Court File and Parties

Court File No.: CV-24-00727086-00CL
Date: 2025-04-04
Court: Superior Court of Justice – Ontario (Commercial List)

Between:
Alexander Shifrin, Applicant
-and-
LDF Frozen Foods Inc., Lev Danielov and Michael Groisman, Respondents

Before: Jane Dietrich
Counsel:

• Jacqueline Cole, Viktor Nikolov for the Applicant
• Daniel Waldman for the Respondents
  Heard: February 18, 19, 20 and 28, 2025

Reasons for Decision

Introduction

[1] Alexander Shifrin seeks a declaration that he is a 15% shareholder in LDF Frozen Foods Inc. (“LDF”), and certain related relief. Specifically, he seeks an order:

(a) declaring that he is the beneficial owner of 15% of the outstanding shares of LDF;
(b) declaring that the respondents Lev Danielov and Michael Groisman hold 7.5% of outstanding shares of LDF in trust for Mr. Shifrin;
(c) rectifying the share register of LDF to reflect Mr. Shifrin as the holder of 15% of the outstanding common shares of LDF nunc pro tunc to April 2014;
(d) declaring that Mr. Shifrin is a ‘complainant’ within the meaning of s. 245 of the Ontario Business Corporations Act (the “OBCA”);
(e) directing the issuance of shares to Mr. Shifrin from LDF’s treasury;
(f) requiring the respondents produce to Mr. Shifrin financial statements since the 2014 fiscal year end, the articles and by-laws of LDF, any unanimous shareholder agreements, a register of directors and of shares, and any minutes of meetings or resolutions of the shareholders;
(g) directing a trial on Mr. Shifrin’s damages; and
(h) costs of this proceeding.

[2] The respondents request Mr. Shifrin’s application be dismissed as they take the position that there was no agreement to provide Mr. Shifrin with shares in LDF, that the funds he invested in LDF have been returned, and that his application is statute-barred in that the limitation period has expired.

[3] For the reasons that follow, I grant the relief requested by Mr. Shifrin, subject to the comments in paragraph 117 below regarding a trial with respect to Mr. Shifrin’s damages.

Background

Procedural Background

[4] This proceeding was commenced by notice of application issued on September 5, 2024. Originally it was set to be heard on November 27, 2024. However, after affidavits had been exchanged, it became clear that issues of credibility were central to the dispute and viva voce evidence would be required.

[5] Accordingly, by endorsement of Justice Black dated November 12, 2024, a three-day hearing was scheduled with the relevant parties and witnesses to attend and provide viva voce evidence. Each witness’ affidavit was to serve as evidence-in-chief (with a 15-minute warm-up examination-in-chief) and transcripts of cross-examinations were to act as discovery evidence. The proceeding remained as an application.

[6] The parties also entered into an agreement regarding the use of exhibits to affidavits and documents produced pursuant to undertakings as contemplated by Girao v. Cunningham, 2020 ONCA 260. Oral evidence was heard over three days. Following oral evidence, factums were exchanged and closing submissions were heard.

Overview of the Dispute

[7] The events at issue date back to November of 2013 and into 2014.

[8] LDF carries on business as a wholesaler of frozen pastries and baked goods. LDF was incorporated in 2009 pursuant to the OBCA and has its registered head office in North York, Ontario. At the relevant times, Mr. Danielov and Mr. Groisman were the only directors of LDF.

[9] As discussed in more detail below, there is some dispute about how the idea emerged, but there is general consensus that in November of 2013, discussions began between Mr. Danielov and Mr. Shifrin about Mr. Shifrin investing funds in LDF and working there. Mr. Danielov and Mr. Shifrin accept that the agreement in principle between them was that Mr. Shifrin would invest $100,000 and work at LDF. In return, Mr. Shifrin would receive 15% of the shares of LDF. Other terms of that agreement are disputed.

[10] In essence, Mr. Shifrin claims that he invested the $100,000, worked at LDF for a while, eventually left LDF because it did not have sufficient funds to pay his salary, but he never received the shares to which he was entitled or the return of the $100,000.

[11] The respondents claim that although Mr. Shifrin did invest $97,000, his work at LDF was not satisfactory and Mr. Shifrin was repaid the amount he invested, in part by an $80,000 cash payment in early 2015 and, therefore, Mr. Shifrin has no claim to any shares in LDF.

[12] Credibility of the parties is central to the dispute.

Facts Not in Dispute

[13] Mr. Danielov and Mr. Groisman were shareholders of LDF. Mr. Danielov held 50% of the shares of LDF. Mr. Groisman also held 50% of the shares of LDF, but there is an issue as to whether he held half of those shares in trust for Gary Tiz (Mr. Groisman’s brother-in-law). That issue is not before me.

[14] Mr. Danielov was responsible for day-to-day operations at LDF and Mr. Groisman’s involvement was of a financial nature – although Mr. Groisman did attend at LDF’s premises from time to time and signed all cheques.

[15] Mr. Shifrin had previously worked for another company in which Mr. Groisman and Mr. Tiz held an interest – Summit View Homes. Mr. Shifrin has a grade 10 education but also holds a real estate license. The work he was engaged in at Summit View Homes (selling homes) was winding down. Mr. Shifrin had known Mr. Groisman since around 1973. Mr. Shifrin has also worked as a limo/uber driver over approximately the past 10 years.

[16] Mr. Shifrin met Mr. Danielov sometime in early 2000 as Mr. Shifrin, Mr. Danielov, Mr. Groisman and Mr. Tiz were part of a small Russian-speaking community.

[17] In November of 2013, discussions began between Mr. Danielov and Mr. Shifrin about Mr. Shifrin investing funds in LDF and working there.

[18] Mr. Shifrin did provide funds to LDF totaling $97,000 through a series of cheques that were dated as follows: $30,000 on November 19, 2013, $10,000 on December 2, 2013, $20,000 on December 13, 2013, $10,000 on December 27, 2013, $7,000 on January 22, 2014, $10,000 on February 21, 2014, $5,000 on March 4, 2014, and $5,000 on March 16, 2014. For the most part, the QuickBooks records of LDF reflect deposits on or about the same date as the cheques. However, for the final two payments of $5,000, the QuickBooks records of LDF show deposits on March 24, and March 26, 2014.

