory and permanent Order requiring the Defendants to pay or reimburse the Plaintiffs for reasonable personal expenses that have historically been paid or reimbursed on their (X) (2) (aa) .9. behalf through The Stronach Group, as well as legal fees and other expenses that have been or may be incurred by them in conjunction with these proceedings and/or any other proceedings that may arise between or involving members of the Stronach family; an Order requiring that a full, detailed and proper accounting be made by the Defendants with respect to the various Trusts, corporations or other entities that comprise The Stronach Group, as defined herein; an Order requiring that a full, detailed and proper accounting be made by the Defendants with respect to all funds received by the Defendants, either directly or indirectly, from the various Trusts, corporations or other entities that comprise The Stronach Group, as defined herein, and/or spent by them, or any of them, in the name of or for the alleged benefit of The Stronach Group, Stronach Consulting Corp. or any of the affiliated entities listed in Schedule a tracing Order with respect to any and all funds received by or spent on behalf of the Defendants, either directly or indirectly, from The Stronach Group, as defined herein; to the extent neCessary, an Order pursuant to sections 161(1) and 248 of the OBCA appointing an'lnspector, and directing an investigation of and reporting on the financial and business affairs of the various Trusts, corporations or other entities that comprise The Stronach Group, as defined herein, in the period since November 2013; (bb) (dd) (89) (if) (99) -10- to the extent necessary or appropriate, an Order requiring the Defendants to disgorge to the Plaintiffs and/or to one or more of the 445 Trusts any and all funds, amounts or benefits acquired, obtained or derived by them, either directly or indirectly, through or as a result of their unlawful activities as desoribed herein; an Order compensating the Plaintiffs and/or one or more of the Trusts, corporations or other entities that comprise The Stronach Group, as defined herein, for all losses, damages or harm suffered as a result of the Defendants? unlawful or oppreSsive conduct in the amount of $250,000,000; damages against Belinda and Alon in the amount of $250,000,000, as well as restitution, including disgorgement, for breach of fiduciary duty, breach of trust and unlawful means conspiracy; punitive, aggravated and/or exemplary damages against Belinda and Alon . in the amount of $20,000,000; to the extent necessary, an Order granting the Plaintiffs standing to assert the various claims pleaded herein; to the extent necessary, an Order granting leave of this Court for the Plaintiff Frank Stronach to be represented by the firm. of Davies Ward Phillips Vineberg LLP and for the Plaintiff Elfriede Stronach to be represented by the firm of Lenczner Slaght Royce Smith Griffin -11- (hh) to the extent necessary, an interim, interlocutory and permanent Order compelling the Defendants to preserve intact and to produceto the Plaintiffs every relevant physical and electronic document (including but not limited to text messages, emails, messages sent or received on any form of social media or electronic messaging platform or application, and other forms of electronic communications) that the Defendants (or any of them) have in their power, possession or control; (ii) an Order expediting this action, fixing a date for trial and setting a timetable for the completion of all steps leading up to the hearing of this action; (ii) to the extent necessary, an Order pursuant to section 249(4) of the OBCA compelling the Defendants to pay the Plaintiffs? interim costs of this action; (kk) the costs of this proceeding on a substantial indemnity basis, plus all applicable taxes; pre?judgment and post-judgment interest in accordance With the Courts of Justice Act, R.S.O. 1990, c. 0.43, as amended; and (mm) such further and other relief, including any other remedy in law or in equity that this Honourable Court may deem just. A. Overview 2. The Plaintiff Frank Stronach is a Canadian business leader who came to Canada from Austria in 1954 at the age of21. He founded Magna International Inc. (?Magna?), one of the largest automotive parts suppliers in the world. -12- 3. The Plaintiff Elfriede Stronach is the wife of Frank. Frank and Elfriede are the parents of Belinda and Andrew. They are the grandparents of Belinda?s children, Nicole and Frankie, as well as Andrew?s daughter, Selena. 4. At the heart of this proceeding lies a series of unlawful actions undertaken by Belinda, together with Alon and others associated with them, to appropriate Stronach family assets for their own personal benefit, to the detriment of Frank and Elfriede, as well as to the detriment of Andrew and Selena. Belinda and Alon appropriated control over the business and assets of The Stronach Group after having concealed their actions and true intentions from Frank, Elfriede, Andrew and Selena during the period from at least 2011 until November 2016 when Belinda and Alon took the position, forthe first time, that Frank was no longer in control of, and had no role in running, the family empire. 5. ln furtherance of their objective of taking for their own benefit wealth created by Frank over a period of more than six decades, Belinda and Alon have undertaken a series of covert and unlawful actions, as described below, that have been contrary to the. best interests of, and to the oven/vhelming detriment of, other members of the Stronach family, including Frank, Elfriede, Andrew and Selena. 6. Belinda has taken advantage of her close relationship with her father and has wielded inappropriately her relationship with him, including by misleading Frank into believing that he could trust her to run the family enterprise on a fair, proper, sensible and business-like basis, when, in fact, she was entirely unwilling or incapable of doing so. In reality, Belinda was motived to work in concert with Alon to gain control over the family assets to the exclusion of all of Frank, Elfriede, Andrew and Selena. Belinda and Alon have asserted control over The Stronach Group in an oppressive manner, and have -13- taken steps to shut the rest of the Stronach familyvout of the family?s business. Belinda and Alon engaged in this conduct wilfully, covertly and oppressively, with the intent to favour their personal interests over the interests of other members of the Stronach family that they were duty bound to protect. 7. The Defendants have operated in persistentbreach of their legal, equitable and fiduciary obligations. Belinda has appropriated funds from The Stronach Group and has acted in a self-interested manner. She has placed. herself repeatedly in situations of potential and actual conflict. Alon was at all times aware of, participated in and facilitated Belinda?s unlawful conduct. Moreover, at the direction of Belinda and Alon, corporate documents were falsified as part of a scheme designed to prevent Frank and Elfriede from discovering that Belinda and Alon had purported to limit or eliminate Frank?s role in running the Stronach family business. 8. As a result of the actions of the Defendants as described herein, there has been a complete break-down in the relationship between Belinda on the one hand, and her father, mother, brother and niece, on the other, including as a result .of repeated breaches by Belinda and Alon (working together with others) of their legal, equitable and fiduciary duties as Trustees, officers, directors and senior members of management of the various Trusts, companies and other'entities that comprise The Stronach Group. (D Frank Stronach . 9. Frank Stronach is one of Canada?s most successful entrepreneurs, and is the founder and former CEO and Chairman of Magna. Under Frank?s leadership, Magna became a world leader in the automotive industry. Today, the company includes a global network of more than 330 manufacturing operations and is the world?s third largest -14- automotive part supplier, with more than 173,000 employees in 28 countries, including 22,000 employees in Canada alone; 10. Frank?s drive for innovation and excellence is renowned in the automotive industry and beyond. He has received countless awards and accolades for his work in the Canadian and international business communities. Though Frank has since turned his attention to other ventures (as described below), his impact on the automotive industry continues to be recognized. in July 2018, he was inducted into the Automotive Hall of Fame at a ceremony in Detroit, Michigan where he was commended for implementing a unique corpOrate culture and compensation system at Mag?na that has been one of the keys to that company?s enormous success over the years, as well as for driving competition and excellence in the global automotive industry. 11. Frank is also well known for his philanthropic efforts, and has served on the Boards of a number of not-for-profit and other organizations, including the Boards of Governors of both the North York General Hospital and York University, as well as?the Corporate Governance Board of Nasdaq. He has been widely recognized for his commitment to the humane treatment of animals, which lies at the heart of his efforts to create and build the Adena Farms agricultural business, discussed below. (ii) 'Elfriede Stronach 12. . As described below, Elfriede was at, all relevant times a Trustee and beneficiary of certain of the Trusts at issue in these proceedings, including in particular a Trustee and beneficiary of the 445327 Trust. Elfriede also acts as Trustee, Director and Officer of various other trusts and corporate entities listed in Schedule -15- Belinda Stronach 13. Belinda is the acting President and CEO of Stronach Consulting Corp. (which is a core component of The Stronach Group). As described below, Belinda has engaged in a series of self-dealing transactions and has utilized and diverted substantial funds and resources of The Stronach Group to favour her own personal and business interests at the expense of other members of her family, including Frank and Elfriede. 14. As described below, Belinda is a Trustee of the?Belinda 445 Trust, the Andrew 445 Trust and the 445327 Trust, and is also a beneficiary of the Belinda 445 Trust. She acts as a Trustee, Director and Officer of various other Trusts, corpdrations and other entities that form part of The Stronach Group. (iv) Alon Ossip 15. Alon is a former employee of Magna and the former CEO of Stronach Consulting Corp. As explained below, Alon was purportedly suspended by Belinda from his role as CEO of Stronach Consulting Corp. in January 2017 at the insistence of Frank as a result of Alon?s inattention and insubordination. Notwithstanding his purported suspension, Alon has continued to play an ongoing role in the direction and management of The Stronach Group, and his activities and interactions with Belinda have been concealed frOm Frank and Elfriede'Alon maintains positions as Trustee, Director'and Officer of various trusts and corporate entities that form part of The Stronach Group as listed in Schedule 16. During his tenure with Magna and in his role as CEO of The Stronach Group, Alon cultivated a relationship of trust, confidence and reliance with Frank. Alon held himself out to be a fair minded, decent, trustworthy and honourable colleague and -15- businessman, and led Frank to believe that he could trust Alon to safeguard assiduously therights and interests of all members of the Stronach family, including Frank, Elfriede, Andrew and Selena. As a result, Frank came to rely heavily on Alon, and regarded him not only as an employee, but also as a trusted business partner and advisor. In 2013, Alon misused his relationship with Frank to secure for himself under false pretences a significant interest in what had always been intended to be the business legacy of the Stronach family. Frankie and Nicole Walker 17. Frankie is the 27 year old son of Belinda. 18. Nicole is the 25 year old daughter of Belinda. 19. Beginning in November 2013, Frankie and Nicole were appointed as temporary Trustees of the Belinda and Andrew 445 Trusts. As described below, Frankie and Nicole ceased being Trustees of the Belinda and Andrew 445 Trusts in January 2017, at the very latest, upon Frank?s reappointment as a Trustee of those Trusts. (vi) Stronach Consulting Corp. 20. The Defendant Stronach Consulting Corp. is a private company incorporated under the laws of the Province of Ontario. As described below, Stronach Consulting Corp. was incorporated in March 2004 for the. initial purpose of receiving'a portion of sizeable consulting fees paid or payable to Frank by M'agna. Stronach COnsulting Corp. is the principal business entity that owns and operates a number of important assets of The Stronach Group, either directly or indirectly. -17_ B. Magna and the Stronach Trust Frank Establishes Magna and Magna Entertainment Corporation 21. In 1954, at the age of 21, Frank left Austria for Canada as a struggling tool and die maker. The tool?and die shop that Frank founded in Toronto in 1957 grew exponentially, and in 1969 merged with Magna Electronic Company Ltd., a publicly traded aerospace, defence and industrial components manufacturer. In 1973, the combined Company became known as Magna international Inc, with Frank at the helm as the company?s Chairman and CEO. Over the following decades, Frank worked with othersto develop Magna into a global leader in the automotive business, and cultivated a reputation for innovation, employee rights, and first?to?market technologies and manufacturing processes. 22. Frank?s status as a corporate visionary was on full display during his time at Magna. In 1990, when Magna suffered financial difficulties after funding growth thr0ugh debt financing, Frank responded by steering the Company away from debt. Magna developed a strong balance sheet and accumulated significant cash. reserves. Following this experience, he implemented a ?no debt? policy at Magna that remained in effect until he relinquished control of the organization decades later. Frank?s commitment to sound and conservative financial management allowed Magna to emerge from the global financial crisis that engulfed much of the developed world between 2007 and 2009 as one ?of the world?s leading automotive parts suppliers. 23. Frank is also noted for his creation of the ?Magna Culture?, which is credited as being a key element in Magna?s success. The Magna Culture was derived from .- Frank?s personal conviction that profits and wealth 'should be shared not Just among ~18- executives, but with employees as well. Frank is credited for implementing employee profit sharing at Magna at a time when few other Canadian companies had done so. 24. In addition to Magna?s prominence in the automotive industry, the Company and its affiliates also established an unrivalled reputation and position in the North American horse racing industry under Frank?s leadership. Frank purchased his first Thoroughbred in 1962, and in the ensuing period exhibited his passion for horse racing and breeding through the acquisition of racetracks and prize Winning racehorses, as well as through the establishment of Adena Springs, a Thoroughbred breeding operation located near Versailles, Kentucky. 25. in 1999, Frank formed Magna Entertainment Corporation an Ontario public company created as part of a reorganization of the non-automotive businesses of Magna. As' part of that reorganization, Magna transferred its racing and gaming assets to MEC, which later went on to become the largest owner and operator of Thoroughbred racetracks in. North America. As described below, these-racing and gaming assets now form one of the core businesses operated by The Stronach Group. 26. Although Frank resigned as the CEO of Magna in 1988, he continued to serve as the Company?s Chair. He maintained and exercised effective control over the Company by virtue of its dual class share structure (described below). While several others stepped in'to?the challenging role of Magna?s CEO in the period after Frank stepped down (including Manfred Gingl and Donald Walker), it was Frank?s hope and expectation that the role of CEO would once again be occupied by a member of the Stronach family, at the appropriate time. -19- 27. . In 2001, Belinda wasrappointed at Frank?s insistence as the CEO and Vice?Chair of Magna. In 2002, she became the Company?s President. As President and CEO of Magna, Belinda shared Frank?s expectation and understanding that she would continue to pursue the family first philosophy that lay at the heart of Frank?s decision-making over the years. That philosophy is discussed below. 28. Belinda resigned as the President and CEO of Magna in January 2004, just hours before. launching. (what later turned out to be) an unsuccessful bid for the leadership of the federal Conservative Party. Upon Belinda?s resignation from Magna, Frank took over as interim President and CEO until 2005, when he appointed Donald Walker and Siegfried Wolf to act as co?CEO?s. Mr. Walker continues to be the CEO of Magna. (ii) 445327 Ontario Limited and The Stronach Trust The Establishment of 445327 Ontario Limited and The Stronach Trust . 29. It was always Frank?s intention that the legacy and wealth he created through decades of hard work would be for the benefit of all members of the Stronach family for generations to come. Frank also intended that members of his family would be treated equitably and fairly. This family first philosophy was central to Frank?s business dealings and estate planning throughout much of his tenure at Magna. It continues to motivate his decision-making to the present day. 30. In 1980, Frank incorporated 445327 Ontario lnc. (?445327 which in turn owned all of the issued and outstanding Class multiple voting shares of Magna. Frank used those multiple voting shares to exert control over Magna and its affiliates, -20_ including MEC and Ml Developments Inc. Prior to February 1991, all of the common shares of 445327 Co. were owned by Frank personally, giving him indirect legal and effective control over Magna and its affiliates. 31. In February 1991, Frank settled the Stronach Trust, and transferred his common shares of 445327 Co. to that Trust. The Stronach Trust was a discretionary trust that named each of Frank, Elfriede and their issue as beneficiaries. In the period after 1991, the Stronach Trust controlled Magna through its indirect ownership of all of Magna?s Class multiple voting shares. Frank, in turn, controlled the Stronach Trust in the manner described below. 32. Frank?s establishment of the Stronach Trust reflected his intention and desire to ensure that the ownership of the empire he had created would be shared fairly and responsibly by members of his family, forthe benefit of all of them. All members of the family, including Belinda, understood and agreed that Frank would maintain control of the family business as the creator of the family?s wealth. 33. To that end, although all members of the Stronach family were named both as Trustees and bene?ciaries of the Stronach Trust, Frank was afforded unique ?Super Trustee? status and powers under the Trust Deed governing the Stronach Trust, including the ability to appoint and remove other Trustees at will, 34. in his capacity as Super Trustee of the Stronach. Trust, Frank enjoyed a broad and all?encompassing veto right in respect of matters relating to the administration of the Stronach Trust, including concerning the distribution to beneficiaries of assets that were owned or controlled by the Trust. These Super Trustee powers reflected the family?s _21_ shared understanding, intention and reasonably held expectation that Frank would have effective control over all matters relating to the business and affairs of the various businesses that the Stronach family was or became involved in, including over the use, deployment and distribution of the family?s assets. The 445327 Co. Unanimous Shareholders Agreement 35. Consistent with the shared expectations of members of the Stronach family, including Belinda, Frank tooksteps in 2005 to ensure that control of Magna and its affiliates would remain within the Stronach family in the event of his death or incapacity. 36. At Frank?s direction and insistence, on September 12, 2005, a Unanimous Shareholders Agreement was entered into between 445327 00., the Stronach Trust and Belinda (with the 445327 Trust later added as a party to that Agreement on December 23, 2005) (the ?2005 Under the terms of the 2005 USA, Belinda received 100 nominal value Class A Special shares of 445327 Co. 37. . ,Pursuant to section 4(b) of the 2005 USA, Belinda was appointed to act as the sole director of 445327 Co. ?at such times as she is qualified to serve as a director?. Frank was appointed as a company representative, and in the event that Belinda ceased to be a director of 445327 Co. for any reason, Frank or a nominee of his choice would replace her as the company?s sole director. 38. The 2005 USA also provided for the appointment of Andrew as. a representative of 445327 Co. in certain circumstances. Following any such appointment, Andrew would be empowered to act on the corporation?s behalf at all meetings of the shareholders of As discussed above, MID was an affiliate of Magna. -22- C. Frank?s Departure from Magna and the Establishment of The Stronach Group - Ml Developments and Magna Entertainment Corporation 39. in 2010, Frank decided to relinquish the controlling stake that he and his family held in Magna (and its affiliates and MEC). was an Ontario public company created as a result of a spin?out from Magna that was engaged principally in the acquisition, development, construction, leasing, management and ownership of industrial and commercial real estate properties in North America and Europe. Members of the Magna group of companies constituted MlD?s primary tenants, and accounted for approximately 98% of the annual real estate revenues generated by MlD?s income-producing properties. 40. As part of the spin?out of from Magna, Magna transferred to all of its shares in MEC, described above. At the time of the spin?out of MID, MEC was one of the world?s leading suppliers of horse racing and gaming operations. it owned or leased I racetracks in California, Florida, Maryland, Texas, Oklahoma, Ohio, Oregon and Austria. MEC also owned more than 3,000. acres of valuable real estate in urban} markets in the United States, including its racetrack properties and large blocks of underused lands surrounding them.1 (ii) The Magna and Transactions 41. Discussions took place between Frank, members of management of Magna, Board members and investors in early 2010 regarding a series of transactions 1 that were intended to collapse Magna?s dual class share structure and eliminate Magna?s 1 In March 2009, in the midst of the global ?nancial crisis, MEC and certain of its subsidiaries ?led voluntary petitions for relief under Chapter 11 of the United States Code in the U. S. and under the Companies? Creditors and Arrangements Act in Canada. -23_ multiple voting shares as part of an overall reorganization of the Company. The proposed transaction was announced by Magna on May 6, 2010, and received approval from Securities Regulators on June 24, 2010. 42. in exchange for giving up voting control of Magna and MID, Frank and other members of the Stronach family received indirectly significant proceeds in the form of cash, shares of Magna (that were subsequently sold), and real estate and other assets used in MEC's racing and gaming business. 43. This transaction took place in two stages. in August 2010, wholly owned subsidiaries of 445327 Co. received consideration valued at approximately million, comprised of million in cash and nine million subordinate voting common shares of Magna (the ?Magna in addition, as part of the Magna Transaction, the Stronach Trust agreed to invest indirectly million in cash in exchange for a 26.67% interest in a partnership with Magna for the development of Magna?s electric vehicle business. 44. in June 2011, the Stronach Trust received the transfer of horse racing and gaming assets, certain real estate development and other assets (and associated liabilities), as well as million in working capital (the Transaction?). 45. The value of the aSsets transferred to the Stronach Trust in the MID Transaction was approximately million. In total, the Stronach family 2 All of these shares of Magna were disposed of by the Stronach Trust in the year or so following the Au?gUst 2010 Magna Transaction. -24- received indirectly cash and other assets valued at approximately to 1.5 billion as a result of the Magna and Transactions. The 445327 Trust 46. As noted above, assets generated by the disposition of the Stronach family's controlling interest in Magna and MID were held directly and indirectly by 445327 00., control of which was held by the Stronach Trust until early 2012. 47. In February 2012 (immediately prior to the 21St anniversary of the Stronach Trust), 445327 Co. redeemed approximately million worth of preferred shares of 445327 Co. held by the Stronach Trust. Following this share redemption, control of 445327 Co. changed from the Stronach Trust to the 445327 Trust, which held all of the common shares of 445327 Co. (apart from the 100 non-participating nominal value Class A Special shares held by Belinda pursuant to the Unanimous Shareholder Agreement referred to above). - 48. The 445327 Trust is a discretionary trust, and was settled in 2005 for the benefit of Elfriede and the issue of Frank (including Belinda, Andrew, Nicole, Frankie and Selena). Elfriede acted asoriginal and sole Trustee of the 445327 Trust until January 2015, when Belinda and Alon were added as Trustees. (iv) Frank Receives Consulting Fees from Magna 49. Both before and after the Magna and Transactions, Frank provided valuable consulting services to Magna and its subsidiaries. Those services were provided personally and through certain business entities, pursuant to four consulting, business development and business services agreements (the ?Consulting Agreements?). -25- During the period from 2007 to 2009, Frank received either directly or indirectly nearly million in fees under these Consulting Agreements. 