Court File and Parties

Court File No.: CV-24-00730369-0000 / CV-24-000731461-0000
Date: 2025-01-22
Court: Superior Court of Justice - Ontario

Parties:

• Michelle Goldstein Zaldin (Applicant/Respondent)
• Seymour Goldstein aka Sonny Goldstein, Sonny Goldstein Annuity and Insurance Agencies Inc. c.o.b. as Goldstein Financial Consultants and Goldstein Financial Investments Inc. (Respondents/Applicants)

Before: J.T. Akbarali

Counsel:

• Tanya A. Pagliaroli and Vinayak Mishra, for the Applicant/Respondent Michelle Goldstein Zaldin
• Jody Brown and Geetha Philipupillai, for the Respondents Seymour Goldstein aka Sonny Goldstein, Sonny Goldstein Annuity and Insurance Agencies Inc. c.o.b. as Goldstein Financial Consultants and Goldstein Financial Investments Inc. and the Applicant Seymour Goldstein

Heard: 2025-01-20

Endorsement

Overview

[1] The applicant/respondent, Michelle Goldstein Zaldin, is the daughter of the respondent/applicant, Seymour Goldstein. Ms. Zaldin and Mr. Goldstein were in business together for over 25 years. Ms. Zaldin owns 10% of the shares of Sonny Goldstein Annuity and Insurance Agencies Inc. (“SGA&I”), while Mr. Goldstein owns the remaining 90% of the shares. SGA&I is an insurance agency. SGA&I owns 100% of the shares of Goldstein Financial Investments Inc. (“GFII”), a mutual fund dealer.

[2] The business relationship between Ms. Zaldin and Mr. Goldstein has broken down. After Ms. Zaldin commenced an action against Mr. Goldstein, among other defendants, Mr. Goldstein made an offer to sell his shares, or purchase Ms. Zaldin’s shares, in SGA&I at a fixed price per share pursuant to a shotgun clause in a shareholders’ agreement. Ms. Zaldin agreed to purchase Mr. Goldstein’s shares at the specified price.

[3] The deal did not close. Ms. Zaldin alleges that Mr. Goldstein breached his obligations under the agreement. She seeks an order for specific performance of the agreement, and asks that I imply certain terms which she argues are necessary to bring efficacy to the agreement. These terms include a purchase price adjustment.

[4] For his part, Mr. Goldstein argues that Ms. Zaldin never actually agreed to purchase his shares at the proposed price, and that as a result of her refusal, he is now entitled to purchase her shares under the terms of the shotgun clause. He seeks an order for specific performance.

[5] For the reasons that follow, I grant Ms. Zaldin’s application for specific performance, but I decline to imply the additional terms she seeks. I deny Mr. Goldstein’s application.

Background

[6] Mr. Goldstein has spent his career in the financial services industry. In 1986, he incorporated SGA&I, an insurance agency, and has been its president since that time. In approximately 1995-1996, Ms. Zaldin purchased 10% of the shares of SGA&I. A 1996 shareholders’ agreement provides, among other things, that:

a. neither Ms. Zaldin nor Mr. Goldstein will have the right to sell or assign their shares in SGA&I without the other’s approval;
b. SGA&I will not issue any further shares without unanimous consent of directors;
c. Ms. Zaldin will be a director of SGA&I;
d. on the death or retirement of Mr. Goldstein, SGA&I will repurchase his shares making Ms. Zaldin the sole owner and shareholder of SGA&I, and for that purpose, SGA&I will purchase a $1,000,000 life insurance policy to effect the repurchase of Mr. Goldstein’s shares;
e. A shotgun clause will be available to both Mr. Goldstein and Ms. Zaldin.

[7] After Ms. Zaldin became a part-owner of SGA&I, GFII, a registered mutual fund dealer and wholly owned subsidiary of SGA&I, was incorporated. Mr. Goldstein is the only director of GFII. He is also GFII’s president, ultimate designated person (“UDP”) and chief compliance officer (“COO”). UDP and COO are positions required under the regulatory regime for mutual fund dealers. Ms. Zaldin appears on the corporation’s registry as an officer with an untitled position.

