Case Summary

Two cousins, Sina Majidi and Ario Khoshbin, were business partners in two companies: Continuum (a cosmeceuticals company) and 910 (which owned a commercial property at 1111A Finch in Toronto). Majidi held 30% interests in both companies through Cell Space Technologies Corporation, while Khoshbin held 70% interests through 8378550 Canada Inc. The relationship deteriorated after Khoshbin discovered that Majidi had allowed illegal activities at the property, including an illegal marijuana dispensary and a brothel operation, and had failed to disclose his 50% ownership interest in an adjacent strip club (Bliss) while using corporate funds to pursue rezoning of the property to benefit that business. Khoshbin removed Majidi as director and sought an oppression remedy. The court found that Majidi had committed significant breaches of fiduciary duty and acted oppressively by failing to disclose his conflict of interest with Bliss, facilitating illegal activities at the property, and misappropriating corporate funds for the rezoning application. The court granted Khoshbin's oppression application and ordered Majidi to sell his interests in both companies to Khoshbin at fair market value, with specific valuations and deductions applied. interesting_citations_summary: > The decision provides important guidance on oppression remedies under the Canada Business Corporations Act, particularly regarding the disclosure obligations of directors with conflicts of interest, the application of minority discounts in oppression cases, and the valuation of shares in closely-held corporations. The court applied the holistic test from BCE Inc. v. 1976 Debentureholders regarding reasonable expectations of stakeholders. The decision clarifies that a minority discount should not normally be applied in oppression cases where the minority shareholder is the oppressed party, but may be applied where the minority shareholder is the oppressor. The court also addressed the distinction between employees and shareholders in determining entitlement to wrongful dismissal damages, and the appropriate remedies available under section 241(3) of the CBCA. The decision demonstrates careful analysis of expert valuation evidence, including the selection of appropriate discount rates and valuation methodologies for businesses engaged in illegal activities. final_judgement: > The court granted the oppression application brought by Ario Khoshbin and 8378550 Canada Inc. against Sina Majidi and Cell Space Technologies Corporation. The court declared that Majidi acted oppressively towards Khoshbin and 837, and ordered Majidi to sell his 30% interest in 910 to Khoshbin for $264,844.80 (as at March 6, 2020) and his 30% interest in Continuum to Khoshbin for $614,418 (as at March 6, 2020). The court also ordered reimbursement to Majidi of $131,391.27 for expenses incurred on the Toronto Condominium, subject to set-offs for unpaid costs awards. The court dismissed all of Majidi's claims for oppression, wrongful dismissal, and unpaid wages. legislation: - title: "Canada Business Corporations Act, R.S.C., 1985, c. C-44" url: "https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html" - title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194" url: "https://www.ontario.ca/laws/regulation/900194" - title: "Planning Act, R.S.O. 1990, c. 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Betts, 2006 BCSC 1096" url: "https://www.canlii.org/en/bc/bcsc/doc/2006/2006bcsc1096/2006bcsc1096.html" - title: "2025925 Ontario Inc. v Maramusche Holdings Inc., 2023 ONSC 3041" url: "https://www.canlii.org/en/on/onsc/doc/2023/2023onsc3041/2023onsc3041.html" - title: "Imagin Diagnostic Centres Inc. et al., 2010 ONSEC 18" url: "https://www.canlii.org/en/on/onsec/doc/2010/2010onsec18/2010onsec18.html" - title: "Mason and Intercity Properties Ltd, Re, 59 O.R. (2d) 631 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/1987/1987canlii173/1987canlii173.html" - title: "Pilch v. TemboSocial Inc., 2014 ONSC 5590, 122 O.R. (3d) 270" url: "https://www.canlii.org/en/on/onsc/doc/2014/2014onsc5590/2014onsc5590.html" - title: "Levine v 1751060 Ontario Inc., 2016 ONSC 3691, 132 O.R. (3d) 269 (S.C.)" url: "https://www.canlii.org/en/on/onsc/doc/2016/2016onsc3691/2016onsc3691.html" - title: "Kummen v. Kummen-Shipman Ltd., [1983] M.J. No. 110, 19 Man. R. (2d) 92 (C.A.)" url: "https://www.canlii.org/en/mb/mbca/doc/1983/1983canlii3647/1983canlii3647.html" - title: "Vallée v. Pickard, 28 B.L.R. (4th) 149 (Ont. S.C.J.)" url: "https://www.canlii.org/en/on/onsc/doc/2007/2007canlii412/2007canlii412.html" - title: "Wilson v Alharayeri, 2017 SCC 39, [2017] 1 SCR 1037" url: "https://www.canlii.org/en/ca/scc/doc/2017/2017scc39/2017scc39.html" - title: "Van den Boogaard v. Vancouver Pile Driving Ltd., 2014 BCCA 168" url: "https://www.canlii.org/en/bc/bcca/doc/2014/2014bcca168/2014bcca168.html" - title: "Doucet and Daupinee v. Spielo Manufacturing Incorporated and Manship, 2011 NBCA 44, 372 N.B.R. (2d) 1" url: "https://www.canlii.org/en/nb/nbca/doc/2011/2011nbca44/2011nbca44.html" - title: "McIntyre v. Hockin, [1889] O.J. No. 36 (C.A.) (QL)" url: "https://www.canlii.org/en/on/onca/doc/1889/1889canlii1/1889canlii1.html" - title: "McInerney v. RJM Holdings Limited, 2019 ONSC 7179" url: "https://www.canlii.org/en/on/onsc/doc/2019/2019onsc7179/2019onsc7179.html" keywords: - Oppression remedy - Fiduciary duty - Conflict of interest - Corporate governance - Minority shareholder - Share valuation - Wrongful dismissal - Constructive dismissal - Illegal business activities - Director disclosure obligations areas_of_law: - Corporate Law - Oppression Remedy - Fiduciary Law - Business Valuation - Employment Law --- # Court File and Parties **Court File No.:** CV-21-00660248-0000 **Date:** August 27, 2025 **Ontario Superior Court of Justice** **Between:** **SINA MAJIDI and CELL SPACE TECHNOLOGIES CORPORATION** Plaintiffs (Defendants by Counterclaim) **– and –** **ARIO KHOSHBIN, 8378550 CANADA INC., 8410097 CANADA INC. and 9102213 CANADA INC.