50. As part of the Magna Transaction, Magna agreed to amend and extend the Consulting Agreements for an additional term of four years (to expire on December 31, 2014). In total, in the period from 2010 to 2014, Frank or entities affiliated with him received approximately million in consulting fees under the Consulting Agreements for services provided to Magna by Frank, either directly or through companies controlled by him. These consulting fees were paid to two separate entities for estate planning purposes: Stronach'Consulting Corp. (an Ontario corporation that is named as a Defendant in these proceedings); and Stronach Co. (a Swiss limited partnership of which Frank is the General Partner). 51. The cumulative total of the amounts that have been paid to, received by or spent on behalf of Frank in the period since the Magna and MD Transactions were completed in 2010 and 2011 is less than half of the consulting fees that were paid or payable to Frank (either directly or indirectly) as a result of his departure from Magna. The remainder of those fees remain due and owing to Frank. D. The Stronach Group 52. As stated above, the collection of Trusts, corporations and other entities that came to own, manage and operate the Stronach family businesses inthe period following Frank?s departure from Magna until the present day (including the racing and gaming business acquired in the MID Transaction) is referred to in the Claim, and known colloquially, as The Stronach Group. ?26? 53. i The Stronach Group is comprised of a complex network of Stronach family owned corporations, Trusts and other entities established in various jurisdictions around the world. The intricate network of Trusts, operational companies and holding entities that comprises The Stronach Group was conceived of and implemented by financial, accounting, tax and legal advisors to the Stronach family over a period of several decades, and was put in place and operated for legitimate estate and business planning purposes for the ultimate benefit of the Stronach family as a?whole. 54. The Stronach Group has a number of related business divisions, including Thoroughbred horse racing and associated wagering, horse breeding, property development and agriculture. Horse racing and wagering form the core of the business of The Stronach Group, generating nearly all of the Group?s revenues and profits. The Stronach Group is one of the world?s leading horse racetrack operators and is also a leading supplier of ?pari-mutuel?3 wagering technology, The Stronach Group owns and operates racetracks across the United States, including Santa Anita Park in California, Pimlico Race Course (home of the legendary Preakness Stakes in Baltimore, Maryland), Laurel Park (located between Baltimore and Washington, DC) and Park in Hallandale Beach, Florida. The organization is also one of the world?s leading Thoroughbred breeders, and has produced numerous Triple Crown and Breeders? Cup champion horses. 55. A At the time The Stronach Group was established in or around the time of Frank?s departure from Magna, he was given the title of Founder and Honorary Chairman. 3 Pari?mutuel wagering is a form of pool betting that does not use ?xed odds and is the most common form of horse racing betting. -27- Frank appointed the Officers and Directors of The Stronach Group. The organization?s senior management and Directors consisted of Alon (CEO), Belinda (President and Chairman) and John Simonetti (CFO). Mr. Simonetti has since been replaced by Doug Tatters, who occupies the roles of director and Interim CFO. 56. Both at the time The Stronach Group was formed, and again during the events of 2013 described below, Belinda and Alon committed to devote their full time and attention to the business and affairs of The Stronach Group. They also committed to operate the various businesses of The Stronach Group in a prudent and commercially sensible manner that safeguarded and advanced properly the rights and intereSts of all members of the family in a fair and even?handed manner. Frank and Elfriede reasonably expected that Belinda and Alon would operate the family businesses in accordance with these commitments, and in a fair, prudent and commercially reasonable manner in the best interests of the Stronach family as a whole. They reasonably expected that Belinda and Alon would refrain strictly from: placing themselves in positions of potential or actual conflict; (ii) favouring their persdnal interests over the rights or interests of other members of the Stronach family; and engaging in self?dealing transactions that enriched them or members of their immediate families at the expense of Frank, Elfriede, Andrew and .Selena. 57. The shareholders of Stronach Consultinngorp. are Frank (who holds preferred voting shares), Elfriede (in her capacity as sole Trustee of the Stronach Family ~28? Trust 2005),4 the 445327 Trust (of which Elfriede. is a Trustee and beneficiary), 2382399 Ontario Inc.5 and Magna Vita Inc.6 58. As detailed below, the actions of Belinda and Alon, including in their capacities as Directors, Officers and members of senior management of Stronach Consulting Corp. and as Trustees of the Belinda 445 Trust, the Andrew 445 Trust and the 445327 Trust have been and are oppressive, unfairly prejudicial to and have unfairly disregarded the rights and interests of the Plaintiffs, including in their capacity as direct or indirect shareholders of Stronach Consulting Corp. E. Alon?s Employment Arrangement 59. In April 2013, Alon entered into an employment agreement with Stronach Consulting Corp. (the ?April Employment Agreement?) that continued his employment as CEO of The Stronach Group. 60. In exchange for Alon?s undertaking and commitment to devote his full time, . care and attention to the business and affairs of The Stronach Group, to conduct himself fairly and professionally, and to safeguard in an even-handed manner the rights and interests of all members of the Stronach family, the April Employment Agreement provided that Alon would be paid a salary of$1 million annually, together With substantial employee benefits and a sizeable discretionary bonus. 4 The Stronach Family 2005 Trust is a discretionary trust established in 2005. Its sole trustee is Elfriede Stronach and its bene?ciaries are Elfriede Stronach and the issue of Frank Stronach. 5 2382399 Ontario lnc. is an Ontario corporation incorporated in July 2013 that forms part of The Stronach Group. it is controlled by Belinda and Alon. To the Plaintiffs? knowledge, 2382399 Ontario lnc. also holds voting shares of Stronach Consulting Corp. 6 Magna Vita Inc. is an Ontario corporation incorporated in May 201 0 that forms part of The Stronach Group. As with 2382399 Ontario lnc. it is controlled by Belinda and Alon. -29.. 61. in addition to the generous arrangements provided for in the April Employment Agreement, Alon was granted an approximate 5% interest in certain assets of The Stronach Group, including components of the highly valuable racing and gaming business. it was an express or implied term and condition of Alon?s entitlement to that interest that he would conduct himself at all times in the manner described immediately above. Alon?s entitlement to this interest was referred to in a term sheet dated July 30, 2013 (the ?July 2013 Term Sheet?). 62. No consideration was provided by Alon to Frank or The Stronach Group in exchange for this 5% interest. As described below, from virtually the moment this arrangement was entered into, Alon failed to fulfil his most basic obligations as CEO of The Stronach Group. Instead, he breached repeatedly his legal, equitable and fiduciary du?es. 63. Alon had no intention of honouring his obligations under the April Employment Agreement in the period before the Agreement Was entered into, but concealed his true intentions from Frank and Elfriede. Alonknew at the time, and the fact is, that if he had made full and fair disclosure to Frank and Elfriede concerning the conduct he planned to engage in in the period after the Agreement was executed, Frank would have terminated his employment immediately. Frank and Elfriede onld never have agreed to provide Alon with the interest referred to above. 64. In connection with the October 2013 reorganization (described below) and as contemplated by the July Term Sheet, two Unanimous Shareholders Agreements were entered into on October 31, 2013 which provided for the issuance of shares of two .30_ companies in The Stronach Group to Alon and to a company wholly-owned and controlled by Alon. 65. Taken together, these two Unanimous Shareholders Agreements purported to confer upon Alon an approximate 5% interest in certain assets of The Stronach Group. The Agreements provided that this interest'would on the occurrence of certain specified events, including upon the termination of Alon?s employment with The Stronach Group. Pursuant to section 83(3) of each of these Agreements, in the event Frank and Alon are unable to agree on the ?fair value? of Alon?s 5% interest, Frank is entitled to determine the ?fair value? of any such interest in his sole and absolute discretion. F. The Establishment of Adena Farms and the Adena Golf and Country Club Adena Farms 66. Beginning in approximately 2008, Frank took steps to establish a world?class agricultural business that was intended to be a model for the food industry. Frank?s vision was to establish an agricultural business that would raise animals in the most natUral environment reasonably possible without the use of hormones or other? chemicals, and to process them humanely using the greatest of care and the highest standards of quality, in order to provide customers with all-natural foods. 67. i . In the period following Frank?s departure from Magna and MID, The Stronach Group acquired approximately 90, 000 acres of land in Ocala, Florida beginning in approximately 2010. Substantial amounts were also spent to acquire livestock, to clear and convert lands into pasture, and to build an innovative meat processing plant with the capacity to slaughter 600 cattle per week. Between 2010 through to the end of 2016, -31- approximately million was spent by The Stronach Group to develop and establish the agricultural business, which came to be known as Adena Farms. 68. Today, Adena Farms remains committed to producing . and selling all-natural food that is free from chemicals, antibiotics, growth hormones and genetically modified organisms. All of Adena Farm?s animals are grass-fed in open pastures, meeting the American Grassfed Association?s objective certification standards fOr grass?fed meat. 69. Further, Adena Farms has developed a ?Charter bf Animal Rights? which creates minimum standards for animal welfare. Adena Farms has receiVed a ?Step 4 Animal Welfare Rating?, which is one of the highest ratings attainable by an agricultural operation of this nature. Adena Farms is also committed to environmental sustainability and biodiversity, and maintains approximately one quarter of its property as wetlands and forest in order to preserve native species. 70.. Grass?fed beef is presently a billion per year market, with industry projecting that the market willdouble to billion. in the next two to three years alone. 71. The reasons for the spectacular existing and growth potential in the grasS?fed beef industry are clear. Consumers around the world, including in North America,are becoming better informed and more knowledgeable about nutrition, and are trending towards healthier and more environmentally sustainable food options. Grass-fed I beef is widely considered to be healthier and more environmentally sustainable than grain?fed alternatives. Asia result, substantial and continued growth in the supply of and demand for grass-fed, organic and antibiotic-free meat is expected to COntinue. 72. Although there are challenges to commercial success in the grass?fed beef market, Frank?s plan for Adena Farms was and is well considered, prudent-and designed to address issues that have plagued this industry for years. Frank?s vision was to fully integrate the operations of Adena Farms to reduce supply chain issues that have been experienced by competitors to Adena Farms and to build the business in a manner that will permit it to be scaled up as appropriate. With available capacity in Adena Farm?s supply chain, the company is well?positioned to meet increasing consumer demand as well as to provide solutions to supply issues faced by other producers in the market. 