Bookkeeping on Anne movies ‘laughable,’ trial told

Lawyers for Sullivan Entertainment, author’s descendents conclude arguments

by Gayle Macdonald
The Globe and Mail, November 29, 2003

The trial of Toronto’s Sullivan Entertainment versus the heirs of Anne of Green Gables creator Lucy Maud Montgomery wrapped up yesterday, capping a month of testimony that chronicled how a once rosy business partnership deteriorated into one of seething distrust.

In closing arguments before Madam Justice Jean MacFarland, defence lawyer Paul Schabas, who represents three of the P.E.I. author’s descendents, their lawyer, Marion Hebb, and the public relations firm Media Profile, called Sullivan Entertainment’s bookkeeping for the Anne of Green Gables TV movies “laughable” and “a joke”.

Mr. Schabas told the judge that the Macdonald family, led by the 88-year-old matriarch Ruth Macdonald, pleaded time and again for an accounting of the programs, the highest-rated in Canadian history. For a decade, Mr. Schabas told the court, they were stonewalled. In desperation, he said, the family and Ms. Hebb held a press conference in the summer of 1999 to tell their side of the story, in which they said they were owed substantial royalties that Sullivan Entertainment was refusing to pay.

Soon afterward, Sullivan Entertainment, which has maintained that the shows never recouped their costs, launched a $55-million defamation suit against the defendants, alleging that the press conference scuttled a $25-million initial public offering in the works.

Lawyer Julian Porter, representing Ms. Hebb in this suit, told the Ontario Superior Court yesterday that Ms. Hebb should be commended for her restraint at the press conference. “She could have got up and said, ‘Liar, liar, liar, your pants are on fire!” Mr. Porter told the court, with great flourish. “But she didn’t.”

Instead, she said that Kevin Sullivan (co-owner of the company with his wife, Trudy Grant) has told us his films haven’t recouped. And that she found this hard to believe.

“This is just Enron in the advance of Enron.” Mr. Porter said in Court. “This is exactly the kind of accounting Enron did.” Referring to the now defunct U.S. poster child of corporate scandal.

Last week, Sullivan Entertainment’s lawyer Tony Kelly said in his summation that the heirs deliberately sabotaged his client’s IPO with the press conference.

“The motive was personal gain … to bring Sullivan to the table to get a better offer.” Mr. Kelly told the court.

Yesterday, Mr. Schabas also alleged that nearly $10-million in interest charges Sullivan claims was paid on the two Anne movies is a fabrication. He told the court the interest calculations on the two programs is “actually more fictional, maybe more so, than Anne of Green Gables.”

Earlier, Mr. Schabas said that Mr. Sullivan and Ms. Grant, who together wholly own Sullivan Entertainment, took home roughly $35-million in dividends from 1996 to the first six months of 1999.

Both parties agree that Montgomery heirs received $425,000.00 from Sullivan Entertainment in 1984 for the first Anne of Green Gables movie and $100,000 for its sequel, both of which attracted 5.4 million viewers each.

Judge MacFarland told the court she hopes to deliver a judgment before the end of the year.