** Defendants (Plaintiffs by Counterclaim) --- **Heard at Toronto:** February 18-21 and 24-27 and March 13, 2025 **Before:** Parghi J. --- # Reasons for Judgment ## Table of Contents - Introduction - Background - Witness Credibility - Facts - Liability - Remedy - Order Granted --- # Introduction [1] Sina Majidi and Ario Khoshbin are cousins embroiled in a contentious corporate separation. [2] Until March 5, 2020, the two were business partners. Mr. Majidi and Mr. Khoshbin were 30%-70% shareholders, respectively, in 8410097 Canada Inc. ("Continuum"), a cosmeceuticals company, and 9102213 Canada Inc. ("910"), which owned a small commercial property at 1111A Finch Avenue in Toronto ("1111A Finch"). They were both directors in each company. Mr. Majidi was responsible for the day-to-day operations, and Mr. Khoshbin was a silent partner. Mr. Khoshbin was also running his primary company, Prollenium Medical Technologies ("Prollenium"). [3] Around late 2018, Mr. Khoshbin heard from a friend, Matteo Ocilka, that Mr. Majidi was operating a strip club or brothel out of 1111A Finch. Mr. Khoshbin says he did not want to have conflict within the family, so he did not confront Mr. Majidi. Rather, he tried to address the issue by finding a new tenant for the property, so that the illicit activities would have to stop. [4] Beginning in February 2020, Mr. Khoshbin tried to get a key to the building from Mr. Majidi, without success, and on March 5, 2020, he entered the building's first-floor unit with the help of a locksmith. He determined, based on what he saw, that Mr. Majidi had been allowing the unit to be used as "overflow" space by a neighbouring strip club called Bliss Gentlemen's Club ("Bliss"), and permitting paid sex work, parties, and unlicensed alcohol service to take place there. Although Mr. Khoshbin did not know it at the time, Mr. Majidi was a 50% owner of Bliss. [5] Matters erupted between the cousins. Mr. Khoshbin locked Mr. Majidi out of 1111A Finch and took steps to end his roles with 910 and Continuum. Mr. Khoshbin states that in the ensuing weeks, he learned about other improper things Mr. Majidi had been doing as director of 910, which are detailed below. [6] The following summer, Mr. Khoshbin wound Continuum down. He says he did so upon receiving legal advice that Continuum faced significant regulatory and customs risks because its primary source of revenue was the importation and resale of unlabeled botulinum toxin (commonly referred to by its trade name"Botox") in the United States. He says he did not appreciate the magnitude of these risks previously. [7] Mr. Majidi now alleges oppression and wrongful dismissal. He claims that Mr. Khoshbin did the following: > a. summarily forced Mr. Majidi out as director of Continuum and 910 and constructively dismissed him from both companies without cause; > > b. improperly shut down Continuum in the midst of litigation over the value of Continuum's shares; > > c. improperly continued carrying on Continuum's business after ostensibly shutting it down; > > d. improperly got rid of evidence after the litigation was commenced by shutting down Continuum's email accounts; and > > e. appropriated funds from Continuum by using PayPal to receive customer payments and not properly accounting for those payments. [8] Mr. Majidi seeks to recover his unpaid 30% share of the two companies' profits; the value of 30% of both companies; debts owed by 910 to his holding company, Cell Space Technologies Corporation ("Cell Space"), and to him; reimbursement for amounts he spent on two properties owned by 910; two months' pay owed to him for work at Continuum in May and June 2020; and 12 months' pay in lieu of notice due to his alleged constructive dismissal. In total, he seeks $1,932,996, plus U.S. $23,317. [9] Mr. Khoshbin, in his counterclaim, alleges breach of fiduciary duty, conflict of interest, oppression and misappropriation of corporate funds by Mr. Majidi. He states that Mr. Majidi had a conflict of interest given his 50% ownership interest in Bliss. He alleges that Mr. Majidi (and/or 910 under Mr. Majidi's watch) did the following: > a. underutilized 1111A Finch and relying excessively on transfers of money from Continuum to cover shortfalls in 910's rental income, about which Mr. Majidi did not tell Mr. Khoshbin; > > b. improperly used $120,000 of Continuum's funds to apply to have 1111A Finch rezoned so that Bliss could become a tenant there, without telling Mr. Khoshbin; > > c. allowed one of 1111A Finch's units to be used to hold parties, including parties where there was gambling and alcohol was served without a license, and to be used as an illegal strip club or brothel, without telling Mr. Khoshbin; > > d. improperly told Continuum's customers that Continuum would be "suspending shipping starting July 1st"; > > e. allowed another of 1111A Finch's units to operate an illegal marijuana dispensary, without telling Mr. Khoshbin; > > f. misappropriated money from cash sales made by Continuum; and > > g. improperly told Continuum's employee in Miami, Florida that Continuum would be "going out of business" which led her to fear for her job security and quit. [10] Mr. Khoshbin seeks to purchase Mr. Majidi's interest in 910 at fair market value, which he says is $116,524. He states that Mr. Majidi owes Continuum $78,709 in a wind-up, and that the difference of roughly $40,000 between what Mr. Majidi is owed for 910 and what Mr. Majidi owes to Continuum should not be paid to him, because there is at least $40,000 in cash that Mr. Majidi received from 1111A Finch tenants or Continuum customers that he did not account for or remit. Mr. Khoshbin further asks this court to recognize his 2021 wind-up of Continuum's affairs. [11] For the reasons below, I dismiss the claims brought by Mr. Majidi and Cell Space. I grant the oppression remedy application brought by Mr. Khoshbin and his holding company, 8378550 Canada Inc. ("837"), and find that Mr. Majidi breached his fiduciary duties to 910 and Continuum. I award the following remedies: > a. a declaration under section 241(2) of the [Canada Business Corporations Act, R.S.C., 1985, c. C-44](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) ("CBCA") that Mr. Majidi acted oppressively towards Mr. Khoshbin and/or 837; > > b. an order under section 241(3) (f) of the CBCA requiring Mr. Majidi and/or Cell Space to sell their 30% interest in 910 to Mr. Khoshbin for its fair market value of $264,844.80 as at March 6, 2020, which amount includes the debts owed by 910 to Cell Space and Mr. Majidi; > > c. an order under section 241(3)(f) of the CBCA requiring Mr. Majidi and/or Cell Space to sell their 30% interest in Continuum to Mr. Khoshbin for its fair market value of $614,418 as at March 6, 2020; and > > d. an order that Mr. Majidi be reimbursed $131,391.27 for expenses he has incurred in respect of the Toronto Condominium, subject to any additional set-offs between the parties arising from unpaid costs awards by Mr. Majidi. --- # Background [12] Continuum was incorporated in January 2013. Mr. Khoshbin invited Mr. Majidi to take over the company in 2014. Mr. Khoshbin held his 70% interest in Continuum through 837. Mr. Majidi held his 30% interest through Cell Space. Continuum sold "cosmeceuticals" pharmaceuticals used for cosmetic procedures. As discussed below, the parties dispute how to characterize the products sold by Continuum over time, although they both agree that a significant volume of its sales were of unregulated botulinum toxin products, primarily to physicians in the United States. [13] In February or March 2014, just over a year after Continuum was incorporated, Mr. Majidi and Mr. Khoshbin learned that 1111A Finch was listed for sale. 1111A Finch was a small commercial property with one upstairs unit and three downstairs units. Mr. Majidi, who had a real estate license, recommended buying it. He testified that the property was a "unicorn" because it was a rare freestanding property of that size in that location. Mr. Majidi purchased 1111A Finch in trust for 910 through a final agreement for purchase and sale dated June 18, 2014. The purchase closed on February 19, 2015. Mr. Majidi managed the commercial tenancies at 1111A Finch and was given free rein to manage the building with little or no involvement from Mr. Khoshbin. [14] In November 2014, Mr. Majidi incorporated 910 to hold real estate investments to be purchased from Continuum's profits. Mr. Khoshbin held a 70% interest in 910 directly, and Mr. Majidi held a 30% interest in it through Cell Space. The first real estate investment held by 910 was 1111A Finch, for which Continuum paid over $600,000. Over time, 910 acquired additional properties. --- # Witness Credibility [15] There are several factual disputes between the parties. To resolve those disputes and assess Mr. Majidi's and Mr. Khoshbin's claims, I must assess the reliability and credibility of their evidence and that of the other witnesses. In this case, credibility issues loomed especially large. [16] In assessing witness credibility, I am to consider such factors as whether the witness' evidence makes sense by being internally consistent, logical, or plausible; whether the witness' evidence contains inconsistencies or weaknesses, such as internal inconsistencies, prior inconsistent statements, or inconsistencies with the evidence of other witnesses; whether there is independent evidence to confirm or contract the witnesses' evidence or a lack of such evidence; and whether the witness, particularly one that is a party in a case, may have a motive to fabricate ([Caroti v. Vuletic, 2022 ONSC 4695, 38 B.L.R. (6th) 1](https://www.canlii.org/en/on/onsc/doc/2022/2022onsc4695/2022onsc4695.html), at paras. 434-436; [1088558 Ontario Inc. v. Musial, 2022 ONSC 5239](https://www.canlii.org/en/on/onsc/doc/2022/2022onsc5239/2022onsc5239.html), at para. 83). [17] Additionally, because Mr. Khoshbin initially brought this as an application, the parties have provided affidavit evidence in addition to testifying. In assessing the credibility of their affidavit evidence, I am to consider such factors as the presence or absence of details supporting conclusory assertions, artful drafting that shields equivocation, the use of language that is inappropriate to the particular witness, indications that the deponent has not read the affidavit, affidavits that lack the best evidence available, lack of precision and factual errors, the omission of significant acts that should be addressed, and disguised hearsay ([Konstan v. Berkovits, 2023 ONSC 497](https://www.canlii.org/en/on/onsc/doc/2023/2023onsc497/2023onsc497.html), paras. 8-12, rev'd in part, 2024 ONCA 510; [Prodigy Graphics Group Inc. v. Fitz-Andrews, [2000] O.J. No. 1203 (S.C.)](https://www.canlii.org/en/on/onsc/doc/2000/2000onsc1203/2000onsc1203.html), at para. 46). [18] As discussed below, I find each of Mr. Majidi and Mr. Khoshbin to be credible on some issues and not on others. There are several issues on which their evidence differed; I prefer Mr. Majidi's evidence on some of those issues and Mr. Khoshbin's on others. I also find Mr. Ocilka's evidence to be credible, and Mr. Moghadam's evidence to be less credible. [19] While most of my credibility analysis is set forth below, there is one overarching credibility issue that I address at the outset. During the litigation, Mr. Majidi provided an answer to an undertaking consisting of WhatsApp messages that he had exchanged with Mr. Khoshbin in 2018 and 2019. During the trial, the parties determined that some of the messages in the chain had been deleted before Mr. Majidi produced them. The deleted messages referred to botulinum toxin, the U.S. Food & Drug Administration ("FDA"), and issues with U.S. Customs that Continuum was experiencing when sending its products over the border to U.S.-based customers. The fact of the deletion came to light after a comparison of Mr. Majidi's produced WhatsApp messages with those of Mr. Khoshbin. [20] At trial, Mr. Majidi testified that he must have deleted the messages in question, although he did not recall having done so. He believed he deleted them at the time the messages were exchanged or soon after, which was well before his dispute with Mr. Khoshbin and the ensuing litigation. He could not remember why he deleted them. He "speculat[ed]" and "guess[ed]" that he did it because he was trying to get his cannabis license and security clearance at the time, so he was "really uncomfortable" with the topics discussed in the deleted messages. The U.S. "scares the hell out of" him. It was a "very sensitive time" and this topic made him "very nervous". He was in "unfamiliar territory". [21] I find his explanation perplexing. I appreciate that it is speculation. But even as speculation, it is difficult to understand. No explanation was given as to why Mr. Majidi was comfortable discussing these topics via WhatsApp in the first place, but was so nervous that he felt the need to delete the messages soon after sending them. No explanation was given as to why deleting the messages alleviated his fear and nervousness, other than his speculation that he found it helpful not to have the messages at issue "in [his] visual field". No explanation was given as to why Mr. Majidi did not delete the several other messages in the chain that addressed these same, allegedly fear-inducing, topics. I also find it difficult to believe, in light of the many off-colour topics canvassed in the messages, that Mr. Majidi was as sensitive to what was visible on his phone as he suggested. [22] Counsel for Mr. Khoshbin invited me to infer that Mr. Majidi deleted the messages after the litigation was commenced, in an effort to destroy evidence. He also invited me to find that the fact that Mr. Majidi deleted the messages renders his evidence incredible in its entirety. I am not prepared to make any such inferences or findings. I accept that if Mr. Majidi had intended to hoodwink the court, he would have deleted more, or different, messages, and certainly not ones that he would have known Mr. Khoshbin was himself going to produce in the litigation. Nonetheless, while I do not find that he intentionally destroyed evidence, I do find his explanation for deleting the messages to be illogical and almost nonsensical. The explanation itself raises significant credibility issues. As a consequence, the issues on which I prefer Mr. Majidi's evidence over Mr. Khoshbin's are generally those on which there is documentary or other independent corroboration of his testimony. When it is simply a question of his word against Mr. Khoshbin's, I generally prefer Mr. Khoshbin's. --- # Facts ## Mr. Khoshbin's allegations against Mr. Majidi ### The underutilization of 1111A Finch and reliance on Continuum to cover shortfalls [23] Mr. Khoshbin alleges that Mr. Majidi underutilized 1111A Finch, relied excessively on transfers of money from Continuum to 910 to cover shortfalls in 910's rental income, and did not tell Mr. Khoshbin about the underutilization or the extent of the funding from 910. Mr. Majidi denies that 1111A Finch was underutilized and asserts that Mr. Khoshbin was aware that there were vacant units in the building and that Continuum was making financial transfers to 910. [24] When Mr. Khoshbin and Mr. Majidi first acquired 1111A Finch in 2015, all its tenants were jewellers. Diamond Jewellery Liquidators occupied unit 1 on the first floor, paying $21.34 per square foot in rent. Jeff Morrison Group occupied units 2 and 3 on the first floor, paying $16.21 per square foot. Gem Star Inc. occupied unit 4 on the second floor, paying $40.77 per square foot. Mr. Majidi testified that rent was sufficient to cover mortgage payments and taxes on the building and that that continued to be the case until approximately 2016, when Gem Star Inc. moved out. [25] In the summer of 2016, a marijuana dispensary operating under the name GreenMedz began occupying unit 4. GreenMedz and 910 entered into a lease in January 2017. As discussed below, GreenMedz was an illegal marijuana dispensary. After GreenMedz was raided by the police in 2017 and its lease was eventually terminated, a new tenant, Reunion Foods Inc., came into unit 4 beginning in early 2018. Reunion Foods Inc. paid $24 per square foot plus $5.50 in taxes, maintenance, and insurance. After Reunion Foods left, the unit was listed three more times, but no tenant could be found. [26] At some point, Mr. Majidi decreased the rent obligations of Diamond Jewellery Liquidators by $6 or $7 per square foot. He testified that he chose to accept less in rent from them over having to find a new tenant. Finding a new tenant would have been hard due to the mortgage crash. It also would have been more expensive because there would have been a vacancy period between tenants, and he would have had to pay commissions to the agent. He did not tell Mr. Khoshbin that