Canada

Barry Sherman’s legal battle with his cousins goes on weeks after his murder

Winning $300,000 in costs from his relatives apparently wasn't enough. The day after his memorial, the drug tycoon’s lawyers appealed for more than three times that amount.

Barry Sherman during a tour of one of Apotex’s plants in 2004. (Norm Betts/Bloomberg/Getty Images)

One week after Barry Sherman and his wife Honey were discovered strangled inside their Toronto mansion—and one day after the couple was memorialized in a nationally televised service attended by thousands—lawyers for the billionaire drug-maker fired yet another volley in a bitter, decade-long legal battle between the founder of Apotex Inc. and his estranged first cousins.

At issue now is how much money the cousins should have to pay Sherman to cover his legal bills after their high-profile lawsuit, which sought a 20 per cent cut of their relative’s pharmaceutical fortune, was dismissed last September in Ontario Superior Court. A judge rejected the cousins’ claim as “wishful thinking and beyond fanciful,” and on Dec. 6—seven days before Barry and Honey were last seen alive—the same judge ordered the cousins to pay $300,000 toward Sherman’s legal costs.

That amount wasn’t large enough, apparently. Court records obtained by Maclean’s show that lawyers representing Sherman and his generic drug company filed a written notice at Ontario’s Court of Appeal on Dec. 22, the day after memorial, arguing that the cost award should be overturned because it “is clearly and plainly wrong.” They insist the cousins should be forced to pay more than triple that amount: approximately $985,000.

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RELATED: Judge greenlights lawsuit alleging Barry Sherman’s company stole rival’s trade secrets

While Jordan Berman, an Apotex spokesman, said he can’t discuss active litigation, the timing of the appeal is telling: it suggests that one of the last things Sherman did while he was still alive was to instruct his lawyers to continue battling, in the province’s highest court, to have his cousins reimburse a much bigger chunk of his legal bills.

As police continue to investigate the couple’s deaths—now confirmed as a “targeted” double homicide—these latest court documents paint the clearest picture yet of what transpired over the past few months in that fractious lawsuit. They also serve as another reminder of just how litigious Sherman was, and how rarely he surrendered when confronted in court.

Though well-publicized over the years, the cousins’ lawsuit was thrust back into the spotlight last week when Kerry Winter, the lead plaintiff, broke his silence about the Shermans’ violent deaths in a series of sensational media interviews. Predictably, the timing of the costs ruling has also triggered much speculation. Again, the cousins were ordered to pay that $300,000 on Dec. 6, one week before Barry and Honey were last seen, on Thursday Dec. 13. Two days later, the couple was discovered dead near their indoor swimming pool, with belts wrapped around their necks and tied to a steel railing.

Despite the fact that police are now certain both the Shermans were murdered, Winter remains adamant that Barry killed Honey inside the house, then took his own life; in one astounding allegation, he told multiple reporters that his wealthy cousin had previously asked him to arrange his wife’s murder. Speaking to CBC’s The Fifth Estate, Winter also admitted to fantasizing about ambushing Sherman at Apotex headquarters and slitting his throat. “I wanted to roll his head down the parking lot,” he said.

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RELATED: Barry and Honey Sherman murders: What’s slowing the cops down at Apotex headquarters

Winter, who recently met with a Toronto detective for four hours, insists he had nothing to do with the Shermans’ deaths. In a telephone interview with Maclean’s, he repeated the same thing. “I categorically deny any involvement in Honey and Barry’s demise,” he said. “I have every reason to hate this man, but I had nothing to do with their demise.”

That deep hatred is rooted in events that date back more than five decades, when Barry Sherman was spending his summers working at Toronto’s Empire Laboratories Ltd., a generic drug firm operated by his uncle, Louis Winter. In November 1965, tragedy struck the Winter family: Louis died suddenly, and 17 days later his wife, Beverley, succumbed to leukemia—making orphans of their four young sons: Kerry, Paul, Dana and Jeffrey.

Two years later, Sherman and a business partner, Joel Ulster, scrounged together $450,000 to purchase Empire from the executors of Winter’s estate. The deal included a written option that Sherman’s first cousins would have the right to work for the company at age 21, and purchase up to five per cent each of the firm’s shares. Empire was sold four years later, making the option agreement null and void.

Three years after that, in 1974, Sherman founded Apotex—now a multi-billion-dollar global giant in the generic drug business. In Canada alone, Apotex medications fill 90 million prescriptions a year, or one of every five.

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The cousins launched their controversial lawsuit in 2007, claiming a 20 per cent stake in Apotex on the grounds that Sherman failed to honour the 1967 Empire option agreement and breached his fiduciary duty to his uncle’s sons. Simply put, the brothers claim that Empire led to Apotex, so they deserve their portion of the riches.

RELATED: Barry Sherman’s death cuts short the lobbying probe against him

Sherman’s relationship with his younger cousins is a matter of heated debate. In testimony under oath, Sherman insisted that he visited them often after their parents’ deaths to provide “continuity” before they were adopted. In the 1980s, he said he also gave them millions of dollars to help bankroll businesses and purchase houses. Winter counters that any money from the generic drug entrepreneur came with promissory notes attached.

On Sept. 15, 2017—11 years after the original statement of claim was filed, and three months to the day before Barry and Honey were found dead—Justice Kenneth Hood dismissed the lawsuit, agreeing with Sherman that the case was an abuse of process. Hood reiterated that the sale of Empire nullified the option agreement, and that “Apotex did not own or use any of the assets, goodwill, property or business” of Lou Winter’s former company. “The claimed interest in Apotex was wishful thinking, and beyond fanciful,” Hood concluded in his 10-page ruling, granting summary judgment to the defendants. “Nothing can now change these findings of fact.”

