Barry Sherman's orphaned cousins fight for cut of Apotex fortune in lawsuit appeal

Before he died, Barry Sherman was dealing with a family lawsuit that had dragged on for a decade.

The Toronto billionaire's orphaned cousins sued Sherman for a cut of his Apotex fortune in 2007. A judge dismissed the case in September as an abuse of process, but court records show they filed an appeal a month later.

Four brothers — Kerry, Jeffrey, Paul and Dana Winter — started the action a decade ago, although Dana's widow Julia is now acting as his representative, and Jeffrey is not involved in the appeal.

Sherman and his wife Honey were found dead in their home on Friday. Autopsies over the weekend revealed the cause of death to be "ligature neck compression," meaning strangulation.

Police have remained tight-lipped about the case, but homicide detectives are now leading the investigation into the Shermans' deaths, which police have deemed "suspicious."

The family of the Shermans released a statement over the weekend slamming media reports speculating that police are probing the theory that the pair died in a murder-suicide. CBC Toronto has not independently confirmed details about what led to the Shermans' deaths.

The Winter brothers' lawyer, Brad Teplitsky says his clients will be moving forward with their appeal because they believe the judge made legal errors in dismissing the case.

Teplitsky has been in contact with Kerry Winter since the Shermans' deaths and says Winter has "no comment at this time other than to express his sincere condolences to the Sherman family and is requesting that the media respect their privacy during this period."

Teplitsky told CBC Toronto his clients will not be attending the funeral Thursday, and have had no contact with the Shermans since they've been "in litigation for many years."

What is the lawsuit all about?

The Winter brothers' father Louis Winter ran Empire Companies, a pharmaceutical business, until his death in 1965, when the siblings were children. Their mother died within a month, and the orphans were all adopted by another Toronto family.

Sherman was Louis's nephew and had worked at Empire Companies from time to time back then, according to court records.

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The Winter brothers' claim revolves around the fiduciary duty they say Sherman owes them after he bought their father's company a couple years after their father's death.

In the suit, the siblings claim they're collectively owed 20 per cent of Sherman's interest in Apotex, which would likely amount to millions of dollars.

Jobs and shares in Empire Companies

The claim stems from an option in the sale of Empire Companies that would allow the Winter children to get jobs at their father's old company as adults, along with a five per cent share each in the company after working there for two years.

But the jobs and the shares never materialized.

Within a few years of the sale, Sherman was no longer controlling the company and had traded in his own remaining shares for shares in another company that had bought Empire, according to court records. He later founded Apotex in 1974.

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The crux of the case is how the option in the 50-year-old purchase agreement should be interpreted.

The Winter brothers argue the agreement means that Sherman made a commitment and has a fiduciary duty to them.

Sherman's lawyers argued the case amounted to an abuse of process because of a ruling against the Winter brothers in a prior suit they filed against the trust company that managed their family's estate. In that decision, the judge found that the option didn't extend past Empire Companies to Apotex.

Claim was 'wishful thinking'

In his September decision, Justice Kenneth Hood wrote that the purchase agreement itself shows that "there was only so much that Sherman was willing to do for the plaintiffs" and that "the option agreement was limited, qualified, contingent and conditional." 

Hood dismissed the case and wrote "the claimed interest in Apotex was wishful thinking, and beyond fanciful."

The Winter family disagrees. Their lawyer, Teplitsky, told CBC Toronto that the siblings just want "compensation and recognition for what their father did in terms of building up the company, and what [Barry] Sherman is alleged to have promised to them."