Law Times

Page 2 January 6, 2014 Law Times • NEWS Woman who won landmark spousal support order now suing former lawyer BY MICHAEL McKIERNAN For Law Times A woman who won a record-breaking interim spousal support order is suing the estate of her former lawyer, claiming his reorganization of her husband's family business during the marriage cost her millions after the divorce. Carol Elgner hit the headlines in 2009 when a landmark Superior Court judgment ordered ex-husband, Claude Elgner, to pay her $110,000 per month in spousal support plus $3.4 million in retroactive payments dating back to their 2007 separation after 33 years of marriage. The Ontario Court of Appeal upheld the award in 2011 and while the matrimonial litigation settled in 2012, Carol has since turned her attention to the estate of the Elgner family's long-time lawyer, the late Harvey Freedman. In a statement of claim filed with the Ontario Superior Court of Justice, none of which has been proven in court, Carol seeks $20 million in damages from Freedman's estate, including $15 million for alleged breach of contract, breach of duty of care, and negligence. She claims a further $4 million for legal expenses she says she incurred as a result of the alleged negligence, plus another $1 million in punitive damages. The lawsuit also names Freedman's daughter Alana, a lawyer who worked with him in his law office, as a defendant for allegedly failing to turn over documents related to the case. The roots of Carol's claim lie in the 1992 corporate restructuring of the Elgner family business involving a group of companies mainly related to the auto parts manufacturing business co-founded by Claude's father. According to the claim, Freedman oversaw an estate freeze and the creation of several trusts in favour of Carol and each of her three children as part of a deal to allow one of the firm's business partners to cash out. According to the claim, a decade and a half later and after the pair had separated, Claude informed Carol through their lawyers that the reorganization involved gifts of shares to him from his father and excluded much of his wealth, which she estimates is in excess of $100 million, from the equalization process. "This meant that instead of being entitled to an equalization payment of approximately $38 million, Carol Elgner would receive no more than approximately $2 million as a result of the equalization process," according to the statement of claim. "Carol Elgner was surprised by this revelation. Carol Elgner had no knowledge, no information, and no understanding that she had been shut out of her rights and entitlements to property division and specifically, equalization of net family property as a result of the reorganization, or otherwise." Carol's claim alleges Freedman was in a conflict due to his concurrent representation of her, Claude, and the corporate entities in the 1992 transaction. "It was not possible for Harvey Freedman to protect the interests of all persons on whose behalf he was acting. In the event, he was negligent in failing to appreciate the position of conflicted interests he was representing and was negligent in failing to advise Carol Elgner to seek independent legal advice. In choosing to act for all parties, he owed Carol Elgner the highest duty of care and was negligent in failing to do so, and he was 2014 ONTARIO LAWYER'S PHONE BOOK THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. More detail and a wider scope of legal contact information for Ontario than any other source: 27,000 lawyers listed 9,000 law firms and corporate offices listed December each year On subscription $74 One time purchase $77 L88804-626 Multiple copy discounts available Prices subject to change without notice, to applicable taxes and shipping & handling. Includes lists of: Federal and provincial judges Federal courts, including a section for federal government departments, boards and commissions Ontario courts and services, including a section for provincial government ministries, boards and commissions Small claims courts Miscellaneous services for lawyers Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation Untitled-3 1 www.lawtimesnews.com 13-12-02 7:29 PM negligent in failing to keep her fully informed of her rights and in failing to protect her interests," according to the statement of claim. As part of her claim for equalization, Carol says she spent $4 million in legal fees and disbursements over three years attempting to obtain disclosure of documents related to the 1992 reorganization but was "met with resistance to the delivery of documents to which she, as a client of Harvey Freedman, was prima facie entitled." Neither Freedman's estate nor his daughter have filed a defence but instead served a demand for particulars. They claim they're unable to properly plead given their lack of knowledge about the reorganization. Court documents show the proceedings took on another level of acrimony after a letter from Carol's lawyer, Julie Hannaford, to Freedman's counsel, Michael Kestenberg, characterized the request for particulars as part of a pattern of delay tactics by the defendants and threatened to note them in default if a statement of defence wasn't forthcoming. A week later, Hannaford followed through on the threat, prompting an angry written response from Kestenberg. Accusing her of "sharp practice," he wrote that it was "inexplicable for you to have taken the steps of noting our client in default given our clear indication that we would be bringing a motion to compel particulars." Kestenberg proceeded with a complaint to the Law Society of Upper Canada, but the assigned investigator, noting investigations related to ongoing court actions were warranted only in exceptional circumstances, soon closed the file. The defendants have filed a motion to set aside the noting in default. In a factum, they stated that at all times they "displayed a clear intention" to defend the action. And on Dec. 11, they won a minor victory when Ontario Superior Court Master Robert Muir dismissed Carol's motion seeking answers to refused questions on a number of examinations. According to Muir's decision, the plaintiff sought access to all of the documents and information in the possession of the defendants and their lawyers relating to the litigation, arguing the service of an affidavit by one of Kestenberg's associates resulted in a waiver of solicitor-client privilege attaching to them. Muir ultimately decided the waiver was much narrower as it attached only to documents related to the issues raised in the associate's affidavit. "I have come to the conclusion that all of the questions are either beyond the scope of the waiver of privilege or have been satisfactorily answered by the defendants as set out in their responding chart," wrote Muir in his endorsement. LT

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