[19] The funds were recorded by LDF as a loan, however, all parties acknowledge that was simply a matter of how it was reflected on the QuickBooks system and was not reflective of any agreement between the parties.

[20] Mr. Danielov and Mr. Shifrin accept that the agreement in principle between them was that Mr. Shifrin would invest $100,000 and work at LDF. In return, Mr. Shifrin would receive 15% of the shares of LDF. Other terms of that agreement are disputed and are discussed below.

[21] In December of 2013, Mr. Shifrin’s company, Shifco Inc., received two cheques from LDF, each in the amount of $1,500 plus HST dated December 6, 2013, and December 20, 2013. Shifco Inc. issued two invoices dated December 7, 2013, and December 22, 2013, to LDF for ‘services rendered managing and consulting for LDF Frozen Foods Inc.’ for $1,500 plus HST.

[22] Mr. Danielov instructed his counsel to draft a written contract reflecting the agreement he had reached with Mr. Shifrin and a draft was provided in February of 2014. That contract, which was marked up by hand by Mr. Danielov and Mr. Shifrin was signed by Mr. Danielov and Mr. Shifrin in February of 2014 (the “February 2014 Agreement”) and provided, among other things:

(a) the shareholdings of LDF would be restructured from Mr. Groisman and Mr. Danielov each holding 50% of the shares to Mr. Groisman and Mr. Danielov each holding 42.5% and Mr. Shifrin holding 15% of the shares;
(b) Mr. Shifrin would pay $100,000 as consideration for the shares and the shares would be issued concurrently with such payment;
(c) Mr. Groisman and Mr. Danielov would be the only directors and officers of LDF and Mr. Shifrin would enter into a voting trust agreement such that Mr. Groisman and Mr. Danielov would vote Mr. Shifrin’s shares;
(d) in a section headed ‘Employments’, it was provided that Mr. Shifrin would provide services to LDF as general manager commencing in February of 2014. Paragraph 3 of that section provided that subject to normal statutory deductions and company policies LDF agreed to pay Mr. Shifrin an amount that was left blank per week, paid every two weeks, in arrears plus benefits as listed in a schedule (and that schedule was not included). Mr. Shifrin was subject to a probationary period of two years during which LDF could terminate the agreement without notice or liability or obligation provided that LDF was to repurchase Mr. Shifrin’s shares at the original purchase price paid by Mr. Shifrin; and
(e) the agreement contained a ‘four corners’ clause providing that it was the complete agreement of the parties and superseded and terminated any prior agreement with respect to such subject matter.

[23] The February 2014 Agreement was emailed by Mr. Shifrin to an email address of Mr. Groisman in February of 2014. However, there is a dispute as to whether or not Mr. Groisman ever signed the agreement.

[24] Mr. Shifrin received and deposited a series of 17 cheques from LDF, each in the amount of $750 between April and August of 2014. It is not disputed that each of those cheques noted on the cheque stub, ‘Alex Shifrin – Loan, Loan Return’.

[25] At some point in 2014 (the date is disputed), Mr. Shifrin stopped working at LDF. However, Mr. Shifrin continued to perform a number of tasks for LDF into 2016.

[26] No share certificates were ever issued to Mr. Shifrin.

[27] On July 3, 2024, counsel for Mr. Shifrin as a shareholder in LDF, sent a letter to the respondents requesting certain documents related to LDF and noting that if LDF disputes that Mr. Shifrin is a shareholder of LDF that he makes such requests in his capacity as a creditor.

[28] On July 11, 2024, counsel to the respondents replied to the correspondence of July 3, 2024, advising that Mr. Shifrin was neither a shareholder nor a creditor of LDF and noting that Mr. Shifrin had been repaid amounts owing to him, at his request, in 2014.

Primary Areas of Disagreement

[29] Mr. Shifrin’s evidence is that Mr. Danielov requested the $100,000 be paid overtime in installments. Mr. Danielov claims that that it was to be paid all at once, but Mr. Shifrin chose to pay it overtime in order to entice Mr. Danielov to keep giving Mr. Shifrin a chance to continue to work at LDF. What is clear is that Mr. Danielov accepted the partial payments over a series of cheques and deposited those funds into LDF’s accounts.

[30] Mr. Shifrin claims that he was to be paid $3,000 a month as salary as an employee of LDF. He claims that the two payments to his company, Shifco Inc., in December of 2013 and the cheques of $750 a week through April to August of 2014 represented partial payments of that salary.

[31] Mr. Shifrin also claims that it was agreed by Mr. Danielov that the additional $3,000 that Mr. Shifrin owed as an investment in LDF (to make up the difference between the $100,000 he was to contribute and the $97,000 he paid by cheques) was to be offset against salary owing to Mr. Shifrin by LDF.

[32] Mr. Shifrin also testified that often LDF was unable to pay his salary because of cash flow issues, and he accepted that as an ‘owner’ or ‘partner’ in LDF. However, by the fall of 2014, Mr. Shifrin stated that he could no longer continue without receiving a regular salary as he needed a reliable income. Accordingly, Mr. Shifrin says he resigned from LDF effective on or about October of 2014.

[33] Mr. Danielov claims that there was never an agreement to pay Mr. Shifrin a salary of any amount.

[34] Mr. Danielov also claims that the work Mr. Shifrin performed at LDF was not to the level required and of no or very limited value. Accordingly, Mr. Danielov says that beginning in January and definitively by the end of March of 2014, he told Mr. Shifrin the arrangement would not work out and LDF began repaying Mr. Shifrin his investment (hence the weekly cheques for $750).

[35] Mr. Danielov further claims that Mr. Shifrin did not want to wait for a return of his funds, so in December of 2014, Mr. Danielov borrowed approximately $80,000 in cash from a friend, Isaac Kron. Mr. Danielov gave evidence that in January of 2015 he met with Mr. Shifrin at the LDF offices and gave that cash to Mr. Shifrin in full repayment of Mr. Shifrin’s investment.

[36] Mr. Shifrin denies ever receiving approximately $80,000 in cash from Mr. Danielov or LDF.

[37] For his part, Mr. Groisman says that he had understood at a high level that Mr. Shifrin was going to invest $100,000 in LDF and work there for some interest in LDF. However, Mr. Groisman says that he received a phone call from Mr. Shifrin saying an agreement would be sent to him for signature and Mr. Groisman responded that was not how he did business, and he wanted to sit down and discuss the terms of the agreement first. He says no discussion ever took place and he did not see or sign the February 2014 Agreement.

[38] Mr. Shifrin says he emailed a copy of the February 2014 Agreement to Mr. Groisman in February of 2014 as Mr. Groisman was in Florida at that time. Mr. Shifrin says he attended Mr. Groisman’s office at the end of March 2014 when Mr. Groisman returned from Florida and was provided with a copy of the February 2014 Agreement signed by Mr. Groisman. However, Mr. Shifrin says that he cannot locate the copy of the February 2014 Agreement signed by Mr. Groisman.

[39] Mr. Shifrin claims that he did substantial work for LDF not only during 2014, but also in the two years following (into 2016). He says he did this work because he was an ‘owner’ or ‘partner’ in LDF and produced numerous emails to support his claim. In many of these emails, Mr. Shifrin held himself out as representing LDF to third parties.

[40] Mr. Danielov did not take issue with these emails or Mr. Shifrin holding himself out as representing LDF during that time. Mr. Danielov says that Mr. Shifrin refused to do much of the production work claiming it was too hard, that Mr. Shifrin’s work was only sporadic and could have been done by anyone for minimum wage, that the emails going into to 2016 were simply dealing with responses to emails Mr. Shifrin had sent in 2014, and that Mr. Shifrin would agree to perform ongoing minor tasks for LDF on a voluntary basis.

[41] Mr. Shifrin says he has spoken to Mr. Danielov in the months and years that followed Mr. Shifrin leaving LDF asking about payment for the months he worked at LDF and having the share certificates issued to him. Mr. Shifrin claims that Mr. Danielov told him that LDF was not doing well, and that he continued to tell Mr. Shifrin that he would send proof of the shares, but never did so.

[42] Mr. Shifrin says he accepted Mr. Danielov’s explanation that LDF was not doing well until he learned about Mr. Danielov’s collection of luxury cars and recent luxury vacations in 2023. At that time, he became suspicious that LDF was in fact doing well.

[43] Mr. Shifrin says although he knew he was supposed to receive share certificates under the February 2014 Agreement and had not been provided with them, it was not until July of 2024 when the respondents’ counsel wrote to Mr. Shifrin’s counsel that the respondents took the position that he was not in fact a shareholder.

Other Witnesses

[44] Along with testimony from Mr. Shifrin, Mr. Danielov and Mr. Groisman, evidence was also received from five other witnesses. A summary of the evidence is provided in this background section, and other aspects of the evidence will be examined below in the context of an assessment of credibility.

[45] Mr. Tiz filed an affidavit sworn on October 22, 2024, in support of Mr. Shifrin’s position. Mr. Tiz claims that Mr. Groisman holds 50% of the shares held in Mr. Groisman’s name in trust for Mr. Tiz such that, after taking into account Mr. Shifrin’s 15% shareholding, Mr. Tiz owns 21.25% of the shares of LDF beneficially. Mr. Tiz and Mr. Groisman were partners in Summit View Homes, and Mr. Tiz claims that funds from Summit View Homes were used to invest in LDF.

[46] Mr. Tiz claims that he was advised not to take shares in LDF in his own name as Mr. Tiz was going through a divorce at that time. However, Mr. Tiz put forward a number of documents that he was receiving and sending emails regarding LDF and had arranged for and guaranteed loans for LDF’s benefit. Mr. Tiz also testified that he had understood Mr. Shifrin was entitled to 15% of the shares of LDF.

[47] Mr. Danielov and Mr. Groisman deny that Mr. Tiz had the authority to enter into loan agreements or any other documents on behalf of LDF. Mr. Danielov says that Mr. Tiz was involved in LDF emails solely because his office was near Mr. Groisman’s and Mr. Groisman did not use email himself. According to Mr. Danielov, occasionally if he had a question, Mr. Groisman would suggest that Mr. Danielov discuss the matter with Mr. Tiz given Mr. Tiz’ background in accounting.

[48] Further, Mr. Danielov claims that Mr. Tiz is behind the claim by Mr. Shifrin. He claims that Mr. Tiz told Mr. Shifrin that LDF was doing much better, and that Mr. Tiz does not like Mr. Danielov.

[49] Two other witnesses gave evidence for Mr. Shifrin. An affidavit was filed by Mr. William Lehun, who gave evidence that he was a long-time lawyer for Summit View Homes. He recalled a conversation in 2011 or 2012 with Mr. Tiz and Mr. Groisman who told Mr. Lehun that they were 50/50 partners with a third Russian associate in LDF. He recalls being told, but does not recall by who, that Mr. Groisman held Mr. Tiz’ interest in trust in some form for Mr. Tiz. He does not have any knowledge regarding Mr. Shifrin as a shareholder of LDF.

[50] Ms. Francine Baker-Sigal also swore an affidavit on December 3, 2024, and testified during the hearing. Along with being a lawyer, Ms. Baker-Sigal also works in a managerial capacity at Embee Properties Limited (a family-related company). She gave evidence that her father approved loan requests from Mr. Tiz on behalf of LDF in 2016 and 2018. Ms. Baker-Sigal was involved in documenting the two loans by Embee Properties Limited as lender to LDF as borrower, with Mr. Tiz as guarantor. One loan occurred in 2016 for $600,000 and one in 2018 for $500,000. She gave evidence that Mr. Tiz advised her that he was a shareholder and had the authority to bind LDF. The promissory notes produced showed Mr. Tiz signing on behalf of LDF. Both Mr. Danielov and Mr. Groisman denied that Mr. Tiz had the power to bind LDF.

[51] As noted above, the issue of whether Mr. Tiz is a beneficial shareholder of LDF is not one that is before me.