Diamond Jewellery Liquidators had started to pay lower rent. [27] In November 2017, 910 entered into a new lease with the Morrison Group at a lower rental rate because the Morrison Group was having financial difficulties. Mr. Majidi testified that he was worried about getting new tenants and offered a lower rental rate to the Morrison Group because of what he called economic factors and the mortgage crisis. The new rental rate was lower by $4 to $6 per square foot. He later felt that that was a mistake, and he should have gotten a tenant who would pay market rent. He did not tell Mr. Khoshbin that he had reduced the Morrison Group's rent. [28] As a part of the new lease, the Morrison Group also left unit 2, opting to only rent unit 3 instead. After it left unit 2, the unit remained vacant. Mr. Majidi testified that unit 2 was hard to rent out, for several reasons: the unit had limited square footage, the Morrison Group still had access to it whenever it wanted, and, at Mr. Khoshbin's request, Mr. Majidi was trying to keep it available for Mr. Khoshbin's then-girlfriend, who had plans to construct a spa there. [29] The record supports the claim that Mr. Khoshbin's girlfriend planned to build a spa in 1111A Finch. In February 2018, Mr. Khoshbin referred to these plans, and his girlfriend's intention to lease space for the spa, in a text message to Mr. Majidi. They continued to correspond about the possibility of a spa in the spring of 2018 and again in November 2018. [30] Continuum began to use unit 2 as office space. The parties dispute how this came to be. Mr. Khoshbin initially testified that Mr. Majidi told him he would just use it as an office until he could find a new tenant. Mr. Khoshbin understood that this would be a temporary arrangement and would end when Mr. Majidi found a new tenant in a couple of months. On cross-examination, however, he acknowledged that it was his idea. [31] Around February 2018, Mr. Majidi and Mr. Khoshbin agreed to create leases between 910 and Continuum, and between 910 and Mr. Khoshbin's girlfriend's company, to show the bank that they had full occupancy for financing purposes. Mr. Majidi proposed putting inflated rent values in the leases "to make it look better." They prepared leases accordingly. [32] I agree that Mr. Majidi was not sufficiently transparent with Mr. Khoshbin about how 1111A Finch was being used. Mr. Majidi did not tell Mr. Khoshbin when he decreased the rent payable by Diamond Jewellery Liquidators and the Morrison Group. While he was certainly entitled to decide to lower the rent, given his responsibilities for day-to-day operations, and indeed may well have had good reasons for doing so, he should have told Mr. Khoshbin about his decisions, either at the time or during routine reporting on rent revenue and affairs in the building generally. (It is uncontested between the parties that Mr. Majidi was supposed to keep Mr. Khoshbin updated on what he was doing.) I also accept, as discussed below, that Mr. Majidi let Nicola Madel, a former Bliss dancer, use unit 2 free of charge; that in doing so, he lost an opportunity to earn rent revenue on the unit; and that he should have told Mr. Khoshbin that he had approved this use of unit 2. [33] That said, I am not persuaded that Mr. Majidi under-utilized 1111A Finch, as Mr. Khoshbin alleges. Mr. Majidi rented out the GreenMedz unit after the police raids. He listed the Reunion Foods Inc. unit three times, to no avail. I accept that unit 2 was, at least for some time in 2018, being kept available for Mr. Khoshbin's girlfriend. I also accept Mr. Majidi's evidence, to which Mr. Khoshbin did not respond, that unit 2 was harder to rent out in part because it was smaller and a neighbouring tenant had access to it. In addition, I accept Mr. Majidi's evidence that he had reasons for lowering the rent paid by existing tenants, including that getting a new tenant is more expensive than keeping an existing tenant. [34] Having regard to Continuum's role in 910's finances, Mr. Majidi acknowledged in cross-examination that Continuum "regularly" wrote cheques to 910 that were recorded in the books as rent payments. Once Continuum's contributions to 910's rent revenue are netted out, 910's gross rent revenue went down over time: it was approximately 22% lower in 2018 and 2019 than it had been in 2015. 910's debt to Continuum went up each year, and by March 6, 2020, the day after Mr. Khoshbin's fateful visit to 1111A Finch, 910 owed Continuum over $613,500. [35] In March 2019, Mr. Khoshbin asked Mr. Majidi via text message how Continuum's books were looking and whether there would be a dividend. Mr. Majidi responded that there would be a dividend, but smaller than before, because Continuum had earned $250,000 less in sales and had spent $400,0000 to pay down the mortgage on 1111A Finch. Mr. Khoshbin was surprised and said that he thought the tenants' rent payments were paying down the mortgage. He asked Mr. Majidi whether or not the rent was covering the monthly mortgage and taxes. [36] Mr. Majidi's response to Mr. Khoshbin's inquiry was inaccurate and misleading. Mr. Majidi explained to Mr. Khoshbin that 910 had to refinance its mortgage on 1111A Finch. The previous mortgage had been for $1.35 million, but now the bank was only willing to refinance $965,000, so 910 put in another $400,000 to make up the difference Mr. Majidi offered Mr. Khoshbin his assessment that the building had "2M plus in equity" to which Mr. Khoshbin responded "oh yeah. Ok". Mr. Majidi told Mr. Khoshbin that the equity had "gone up at least 1M in 4 years". Mr. Khoshbin's response was "ok good." Additionally, he told Mr. Khoshbin that he was "aiming for" the building to be worth $4 million in two years. Mr. Khoshbin