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The producers of the heartwarming Anne of Green Gables TV shows alleged in court yesterday that author Lucy Maud Montgomery's heirs deliberately set out to torpedo a public offering by Sullivan Entertainment four years ago.

In his opening statement in this long-awaited trial, Sullivan's lawyer Anthony Kelly said Montgomery's descendents, including her 88-year-old daughter-in-law Ruth Macdonald, threatened a press conference in the summer of 1999 because they saw "Sullivan had a particular vulnerability at this point in time that could be exploited to extract more money from Sullivan."

According to Kelly, when the company's co-owners Kevin Sullivan and his wife Trudy Grant, didn't respond fast enough to the family's "threat" of going public with their grievances, Montgomery's heirs went ahead with the presser, at which they alleged they had been "stonewalled" by Sullivan to get a fair accounting of the wildly popular Anne of Green Gables shows.

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The family of the Prince Edward Island author allege that, under a 1984 agreement with Kevin Sullivan, they are entitled to "10 per cent of the net profits" from the Anne programs, among the best-watched in Canadian history.

In his remarks to Madame Justice Jean MacFarland of the Superior Court of Justice, Kelly asked "what better time to implement [the press-conference strategy]than when Sullivan is going public with its IPO and will be concerned that the threatening press conference would be fatal to the IPO. The die is now cast!!"

Soon after the press conference in 1999, Sullivan slapped Montgomery's heirs with a $55-million defamation suit.

It names Ruth Macdonald (widow of Montgomery's youngest son, Stuart), Kate Macdonald Butler, (the author's granddaughter), David Macdonald (son of Montgomery's other son, Chester) and Marian Hebb, the Macdonalds' former lawyer.

The public-relations firm Media Profile that set up the media conference and is run by Liberal insider Patrick Gossage has been added to those named in the Sullivan libel suit.

Yesterday, Kelly said Gossage repeatedly referred to the 1999 presser as "the sting," an event that would squeeze a "far more generous settlement" from his clients.

Yesterday, all the players gathered in a cramped Toronto courtroom to begin what's expected to be a particularly nasty battle over one of Canada's most beloved and wholesome heroines. In a statement of defence, the Macdonalds allege the 1984 agreement granted Sullivan the option to purchase film and TV rights for production of a television series based on Montgomery's Anne of Green Gables novel, in return for a payment of $425,000 plus the 10 per cent of net profits. Shortly after the deal was struck, the defence statement alleges the Macdonald heirs sent a letter to Sullivan's company, then called Huntingwood Films, "summarizing the terms of the agreement. This letter was requested by Kevin Sullivan . . . as he wanted some aspects of the 1984 agreement to remain confidential. . . . This summary of the 1984 agreement was not intended to and did not supersede or act as a substitute for the 1984 agreement."

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According to the document, the 1984 deal also gave the author's heirs "the right to inspect and audit records in relation to the production in order to enforce their right to receive a percentage of profits."

Over the years, Sullivan Entertainment has produced several Anne products including the television miniseries Anne of Green Gables, Anne of Green Gables - The Sequel and the Road to Avonlea TV series, which ran for seven years. Both miniseries had an estimated 5.4-million viewers in Canada.

To date, the Montgomery clan alleges they have never been given a proper accounting of the financial performances of the Anne productions. "While Sullivan paid the $425,000 lump sum . . . it has not paid any money pursuant to its obligation to pay a percentage of profits and has refused to permit a representative of the Macdonald heirs to inspect and audit its records in relation to Anne I."

The statement of defence alleges Sullivan paid $100,000 for Anne II, and agreed to pay 5 per cent of the net profits from that show. The family alleges in court papers it has not been paid a percentage of profits from that miniseries, nor have they been allowed to inspect or audit Sullivan's records.

Kelly says the Macdonalds have no right to audit the shows' records.

Kelly also said his client had offered a one-time settlement to the family of $150,000, which was rebuffed. He said his client also wanted to go to mediation and arbitration. Instead, the family opted to take the matter to the media. And here, basically, they all are.

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Yesterday, lawyers for the Macdonalds opted not to make opening statements.

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