[52] On behalf of the respondents, Ms. Deborah McGowan, who has provided services to LDF as a bookkeeper since approximately 2010 or 2011 also swore an affidavit and provided testimony. In court, Ms. McGowan admitted that she did not have independent knowledge of the relationship between Mr. Shifrin and Mr. Danielov or Mr. Groisman other than what Mr. Danielov told her. She recorded the amounts deposited by Mr. Shifrin as a loan based on Mr. Danielov’s instructions. Although she recalls seeing Mr. Shifrin in late 2013/early 2014 at LDF, she does not recall seeing him often (although she does not routinely go into the production areas). The QuickBooks records show that with respect to amounts owed to Mr. Shifrin, a ‘transfer’ of that amount was recorded on 12/31/2015 with a notation that ‘Vlad took over this Loan LDF paid Vlad’. Ms. McGowan claims that entry was her mistake, she was in rush, thought it was Vlad because she knew it was a Russian name but in fact it was not Vlad.

[53] The respondents originally submitted an affidavit of Isaac Kron sworn on October 3, 2024. The respondents no longer rely on that affidavit; however, it forms part of the record. Mr. Kron testified in his affidavit that in or around late 2014, Mr. Danielov reached out to Mr. Kron requesting a loan to repay Mr. Shifrin. Mr. Kron swore that he provided LDF with a loan in the amount of $80,000 in cash in or around December of 2014. Immediately prior to Mr. Kron’s out-of-court cross-examination, a copy of a signed promissory note reflecting the loan from Mr. Kron to LDF as guaranteed by Mr. Danielov dated December 15, 2014 (the “Alleged Promissory Note”) was provided by counsel to the respondents to counsel to Mr. Shifrin.

[54] During Mr. Kron's out-of-court cross examination that took place on January 23, 2025, Mr. Kron testified that he had the Alleged Promissory Note in his possession since 2014 and had spent an enormous amount of energy going into old files and storage looking for the document and ‘luckily’ stumbled on it. Mr. Kron went on to testify in his out-of-court cross examination that he did not remember who the witness on the document was.

[55] The respondents chose not to call Mr. Kron during the hearing; however, Mr. Shifrin’s counsel cross-examined Mr. Kron in court. During his testimony at the hearing, Mr. Kron admitted that the Alleged Promissory Note was not in fact in his possession since 2014. Rather, Mr. Kron requested that his counsel create the Alleged Promissory Note the week of Mr. Kron’s cross-examination. Mr. Kron also admitted that he himself signed the witness line on the Alleged Promissory Note. Mr. Kron repeatedly referred to his false testimony during his out-of-court examination as a ‘misunderstanding’ and claimed that he thought he was doing the right thing to do to help Mr. Danielov.

[56] For his part, Mr. Danielov says that he signed the Alleged Promissory Note days before Mr. Kron’s out-of-court cross examination, but that Mr. Kron simply told him that it was a document for the lawyers, and that Mr. Danielov did not in fact read the Alleged Promissory Note.

Credibility

[57] The credibility of the witnesses is a significant matter that must be addressed. As stated in Mykki Cavic v. Costco Wholesale Canada Limited, 2012 ONSC 5307 aff’d 2015 ONCA 215:

[20] In assessing credibility of the witnesses in this case, I am guided by the observation of D. Brown J. in Atlantic Financial Corp. v. Henderson et al., 2007 15230 (ONSC), as follows:
In deciding between these two diametrically opposed positions, I am guided by the observations made about assessing the credibility of witnesses by O’Halloran, J.A. in Faryna v. Chorny, 1951 252 (BCCA), [1952] 2 D.L.R. 354 (B.C.C.A.) where he stated, at page 357:
The credibility of interested witnesses, particularly in cases of conflict of interest, cannot be gauged solely by the test of whether the personal demeanor of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of the witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.

[58] Additionally, the presence or absence of evidence contradicting a witness’s statements and corroborative evidence may also be taken into account in assessing a witness’ credibility: see Atlantic Financial Corp. v. Henderson at para 27.

[59] None of Mr. Shifrin, Mr. Danielov or Mr. Groisman were particularly impressive witnesses. Part of the reason for that may be that the events in question happened over 10 years ago. However, in other respects, especially as it relates to Mr. Danielov and Mr. Groisman, the surrounding circumstances do not align with their explanation of events.

Mr. Shifrin

[60] Mr. Shifrin’s story evolved from his first affidavit sworn August 30, 2024, second affidavit sworn October 22, 2024, third affidavit sworn November 29, 2024, his out-of-court cross examination, to his testimony in court, most particularly with respect to when certain things happened and additional documents that came to light.

[61] Mr. Shifrin’s testimony was inconsistent regarding the dates on which various things took place. For example, in his affidavit sworn on August 30, 2024, he testified that the February 2014 Agreement was drafted in November of 2013 and that it was entered into at that time. At the hearing, Mr. Shifrin claimed that in November of 2013 the agreement was verbal, and the February 2014 Agreement was drafted months later.

[62] Further, in his first affidavit he claimed that he wasn’t paid for his work at LDF between November of 2013 and March of 2014 but that he repeatedly asked for payment. Later, he produced two invoices from his company Shifco Inc. to LDF dated December of 2013 for services rendered for managing and consulting fees of $1,500 plus HST each. Copies of the corresponding cheque stubs from LDF to Shifco Inc. were also produced.

[63] Mr. Shifrin also claimed that he was an employee of LDF (not a contractor), however, could not explain why the series of 17 cheques of $750.00 each (which were produced by Mr. Shifrin) did not provide for source deductions of any kind. He claimed that he did not notice that each of the cheques said Loan Return on the cheque stub. It is clear that Mr. Shifrin is not an experienced businessperson in many respects. However, consistent with his testimony that the cheques were income and not a loan repayment, he did report the income from the cheques on his income tax returns as self-employment income.

[64] In his first affidavit, Mr. Shifrin also claimed that Mr. Danielov and Mr. Groisman were equal shareholders of LDF – each owned 50%. That is what the February 2014 Agreement said as well. No mention was made of Mr. Tiz until Mr. Shifrin’s second affidavit which was sworn on October 22, 2024. It was at that point that Mr. Tiz also swore an affidavit supporting Mr. Shifrin. The evidence then indicated that not only was Mr. Tiz a beneficial owner of 50% of the shares held by Mr. Groisman but that he was involved in LDF’s business and in the discussions which led to Mr. Shifrin contributing funds to LDF in exchange for what Mr. Shifrin claims was 15% of the shares of LDF.

