On June 27, 2002, the Ontario Superior Court’s Madame Justice Mary Anne Sanderson rendered her decision in Waxman vs. Waxman. Her ruling, which runs 440 pages, culminates 14 years of civil litigation capped by a 200-day trial between warring factions of the country’s most prominent scrap-recycling family. (See “Family Scrap” in the October/November 2000 edition.)
Judge Sanderson’s decision struck like an avenging sword. The judge ruled that Chester Waxman duped his older brother Morris out of his 50 per cent share of the multi-million-dollar family business I. Waxman & Sons Ltd. in December 1983. The ruling reinstates the plaintiff Morris (now 77) as half-owner of the company and orders Chester and his family to return his share in tens of millions of dollars in profit and bonuses pocketed since 1984.
Stating they were “fabricated,” the judge rejected Chester’s defense and most of his counter suit as well as the testimony of his three sons, company accountant Steve Wiseman, and lawyer Paul Ennis (whom she also found liable). Moreover, she assigned unusual punitive damages against Chester totaling $350,000, saying, “He abused the trust of a loving brother and faithful partner.”
“On the facts before me,” she writes, “I find Chester’s conduct meets, indeed, surpasses, the bar set…for malicious, oppressive and high-handed conduct deserving of public censure by the court.”
The judge accepted Morris’s testimony that in 1983, shortly before he was to undergo open-heart surgery, Chester — his brother and business partner of 40 years and someone he trusted implicitly — got him to sign over half of the business for just $3-million and ignored his pleas to tear up the deal after he realized what had happened.
The judge cites the issue of succession as the trigger for the terrible feud. The accountant had proposed an “estate freeze” (for tax purposes) in which Chester’s three sons (Robert, Gary and Warren) and Morris’s two sons (Michael and Douglas) would each inherit an equal 20 per cent of the company. Morris rejected this proposal as it gave control to Chester’s sons (three could out-vote two).
The judge determined that Chester, angered by Morris’s rejection of the estate freeze, sought to gain control of the company and operate it from then on for the benefit of himself and his sons. Morris and his family, for example, were not made aware of multi-million-dollar bonuses that Chester paid himself and his boys, or of property leases that were highly unfavorable to Morris.
The judge concluded that Chester and his sons formed a number of side businesses that provided various services to the company (e.g., Greycliffe trucking) the real purpose of which was to divert equity from the company through such things as inflated charges. Her ruling provides tracing orders to allow the plaintiff to recover profits that may have been invested in such things as fine art and Bobby Waxman’s notorious racehorses.
The judge also found that Chester and his sons induced Philip Environmental to breach contracts it held with a business operated by Morris and his son Michael, Solid Waste Reclamation Inc. (SWRI). Philip was then just a young start-up company that provided contract services to SWRI. Chester and Bobby told Philip’s owners Allen and Philip Fracassi they would only drop a lawsuit against them if they stopped doing business with Morris.
The judge writes, “I find that Robert tampered with the documents, then presented them to Fracassi…in order to induce Philip to terminate its contract with SWRI.”
The Fracassi’s took most of SWRI’s customers with them to the benefit of Philip and later bought Chester’s business for $30-million. Morris and his family, already shut out of I. Waxman & Sons, were left devastated.
During the trial the judge was absolutely inscrutable. But in her written decision she makes it clear — in terms that are at times scathing and quite personal — that she found Chester and his sons not to be credible witnesses. She mentions that Morris’s family medical benefits were cut off shortly after his wife was diagnosed with cancer.
Meanwhile, she cites testimony that as a child Morris defended his younger brother from schoolyard bullies. She praises Morris as a “reluctant warrior” who was slow to sue his brother Chester for fear of shaming the family. She praises son Michael as a young businessman with whom she was greatly impressed. She quotes transcripts that recount how the extended Waxman family in Hamilton has sided with Chester — who controls the purse strings — and shunned Morris and his family, though the judge decided that he was the real victim.
The story isn’t quite over yet. Chester’s lawyers say they will file an appeal, stating that a man is responsible for his signature and has a duty to read documents before signing them. And Philip Environmental’s lawsuit against Chester’s son Bobby for $150-million is still before the courts. Philip’s lawyers will find Judge Sanderson’s conclusions about Bobby Waxman’s and Allen Fracassi’s testimony in Waxman vs. Waxman excellent bedtime reading.
But there’s one outcome that needn’t wait for further court decisions: The extended Waxman family that sided with Chester should read the judge’s decision line by line, word for word.
Readers can access the complete 440-page decision in Waxman vs. Waxman and the related lawsuits by looking under the “Posted Documents” section at our Web site: www.solidwastemag.com
Guy Crittenden is editor-in-chief of this magazine. Send your letters to: