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The Waxman Family

Source : Family Wars – Grant Gordon & Nigel Nicholson

The Waxman Family

ORIGINS

This is a story of two brothers and their families pitting against each other in court. However, this clash was much more than money and personal enmity. It involved a clash of values and philosophies.

The story begins early in the 20th century when Isaac Waxman left Poland for Canada to begin a new life as a trader of used clothing, bottles, and discarded metal. His son Morris and Chester, born in the 1920S, joined their father in the family business, which had been established and conducted business as I Waxman and Sons.

Chester and Morris shared a workplace but had very different personalities. Morris, the older boy, a quiet and reserved young man, keenly interested in the technology of recycling and a constant tinkerer with inventions, ran the operations. His younger brother Chester was a much more dominant and expansive character, driven by big ambitions. He was characterized as an excellent salesman and trader, and even headed the business development.

The brothers collectively owned a majority of the business, while their father Isaac, who served as president, only owned a small portion of the stock. Morris often struggled to express himself and deal with written communications, and in business dealings he was happy to completely trust his brother. This meant he often signed papers that Chester presented to him without detailed scrutiny.

FIRST DIVISION

The first indication of tension between the brothers was an incident over the division of their father’s small shareholding in the company after his death in 1972. Chester owned a larger portion than Morris, thus gaining control of the firm. Morris put pressure on Chester to amend the shareholding structure, and in 1979 they became equal owners of the business.

During this period, the third generation were starting to join the business, but with the two branches applying different philosophies in terms of hiring policy. Chester’s three sons, Bobby, Warren and Gary, followed their father’s footsteps of joining the firm at an early age, while Morris’s two boys, Michael and Douglas, both went to university and focused on education.

THE STRUGGLE FOR OWNERSHIP

The question of future ownership was an issue that increasingly preoccupied Chester as the existing 50/50 ownership split with Morris meant that his three sons would eventually end up with smaller stakes in the business than their two cousins.

Chester proposed a plan to divide ownership of the firm into five parts, with each member of the third generation getting a 20 per cent stake, but Morris rejected this proposal. Chester then proposed a bonus scheme, with C$250,000 going to his sons and further bonuses of over C$1 million to the three cousins. Although Morris opposed the bonus scheme, but Chester had him sign a board minute authorizing this new form of remuneration in the company. Later Morris claimed that this happened without his knowledge. Morris confronted Chester, but was brushed off.

WAR IS DECLARED

Five years on, after persistent attempts to secure his claims for justice against his brother, Morris shared the matter with his son Michael. Michael immediately confronted his uncle, Chester. But even this emotional reaction of Michael did not yield repentance in Chester; it merely stoked the fire of conflict.

During all Morris’s ineffectual pleading to regain his ownership rights Chester assumed control of the company’s finances, with his sons collectively receiving C$27 million in bonuses in the 10 years up to 1993. Company assets were sold, culminating in the disposal of the main business in 1993 for C$30 million. During this sale, Chester and his sons were able to secure their incomes by obtaining long-term employment contracts with the new owner, while Morris and his family were completely sidelined.

He was a pillar of the local community, noted for his philanthropy. Morris on the other hand kept a low profile and stayed in quiet isolation. Morris and Michael went to law in 1988 to fight against Chester and his family for their rights. The reaction from Chester’s branch was swift, firing Morris from the business and cut off his benefits.

The case took five years to wind its way through the courts, but in the end Morris and his sons got the justice they sought and their father was reinstated as 50 per cent owner of the company. All the court trials resulted in the Waxman family paying dearly for its family war.