73. Other companies have now begun to recognize and take advantage of the trend towards increasing consumer preferences for grass-fed and humanely treated beef. Prominent participants in the food industry that have recently shifted to free?range, grass-fed or all natural meat products include Maple Leaf Foods, Whole Foods and fast food chain Carl?s Jr. Adena Farms is well?positioned to meet at least a portion of this increasing demand. (ii) The Adena Golf and country Club 74. As part of his vision to develop the area around Adena Farms into a vibrant and thriving community, Frank also conceived of and assisted in building a golf course and country club in Marion County, Florida. Frank?s vision was to create a ?destination centre?. that focused on the physical wellness of its guests by offering not only pristine golfing facilities, but also a diagnostics?and wellness centre as well as restaurants and retail stores that 'would serve and sell all?natural foods. Opened in 2015, the 420-acre Adena Golf and Country Club (?Adena Golf?) was masterfully designed and is considered . one of the finest private golf courses in Florida. Frank?s vision included plans to build 120 -33_ homes in the area around Adena Golf, with a view to drawing not only visitors but permanent residents to the area. 75. Regrettably, Belinda and Alon became unfairly and improvidently dismissive of Frank?s vision for Adena Farms and Adena Golf. Rather than continue to support Frank in his efforts to make these businesses a success, Belinda and Alon have taken steps over Frank?s objection to impair, undermine and dismantle the agricultural business in express breach of commitments made by Belinda in the May 2017 Agreement (described below), including by cancelling leases for Adena Farms? proposed retail operations, laying off employees, and cutting off essential funding at a critical point in the company?s growth. in taking these steps, Belinda has hired and relied upon people who have little or no expertise in the agricultural business. Moreover, Belinda has carried on as an absentee owner, having visited the operations of Adena Farms rarely in the period since 2008. Belinda has acted in concert with, and taken advice and direction from, Alon' in taking these steps. 76.. As a result of this interference with?its business and being cut off'from financial support, Adena Farms has been placed in a precarious position and may never reach its full potential, thereby frustrating Frank?s vision to develop Adena Farms into a market leader in the grass-fed beef industry. By taking precipitous and commercially unreasonable steps to dismantle the agricultural business of Adena Farms over the objections of Frank, Belinda and Alon have acted unfairly, prejudicially and unlawfully. All of this has been to the significant detriment of The Stronach Group, and to members?of the Stronach family. _34_ 77. Further, in or around July 11, 2018, Belinda took steps to abruptly close Adena Golf over Frank?s repeated objections. Adena Golf has been listed for sale at a steep discount, despite repeated pleas by the Plaintiffs that the business remain open and not be sold. As with the decision to deny Adena Farms the necessary funding, the sudden closure of Adena Golf and its proposed sale serVes to further undo the shared expectation of the Stronach family and 'widen the growing rift between Belinda and other members of the Stronach family, including the Plaintiffs. G. The 2013 Trust Reorganization The Creation of the Belinda and Andrew 445 Trusts 78. in the summer of 2013, Frank made the decision to reorganize the assets held in the 445327 Trust, and to divide those assets among newly formed Trusts established for the benefit of Frank?s children, his grandchildren, and future generations of the Stronach family. 79. in effecting the reorganization, Frank intended to distribute the family's assets primarily between three family Trusts: one for the benefit of Belinda and her issue, one forthe benefit of Andrew and his issue and the other for the benefit of Elfriede. Given that Belinda has two children (Nicole and Frankie) and Andrew has one child (Selena), Frank decided that the initial distribution of the assets should be weighted more heavily to Belinda and her two children than to Andrew and his daughter as well as Elfriede. At the time Frank decided upon this initial allocation, he trusted, expected and understood that Belinda would devote her full time and attention to the business and affairs of The Stronach Group, and that she would discharge properly and faithfully her important duties as a Trustee, DireCtor and Officer. These included, among others, safeguarding in a fair and responsible fashion the rights, interests and expectations of other members of her family, including Frank, Elfriede, Andrew and Selina. 80. lmportantly, however, this initial distribution conceived of by Frank was not intended to be permanent in nature or irrevocable. Instead, Frank at all times wished to retain the flexibility to reallocate the assets in question if and when, in his sole and absolute discretion, he deemed it appropriate or deSirable to do so. 81. Belinda accepted and agreed to these basic ground rules. In doing so, she recognized that virtually all of the wealth of the Stronach family, including all or substantially all of the assets and businesses of The Stronach Group, were attributable to the hard work and and successful business career of Frank, rather than to her.- 82. in anticipation of, and in order to facilitate, this contemplated distribution from the 445327 Trust, several new entities were created: two new discretionary trusts were settled on October 29, 2013, namely the Belinda 445 Trust'and the Andrew 445 Trust. The original Trustees of the Belinda 445 Trust were Frank, Belinda and Alon. The original Trustees of the Andrew 445 Trust'were Frank, Belinda, Elfriede and Alon; and three new holding companies were incorporated on} August 2, 2013, as follows: 445 Holdings lnc., an Ontario corporation wholly owned by the Belinda 445 Trust; (ii) ASFTR Holdings lnc., an Ontario corporation wholly owned by the Andrew 445 Trust; and -35- 445 TRgHoldings Inc, an Ontario corporation wholly owned by the 445327 Trust. 83. All members of the Stronach family and Alon understood and agreed that Alon would only continue to serve as a Trustee of the Belinda 445 Trust and the Andrew 445 Trust during the period that he was actively employed by and continued to serve as the CEO of Stronach Consulting Corp. Alon?s tenure as a Trustee of the Belinda 445 Trust and Andrew 445 Trust came to an end in January 2017 when he was suspended by Belinda as the CEO of Stronach Consulting Corp., and stopped performing services for the Company on a day-to-day basis. 84. With the full knoWledge, authorization, consent and approval of Belinda and her children (as well Alon), Belinda and Andrew 445 Trusts were established in the fashion deScribed above in order to return Frank to the position of Super Trustee that he had occupied for years as a Trustee of the Stronach Trust, and to confer upon Frank unique and important rights in respect of, and control over, assets held by 445327 Co. and The Stronach Group. 85. in this regard, each of the Belinda and Andrew 445 Trusts include provisions and mechanisms that had the purpose and effect of conferring upon Frank the sole ability to replace other Trustees, including Belinda (and her children), as well as to redistribute some or all of Belinda?s and Andrew?s share of the assets held by those Trusts for any reason, to the complete exclusion of other beneficiaries, during any period in which Frank was or is a trustee of those Trusts (the ?Redistribution Power?). 86. Section 2.1 of the Belinda 445 Trust defines ?Beneficiaries?, as: Belinda; -37_ (ii) Belinda?schildren (whether bornor unborn at the time the Belinda 445 'Trust was created); a trust for the benefit of any one or more of Belinda and/or her children; (iv) a corporation, the shares of which are owned by any one or more of Belinda, her children, or a trust created for the benefit of Belinda and/or her children; a trust for the benefit of any one or more of Elfriede, Belinda, Andrew and/or Belinda or Andrew?s children; and (vi) a corporation, the shares of which are owned by any one of more of the trusts created for the benefit of any one or more of Elfriede, Belinda, Andrew and/or Belinda or Andrew?s children. 87. Although each of the foregoing individuals and entities is defined as a ?Beneficiary? under the Trust Deed, the ?Beneficiaries? listed in items and (vi) above are only entitled to receive discretionary distributions of capital or income from the Belinda 445 Trust (and/or a portion of the Trust assets on the ?Distribution Date?) during any period in which Frank is alive and a trustee of that TrUst (see sections 4.3(b) and of the Belinda 445 Trust). Section 4.4 of the Belinda 445 Trust Deed confers upon Frank the sole decision making power in respect of any such discretionary distribution of income or capital from the Trust. 88. Substantially identical provisions to sections 2.1, 4.4 and appear in the Andrew 445 Trust, with necessary modifications to reflect the fact that Andrew is the primary beneficiary of that Trust. 89. The intended purpose and combined effect of these provisions Was (and is) to give Frank the exclusive ability to redistribute some or all of the assets held in those Trusts, to the complete exclusion of any other beneficiary or beneficiaries, during any period in which Frank is a Trustee of those Trusts. -38- 90. All members of the Stronach family, including Belinda and her children, understood and agreed that Frank might wish to exercise his Redistribution Power in the future for a number of reasons, including to ensure that Elfriede, Andrewand Selena are dealt with fairly and reasonably as time passes having regard to the nature and extent of the involvement of Belinda, as well as her performance and conduct, in discharging her duties and responsibilities as Trustee, Director and Officer, in interacting with other members of the family and in administering the affairs of The Stronach Group. (ii) The October 2013 Distribution from the 445327 Trust and the Unanimous Shareholders Agreements 91. On October 31, 2013, the 445327 Trust made capital distributions of the common shares of 445327 Co. Following these capital distributions, the common shares of 445327 Co. were held as follows: 445 Holdings lnc. 40,440 common shares ASFTR 445?Holdings lnc. 13,860 common shares 445 TR Holdings lnc. 5,700 common shares7 92. As a result of the foregoing distribution, Belinda, Frankie and Nicole collectively obtained a conditional 67.4% interest in the assets held by 445327 00., and in turn The Stronach Group, by virtue of their status as beneficiaries of the Belinda 445 Trust. That interest was at all times, and remains, subject to the exercise by Frank of his Redistribution Power, as explained above. Andrew and Selena acquired a conditional 23.1% interest as beneficiaries of the Andrew 445 Trust. The remaining 9.5% interest was 7 Following a series of rollover transactions effected in late March 2015, three new holding companies were created which superseded these entities. allocated to Elfriede (in her capacity as a beneficiary of the 445327 Trust). As stated above, Frank at all times retained the ability to reallocate the ownership interests of the Belinda and Andrew 445 Trusts as he saw fit, during any period in which he remained a Trustee of those Trusts. 93. in connection with the foregoing reorganization, two Unanimous Shareholders Agreements were entered into on or around October 31, 2013 94. Also in connection with the foregoing reorganization, the 2005 USA was amended and restated to take into account changes in corporate structure and shareholdings effected as a result of the distribution from the 445327 Trust (the ?2013 H. Frank is Elected to Austrian Parliament 95. In September 2013, Frank pursued a longstanding ambition to run for federal office in his home country of Austria as part of Team Stronach for Austria, an official Austrian politicalparty founded by Frank in late 2012. 96. On September 29, 2013, Team Stronach won 11 seats (one of which was held by Frank), making it the fifth largest party in the Austrian National Parliament. 97. Asa result of his election to Parliament, Frank resigned as a Trustee of the Belinda and Andrew 445 Trusts on November 29,. 2013. Upon his resignation, Frank was replaced as a Trustee of those Trusts by Frankie and Nicole. 