[8] Ms. Zaldin was an employee of SGA&I, a director of SGA&I, and a registered representative with GFII. For years, she and Mr. Goldstein worked together to service the clients of SGA&I and GFII, and build the business.

[9] Unfortunately, the relationship between Ms. Zaldin and Mr. Goldstein began to deteriorate. In March 2023, Ms. Zaldin commenced an action against Mr. Goldstein, SGA&I, GFII, Mr. Goldstein’s wife, and Goldstein Financial Realty Inc. She sought an oppression remedy, and advanced a claim for all of the ownership interest and business of SGA&I and GFII.

[10] On January 2, 2024, Mr. Goldstein terminated Ms. Zaldin’s employment with SGA&I and GFII for cause. According to the email he sent Ms. Zaldin, her conduct in the ongoing litigation was incompatible with her continued employment.

[11] Ms. Zaldin amended her claim to include a claim for damages for wrongful termination.

[12] One of the live issues in the action related to Ms. Zaldin’s claim to a right of first refusal with respect to any deal to sell business assets or shares. Ms. Zaldin brought a motion seeking an interim order to prevent Mr. Goldstein from selling the business without providing Ms. Zaldin an opportunity for a right of first refusal.

[13] While the motion was pending, Mr. Goldstein invoked the shotgun clause contained in a 2006 shareholders’ agreement. Mr. Goldstein notes that Ms. Zaldin pleaded in the action that she did not enter into the 2006 shareholders’ agreement, and was only aware of the 1996 shareholders’ agreement. That may be, but for purposes of resolving the action, and for these applications, Ms. Zaldin has accepted the shotgun process contained in the 2006 shareholders’ agreement.

[14] The 2006 shareholders’ agreement includes a shotgun clause which provides that any shareholder may make an offer in writing to sell to the other shareholder all of the shareholder’s shares at a price per share, on terms set forth in the offer, and subject to the provisions of the shotgun clause and terms set out in Schedule A to the 2006 shareholders’ agreement. Under the shotgun clause, the offeree has twenty-one days to accept the offer. If the offer is accepted in writing, there is a binding agreement of purchase and sale. However, if the offeree does not accept the offer in writing, the offeree is bound to sell all of their shares to the offeror on the terms and conditions set out in the offer, subject to the provisions of the shotgun clause and Schedule A.

[15] The shotgun clause provides that an offer is deemed to provide that the closing of the transaction will take place on the business day following the thirtieth business day after which an agreement of purchase and sale has arisen from the offer. It provides that the purchase price shall be payable in full by cash or certified cheque on closing.

[16] Article 7.5 of the 2006 shareholders’ agreement provides that each party has the right to specific performance in the event of any breach of the shareholders’ agreement by another party.

[17] The terms in Schedule A to the 2006 shareholders’ agreement include an obligation on the part of the vendor under the shotgun clause to fully repay and discharge any indebtedness he owes to the corporation on or before the closing date, in an amount verified by the accountants or auditors of the corporation. Schedule A also sets out the obligations of the parties on closing, which include that the vendor shall deliver to SGA&I his or her resignation as an employee, officer and director of the corporation, if applicable. The corporation is defined in the agreement as SGA&I.

[18] The vendor is also required by Schedule A to “do all other things required in order to effectively convey and deliver title to the shares, any indebtedness being purchased to the purchaser free and clear of any and all liens, claims, security interests and any other encumbrances whatsoever and to fully comply with the intent of the agreement.”

[19] The purchaser is required to deliver the purchase price on closing to the vendor.

[20] As I have noted, on August 14, 2024, while the motion for an order that Ms. Zaldin was entitled to a right of first refusal was pending, Mr. Goldstein invoked the shotgun clause from the 2006 shareholders’ agreement. He made an offer to sell his shares to Ms. Zaldin for a total of $7,500,087, equal to $17,007 per share. The offer provided that if the offer was not accepted, Mr. Goldstein would invoke the reverse shotgun clause, and buy Ms. Zaldin’s shares at a price of $17,007 per share, for a total of $833,343, subject to the closing conditions of the 2006 shareholders’ agreement.