[65] In Mr. Shifrin’s first affidavit, he also states that he resigned from LDF, not only because he was not being consistently paid a salary, but also because he was concerned that Mr. Danielov and Mr. Groisman were cutting corners in the business – using expired and moldy products, refusing to pay suppliers and others, using ‘illegal’ workers and Mr. Danielov was forging Mr. Groisman’s signature. These concerns, the respondents claim, are not consistent with Mr. Shifrin wishing to remain an equity owner in LDF.

[66] It is clear that Mr. Shifrin is not an experienced businessperson. He has a grade 10 education, and although he holds a real estate license, for the past 10 years, he has driven limos / uber. The funds he invested in LDF came from a personal line of credit. He uses the terms partner, owner, shareholder interchangeably.

[67] Mr. Shifrin does not understand with precision, what a beneficial owner is. In this respect, I do not find the evidence of whether or not Mr. Tiz was a beneficial shareholder central to the dispute before me, and accordingly the evidence of Mr. Lehun and Ms. Baker-Sigal is also not central to the issue before me.

[68] Although Mr. Shifrin knew that the February 2014 Agreement entitled him to share certificates, which he did not receive, Mr. Shifrin’s evidence is that the share certificates were just paperwork and that he believed he was a 15% shareholder in LDF. However, until 2023, he did not believe that shareholding was worth much given his conversations with Mr. Danielov that the LDF business was struggling.

[69] Despite a number of inconsistencies regarding dates that can be attributed to the 10 years which had elapsed between the events at issue and the evidence being given and a number of statements by Mr. Shifrin which reflect his lack of business understanding, Mr. Shifrin’s testimony was consistent on the main points: (i) he provided $97,000 in cash through a series of cheques to LDF, the remaining $3,000 was to be set off against unpaid salary owed to him for a total investment of $100,000; (ii) in exchange for that investment he was to receive 15% of the shares of LDF; (iii) Mr. Danielov and Mr. Groisman were both aware of the agreement and although he cannot locate a copy of the February 2014 Agreement signed by Mr. Groisman, he did receive a copy signed by Mr. Groisman; (iv) he stopped working at LDF full time in the fall of 2014 but continued to perform work for LDF over the next two years; (v) he repeatedly asked Mr. Danielov for copies of the share certificates and financial information about LDF over the years; and (vi) he did not receive $80,000 in cash from Mr. Danielov.

[70] Mr. Shifrin’s evidence is also consistent with the hundreds of pages of emails from 2014 to 2016 where Mr. Shifrin was emailing about LDF business - including with third parties.

[71] Given the sparse communication in writing through email or text with Mr. Danielov and almost total lack of communication with Mr. Groisman, it is not unreasonable that Mr. Shifrin’s inquiries regarding share certificates of LDF and LDF performance over the years were not made in writing.

Mr. Danielov

[72] Mr. Danielov’s evidence also evolved during the proceedings. Along with changing dates, which in part, like with Mr. Shifrin, can be attributed to the time which has passed since the events in issue, other issues surround Mr. Danielov’s evidence in terms of whether the explanations provided by Mr. Danielov are probable given the surrounding circumstances.

[73] In Mr. Danielov’s affidavit, he stated that Mr. Shifrin never did any work for LDF and did not contribute whatsoever. However, in his oral testimony Mr. Danielov said Mr. Shifrin did do work, just not the work Mr. Danielov was expecting him to do, Mr. Shifrin refused to do a number of tasks and what he did do was only worthy of minimum wage.

[74] Mr. Danielov agrees that Mr. Shifrin sent and received a number of emails regarding LDF business both in 2014 and into 2016 – including during the time period after the parties agree Mr. Shifrin no longer worked at LDF and the time period after Mr. Danielov claims Mr. Shifrin was repaid all amounts owed to him. Although the emails were sent from a gmail account, all parties agree that Mr. Shifrin never had an LDF email account.

[75] Mr. Danielov claims this additional work for LDF was originally to help LDF so LDF could pay Mr. Shifrin back his outstanding $97,000. After this amount was allegedly repaid, according to Mr. Danielov, Mr. Shifrin continued to do these things voluntarily because Mr. Shifrin was a nice guy – but Mr. Danielov could not explain further why Mr. Shifrin continued to do things like pick up cheques for LDF, arrange sales meetings and make sales efforts, contact distributors, or make himself available for deliveries. The emails include Mr. Shifrin holding himself out as acting for LDF, and Mr. Danielov testified he had no concerns about that.

[76] Mr. Danielov denies that any agreement was reached to pay Mr. Shifrin a salary of any kind. Mr. Danielov admits to signing the February 2014 Agreement which he says was consistent with the terms of the oral agreement reached in November of 2013. However, when asked about the two consulting invoices and payments in December of 2013 to Shifco Inc., Mr. Danielov explained that one payment was likely reimbursement of expenses because Mr. Shifrin had taken an LDF van in for repairs. However, no invoices or repair statements were produced and the notation on the LDF cheque stubs, one of which referred to ‘Subcontractors’ and the other to ‘Legal and Accounting: Consulting’ does not correspond to a reimbursement of expenses. Mr. Danielov had no explanation for the second payment.

[77] Further, Mr. Danielov admitted that he told Mr. Shifrin that “sometimes you’re not going to get paid six months, but then when we do get a cheque, sometimes we get paid...”. If there was no agreement to pay Mr. Shifrin a salary, then this statement by Mr. Danielov does not make sense.

[78] Mr. Danielov also stated in his affidavit that Mr. Groisman and he agreed that Mr. Shifrin was not to have any more involvement in the company (given Mr. Shifrin’s alleged failure to pay the amount agreed or contribute to LDF) and, as such, LDF began returning funds to Mr. Shifrin between January and August of 2014. However, it was after LDF apparently began returning his investment to Mr. Shifrin that (i) Mr. Danielov continued to accept cheques from Mr. Shifrin which were agreed by Mr. Danielov to be part of the investment amount; and (ii) Mr. Danielov instructed his counsel to draft the February 2014 Agreement which Mr. Danielov admits to signing.

[79] Mr. Danielov also stated in his affidavit that at the time when Mr. Shifrin was investing funds, Mr. Groisman had already invested $2.2 million. However, at the hearing, Mr. Groisman indicated that in fact much of those funds had been advanced in the years following the events at issue at perhaps only $500,000 or $800,000 was invested in 2013/2014 by Mr. Groisman.