98. It was understood, agreed and intended by all of the Trustees and beneficiaries of the 445 Trusts, including each of the Defendants, that Frank?s resignation _40_ was contingent upon each of the Defendants honouring various commitments and conditions, including that: in the period following his resignation Frank would continue to maintain de facto control of The Stronach Group on an informal basis; (ii) Frank would formally resume his role as Trustee of the Belinda and Andrew 445 Trusts when he chose to do so, including for example when his tenure in Austrian politics concluded and he moved back to Canada; and Belinda, Alon and Belinda?s children would assist and facilitate Frank?s resumption of his role as Trustee of the Belinda and Andrew 445 Trusts when he moved back to Canada from Austria. The reason for this was the shared expectation that Frank would. lead the family as the one who had always been the directing mind of the Stronach family, as well the person who had created all of the family wealth. 99. In this regard, immediately prior to Frank?s resignation on November 29, 2013, a series of reappointment and resignation instruments were drafted by Frank?s counsel at Miller Thomson LLP which provided for the reappointment of Frank as Trustee . of the Belinda and Andrew 445 Trusts, as well, as for the resignation of Nicole and Frankie as Trustees of those Trusts. These resignation and reappointment instruments were validly executed and witnessed by all necessary individuals, including by Belinda, Alon, Nicole and Frankie. Belinda and Alon both executed documents in November 2013 that expressly provided for Frank?s reappointment. 100. Given the uncertainty surrounding the length of Frank?s tenure in Austrian Parliament and the anticipated timing of any proposed return by Frank to the business of The Stronach Group, it was not possible to determine in advance the date that Frank?s reappdintment would become effective. For that'reason, the reappointment and _41_ . resignation instruments were not dated at the'time they were originally signed. It was understOod and agreed by the parties to'those instruments that they would beheld in escrow and become effective when Frank resigned or retired from Austrian politics and decided to reappoint himself as Trustee. l. Frank Resumes His Role with The Stronach Group 101. In January 2014, Frank made the decision to give up his seat in Austrian Parliament in order to devote his time, efforts and attention to the business and affairs of The Stronach Group, including its burgeoning agricultural business. By then, Frank had ceased being a Trustee of the Belinda and Andrew 445 Trusts for less than two months. 102. Upon his resignation from politics, Frank returned to Canada and re?immersed himself in the business of The Stronach Group, most notably in the business of Adena Farms. Thereafter, it was ?business as usual? from Frank?s perspective, and Frank exercised de facto control over the organization in the way he always had. He maintained his office and personal assistant at The Stronach Group?s headquarters in Aurora, Ontario. Members of management and employees of The Stronach Group reported to, and took instructions from, Frank. He executed contracts on behalf'of The 'Stronach Group and hired and dismissed employees. He acquired and disposed of corporate assets, including realestate. 103. Frank did not take steps to formally reappoint himself as Trustee of the . Belinda and Andrew 445 Trusts upon his return to The Stronach Group in January 2014. He was not advised by anyone that it was necessary to do so, including most notably by Belinda and Alon. The understanding and reasonable expectation of Frank, Elfriede and other members of the Strona?ch family (including Belinda, Nicole and Frankie) was that the -42- documents prepared in November 2013 that provided for Frank?s reappointment, and for the resignation of Frankie and Nicole, were effective when Frank resumed his leadership role within The Stronach Group in early 2014. 104. Consistent with this understanding and expectation, everyone associated with the Stronach Group acted on the basis that in the period following his return to Canada in January 2014, Frank had proper signing authority as well as the authority of Super Trustee. At no point prior to November 2016 did Belinda, Alon or anyone else dispute Frank?s position of authority within The Stronach Group, including vis-a-vis the Belinda and Andrew 445 Trusts. 105. As detailed below, Frank later learned that during the period after September 2013 when he was focused on politics, and also in the period after January 2014 when he was focused on building and running Adena Farms, Belinda and Alon seriously neglected the business of The Stronach Group and abused their positions of authority. They did so in order to conceal significant cash flow issues, and to favour their own personal interests at the direct expense of the rights and interests of other members. of the Stronach family. They placed themselves in positions of actual and potential conflict, engaged in self?dealing transactions and breached repeatedly their legal, equitable and fiduciary duties, to the detriment of Frank and Elfriede. J. Belinda Asserts Control Over TheStronach Group 106. In November 2016, Belinda and Alon informed Frank for the first time that The Stronach Group was facing significant liquidity issues. This came as a surprise to Frank and raised red flags about their management of The Stronach Group Unfounded concerns were expressed by Belinda and Alon about amounts being spent by Frank in _43_ connection with Adena Farms, and Alon began refusing legitimate business expenditures proposed by Frank without any proper basis. Belinda and Alon were confrontational, disrespectful and insubordinate. They demanded that Frank take immediate steps to rein in or terminate all expenditures and investments being made by him on behalf of The Stronach Group, including in particular expenditures related to the agricultural business. 107. Belinda and Alon also took the position, for the first time, that Frank had no authority to act in the name of any of the businesses owned or operated by The Stronach Group, including Adena Farms. They asserted that Frank had no signing. authority or ability to access corporate funds, and that he had possessed no such authority since the date of his resignation as Trustee in November 2013. Their assertions were directly contrary to the manner in which Frank had been treated by Belinda, Alon and other members of management and employees of The Stronach Group for years throughout the period from November 2013 to November 2016. 108. Soon after this confrontation, Alonthreatened to fire employees of The Stronach Group who took instructions from or even spoke to'Frank. Alon belittled and embarrassed Frank, and did so with the blessing and encouragement of Belinda. Belinda and Alon made clear to Frank, Elfriede and employees of The Stronach Group that they intended to exert complete control over the o?rganiZation, and to eliminate Frank?s role in the family enterprise that he had 'created and funded. 109. In the period following this confrontation in November 2016, Frank insisted that Belinda terminate Alon. Rather than terminate Alon, Belinda assured Frank that she had suspended him, and that Alon would play no role in the business and affairs of The Stronach Group while he was suspended. That assurance was dishonoured by both -44_ Belinda and Alon from virtually the moment it was given. Instead, Alon has collaborated . covertly with Belinda throughout his period of suspension, and has played an active and important role in directing and managing The Stronach Group virtually continuously in the period since November 2013. 110. Frank also made repeated'requests of Belinda, Alon and others at The Stronach. Group for financial and other information, including detailed information respecting business and personal expenditures and acquisitions made by Belinda, in an effort to understand the source of the serious cash flow issues being faced by the organization. For well over a year, Belinda stonewalled and deflected Frank and his advisors, and provided Frank with virtually no relevant information. To date, only limited and unverified information has been provided in response to Frank?s repeated requests. 111. in light of the position taken by Belinda and Alon that Frank had no formal position at and did not legally control The Stronach Group, Frank also took immediate Steps to reappoint himself as Trustee of the Belinda and Andrew 445 Trusts pursuant to the terms of. the reappointment instruments that were prepared and executed in connection with the OctOber 2013 trust reorganization. Specifically, on January 9, 2017, Frank dated the documents that provided for his reappointment as Trustee of the Belinda and Andrew 445 Trusts and provided them to Belinda. The delivery ?of those documents had the purpose and intended legal effect of reinstating Frank as a Trustee of those Trusts as of January 9, 2017 at the very latest, together with all of the powers and authority that accompany that position. -45_ 112. The execution of these documents also had the purpose and intended legal effect of terminating the involvement of Nicole and Frankie as Trustees of the Belinda and Andrew 445 Trusts on January 9, 2017 at the very latest. 113. The next day, on January 10, 2017, Belinda wrote to Frank and took the unfounded position that Frank?s reappointment on January 9 was not effective. In her letter, Belinda stated, without any support, explanation orjustification, that although Frank had ?tried to complete appointments of trustees? for each of the Belinda and Andrew 445 Trusts using the instruments executed prior to Frank?s resignation, those documents ?were and are not valid?. 114. On January 15, 2017, Belinda once again wrote to Frank, and stated that she would not allow him to ?take control of the family business?. She took the unfounded position that Frank was not a Trustee of the Belinda 445 Trust, and that to the extent he was a Trustee, Belinda, Nicole and Frankie (in their purported capacity as Trustees) were . forcing Frank to resign, effective immediately. 115. Belinda took these positions in concert with and at the instigation of Alon. 116. Contrary to the assertions in Belinda?s January 15 letter, the Plaintiffs at all "times understood and reasonably expected that Frank was, in fact, a Trustee of the Belinda and Andrew 445 Trusts throughout the period following Frank?s retLirn to Canada from Austria in January 2014 onwards. As described below, Frank and Elfriede were actively led by Belinda, Alon and others working in collaboration with them into believing that this was the case. By virtue of their representations and conduct, including in the period from October 2013 fonNard, the Defendants are estopped from asserting that -46? Frank isjnot a Trustee Of the Belinda and Andrew 445 Trusts, and from faulting Frank with respect to his active involvement in the business and affairs of The Stronach Group in the period from January 2014 onwards. 117. . in any event, in light of the steps taken by Frank to reappoint himself and to effect the resignations of Nicole and Frankie as Trustees of the Belinda and Andrew 445 Trusts on January 9, 2017, Belinda and her children had no right or authority to deny Frank?s role as Trustee or to require Frank?s resignation as Trustee, as Belinda purported to do in her January 15 letter. 118. Belinda took those unfounded positions in breach of her legal, equitable and fiduciary duties, in an effort to prefer her personal interests to the rights and interests of other members of her family. She sought to deprive Frank of his powers as Super Trustee, including his power to replace other Trustees and to redistribute the ownership interests of the Belinda and Andrew 445 Trusts. K. Alon is Suspended from .The StronachGroup . 119. As stated above, having lost confidence in Alon?s ability Stronach family business in December 2016, Frank demanded that Alon?s employment with The Stronach Group be terminated by Belinda. On January 16, 2017, Belinda wrote to Alon to advise that he was suspended from all duties as CEO andwasnot required to reportto work from that day fon/vard. 120. Notwithstanding his purported suspension from his formal role as CEO of The Stronach Group, Alon has played an active and ongoing role in virtually all facets of the business of The Stronach Group in close collaboration with Belinda. He has done so? -47_ covertly, in an effort to disguise and conceal his involvement from Frank, with the full knowledge and cooperation of Belinda. Having taken control of The Stronach Group in November 2016, Belinda has abused her power and authority in concert with Alon and has continued to divert substantial sums from The Stronach Group to Alon as well as to business ventures of or involving Alon, in the period since he was ostensibly suspended. 