[21] Within the time period for acceptance set out in the shotgun clause, Ms. Zaldin accepted in writing Mr. Goldstein’s offer for her to purchase his shares. In the same correspondence, Ms. Zaldin sought access to all books of account of SGA&I and GFII for the prior five years, including a listing of current asset and debt obligations.

[22] Ms. Zaldin alleges that Mr. Goldstein made it impossible for her to close to the agreement. She argues that he breached his obligations in the following ways:

a. Failing to obtain regulatory approvals to allow for the change in ownership of GFII;
b. Failing to provide her with required financial disclosure;
c. Advising that he would not resign from GFII on closing, which Ms. Zaldin characterizes as an anticipatory breach of contract.

[23] According to Ms. Zaldin, because Mr. Goldstein failed to obtain the necessary regulatory approvals, her financing fell through. She sought an extension of time to close the deal and Mr. Goldstein’s cooperation in obtaining regulatory approval. However, Mr. Goldstein refused and claimed that Ms. Zaldin’s correspondence was a “rejection of Mr. Goldstein’s offer to sell” which terminated Ms. Zaldin’s right to purchase. Mr. Goldstein indicated his intention to buy Ms. Zaldin’s shares in accordance with the reverse shotgun provision.

Ms. Zaldin’s Position

[24] Ms. Zaldin argues that she is entitled to specific performance of the agreement to purchase Mr. Goldstein’s shares because: (i) the parties had a binding contract; (ii) Mr. Goldstein breached the agreement; and (iii) specific performance is the appropriate remedy.

[25] However, Ms. Zaldin also asks this court to imply terms into the share purchase agreement. These include an “industry standard term” that the purchase price of a mutual fund book of business be adjusted based on the actual accounts that transfer over to the purchaser on closing. Ms. Zaldin notes that Mr. Goldstein advises that one major client of GFII has been lost, and another is likely to be lost, which impacts the value of the shares significantly. She seeks a similar purchase price adjustment based on the revenue of the insurance contracts on the date of the offer versus the closing date.

[26] Ms. Zaldin also seeks an extension of the closing date by 30 days after regulatory approval is received, and the right to terminate the agreement if regulatory approvals are not obtained. Finally, Ms. Zaldin seeks a term that Mr. Goldstein be required to resign all positions with GFII on closing.

[27] Ms. Zaldin further argues that, in any event, the parties’ agreement does not permit specific performance of a reverse shotgun clause in these circumstances, and moreover, that Mr. Goldstein does not come to the court with clean hands, and is thus not entitled to specific performance on that basis.

Mr. Goldstein’s Position

[28] Mr. Goldstein argues that Ms. Zaldin never accepted the offer to purchase his shares because she always intended to adjust the purchase price, which is not provided for in the shotgun clause. He argues that, because she did not accept the offer to purchase, he is entitled to exercise his right to purchase her shares under the shotgun clause. I note this argument is different than that advanced in Mr. Goldstein’s factum, where he argued that a term ought to be implied allowing for a reverse shotgun clause where the offeree/purchaser fails to close the purchase to which they have agreed.

[29] Mr. Goldstein argues that Ms. Zaldin does not really seek specific performance because the terms she asks the court to add in effect rewrite the offer that was made under the shotgun clause. He argues that Ms. Zaldin’s denial of the validity of the 2006 shareholder agreement in the action disentitles Ms. Zaldin to a remedy of specific performance to enforce the 2006 shareholder agreement.

Issues

[30] These applications raise the following issues for determination:

a. Was there a binding agreement between the parties?
b. If so, did Mr. Goldstein or Ms. Zaldin breach the agreement?
c. Is specific performance the appropriate remedy? And if so, who is entitled to it?
d. Should any terms be implied into the agreement?

Was there a binding agreement between the parties?

[31] A binding contract requires an offer, acceptance, consideration, and an intention to create a legal relationship. The latter is assessed on an objective basis, and considers how the parties’ conduct would appear to a reasonable person in the position of the other party: Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22, at paras. 35-37.

[32] A binding contract requires a “meeting of the minds” on all essential terms: Anderson v. Anderson, 2023 SCC 13, at para. 58. In the context of a share purchase, courts have found that the essential terms are identification of the parties, the property, and the price. Closing date is sometimes considered an essential term: Matic et al. v. Waldner et al., 2016 MBCA 60, at para. 60.