Victorious, Sherman’s lawyers asked Hood to award legal costs on a so-called substantial indemnity scale, a recognition that the losing side has exhibited “reprehensible, scandalous or outrageous conduct.” That certainly applies to this lawsuit, they argued in their Sept. 29 cost submissions: for more than a decade, Sherman had to defend himself against “groundless allegations of dishonesty, conspiracy, and breach of fiduciary duty,” they argued, and when such unproven accusations go “to the heart of a person’s integrity,” a court should impose “the sanction of substantial indemnity costs.”

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All told, Sherman’s lawyers demanded $984,813.73 in legal costs, court documents show. They argued that such an award is “proportionate to the plaintiffs’ damages claim and the complexity and duration” of the lawsuit. “Having sought a twenty percent share in Apotex (or more than one billion dollars in damages) for a decade, the Plaintiffs had every reason to expect a substantial cost award being made against them if they were unsuccessful,” wrote the lawyers, Katherine Kay and Mark Walli, of the firm Stikeman Elliott LLP. (In the alternative, they asked for $831,407.58: partial indemnity costs up to July 2014, when they offered to have the lawsuit dismissed on consent, and substantial indemnity costs thereafter.)

Kerry Winter, who along with his siblings and the widow of one of his brothers, sued Sherman (Carlos Osorio/Toronto Star/Getty Images)

Toronto lawyer Brad Teplitsky, who represented three of the four plaintiffs, argued in his reply that $900,000 is “punitive and beyond the reasonable expectations of any party,” especially considering that none of the cousins did anything “in their conduct which would warrant an award on that scale.” An order of $150,000 would be reasonable, he countered.

When Justice Hood issued his handwritten endorsement on Dec. 6, he ordered the cousins to pay $300,000—double what the brothers suggested they should pay, but less than one-third of the amount Sherman’s lawyers were hoping to collect.

“I am unable to find that in pursuing their claim the plaintiffs engaged in such reprehensible, scandalous or outrageous conduct to warrant substantial indemnity costs being awarded against them,” Hood wrote. “An award of costs of this scale is reserved for special and rare circumstances.” In fact, Hood concluded that some of costs submitted by Sherman’s lawyers were “simply excessive,” including claims for taxis, staff overtime, and parking.

Speaking to Maclean’s, Winter says he understands why some may consider him a suspect, given the timing of the lawsuit’s dismissal and the subsequent costs award. “People can think: ‘Oh, Kerry lost his summary judgment motion and he went out and—some way, somehow—got into Barry’s house on Old Colony and did the dirty deed, and now he’s acting like a loon on The Fifth Estate. He is the main suspect,’ ” he says. “Come on. Would I be walking around, six, seven weeks after the murder? If I’m a suspect, where is my DNA? Where is my hair? Where are my fingerprints?”

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Asked how distressing it is to know that many people consider him a murder suspect, Winter replied: “Trust me, it’s been tough. But I’m a strong guy.”

RELATED: The Barry and Honey Sherman murder investigation by the numbers

Assumptions aside, Winter insists he wasn’t angry at all when he read the Dec. 6 costs order because he and his brothers had already launched an appeal of the lawsuit’s dismissal—and plan to take the case all the way to the Supreme Court, if necessary. He also points out that because of all those promissory notes Sherman made him sign, he already owes his cousin more than $6 million. In other words, what’s another $300,000? “I know we don’t pay anything until it’s all said and done,” he says.

Winter also says he wasn’t the least bit surprised when, the day after the funeral, Sherman’s lawyers appealed the costs award. He has no doubt that his cousin personally directed his legal team to file that paperwork in the days before he was killed, and that they carried out his instructions after the memorial service. “Nothing surprises me about Barry Sherman,” Winter says. “If I sound bitter, I am bitter. If I sound angry, I am angry. If I sound like I hate the man, I do hate the man. I’m not hiding my feelings for this person. This person lied and deceived me. All he did was lie and betray me.”

In their notice of appeal, Sherman’s lawyers contend that an award of $300,000 “falls far below the reasonable expectations of the parties viewed in relation to the facts and circumstances of this complex and very high stakes litigation.” They want what they originally demanded: $984,813.73. Reads their court filing: “That the Defendant Sherman breached his purported fiduciary duty and threatened, intimidated and financially and emotionally manipulated the Plaintiffs, were allegations that went to the heart of the Defendants’ integrity and should have resulted in costs being awarded on a substantial indemnity scale throughout.”

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Berman, the Apotex spokesman, said he won’t discuss ongoing litigation “out of respect for the judicial process.” Teplitsky also declined to comment on the appeal. However, he did tell Maclean’s that as of last week he no longer represents Kerry Winter. Teplitsky would not elaborate on why Winter is no longer a client; he would only say that he continues to act for Winter’s brother, Paul Barkin, and the estate of Dana Barkin, who died in 1995. Jeffrey Barkin, the fourth cousin, is self-represented.

In a statement released last week, the Sherman family lashed out at Winter for suggesting that Barry had wanted to harm Honey, and that their gruesome deaths were somehow not a double murder. “We are deeply hurt, shocked, and angered that Kerry Winter is using the tragedy of our parents’ homicides to make outrageous and baseless claims about our father,” the statement read. “The family accepts the conclusion of the Toronto Police Service, and finds it regrettable that the media would give a platform to these completely absurd allegations.”

The lawsuit isn’t over quite yet. The acrimony appears permanent.

The authors can be reached at michael.friscolanti@macleans.rogers.com or anne.kingston@macleans.rogers.com