121. Indeed, throughout the period from January 2017 to the present, Belinda has maintained a pretence of having suspended Alon from The Stronach Group because of his improper behaviour in his dealings with Frank while at the same time collaborating covertly with Alon in her efforts to undermine and cripple the business of Adena Farms. Even though Alon has performed no official services for The Stronach Group in the period since he was suspended in January 2017, Belinda has continued to pay him millions of dollars and has failed to confront him or take action against him in relation to his repeated breaches of his obligations to The Stronach Group as explained herein. L. The May 2017 Agreement I 122. In the period following Belinda and? Frank?s written exchanges of January 2017, Frank and Elfriede made every effort to avoid litigation with Belinda and the other Defendants. Frank sought repeatedly to find common ground with Belinda, and to persuade Belinda not to engage in divisive and disruptive behaviour that pitted her against the rest of her family. Regrettably, these efforts ultimately fell on?deaf ears. These proceedings have only been commenced by Frank and Elfriede as a last resort, after having attempted for more than 20 months to resolve matters with Belinda on a mutually acceptable basis. -48? 123. In the period after January 2017, discussions were engaged in by Frank, A Elfriede, Andrew and Belinda concerning, among other things, the?financial health of The Stronach Group, Frank?s position within the organization, and the future of the agricultural business. 124. On or around March 22, 2017, members of management of The Stronach Group, who now reported to and proceeded at the direction and under the control of Belinda, presented Frank with a list of no fewer than 50 recommendations purportedly aimed at improving the immediate financial position of The Stronach Group?s non-racing and gaming businesses, including the agricultural business. They did so while making .no disclosure concerning the financial status, business or affairs of the racing and gaming business, which Belinda exerted control over in collaboration with Alon. Frank took a conciliatory approach in an effort to avoid further confrontations with Belinda, and therefore accepted and implemented the vast majority of these recommendations. Indeed, Frank added a number of recommendations of his own to the list, aimed at streamlining?the non?racing and gaming businesses while preserving. the ongoing viability of the agricultural business. 125. Following months of discussions, Belinda and Frank reached an agreement in respect of the ongoing funding and management of Adena Farms. Other members of the Stronach family accepted and supported the resolution that Frank and Belinda had been able to achieve. As a result, on May 23, 2017, Frank, Elfriede, Andrew and Belinda executed a binding letter agreement whereby Belinda agreed that The Stronach Group would fund anticipated capital and operating expenditures for the agricultural business for the next three years, up to a maximum of million (the ?May 2017 Agreement?). -49- The May 2017 Agreement formally appointed Frank as the Chairman of Adena Farms and conferred Upon Frank formal signing authority over all Adena Farms expenditures under million. 126. The Plaintiffs viewed the May 2017 Agreement as?an acceptable near term compromise concerning one aspect of the various businesses owned and operated by The Stronach Group. The purpose and effect of the May 2017 Agreement was to sustain the growing agricultural business on a temporary basis while Belinda and Frank worked to establish a mutually acceptable governance structure and business model for The Stronach Group, including the valuable racing and gaming business and associated real estate assets. 127. As explained below, however, Belinda breached the May 2017 Agreement shortly after it was entered into. She did so in collaboration with and at the urging of Alon. M. Frank is Shut Out of the Family Business 128. Notwithstanding Frank?s willingness to work cooperatively and constructiVely with Belinda and members of management of The Stronach Group to improve the organization?s performance and strategic direction, in the period after the May 2017 Agreement was entered into Belinda took steps to further marginalize Frank?s role in the organization. She did so in collaboration with Alon. Belinda has treated her father in a hurtful, disrespectful and irresponsible fashion. She has effectively shut Frank out from playing any meaningful role in the business. and affairs of The Stronach Group, including the racing and gaming business that Frank spent much of his professional career creating, building and nurturing. Belind?a?s conduct in excluding Frank from the family business, including her refusal to recognize Frank?s decision?making power and de -5g_ facfo authority over The Stronach Group, is oppressive, unfairly prejudicial to and unfairly disregards the interests of the Plaintiffs, who at all times reasonably expected that Frank would remain in control of the family empire, including in the period following his resignation from Austrian politics and his return to The Stronach Group in January 2014. 129. Frank has also been denied essential funding for the agricultural business in flagrant breach of the express terms of the May 2017 Agreement. Rather than honour that Agreement, Belinda has cut off funding for the agricultural business, and taken steps to dismantle unilaterally the agricultural business, in the period since the Agreement was executed. Among other things, Belinda has cancelled leases for Adena Farms? proposed retail operations and terminated employees of Adena Farms, all without Frank?s consent or authorization, in circumstances where Frank has used only approximately million of the million in funds promised under the May 2017 Agreement. These actions have jeopardized Adena Farms? ability to enter successfully the all?natural food market and, indeed, have threatened the company?s continued existence. Despite the superiority of Adena Farms? products, the company has lost and will undoubtedly continue to lose numerous business opportunities as a result of Belinda?s conduct, to the detriment of the Plaintiffs and other members of Belinda?s family. She has engaged in this conduct in concert with and at the encouragement of Alon. 130. Moreover, at Belinda?s direction and as noted aboVe, The Stronach Group has closed the doors of Adena Golf and is currently attempting to sell the development for a fraction of its worth, claiming that the sale is necessary to address liquidity issues facing the organization. The Plaintiffs have. demanded repeatedly that the sale be halted -51- pending a resolution of the ongoing ownership and governance issues now facing The Stronach Group. These pleas have been disregarded. 131. in addition to the foregoing, and at Belinda?s direction, The Stronach Group continues to dismantle and sell off other assets that form part of the Stronach family empire, without consulting with or notifying the Plaintiffs, and over their objections. SUch sales include for example the proposed divestiture by The Stronach Group of the so?called ?905 Properties?, a collection of valuable development lands located in the Ontario Greenbelt. To the Plaintiffs? knowledge, the current proposal provides that these properties will be sold for amounts that are substantially?less than they were acquired for, to the detriment of the Plaintiffs. To make matters worse, Belinda has appointed her friends .(at exorbitant salaries) to assume responsibility for selling this valuable commercial real estate, even though they are unqualified to do so. Further, on September 12, 2018, Frank and Elfriede were informed by Belinda that she has instructed employees of The Stronach Group to sell the company airplane. Similar to the proposed sale of the ?905 Properties, the sale of the company airplane was effected without any prior notice to or consultation with the Plaintiffs and unfairly prejudices and disregards their interests. N. The January 2018 Distribution from the 445 Trusts 132. . Notwithstanding serious liquidity issues that were then facing The Stronach Group, in January 2018 Belinda demanded that a substantial diStribution in the amount of million be made to beneficiaries of the Belinda 445 Trust, the Andrew 445 Trust and the 445327 Trust from the assets of The Stronach Group. Belinda only included the Andrew 445 Trust and 445327 Trust in this distribution because she knew that Frank, Andrew and Elfriede had retained counsel, and that she would face immediate legal -52- jeopardy if she caused a distribution to be made only to her or her Trust, to the exclusion of the others. Given the financial difficulties facing The Stronach Group as of January 2018, this distribution was inappropriate, oppressive and not in the best interests of the Plaintiffs and The Stronach Group. 133. At the time she demanded this distribution, Belinda was facing serious financial pressures, including as a result of her investment in and involvement with Acasta Enterprises lnc. (?Acasta?), a special purpose acquisition company established in 2015 by Belinda and Tony Melman. Acasta was a failure. it consistently assumed overly optimistic sales growth, took on excessive levels of debt, made poor investments and overpaid for acquisitions. As a result, Acasta?s share price declined steeply in the 12 month period prior to January 2018. Facing mounting financial pressure, Acasta announced a proposed transaction in early February 2018 whereby Acasta agreed to sell its affiliate Stellwagen Group (an aircraft financing company) for less than half the price it had been acquired for just over a year before. The entity that effected the purchase of Stellwagen Group from Acasta was owned by a group that included Belinda and Alon. 0. Frank Discovers Belinda and Alon?s Conduct 134. In the period since November 2016, Frank has learned that his alleged laCK of formal authority and control over The Stronach Group was. intentionally concealed from him by Belinda, Alon and others asso'ciated with them in the period after January 2014. 135. Those ?with signing authority at The Stronach Group, including Belinda and Alon, routinely permitted Frank to execute agreements and other documents on behalf of the organization in the period following Frank?s resignation as a Trustee in November 2013, notwithstanding the fact that Belinda and Alon were ostensibly of the view that -53_ Frank did not have legal authority to enter into agreements, or to otherwise action behalf of or to bind the organization. Belinda, Alon and othersislip-sheeted their own signatures into agreements that had previously been executed by Frank, in order to give the documents legal effect, without advising Frank that they intended to or had done so. This was done by Belinda and Alon in a coordinated effort to make Frank believe that he remained in control of The Stronach Group, and to prevent him from taking immediate steps to reappoint himself as a Trustee of the Belinda and Andrew 445 Trusts. 136. Frank has also learned that Belinda and Alon repeatedly failed or refused to conduct themselves as diligent and prudent corporate executives. They routinely failed to report to work for days or weeks at a time in the period from late 2013 to November 2016, and failed or refused to return calls, emails and texts on a timely basis, or at all, including, from members of management of The Stronach Group and from others associated with the various businesses carried on by The Stronach Group. Belinda would show up for scheduled meetings hours late, or sometimes not at all. Frank has also become aware that Belinda has hired, and continues to hire, her friends and acquaintances to occupy positions of authority in The Stronach Group that they are unqualified to fulfill. These employees have been paid grossly inflated salaries having regard to their backgrounds, qualifications and the work they actually performed for The Stronach Group. This has occurred at the expense of The Stronach Group and its shareholders, including the Plaintiffs. 137. Further, Belinda and Alon have taken steps to conceal their mismanagement and Belinda?s misappropriation of the organization?s assets, and have persistently failed or refused to maintain proper financial and other controls, including by _54_ failing to prepare accurate and necessary corporate and trust related resolutions, ledgers, receipts and other documents and records for months or years at a time, in breach of their most basic legal and fiduciary duties. Remarkably, Belinda and her advisors disclosed to Frank in April 2018 that it would take years to prepare audited financial statements concerning the various businesses operated by The Stronach Group, including the racing and gaming business. Belinda continues to fail or refuse to respond properly and on a timely basis to repeated requests for information made by the Plaintiffs both before and after November 2016, including for the disclosure of detailed information and documentation concerning the financial and operating performance of the racing and gaming business, as well as regarding personal withdrawals made from The Stronach Group by Belinda and her children. 