[33] On August 14, 2024, Mr. Goldstein made a clear, written offer to sell his shares in SGA&I to Ms. Zaldin. The offer provided a per share price of $17,007. It invoked the relevant article in the 2006 shareholders’ agreement, and the terms to any such shotgun purchase set out in Schedule A to the 2006 shareholders’ agreement. It was made “subject to the closing conditions in the 2006 agreement.” The offer was certain as to what was being sold (all of Mr. Goldstein’s shares in SGA&I), for how much ($17,007 per share), by whom (Mr. Goldstein), to whom (Ms. Zaldin), subject to the terms set out in the 2006 shareholders’ agreement, which included a defined closing date (the business day following the 30th business day after there is a binding agreement of purchase and sale).

[34] I have no hesitation in concluding that the parties reached a binding agreement under which Ms. Zaldin would purchase Mr. Goldstein’s shares at $17,007 per share, subject to the terms set out in the 2006 shareholders’ agreement and Schedule A thereto.

[35] I do not accept Mr. Goldstein’s argument that Ms. Zaldin always intended to adjust the purchase price for the shares, such that there was no meeting of the minds with respect to price. Ms. Zaldin’s correspondence clearly indicates that she accepted the purchase price offered by Mr. Goldstein. That she now seeks to adjust the purchase price does not mean that there was no meeting of the minds on the issue of the purchase price at the time Ms. Zaldin accepted the offer. The adjustment she seeks is better considered in the context of whether any term adjusting the purchase price ought to be implied. I return to this question later in my analysis.

Did Mr. Goldstein or Ms. Zaldin breach the agreement?

[36] I turn first to Mr. Goldstein’s alleged breaches of the agreement.

[37] The biggest issue is whether Mr. Goldstein breached the agreement by failing to obtain necessary regulatory approval. The parties disagree as to whether regulatory approval was required with respect to the change in ownership of GFII. There is no argument that any regulatory approval was required with respect to the change in ownership of SGA&I.

[38] GFII is regulated by the Canadian Investment Regulatory Organization (“CIRO”). Emails in the record from CIRO staff confirm that, shortly before the intended closing of the deal, CIRO had not received a copy of any purchase agreement, nor had it requested one. CIRO advised that it is the responsibility of the dealer member (that is, GFII) to determine whether a purchase agreement triggers a reporting requirement.

[39] CIRO directed the parties to section 3.10 of CIRO By-Law 1, which requires that a member must provide written notice to CIRO not less than 30 days prior to the proposed effective date if the business or ownership of a member is proposed to be transferred, or if a change of control of the member may occur. CIRO also referred to the parties to the Mutual Fund Dealer Rules, s. 8.4 which provide that prior CIRO approval is required for a member to permit an investor to own a significant equity interest in the member. CIRO advised that the Mutual Fund Dealer Rules define “ownership” as “all direct or indirect ownership of the securities of a member,” and define “significant equity interest” to include holding “20% or more of the outstanding participating securities of the member or of a holding company of a member.”

[40] There is no credible argument, in view of these rules, that Ms. Zaldin’s purchase of 90% of the shares of SGA&I, the parent company of GFII, would not result in her holding a significant equity interest in a member, such that CIRO approval is required. The fact that CIRO made no specific request for documents or requested an application for its approval for the proposed transaction is irrelevant; the record is clear that it is the responsibility of the member to seek the requisite approvals and determine what notice must be provided.

[41] GFII thus had the responsibility, not only to notify CIRO of the proposed transaction, but to seek its approval. GFII’s sole director, UDP, and COO was Mr. Goldstein. Ms. Zaldin had been excluded from GFII upon her termination in January 2024. It was up to GFII, acting through Mr. Goldstein, to get the necessary approvals. In my view, that was his specific obligation pursuant to Schedule A of the 2006 shareholders’ agreement, which required him, among other things, to:

do all other things required in order to effectively convey and deliver title to the Shares, … and to fully comply with the intent of this Agreement.