then reiterated his question about whether rent was covering the mortgage, and Mr. Majidi answered that it was, that the building was not making much money, and that he was aiming to raise rent by 50 percent. [37] In cross-examination, Mr. Majidi made clear that his responses were, at best, based on wishful thinking. He explained that the "$2 million plus in equity" figure, which was significantly larger than the amount the bank had been prepared to loan, was based on his look at comparable properties. He was asked what comparable properties he could have looked at, given his characterization of 1111A Finch as a "unicorn". His response was somewhat unclear. It would seem that he looked at a wide range of properties in the search for comparable properties. Mr. Majidi further testified that when he said the equity had "gone up at least 1M in 4 years" that was nothing more than his "estimate". When he said he was "aiming for" the building to be worth $4 million in two years, he meant that that would be the value of the building once an application to rezone 1111A Finch, discussed below, was approved. He did not specify that to Mr. Khoshbin, who was unaware of the rezoning application. [38] It was suggested to Mr. Majidi that the rent was not covering the operating costs of 910 at the time Mr. Khoshbin posed the question to him. He responded that at the time he wrote that to Mr. Khoshbin, he "believed it was true." He had a "good faith belief" that, if he got a second premium tenant on the ground floor, rent revenue would indeed cover the building's operating costs. Asked whether his "good faith belief" was something different from what was actually happening in March 2019, he was evasive, answering that he did not recall the specifics of what was happening at the time. [39] Although Mr. Khoshbin suggested that he did not know until 2020 that Continuum was funding 910's shortfalls, he exchanged text messages with Mr. Majidi on that very topic as early as 2018. In my view, he was certainly aware to some extent that 910 had shortfalls and that Continuum transferred money to 910 to cover those shortfalls. [40] However, I am not persuaded that he was aware of the extent to which 910 was relying on Continuum to backstop it financially, or the extent to which rent at 1111A Finch was falling short of covering the building's mortgage obligations. 910's indebtedness to Continuum grew steadily over time. Moreover, Mr. Majidi did not regularly report to Mr. Khoshbin, in writing or otherwise, about rent revenue or financial shortfalls at 1111A Finch, even though the evidence was uncontroverted that Mr. Khoshbin expected Mr. Majidi to keep him aware of what was going on with the companies. Finally, Mr. Majidi did not offer transparent answers when Mr. Khoshbin asked him about whether rent revenue was covering the building's expenses. Mr. Majidi answered based on an assessment of what the financials would look like in the future if he succeeded in rezoning the building and bringing a premium tenant. It was an answer that, even if fueled by optimism, was clearly misleading. ### The use of Continuum funds to apply to rezone 1111A Finch [41] Mr. Khoshbin alleges that Mr. Majidi had a conflict of interest vis-à-vis Bliss, the strip club in the building adjacent to 1111A Finch, which led him to improperly use $120,000 of Continuum's money to apply to have 1111A Finch rezoned so that Bliss could become a tenant there. He did not tell Mr. Khoshbin that he was doing so. Mr. Majidi asserts that it was not improper for 910 to have used Continuum's funds to pursue the rezoning application because the application, if successful, would have benefited 910. [42] Bliss was located at 1111 Finch Avenue, next door to 1111A Finch. A parking area and driveway separated the two properties. In early 2014, Mr. Majidi met two of Bliss' owners, including Mr. Matteo Ocilka. They began discussing the possibility of Mr. Majidi buying into Bliss. The evidence was that Mr. Majidi made an offer to purchase 1111A Finch while negotiating his purchase of shares in Bliss. On April 8, 2014, he signed an Agreement of Purchase and Sale to purchase 1111A Finch. That Agreement had a 30-day due diligence period and a financing condition. On June 10, 2014, he bought a 50% interest in Bliss. Eight days later, he and Mr. Khoshbin entered into the final agreement of purchase and sale for 1111A Finch. It is uncontested that Mr. Majidi did not tell Mr. Khoshbin about his ownership interest in Bliss, either before or after they purchased 1111A Finch. After Mr. Majidi acquired his interest in Bliss, he began working there once or twice a week for one to two hours at a time. He did not tell Mr. Khoshbin that he was doing so. [43] Mr. Majidi testified that from the outset of his discussions with Bliss' owners about buying a stake in their business, he asked them to agree to move Bliss to 1111A Finch. He would not have bought an interest in Bliss had the other owners not agreed to move to 1111A Finch. In his view, having Bliss as a tenant was a good opportunity for 910. A strip club can only operate in a building that is zoned for adult entertainment. If he could obtain that zoning designation for 1111A Finch, he could charge Bliss premium rents, which in turn would increase the value of the building. [44] Mr. Majidi's view that obtaining the adult entertainment license would increase the value of 1111A Finch was based on his experience as a real estate agent. There was no expert evidence on this point, even though Mr. Majidi retained two expert appraisers in the course of this litigation. I am not persuaded that rezoning the property for use as an adult entertainment venue would increase its value, in the absence of