[80] With respect to the alleged cash payment of $80,000 by Mr. Danielov to Mr. Shifrin in January of 2015, there is no corroborating evidence of this payment. The respondents, understandably, no longer rely on Mr. Kron’s evidence. To be clear, Mr. Kron’s evidence is not at all credible given that he lied under oath regarding the Alleged Promissory Note that he directed to be created just days before his cross-examination and which he then falsely claimed to have in his possession for 10 years.

[81] Mr. Danielov’s explanation that he signed the Alleged Promissory Note in January of 2025 without even reading it yet understanding that it was ‘for the lawyers’ and he needed it for the lawsuit is not credible.

[82] The only evidence from the QuickBooks records regarding loan repayment is a statement from December 31, 2015 that ‘Vlad took over this Loan LDF paid Vlad’. Ms. McGowan, however, admits that this entry is a mistake, and Vlad was just used because she recalled a Russian name.

[83] The failure by Mr. Danielov, or any of the respondents, to produce unredacted financial statements prepared by an accountant is also a factor that I have taken into account in assessing Mr. Danielov’s credibility. Accountant prepared financial statements were produced, but so heavily redacted that no relevant information that was contained in the QuickBooks records could be verified. Mr. Danielov’s explanation that the records were redacted to ensure company information did not become public was not credible given that QuickBooks records reflecting the detailed information of which Mr. Danielov was allegedly concerned was in fact produced. The fact that third party prepared financial statements were available but were only produced in such a heavily redacted form to not allow the internal bookkeeping records to be verified troubles me and leads me to doubt the accuracy of the evidence relied upon by Mr. Danielov to explain the repayment in cash of amounts owing to Mr. Shifrin.

Mr. Groisman

[84] In large part, Mr. Groisman defers to Mr. Danielov with respect to what happened during the time period at issue. He claims that Mr. Shifrin’s involvement in LDF was not important to him - it was left to Mr. Danielov.

[85] Although he admits that a copy of the February 2014 Agreement was sent to his email address in February of 2014, Mr. Groisman’s evidence is that he has never seen the agreement before these proceedings. As noted above, he says that Mr. Shifrin called him about the agreement, and Mr. Groisman’s response was that he wanted everyone to get together and do business in the office and have a discussion, but he never heard anything further.

[86] Although Mr. Groisman repeatedly said that he deferred to Mr. Danielov on the details of Mr. Shifrin’s involvement with LDF, he also stated that he never discussed the February 2014 Agreement with Mr. Danielov. Mr. Groisman stated that he also was not informed by Mr. Danielov of any terms related to work that Mr. Shifrin would do at the company.

[87] However, Mr. Groisman admitted that he knew from discussions with Mr. Tiz that Mr. Shifrin was going to invest potentially $100,000 and try to help with the work in the factory. Mr. Groisman said he could not recall specific conversations, but he knew Mr. Shifrin was at LDF to try to do work. He also admitted that he did not see anything wrong with taking Mr. Shifrin’s investment in exchange for Mr. Shifrin having some stake in the company and working for LDF.

[88] Eventually, in cross examination during the hearing, Mr. Groisman stated:

A. Honestly, I don’t remember exactly. It’s - but because it was like just one or two, you know short conversations between either Mr. Tiz or, or Alex when he called. And I think we were talking about like in the beginning, you know, there was like a number, like a 10 percent interest or, then I, I did hear like probably from [Mr. Danielov] that it was 15 percent interest. But just to clarify a little bit, it was interest in the company. At no time, I ever considered that he is going to get ownership, any kind of ownership shares of that company. You can pay, you can have the interest in the company, but not an ownership.

Q. What other kind of interest would one have in a corporation?

A. Like nonvoting shares

Q. Okay. Okay. So your primary goal was to ensure that you weren’t losing the right, to vote shares. Right?

A. Yes.

[89] Although Mr. Groisman stated that his role in LDF was financial (i.e. investing money) and that he signed every cheque that went out from LDF, he claims that he never looked at any financial statements for the company. Mr. Groisman also stated that he also did not know anything about the private loan that Mr. Danielov says that LDF obtained from Mr. Kron.

Findings of Credibility

[90] The evidence of each of the three primary witnesses, Mr. Shifrin, Mr. Danielov and Mr. Groisman was not without inconsistencies. However, I must consider the principle established in Faryna v. Chorny, referred to above - that the real test of the truth of the story of the witness must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.

[91] Although the evidence of Mr. Shifrin is not wholly consistent, it reflects the recollections of someone with a less than perfect memory and who is an unsophisticated businessperson. On the critical points, Mr. Shifrin’s evidence remained consistent and his explanation as to his conduct since he stopped working at LDF accords with someone who believed himself to be a shareholder of a financially struggling company.

[92] The evidence of Mr. Danielov and Mr. Groisman, however, as referenced above, in large part is not harmonious with the preponderance of the probabilities that a practical and informed person would recognize as reasonable in the circumstances. The explanations provided by Mr. Danielov for a number of matters, including the December 2013 invoices and payments to Shifco Inc., the continued acceptance of funds from Mr. Danielov after it was supposedly determined that he was not working out at LDF, the lack of any agreement to pay Mr. Shifrin a salary, and Mr. Shifrin’s continued involvement in LDF into 2016 do not accord with what a practical and informed person would recognize as reasonable in the circumstances. The lack of corroborative evidence in respect of the alleged cash payment of $80,000, and the failure to produce unredacted financial statements that exist and have been prepared by a third party are also problematic.

[93] With respect to Mr. Groisman, I find many of his explanations are also not reasonable in the circumstances, this includes that he was the financial partner in LDF, signed all cheques, but yet did not ever discuss the specifics of a significant investment by Mr. Shifrin (of which he admits he was generally aware) with Mr. Danielov – especially when Mr. Danielov admits to signing an agreement providing 15% of the shares of LDF to Mr. Shifrin. Mr. Groisman was clear in cross-examination that his concern was voting control of LDF – the February 2014 Agreement provides that Mr. Shifrin was to enter into a voting trust agreement such that Mr. Groisman and Mr. Danielov would vote Mr. Shifrin’s shares. The inclusion of that voting trust structure is consistent with input having been incorporated from Mr. Groisman into the February 2014 Agreement.