[42] By failing to take steps to obtain the necessary regulatory approvals, Mr. Goldstein breached his obligations under the agreement. This conclusion is consistent with that reached by this court in Trayanov and Icetrading Inc., 2024 ONSC 5930, at para. 35, citing Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072.

[43] This breach was significant. The evidence indicates that it impacted Ms. Zaldin’s ability to access the financing that she had arranged.

[44] I need not go further to consider whether Mr. Goldstein breached other obligations under the contract. It is the failure to obtain the necessary regulatory approval that had significant impact on Ms. Zaldin’s ability to close the transaction.

[45] For his part, Mr. Goldstein argues that Ms. Zaldin breached her obligations under the agreement by failing to deliver funds on closing. He is correct that by failing to deliver funds, Ms. Zaldin was in breach of her obligation. However, as I have just noted, that breach was caused by Mr. Goldstein’s failure to obtain the necessary regulatory approvals.

Is specific performance the appropriate remedy?

[46] Specific performance is generally an appropriate remedy when the contract at issue relates to shares of a privately held corporation. In UBS Securities Canada Inc. v. Sands Brothers Canada, Ltd., 2009 ONCA 328, at paras. 99-100, the Court of Appeal for Ontario held that specific performance may be ordered in such circumstances because shares of a privately held corporation may not be readily available on the market and valuation can be difficult. The uniqueness of the shares is a non-determinative factor in deciding the appropriateness of specific performance.

[47] In my view, the fact that SGA&I is a privately held company, and that Mr. Goldstein and, until recently, Ms. Zaldin have worked within it (and its wholly owned subsidiary GFII) to build a book of business, and obtain, retain, and service clients, makes SGA&I shares unique, and militates in favour of an order for specific performance.

[48] Moreover, a shotgun clause has a particular purpose: as this court described recently in Leavens v. Schwartz, 2023 ONSC 3381, at para. 65, a buy/sell provision is “meant to allow an expeditious, relatively inexpensive separation that accomplishes ‘leaving the potentially healthy, profitable business intact’”. In Aronowicz v. Emtwo Properties Inc., 2010 ONCA 96, at para. 50, the Court of Appeal described a shotgun provision as providing “a delicate balance for the preservation of the parties’ individual rights by ensuring that the pulling of the trigger generates the best and highest price in exchange for the involuntary termination of the shareholders’ relationship.”

[49] Put another way, a shotgun clause is designed to quickly separate shareholders from each other while keeping the business intact. It is a dispute resolution mechanism to which the parties agree in advance of trouble in their business relationship; a sale under a shotgun clause is not the product of a negotiated corporate deal. In my view, the purpose of a shotgun clause lends further support to the conclusion that specific performance is the appropriate remedy.

[50] In my view, it is the agreement that the parties actually reached which can be specifically performed.

[51] Mr. Goldstein is not entitled to specific performance of a reverse shotgun clause for the following reasons:

a. He and Ms. Zaldin reached a binding agreement that required Ms. Zaldin to purchase his shares, not that required him to purchase her shares;
b. If Ms. Zaldin failed to close the purchase, Mr. Goldstein’s remedy was set out in the 2006 shareholders’ agreement; he had the right to seek specific performance. He did not have the right to recharacterize Ms. Zaldin’s acceptance of the offer to purchase his shares as a refusal and then seek to purchase her shares;
c. Mr. Goldstein’s breach of his obligations interfered with Ms. Zaldin’s ability to obtain her financing. He does not have clean hands as a result. This alone disentitles him to specific performance.

[52] On the other hand, Ms. Zaldin is entitled to specific performance because:

a. She and Mr. Goldstein reached a binding contract under which she was to purchase his shares;
b. Ms. Zaldin’s breach of her obligation to pay funds on closing was caused by Mr. Goldstein’s breach of his obligation to obtain regulatory approval for the transaction. I thus decline to find her breach disentitles her to specific performance;
c. Ms. Zaldin’s request for terms to be implied does not lead to the conclusion that she is not entitled to specific performance of the agreement. Rather, the appropriateness of the terms she seeks to imply is a matter for consideration, and is addressed later in my analysis;
d. Ms. Zaldin’s position in the action that the 2006 shareholders’ agreement is invalid is not a reason not to order specific performance of the agreement to purchase Mr. Goldstein’s shares. Ms. Zaldin, notwithstanding the position she took in the action, was prepared to proceed with a transaction to purchase Mr. Goldstein’s shares. Having made an offer under the 2006 shareholders’ agreement, Mr. Goldstein cannot now resile from it on the basis that Ms. Zaldin in another proceeding denied its validity. The parties reached a binding agreement to sell Mr. Goldstein’s shares to Ms. Zaldin pursuant to the shotgun clause. Earlier positions taken in other litigation is irrelevant to the parties’ rights under an agreement for the sale of shares to which the parties agreed.

[53] I thus grant Ms. Zaldin’s application for specific performance and dismiss Mr. Goldstein’s application.

[54] I turn next to consider whether any of the terms Ms. Zaldin asks that I imply into the agreement ought to be implied.

What terms, if any, ought to be implied?

[55] As I have noted, Ms. Zaldin asks this court to imply the following terms:

a. The purchase price for the shares be adjusted based on the actual GFII accounts that transfer over to the purchaser on closing, and based on the revenue of the insurance contracts on the date of the offer versus the closing date;
b. An extension of the closing date by 30 days after regulatory approval is received;
c. Ms. Zaldin shall have the right to terminate the agreement if regulatory approvals are not obtained; and
d. Mr. Goldstein be required to resign all positions with GFII.

[56] In M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., at para. 29, the Supreme Court of Canada held that a contractual term may be implied on the basis of presumed intentions of the parties where necessary to give business efficacy to the contract or where it meets the “officious bystander” test. The focus is on the actual parties, not reasonable parties. The implication of a term “must have a certain degree of obviousness to it,” and cannot be found where there is evidence of a contrary intention on the part of either party.

[57] In the context of shotgun provisions, citing the Court of Appeal in Western Larch Limited v. Di Poce Management Limited, 2013 ONCA 722, at para. 46, this court recently held in Leavens, at para. 22, that:

…the court’s role is not to rescue a party who later regrets contractual arrangements that were carefully designed and accepted. The court’s task is to consider whether compliance with the shotgun buy-sell provision is sufficiently strict, given the vagaries and complexities of commercial arrangements and commercial life, which the parties have plainly accounted for in their contractual arrangements. Strict compliance is not perfect compliance.

[58] In Leavens, at para. 58, the court found that there is no requirement that the terms of a buy/sell offer reflect the fair market value of the company; one of its purposes is to avoid the need to value the business. Parties may choose to include a valuation requirement in a buy/sell clause, but where they do not, it is not the court’s role to add one.

[59] In this case, the shotgun provision of the 2006 shareholders’ agreement did not require a fair market value valuation. The fact that it is standard practice in the industry to include such a valuation when entering into a negotiated agreement for the purchase of a book of business, whether through an asset or a share purchase, is irrelevant to the terms of the shotgun clause agreed to between the parties. A purchase pursuant to a shotgun clause is qualitatively different than a fair market value negotiated transaction. Moreover, as the court held in Leavens, at para. 58, citing Class Organ Co v. Artisan Organ Ltd (1997), 1997 CarswellOnt 1773 (Ont. Gen. Div.) at para. 33:

[T]here is no better way for a person to put a fair value on what he or she owns than to agree upon a price for which they would be prepared either to buy or to sell.

[60] I conclude that there is no basis upon which to imply any term adjusting the purchase price. The purchase price is what was agreed to: $17,007 per share.

[61] The proposed closing date of 30 days after regulatory approval is received is directly contrary to the closing period set out in the 2006 shareholders’ agreement. There is no basis to imply a term that is inconsistent with the term to which the parties have already agreed.