expert evidence and in the face of Mr. Majidi's own testimony about the stigma associated with having strip club tenants. [45] Mr. Majidi testified that the other owners of Bliss committed to moving the club over to 1111A Finch. He planned to charge them roughly $13,500 or $14,000 in rent per month, which was less than what they were currently paying at 1111 Finch, but still a premium amount, in his view. [46] The only catch was that 1111A Finch was not zoned for adult entertainment. Mr. Majidi therefore engaged an urban planner and a paralegal to apply to rezone 1111A Finch so that Bliss could move there. Their services cost more than $120,000. Continuum paid for their work. Mr. Majidi testified that the rezoning application "was [his] gamble". [47] Mr. Majidi did not obtain a legal opinion on the likelihood of success in seeking rezoning. He did not tell Mr. Khoshbin that he was hiring the urban planner and paralegal, or that Continuum was paying for them. He did not tell Mr. Khoshbin the cost of the rezoning application. When testifying, he did not know the amount himself. Mr. Khoshbin testified that Mr. Majidi never told him that he was pursuing the rezoning application and that he only learned about it shortly before his March 5, 2020 visit to the building. [48] Mr. Majidi testified that, if he had succeeded in obtaining an adult entertainment license, Bliss would have paid back some of the costs of obtaining the license. He expressly discussed with his Bliss partners that Bliss would cover half of the costs of the zoning reapplication. This evidence was contradicted by Mr. Ocilka, who testified that Mr. Majidi did not ask Bliss to contribute any money to the zoning applications. Mr. Majidi's evidence was inconsistent as to whether the reimbursement would be achieved via ordinary reimbursement or by way of monthly rent adjustments. His explanation of what those monthly rent adjustments would involve was somewhat vague. It is uncontested that he did not enter into any written agreement with his Bliss co-owners about repaying the rezoning application expenses. I am not persuaded that Mr. Majidi entered into any such agreement at all. There is no documentation to support his claim, and I prefer Mr. Ocilka's evidence on this issue over Mr. Majidi's, given my concerns with Mr. Majidi's credibility. [49] Mr. Majidi testified that he told Mr. Khoshbin at some point that he wanted to bring Bliss over as a tenant and rezone 1111A Finch. He told Mr. Khoshbin that if Bliss became a tenant, he could "lock them in" at a premium rental rate. Mr. Khoshbin was "okay with that". [50] Mr. Khoshbin disputed this. He testified that Mr. Majidi told him something to the effect that he knew someone who had a strip club and was looking for space, and that if they brought the strip club into the building, the club could have the whole building and they could double their rent. Mr. Khoshbin responded that he did not want anything to do with a strip club. He did not want to be associated with a business like that. It would attract criminal elements. He "quickly shut down the conversation." Mr. Khoshbin remembered this overture "vividly". [51] Mr. Majidi also testified that he asked Mr. Khoshbin in 2014 whether Mr. Khoshbin wanted an ownership stake in Bliss. Mr. Khoshbin rebuffed the offer. [52] I find that the two cousins never agreed to try to rezone 1111A Finch so that Bliss could become a tenant. Generally, I prefer Mr. Khoshbin's evidence on this issue over Mr. Majidi's. Mr. Majidi's explanation of why he discussed Bliss' potential tenancy with Mr. Khoshbin, but did not discuss his own ownership stake in Bliss with him, was somewhat perplexing. He explained that there was a stigma associated with the strip club line of business. He was unable to explain why that stigma applies to owning a strip club but not to having one as a tenant. Nor is it clear from his evidence why this stigma stopped him from telling Mr. Khoshbin about his own ownership interest in Bliss, but did not prevent him from inviting Mr. Khoshbin to take on an ownership interest in Bliss. [53] Mr. Majidi testified that he did not disclose his interest in Bliss to Mr. Khoshbin because he had not yet done anything to pursue rezoning for 1111A Finch. Any transfer of Bliss from 1111 Finch to 1111A Finch was "years away" and not being "actively" pursued. Bliss still had an existing lease. In his view, buying into Bliss and trying to get 1111A Finch rezoned for adult entertainment were "two wholly separate acts". [54] Mr. Majidi never succeeded in getting 1111A Finch rezoned for adult entertainment. He ran into obstacles with the City, and then with the Ontario Municipal Board. Eventually, this litigation intervened. Bliss' existing lease at 1111 Finch expired in June 2017, and it never moved to 1111A Finch. [55] Mr. Majidi denied that he bought 1111A Finch specifically to get Bliss to become a tenant, as Mr. Khoshbin suggests. He testified that even if Bliss did not exist, he would "100%" still have purchased 1111A Finch, because it was the kind of building that rarely comes up for sale in Toronto. [56] Mr. Khoshbin asserted that Mr. Majidi's effort to get 1111A Finch rezoned was bound up in his ownership of Bliss, about which Mr. Khoshbin knew nothing. He stated that Mr. Majidi had a conflict of interest because of his ownership stake in Bliss, which he acquired around the same time that 910 purchased 1111A Finch, and that Mr. Majidi improperly spent Continuum funds in pursuit of the rezoning application to benefit Bliss at the expense of Continuum. In his view, rezoning 1111A Finch would have benefitted Mr. Majidi as an owner of Bliss, and not 910. Moreover, the attempt to get 1111A Finch rezoned was not