138. Based on the limited information obtained to date, the Plaintiffs have reason to believe that Belinda has engaged in a pattern of self?dealing transactions and fiduciary breaches, and has wrongfully appropriated both personally and for her children well in excess of million from The Stronach Group (and in turn-from the 445 Trusts) for purposes of maintaining her extravagant lifestyle. Alon has taken full advantage of his . relationship with Belinda to profit at the expense of members of the Stronach family, including the Plaintiffs. He did so both before and after he was purportedly suspended by Belinda as the CEO of The Stronach Group. Belinda and Alon have placed themselves repeatedly in positions of potential and actual conflict, and have favoured their own interests over the interests of other members of the Stronach family whom they are duty bound to protect. This conduct constitutes a breaCh of their duties owed as Trustees, including their fiduciary duties, and is oppressive, unfairly prejudicial to and/or unfairly disregards the interests of the Plaintiffs. -55_ 139. Among other things, the Plaintiffs have learned that Belinda routinely submitted hundreds of thousands of dollars in personal expenses to members of management of The Stronach Group for reimbursement as business expenses. Such personal expenses included, for example, expenses associated with parties, vacations for Belinda and her children, limousine rides and expensive meals, none of which related to legitimate business expenses and all of which were funnelled by Belinda through the business of The Stronach Group. 140. One particularly egregious transaction that the Plaintiffs have become aware of is the purchase and refurbishment by Belinda of an extravagant office in the upscale Yorkville area of Toronto, ostensibly in the name of and at the expense of The Stronach Group. Located on Prince Arthur Avenue, Belinda?s new office has cost The Stronach Group more than million at a time when The Stronach Group is suffering from liquidity issues. The purchase of this office by Belinda served only to convenience the Defendants, and in particular Belinda, who lives only blocks away. To the extent that?Belinda uses this office at all, she does so for purposes thatare largely unrelated to the business and affairs of The Stronach Group. Moreover, this office was intended toand does in fact permit Belinda to: avoid having to meet with or interact with other members of her family, including most notably her father; and (ii) disguise or conceal. the entirely inadequate. amount of time she actually spends on a day?to?day and week-to?week basis running and operating The Stronach Group- In circumstances where The Stronach Group owns and operates a well?established and appointed head office in Aurora, where the family business, Magna, MID and have always been centered, the purchase of this second office in the name and at the expense of The Stronach Group _55_ is irresponsible, constitutes an unnecessary and extravagant expense to the ultimate detriment of the Plaintiffs and other members of the Stronach family, and is oppressive. 141. Belinda and Alon have also taken steps to conceal the fact that in the period prior to his suspension, Alon consistently and repeatedly favoured and prioritized his own personal interests above his obligations to The Stronach Group and to members of the Stronach family. The Plaintiffs have learned that during his tenure as CEO of The Stronach Group, in the very period that Alon was required to deVOte his full time and attention to the business and affairs of The Stronach Group, Alon held senior positions . with (and devoted substantial amounts of his time, effort and attention to) at least nine other organizations, including the following: 7 Acasta Enterprises (Advisor); Almada Inc. Campar Capital Corporation (Director and Member of the Audit Committee and CorpOrate Governance and Compensation Committee); .JemPak Magna (Consultant and Advisor); 08 Investments LLC (Managing Director); (9) Tactical Minds (Chairman); True North Apartment Real Estate Investment Trust (Member of the SpeCial Committee; Governance, Compensation and Nominating Committee; and Investment Committee); and True North Commercial Real Estate Investment Trust (Lead Trustee and Member of the Governance, Compensation and Nominating Committee) -57_ 142. As a result of his involvement in these and other pursuits, Alon was unwilling or unable to devote the appropriate time, care and attention required in his capacity as Director and CEO of The Stronach Group. By exhibiting repeatedly this disregard for even his most basic obligations to The Stronach Group, Alon disentitled himself to the equity interest referred to above, which is null, void and unenforceable. To the extent that they were ever enforceable, Alon fundamentally breached the agreements that provided for that equity interest. At the time the Term Sheet and Unanimous Shareholders Agreements providing for this interest were entered into, Alon had no intention whatsoever of honouring his end of the bargain, but made no disclosure of his intentions in this regard to Frank. Alon induced Frank to provide that interest to him under decidedly false pretences, and then kept Frank in the dark concerning the various matters referred to above. He acted in concert with Belinda both at the time these agreements were entered into and thereafter. Alon?s conduct was, and is, unconscionable. P. Causes of Action Asserted and Remedies Sought Oppression 143. The conduct of Belinda and Alon described herein was oppressive, unfairly prejudicial to and unfairly disregarded the rights and interests of the Plaintiffs within the meaning of section 248 of the OBCA. 144. As shareholders of Stronach Consulting Corp, the Plaintiffs have standing under section 245 of the OBCA as complainants whose interests have been prejudiced by the actions of Belinda and Alon in their capacities as Directors and Officers of Stronach Consulting Corp. and its affiliates, and in their capacities as Trustees of the 445 Trusts. 145. At all relevant times, the Plaintiffs held the following reasonable expectations: as the founder of both Magna and The Stronach Group, and the creator of all or virtually all of the Stronach family?s wealth, Frank would at all times: maintain de facto control of the family empire, and in particular The Stronach Group, including in the period following his resignation from the Austrian Parliament in January 2014; and (ii) be able to participate meaningfully in the management and decision-making of the family business; Belinda and Alon would actproperly, fairly and reasonably in accordance with their legal, equitable and fiduciary duties, including by, among other things: devoting their full time, care and attention to the business of The Stronach Group; (ii) conducting themselves in a commercially sensible and appropriate fashion; providing the Plaintiffs with accurate and timely financial and other information concerning all aspects of the business and affairs of The Stronach Group; (iv) . safeguarding fairly, equitably and properly the rights and interests of all members of the Stronach family, and not placing any member or members of the family at an unfair disadvantage; and refraining from placing themselves in positiOns of actual or potential conflict and engaging in self-dealing transactions using corporate or other resources at the expense of the Plaintiffs and other members of the Stronach family. 146. Belinda?s conduct as described herein constitutes an abuse of her position of authority, and is oppressive, unfairly prejudicial to and/or unfairly disregarded the interests of the Plaintiffs. Without limiting the generality, of the foregoing, Belinda?s oppressive conduct includes: (C) (8) asserting improperly and unlawfully control over The Stronach Group in a manner that was calculated to marginalize the involvement of her father and the involvement of other members of her family; engaging in self?dealing transactions and misappropriating funds from the business of The Stronach Group for her personal use and benefit; failing repeatedly to ensure that. proper and sufficient financial and other controls were in place and administered properly, diligently and on a timely basis; facilitating or allowing the falsification of corporate documents in order to prevent Frank from learning that he no longer, in Belinda and Alon?s view, had'a position of legal authority within The Stronach Group; placing herself in positions of actual or potential conflict; failing and/or refusing to respond to reasonable inquiries from shareholders of The Stronach Group and beneficiaries of the Andrew 445 Trust and the 445327 Trust, including requests for detailed financial and other information concerning the various businesses owned and operated by The Stronach Group; and abdicating her responsibilities for the management and operation of The Stronach Group. _50_ 147. As CEO and a Director of The Stronach Group, Alon had an obligation to. oversee the business and affairs of The Stronach Group in 'a proper, diligent and business-like fashion, and to monitor closely its financial performance, position and prospects. He also had an obligation to respond on a proper, detailed and timely basis to reasonable inquiries from shareholders and other stakeholders concerning the organization?s, business, affairs and financial health. At best, Alon turned a blind to Belinda?s conduct. At worst, he was wilfully complicit, encouraged and facilitated that conduct. He breached repeatedly his duties as a corporate fiduciary to the detriment of the Plaintiffs. 148. Compensatory and disgorgement related orders against Belinda and Alon in favour of the Plaintiffs are appropriate and necessary to properly rectify their oppressive conduct. The other oppression?based remedies sought by the Plaintiffs are also appropriate and necessary to rectify the wrongs committed and to prevent the clear likelihood, in the circumstances described herein, of future oppression by Belinda and Alon.? 149. Among other things, and to the extent necessary in the event that this Court determines that Frank is not already a trustee of the Belinda and Andrew 445 Trusts, an Order reappointing Frank as Trustee of the Belinda and Andrew 445 Trusts is both appropriate and necessary. Members of the Stronach family had strong and legitimate concerns throughout the relevant period concerning Belinda?s lack of business acumen and experience, including because of her unenviable track record of participating in failed or problematic business investments. As the family patriarch and the sole creator of virtually all of the wealth enjoyed bythe Stronach family, it was at all times understood -51_ and agreed by both the Plaintiffs and Defendants that Frank Would play an active role and maintain effective control over The Stronach Group. An Order reappointing Frank as Trustee is consistent with the parties? intentions and with the Plaintiffs? reasonable expectations. 150. Further, it is also appropriate for this Court to amend or vary the terms of the 2013 USA thereby removing Belinda as sole director of 445327 Co. and, to the extent necessary, appointing Frank in her place. 151. Notwithstanding Belinda?s unlawful conduct and the nature of the relief sought, it remains Frank?s hope to be able to work collaboratively with her and other members of the Stronach?family to collectively govern The Stronach Group, for the benefit of the family as a whole as well as for the benefit of future generatiOns. lfthat should prove to be too difficult or impossible, however, Frank is fully willing to have one or more Trustees who are independent of the Stronach family appointed, in place of Belinda and her children, to the extent necessary or appropriate. (ii) Breach of Fiduciary Duty and Breach of Trust 152. In breach of their legal and equitable duties, the Defendants have failed to exercise their fiduciary powers diligently, with integrity, and in good faith for the benefit of the beneficiaries of the Andrew 445 Trust and the 445327 Trust. By engaging?in the conduct described herein, the Defendants have flouted their obligations and duties owed as Trustees, and have done so for the impermissible purpose of advancing their own personal interests. -52- 153. . As described above, Belinda has breached her fiduciary duties owed to the Plaintiffs by endangering trust property, placing herself in positions of potential and actual conflict and failing to maintain and administer proper controls, records and accounts for the 445 Trusts. She has done so wilfully and with disregard for the rights and interests of the beneficiaries. 154. The Plaintiffs have reason to believe that additional wrongful conduct has been engaged in by Belinda and Alon in breach of their legal, equitable and fiduciary duties, which conduct has been actively concealed from the Plaintiffs. In particular, the Plaintiffs have been, and continue to be, denied access to critical financial and other information relating to the business and financial affairs of the 445 Trusts and The Stronach Group, despite having made repeated requests, and despite their entitlement to the information sought. 