[62] Similarly, in the face of a clear agreed upon closing date, and having regard to the shotgun provision that operates to definitively separate the parties from one another either through acceptance of the offer to sell, or obligation to buy if the offer to sell is rejected, there is no basis to imply a right to terminate the agreement to purchase Mr. Goldstein’s shares on the basis of a failure to obtain regulatory approval. The parties did not bargain for such a right in the 2006 shareholders’ agreement. The parties knew GFII was a regulated entity when they entered into the 2006 shareholders’ agreement. They agreed to a closing period on the business day following the 30th business day after the agreement was formed. The record suggests CIRO requires 30 days’ notice of the proposed transaction. In theory, there is sufficient time to obtain the necessary regulatory approval before the closing date. If regulatory approval is not obtained, the parties will have to consider their next steps. Someone may argue that the contract has been frustrated. But that is a question for another day, if it arises at all.

[63] Finally, I would also not imply a term requiring Mr. Goldstein to resign all positions with GFII on closing. The terms of the agreement clearly require the selling shareholder to resign all positions with SGA&I on closing. There is no basis, in view of the silence in the 2006 shareholders’ agreement, to expand the clause to include GFII. The parties were aware of GFII, and agreed that the obligation to resign positions was with respect to SGA&I. The court ought not to rewrite that bargain.

[64] Thus, I decline to imply any of the terms sought by Ms. Zaldin.

[65] The only term that must be implied for business efficacy is to reset the clock for specific performance. The closing date shall operate in accordance with the terms of the 2006 shareholders’ agreement, except that the triggering event is the release of these reasons. In other words, closing of the transaction will take place on the Business Day following the thirtieth Business Day after which these reasons have been released.

[66] Finally, for sake of completeness, I note that the interim order I made on January 20, 2025, continuing the interim order of Akazaki J. preserving the status quo in this litigation is no longer required in view of my conclusions. The order is no longer operative on the release of these reasons.

Costs

[67] At my direction, the parties uploaded costs outlines and offers to settle to Case Center. I proposed that after I reached my determination on the merits of the applications, I would proceed to determine costs on the basis of the materials filed, without the need for further submissions. The parties agreed with my proposal. That is the process I have followed.

[68] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: see Fong v. Chan, at para. 22.

[69] Subject to the provisions of an act or the rules of this court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion considering the factors enumerated in r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: see Boucher v. Public Accountants Council for the Province of Ontario, at para. 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: see Zesta Engineering Ltd. v. Cloutier, at para. 4.

[70] Ms. Zaldin is the successful party on these applications, and is presumptively entitled to her costs.

[71] Ms. Zaldin’s costs outline supports partial indemnity costs, all-inclusive, in the amount of $54,015.60, and actual costs of $90,026.00 all inclusive. Mr. Goldstein’s costs are similar. His costs outline supports partial indemnity costs of $58,817.97, and actual costs of $93,229.63.

[72] Ms. Zaldin’s costs materials include two offers to settle, neither of which she has beaten. There is no basis upon which to award costs other than on a partial indemnity scale.

[73] Factors relevant to quantum of costs include:

a. The costs claimed by each party were similar, and thus within each other’s reasonable expectations;
b. The matters raised in the applications were important to both parties;
c. No party failed to admit anything that should have been admitted or acted in a way to drive up costs of the other unnecessarily;
d. The matters raised in the applications were moderately complex.

[74] I find that Mr. Goldstein is responsible for Ms. Zaldin’s fair and reasonable costs in the amount of $54,000, to be paid within thirty days.

[75] I make no order for costs for or against the corporate respondents. Given the nature of the dispute, and the resolution which will include Ms. Zaldin taking ownership of both entities directly or indirectly, there is no good reason to make a costs award for or against the corporations.

Summary of Orders

[76] In summary, I make the following orders:

a. The interim order dated January 20, 2025 preserving the status quo is no longer operative;
b. Ms. Zaldin’s application for specific performance is granted, without implying any of the additional terms she sought;
c. Closing of the transaction shall be on the basis that Ms. Zaldin pays Mr. Goldstein $17,007 per share to purchase all of his shares in SGA&I, and the purchase shall close on the Business Day following the thirtieth Business Day after the release of these reasons;
d. Mr. Goldstein’s application for specific performance is dismissed;
e. Mr. Goldstein shall pay Ms. Zaldin’s costs fixed at $54,000 within thirty days; and
f. There shall be no order as to costs for or against the corporate respondents.

J.T. Akbarali
Date: 2025-01-22