[94] Accordingly, where there is a material conflict between the evidence of Mr. Shifrin and the evidence of Mr. Danielov or Mr. Groisman, I prefer and accept the evidence of Mr. Shifrin over that of Mr. Danielov or Mr. Groisman.

Issues

[95] The issues to be determined on this application are:

(a) Was there an enforceable agreement (oral or written) between Mr. Shifrin, Mr. Danielov and Mr. Groisman to provide Mr. Shifrin with 15% of the shares in LDF;
(b) Is Mr. Shifrin entitled to oppression remedy relief under s. 248 of the OBCA; and
(c) Is Mr. Shifrin’s claim to 15% of the shares of LDF statute-barred by the Limitations Act, 2002?

Analysis

Issue 1: Was there an enforceable agreement (oral or written) between Mr. Shifrin, Mr. Danielov and Mr. Groisman to provide Mr. Shifrin with 15% of the shares in LDF?

[96] For a legally binding contract to exist, the parties must have agreed on all of the essential terms. Those essential terms vary with the nature of the transaction and the context in which the agreement is made see para 75 of Cdn. Northern Shield v. 2421593 Canadian Inc., 2018 ONSC 3627. Further, as stated at para 74 of Cdn Northern Shield:

[74] The determination of whether the parties intended to contract and whether the essential terms of the contract can be determined with a reasonable degree of certainty is arrived at from the perspective of an objective, reasonable bystander in light of all the material facts. The subjective intentions and beliefs of the parties are irrelevant and have no place in the analysis. See: United Gulf Developments Ltd. v. Iskandar, 2008 NSCA 71, at para. 82; Olivieri v. Sherman, 2007 ONCA 491, at para. 44; Apotex Inc. v. Allergan Inc., 2016 FCA 155, at paras. 44-51.

[97] As set out by the Supreme Court of Canada in Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20 the overriding concern of contractual interpretation is to determine the parties’ intention and the scope of their understanding: see Earthco at para 62. The actual words chosen are central to the analysis, but to determine true intent, “decision makers must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract” see Earthco at para 63 quoting Sattva Capital Corp v. Creston Moly Corp, 2014 SCC 53, at para 47. Although the facts surrounding the contract formation are relevant, those facts must not be allowed to overwhelm the words of the contract see Earthco at para 63.

[98] As stated in paragraph 65 of Earthco, “Sattva allows courts to interpret contractual terms in light of the contract as a whole and with reference to objective evidence that illustrates what was within the parties’ knowledge at or before the time of their contract’s formation (see para. 58). Ultimately, ascertaining the objective intent of the parties involves not only a consideration of the actual words used in a contract but also a consideration of the factual matrix surrounding the contract.”

[99] Contractual interpretation also requires the court to consider the principle of commercial reasonableness and efficacy: see Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60 at para 79.

[100] As stated by the Ontario Court of Appeal, courts should not strive to set aside a commercial bargain that was intended to have legal effect where a clause in an agreement – even if not precisely expressed – has an ascertainable meaning: see Mapleview-Veterans Drive Investments Inc. v. Papa Kerollus VI Inc. (Mr. Sub), 2016 ONCA 93 at para 29.

[101] The February 2014 Agreement was not a sophisticated document – for example, at paragraph 3 on page 1, it provides that Mr. Shifrin “shall pay a total of $100,000 (Can) to The company. This shall be paid concurrently with the issuing of the shares”. The parties all acknowledge however, that at the time the February 2014 Agreement was signed, Mr. Shifrin had already advanced $77,000 of the $100,000. It is not reasonable, when taking into account the surrounding circumstances, to interpret the February 2014 Agreement as not having been complied with simply because a portion of the funds were advanced prior signing the agreement and another $20,000 was subsequently advanced by Mr. Shifrin. For the remaining $3,000, I accept Mr. Shifrin's evidence that LDF agreed that amount was to be set off against wages owed but not paid to Mr. Shifrin.

[102] Similarly, it is not reasonable to interpret the February 2014 Agreement to mean that no amount was to be paid to Mr. Shifrin for the work he was to perform at LDF. Although the amount of the weekly salary was left blank (not filled it), the clause was not struck, nor was a $0 inserted. When considering the factual matrix surrounding the contract, including Mr. Shifrin’s evidence, which I have accepted, I find that the February 2014 Agreement should be interpreted to reflect that Mr. Shifrin was in fact to be paid for his work.

[103] In this context, I do not find the entire agreement clause relied upon by the respondents to preclude an interpretation that some amount was to be paid as salary to Mr. Shifrin. The clause reads: “This Agreement is complete agreement of the Parties concerning the subject matter hereof and supersedes and terminates any prior such agreements with such subject matter”. As noted, the February 2014 Agreement does not actually speak to the amount that was to be paid to Mr. Shifrin – it is clear that some amount was to be paid – but the amount was left blank. As well, the clause only speaks to prior agreements – and does not preclude the parties from agreeing on a go forward basis as to what amounts LDF agreed to pay Mr. Shifrin for his work would be.

[104] Although I accept Mr. Shifrin’s evidence regarding the amount of salary he was to receive, the precise amount is only relevant as it relates to the full payment by Mr. Shifrin of the $100,000 investment amount.

[105] Accordingly, I find that the essential terms of the agreement – that Mr. Shifrin was to invest $100,000 and work at LDF as general manager in exchange for a salary and 15% of the shares of LDF were agreed to in the February 2014 Agreement.

[106] I also accept, as was agreed to by Mr. Danielov in his testimony, that the terms of the February 2014 Agreement were consistent with the oral agreement that existed between the parties in November of 2013 when Mr. Shifrin began advancing funds. Even if the February 2014 Agreement had not been drafted and executed, I would have found that the agreed intention of the parties was to provide Mr. Shifrin with 15% of the shares in LDF in exchange for an investment of $100,000 and his working at LDF: see 1329207 Ontario Inc. v. D&R Custom Millwork Ltd. at para 18.

[107] Accordingly, I find that there was an enforceable agreement between Mr. Shifrin, Mr. Danielov and Mr. Groisman to provide Mr. Shifrin with 15% of the shares of LDF.