155. By engaging in the conduct described herein, Alon has breached his legal, equitable and fiduciary duties owed in his capacity as a Trustee of the Andrewv445 Trust and the 445327 Trust, including by knowingly assisting Belinda in breaching her fidUciary and other obligations to the detriment of the beneficiaries. 156. In breach of their duties as Trustees of the Andrew 445 Trust, Frankie and Nicole failed or refused to prevent breaches of fiduciary duty and breaches of trust committed by Belinda and Alon. Both Nicole and Frankie left the handling of twist property entirely to the discretion of Belinda, and in doing so breached their duty to safeguard the trust property and act in the best interest of the beneficiaries. ?63? 157. The breaches of fiduciary duty by the Defendants described herein have caused harm to the Plaintiffs, including by diminishing the value of The Stronach?Group and in turn the assets controlled by the 445 Trusts for the ultimate benefit of the beneficiaries of those Trusts. 158. As a result of the repeated breaches of the legal, equitable fiduciary and other duties owed by the Defendants, each of the Defendants should be immediately removed as Trustees of the 445 Trusts. Removing them as Trustees is in the best interests of the beneficiaries. Unlawful Means Conspiracy 159. As pleaded herein, Belinda and Alon have engaged in a pattern of covert and coordinated conduct that was at all times directed at, and certain to harm, members of the Stronach family, including the Plaintiffs. Belinda and Alon carried out their conspiracy through unlawful means, including through their oppressive conduct, as well as through their repeated and systemic breaches of their legal, equitable and fiduciary duties owed to the Plaintiffs, as described above. 160. As pleaded herein, Belinda and Alon have taken steps to conceal their conduct from the Plaintiffs, and as a result the Plaintiffs are not aware of the exact circumstances in which the agreement giving rise to the conspiracy arose. That agreement-has, however, been implemented repeatedly by Belinda and Alon in the manner described above. 161. Belinda and Alon knew that harm was likely to result to the Plaintiffs from their conduct. Such harm has, in fact, occurred. -54- (iv) FraudulentConcealment 162. As pleaded herein, the Defendants have taken steps to intentionally conceal their conduct from the Plaintiffs, and accordingly the full extent of the Defendants? conduct is not yet .known. in the period after November 2016,, the Plaintiffs have repeatedly requested financial and other information from Belinda, including respecting the status of assets for which Elfriede is an ultimate beneficiary. These requests for information have been largely ignored for months at a time and largely remain outstanding. Breach of Contract 163. Belinda and Stronach Consulting Corp. have breached their contractual obligations under the May 2017 Agreement by, among other things, refusing to approve or fund reasonable and necessary expenditures for the agricultural business within the limits prescribed by that Agreement, and by refusing to recognize Frank?s decision?making authority in his role as Chairman ofAdena Farms. These breaches have undermined and harmed the business of Adena Farms, and placed the very future of Adena Farms injeopardy. The conductengaged in by Belinda and Ossip has caused, and will continue to cause, Adena Farms to suffer both reputational and monetary losses. (vi) Unjust Enrichment 164. . As a result of the Defendants? unlawful conduct as described above, the Defendants have been enriched at the expense of the Plaintiff-srThere is no juristic . reason orjustification for the Defendants? enrichment. Rather, the Defendants? conduct is unlawful and unjustifiable. it would be inequitable to permit the Defendants? to retain any of the ill-gotten gains resulting from the conduct described herein. The Plaintiffs are _55_ entitled to full disgorgement of the Defendants? ill?gotten gains resulting from the Defendants? unlawful condUct described herein. 165. The Defendants should be required to provide a full and detailed accounting of all sums taken or received by them, either directly or indirectly, in the period since The Stronach Group came into existence in approximately 2010. (vii) Punitive Damages 166. As described above, the conduct of Belinda and Alon warrants the condemnation of this Court. Belinda and Alon have deliberately and systemically flouted their legal, equitable and their fiduciary obligations in their capacities ?both as Trustees and as senior corporate officers and directors. They have done so for the purpose of advancing their own economic and other interests at the expense of the rights and interests of other members of the Stronach family, including the Plaintiffs. They have treated other members of the Stronach family in a rude, discourteous and disrespectful fashion, and have belittled and marginalized them over a period of months or years at a time. 167. In all of the relevant circumstances, the conduct of Belinda and Alon is disgraceful, shocks the conscience of the Court and warrants a substantial award of aggravated, exemplary or punitive damages. Q. Statutory. Provisions 168. The Plaintiffs plead and rely upon the relevant provisions of the following legislation: Courts ofJustice Act, R.S.O. 1990, c. -55- Business Corporations Act, 0 and (0) Trustee Aot, R.S.O. 1990, c. T23. R. Place of Trial 169. . The Plaintiffs propose that this action be tried in Toronto on the Commercial List. SW8 DAVIES WARD PHILLIPS LLP 2013 155 Wellington Street West Toronto ON M5V 3J7 Kent Thomson (LSO kentthomson@dwpv.com Tel: 416.863.5566 James Doris (LSO jdoris@dwpv.com Tel: 416.367.6919 Chantelle Cseh (LSO ccseh@dev.oom Tel: 416.367.7552 Fax: 416.863.0871 AND LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Suite 2600 130Adelaide Street West Toronto, ON M5H 3P5 Tom Curry (LSO tourry@litigate.com Tel: 416.865.3096 Paul-Erik Veel (LSO pveel@litigate.com Tel: 416.865.2842 Fax: 416.865.9010 Lawyers for the Plaintiffs Schedule Trusts, Corporations and Other Entities that Comprise the I Stronach Group 105 Oceanside Limited Partnership 1081 Woodington Road. Inc. 1180482 Ontario Inc. 1576300 Alberta ULC 17B 1 St. Thomas Street Inc. 1929461 Ontario Inc. 20005 Delaware LLC 20006 Delaware Inc. 20007 Austco Liegenshaftshafts Holding 20008 Austco Liegensha?sbesitz 20009 Mexico 8. A. de CV 2041067 Ontario Inc. 2046171 Ontario Inc. 2057124 Ontario Inc. 2280781 Ontario Inc. 2282659 Ontario Inc. 2283185 Ontario Inc. 2283186 Ontario Inc. 2287069 Ontario Inc. 2299000 Ontario Inc. 2299001 Ontario Inc. 2305218 Ontario Inc. 2324185 Ontario Inc. 2362918 Ontario Inc. 2375920 Or'itario Inc. 2382399 Ontario Inc. 2382400 Ontario Inc. 2384543 Ontario Inc. 24 Lowther Avenue Inc. 2402771 Ontario Inc. 2425 Appaloosa Limited Partnership 2459655 Ontario Inc. 2523173 Ontario Inc. 2581102 Ontario Inc. 2607256 Ontario Inc. 3001 Jade Trust 445 Family Holdings Inc. 445 Holdings Inc. 445 Trust Holdings Inc. 445327 Ontario Limited 445327 Trust Error! Unknown document property name. 446 Holdings Inc. 42 43 455 Limited Partnership 44 455 Magna Drive Inc. 45 4721 Miramar LLC 46 635 Miiwood LLC 47 702 South Front Inc. 48 8Track Music Inc. 49 87 Elk Track Lane LLC 50 Acasta Capital Inc. 51 Adena Wellington Developments Inc. 52 Adena Beef Products Limited Partnership 53 Adena Farms, Inc. 54 Adena Farms Limited Partnership 55 Adena Farms LLC 56 Adena Farms ULC, Inc. 57 Adena Foods 2013 Limited Partnership 58 Adena Golf Limited Partnership 59 Adena Holdings LLC 60 Adena Springs Limited 61 Alpen Limited Partnership 62 Alpen Personal Holdings ULC 63 AmTote Australasia Pty Limited 64 AmTote Canada, Inc. 65 AmTote International Inc. 66 AmTote South Africa (Pty) 67 Aquabelle LLC 68 AS Ohio Fields LLC 69 ASF Trust Holdings Inc. 7.0 ASIP Holdings Inc - 71 Aurora Bayview Southeast Developments Inc. 72 BCS Charitable Corp. 73 Beland Investment Inc. 74 Beland Investments 25 Liberty Street Limited Partnership 75 Beland Investments Acasta Holdco Inc. 76 Beland Investments Acasta Investments Limited Partnership 77 Beland Investments GP Inc. 78 Beland Holdings Inc. 79 Belinda Stronach Inc. 80' Bergenie Anstalt A 81 Betmix, LLC 82 Big Bold Sun Music Inc. 83 Bionx Canada Inc. 84 BionX Europe 85 Bionx 86 Bionx International Corporation 87 BionX of America Inc. 88 Blue Lakes Limited Partnership 89 BRV Limited Partnership 90 BSF Trust Holdings Inc. 91 BSFIN Investments Inc. 92 BSFIN 2011 93 Canadian Paradigm Limited 94 DEPGAN investments Inc. 95 Downey Springs LLC 96 EIby Bike Europe 97 EIby GP Inc. 98 EIby Limited Partnership 99 Elite Turf Club, LLC 100 Enzian Investments and Consulting Limited 101 Event Planning Marketing Software Inc. 102 FC Park, LLC. 103 FM Food Products Limited Partnership 104 FM Meat Products Limited Partnership 105 FM Meats GP Inc. 106 Foxwood Limited Partnership 107 Frank Stronach Beteiligungs 108 Frank Walker 2012 Trust 109 Ghostzapper LLC 110 Golden. Gate Land Holdings LLC 111 Golden Horizon Racing LLC 112 Golden Pegasus Racing Incorporated CA 113 GPRA Commercial Enterprises, Inc. 114 GPRA Thoroughbred Training Center, Inc. 115 GSP Tower Condominium AssoCiation, Inc. 116 Park Racing Association, Inc. 117 Park Thoroughbred After Racing Program, Inc. 118 Park Tower LLC . 119 Village Holdings, LLC 120 Innovator Propulsion Systems (Suzhou) Co. Ltd. 121 Jade 3001 Limited Partnership 122 Jade Limited Partnership 123 Latin American Caballeros Inc. 124 Laurel Gaming LLC 125 Laurel Racing Assoc. Inc. 126 Laurel Racing Association Limited Partnership 127 LC Meat Products Limited Partnership 128 Leslie Wellington Developments Inc. 129 Los Angeles Turf Club II, Inc. '130 Los Angeles Tun? Club, Incorporated 131' Magna Vita Inc. 132 -4- Magnolia Projektentwicklungs 133 Maryland Jockey Club, Inc. . 134 Maryland OTB Facilities, LLC 135 Maryland Racing Management LLC 136 Maryland Racing, Inc. 137 Maryland RE LLC . 138 Maryland Thoroughbred Purse Account, Inc. 139 Maryland Turf Caterers, Inc. 140 Mavrinac East Developments Inc. 141 Mavrinac West Developments Inc. 142 MJC RACING (2007) LLC 143 Monarch Content Management LLC 144 Nevele Investments Inc. 145 Northern California off? Track Wagering Incorporated 146 Northern Dynamics Inc. 147 Ocala Farms International Limited 148 Ocala Holdings Inc. 149 Ocala Meadows Farms Ltd. 150 Ocala Meadows Holdings Limited 151 Ocala Meadows International Limited Partnership 152 Ocala Meadows Land GP LLC 153 Ocala Meadows Lands LLC 154 Ocala Services LLC 155 Ocala Settlement 156 Ocalux s. a. r. I. 157 Orchid Concessions, Inc. 158 Oregon Racing Inc. 159 Pacific Racing Association 160 Pacific Racing Association I I 161 Parimax Holdings LLC 162 Pari?Mutuel Live Racing Games Inc. 163 Pegasus Florida Inc. 164 Pegasus Race Participants, LLC 165 Pimlico Racing Association, Inc. 166 Player Management Group LLC 167 Holdings Inc. 168 PRC Inc. 169 Primel Anstalt .170 Prince George?s Racing Ventures, LLC 171 Prince George?s Racing, Inc. 172 QMF Limited Partnership 173 Race Track Payroll Account, Inc. 174 Racetrack Television Network, LLC 175 RC Magna Racino 176 ?Saddle Trail Park LLC 222 The PPSC 1 Co. Inc. 223 The PPSC 2 Co. Inc.? 224 The PPSC 3 Co. Inc. 225 The PPSC Holdco. Inc. 226 The Stronach Group Inc. 227 The Village at Park LLC 228 Triple Bell Farms, LLC 229 Triple Bell Holdings Limited 230 Triple Bell Holdings Limited Partnership 231 Triple Bell Holdings LLC 232 Triple Bell Limited Partnership 233 Triple Bell Trust 234 Triple Bell US Holdings Limited 235 Triple Crown Productions, LLC 236 TSG Developments Investments Inc. 237 TSG Developments Land Holdings Inc. 238 TSG Developments US Financing Inc. 239 TSG Developments US Holdings Inc. 240 TSG Enterprises Limited Partnership 241 TSG Global Wagering Solutions LLC 242 TSG GWS Germany 243 TSG HIP Inc. 244 TSG Land Holdings (Oregon) LLC 245 TSG Media Distribution Corp. 246 TSG MEDIA TELEVISION HOLDINGS, INC. 247 TSG Technologies, LLC 248 TSG US GP Inc. 249 TSG-Stron Inc. 250 Vision Ostereich 251 Wilko Racing Club Inc. 252 Xpressbet Canada Inc. 253 Xpressbet, LLC FRANK STRONACH et al. Plaintiffs ?and? BELINDA STRONACH et aI. Defendants 441908183800? Court File No. ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) PROCEEDING COMMENCED AT TORONTO STATEMENT OF CLAIM DAVIES WARD PHILLIPS VINEBERG LLP 155 Wellington Street West Toronto ON .M5V 3J7 Kent ThomsOn (LSO kentthomson@dwpv.oom Tel: 416.863.5566 James Doris (LSO jdoris@dwpv com Tel: 416.367.6919 Chantelle Cseh (LSO ocseh@dwpv.com Tel: 416.367.7552 Fax: 416.863.0871 LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP 130 Adelaide Street West . Suite 2600 Toronto, ON M5H 3P5 Tom Curry tourry@litigate. com Tel: 416. 865 3096 Paul- Erik Veel (LSO pveel@litigate. Tel: 416 865 284 %emEuR; {:32 ?90 0 we Fax: 416 86796