[108] I am also satisfied on the evidence before me that Mr. Shifrin complied with the terms of that agreement, he contributed the $100,000 and was entitled to 15% of the shares of LDF. I do not accept the evidence of Mr. Danielov that Mr. Shifrin was repaid the $100,000. The notation of ‘loan return’ on the cheques issued to Mr. Shifrin is not determinative – Ms. McGowan testified that she needed to enter amounts in QuickBooks in some way and did so on the instructions of Mr. Danielov, however, Mr. Danielov admits that at no point was any loan intended. Moreover, as noted above, I do not accept the evidence of Mr. Danielov that Mr. Shifrin was repaid $80,000 in cash in January of 2015.

Issue 2: Is Mr. Shifrin entitled to oppression remedy relief under s. 248 of the OBCA?

[109] The application by Mr. Shifrin has been brought pursuant to s. 248 of the OBCA (the “Oppression Remedy”).

[110] Under s. 245 of the OBCA, for purposes of the Oppression Remedy a complainant means:

(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates,
(b) a director or an officer or a former director or officer of a corporation or of any of its affiliates,
(c) any other person who, in the discretion of the court, is a proper person to make an application under this Part.

[111] Given my findings above as to Mr. Shifrin’s entitlement to 15% of the shares of LDF, Mr. Shifrin is a proper complainant for purposes of the Oppression Remedy.

[112] The Supreme Court of Canada has mandated a two-step inquiry to assess claims for an oppression remedy. The court must first determine (i) whether the evidence supports the reasonable expectation asserted by the claimant and, if so, (ii) it must then determine whether the evidence establishes that the reasonable expectation was violated by conduct that falls within the term’s “oppression” or “unfair prejudice”: see BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 at para 68.

[113] As stated in Wong v. 10658987 Canada Inc. et al., 2024 ONSC 2795 at para 69 (references omitted): “Just because a litigant has standing to ask the Court for an oppression remedy, does not mean such a remedy should be granted. It remains an extraordinary discretionary remedy. Courts have declined to recognize a person as a complainant or to grant an oppression remedy if there is another legal remedy available such as a breach of contract claim, an action for fraud or a simple action in debt.”

[114] Here the relief requested by Mr. Shifrin goes beyond a breach of contract claim. He seeks not only the issuance of the relevant shares, but he also asks for production of related financial statements and other documentation related to LDF as set out above.

[115] The relief sought by Mr. Shifrin is also consistent with other decisions of this court and others across the country which have found that where a respondent has refused to issue shares and an applicant is contractually entitled to receive those shares a claim under the Oppression Remedy is appropriate: See Fedel v. Tan, 2008 46697 at Fedel v. Tan, 2010 ONCA 473 paras 209-215 as aff’d paras 52-71.

[116] Based on the February 2014 Agreement and to the extent relevant, the oral agreement that preceded it, Mr. Shifrin’s reasonable expectation was that he would be a 15% shareholder of LDF, subject to my comments in the following paragraph, the relief he seeks as set out above is consistent to that which he is entitled as a shareholder and is granted.

[117] As part of the remedy sought by Mr. Shifrin, he seeks an order directing a trial as to his damages. Mr. Shifrin’s position is that because no financial information has been provided to him regarding LDF’s performance, he cannot quantify his claim at this time. I accept that. However, without the production of and an assessment of the financial information, it is not clear that a trial is the appropriate proceeding to quantify those damages. The current proceeding remains an application by Mr. Shifrin. It may be that it is appropriate to determine damages with or without viva voce evidence. Once the respondents produce the required information to Mr. Shifrin and he has a chance to consider that information, then the parties can book a case conference before me through the Commercial List Office so a decision on the appropriate process to determine damages can be made on an informed basis.

Issue 3: Is Mr. Shifrin’s claim to 15% of the shares of LDF statute-barred by the Limitations Act?

[118] The respondents argue that if Mr. Danielov and Mr. Groisman had agreed to issue shares to Mr. Shifrin by virtue of the February 2014 Agreement, such proceeding is barred by the two-year limitation period set out in s. 4 of the Limitations Act, 2002.

[119] In his evidence, Mr. Shifrin accepted that the February 2014 Agreement was breached in 2014 as the shares were not issued concurrently with his payment of the $100,000.

[120] However, as set out in Grant Thornton LLP v. New Brunswick, 2021 SCC 31 at para 42, to discover a claim, a plaintiff (or applicant) must have “knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.” Mere suspicion or speculation is insufficient. A plaintiff must know that (a) the injury, loss or damage occurred; (b) the injury, loss or damage was caused by or contributed to by an act or omission; and (c) the act or omission was that of the defendant. The list is cumulative rather than disjunctive: see Grant Thornton at para 43. The question of when a party has or ought to have discovered a claim requires a fact-based analysis dependent on the circumstances of each case.

[121] Although Mr. Shifrin acknowledged that he was aware as of 2014 that he had not been issued share certificates, he also provided evidence that he understood he was just missing the paperwork – he did not understand that the respondents were denying that he was a shareholder at all.

[122] The witnesses’ evidence was that their relationship was friendly in the intervening years – Mr. Shifrin even attended at least one LDF holiday party. This is consistent with Mr. Shifrin’s belief that he was a shareholder of LDF, however, he had not been provided with the share certificates. I accept Mr. Shifrin’s evidence that Mr. Danielov did not tell him, prior to 2024 that he denied Mr. Shifrin was a shareholder, rather Mr. Danielov told him LDF was not doing well, and he would get him the share certificates, but never did.

[123] Accordingly, I find, based on the record before me, that the claim was not discoverable by Mr. Shifrin until July of 2024 when the respondents denied that he was a shareholder. As such, I find that Mr. Shifrin’s claim is not barred by s. 4 of the Limitations Act.

Disposition

[124] For the reasons above, I grant the relief requested by Mr. Shifrin, subject to the comments in paragraph 117 hereof. The production of information set out in para 1(f) above is to occur within 30 days hereof or such other time as the parties may agree.

[125] If the parties are not able to resolve costs of this application, the applicant may email its costs submission of no more than three double-spaced pages to the commercial list office within 15 days of the date of this decision. The respondents deliver responding submissions of no more than three double-spaced pages within 15 days following the delivery of the applicant’s submissions. No reply submissions are to be delivered without leave.

Jane Dietrich
Date: April 4, 2025