Mr. Majidi's "gamble" as Mr. Majidi claimed. He stood to gain from the possibility of successful rezoning, but it was Continuum that bore the consequences when those efforts ultimately failed, because it was Continuum that was funding those efforts, unbeknownst to Mr. Khoshbin. [57] Mr. Majidi disagreed; his view, outlined above, was that it was in 910's interests for the rezoning application to come through and that Bliss would repay 910 when the rezoning was accomplished. ### The use of unit 4 as an illegal marijuana dispensary [58] Mr. Khoshbin asserts that Mr. Majidi permitted the improper use of another of 1111A Finch's units as an illegal marijuana dispensary, without telling Mr. Khoshbin. He states that this, too, was misconduct by Mr. Majidi, that he only learned about later. Mr. Majidi states that he did not know that the unit was being used in this way. [59] Beginning in the late summer of 2016, a tenant called GreenMedz began occupying unit 4, the only second-floor unit at 1111A Finch. Mr. Majidi's evidence was that GreenMedz entered into a lease in January 2017, a few months after it started using the unit. He understood GreenMedz to be a medical marijuana dispensary. His affidavit evidence from earlier in the proceeding indicates that the City had "cleared" GreenMedz to use the space to dispense medical cannabis in 2016. [60] In fact, GreenMedz was an illegal cannabis dispensary and was the subject of two police raids on November 7 and 14, 2017. During the first raid, the police seized more than 95 pounds of marijuana, cell phones, money counters, vacuum sealers, electronics, air purifiers, and cash. Mr. Majidi testified before me that he had no direct knowledge of either of the police raids. After the first raid, he told GreenMedz to wrap up its operations, but GreenMedz did not comply. It kept operating. After the second raid, he terminated the lease and changed the locks. [61] In the wake of the raids, 910 was charged under the [Planning Act, R.S.O. 1990, c. P.13](https://www.ontario.ca/laws/statute/90p13), for permitting the property to be used for a purpose that was not permitted, although those charges were later dropped. GreenMedz eventually shut down. It is common ground that Mr. Majidi did not tell Mr. Khoshbin about either raid, about GreenMedz subsequently shutting down, or about the charges laid against 910. He testified that he kept this information from Mr. Khoshbin because he was "embarrassed that [he] let it get this far". Mr. Khoshbin did not learn of the charges until later. [62] During the November 7, 2017 raid, law enforcement authorities determined that GreenMedz was also using unit 2, which lay directly beneath it, for its operations. They found that a shaft and pulley system had been built between the two units to enable cash or drugs from unit 4, GreenMedz' upstairs unit, to be transported down to unit 2 surreptitiously. The pulley system was disguised by a fake water shutoff valve with an encasement that was secured by Velcro and could easily be removed. [63] Mr. Ocilka's evidence was that he constructed the fake valve and pulley system at the request of Mr. Majidi in or around 2017. He testified that Mr. Majidi asked him to build the pulley system and shaft so that money could be dropped from unit 4 down to unit 2 in case of a police raid or robbery. Questioned on this point in cross-examination, Mr. Majidi disagreed with Mr. Ocilka, albeit mildly. He first responded"I don't think it's true. No." He added"I don't have any recollection of" telling Mr. Ocilka to build the false valve "at all at that time." Asked again if it was his evidence that he did not instruct Mr. Ocilka to construct the false valve, he answered"[n]o, I don't think so". This evidence is equivocal at best. It does nothing to undermine Mr. Ocilka's evidence that Mr. Majidi ordered the construction of the pulley system and shaft between the units to assist GreenMedz in the case of a police raid or robbery. [64] I pause to comment on Mr. Ocilka's credibility. It is uncontested that he has a close personal and professional relationship with Mr. Khoshbin: he has worked for Mr. Khoshbin's company, Prollenium, since 2020, and has visited Mr. Khoshbin's cottage in Ontario and his resort in Anguilla and joined his family for holiday dinners. Despite this potential for bias, however, I find Mr. Ocilka's evidence generally believable. He did not deny his relationship with Mr. Khoshbin. He answered questions about their relationship readily and without evasion. He also testified about building the valve and pulley system, and about doing so at Mr. Majidi's request, in a way that was granular and believable. In my assessment, his evidence on this important point was more credible than Mr. Majidi's equivocal denials were. [65] Mr. Ocilka further testified that Mr. Majidi had told him that he was a part-owner of GreenMedz, which Mr. Majidi also denied. Mr. Majidi's evidence was that he was a 50% owner of a medical marijuana facility in Mississauga that Mr. Ocilka had visited, but he had never owned, and had never told anyone he owned, any part of GreenMedz. I am of the view that Mr. Ocilka was mistaken on this issue. I accept that Mr. Majidi had no ownership stake in GreenMedz. However, I do not think anything turns on this. [66] The police seized two safes from unit 2, the downstairs unit, during the November 7, 2017 raid. The safes were located near the bottom of the shaft connecting units 2 and 4. Together, they contained over $91,000 of cash. [67] The Public Prosecution Service of Canada applied for forfeiture of the cash and property seized. Mr. Majidi claimed to be the lawful owner of the money seized from the two safes, along with property found near the two safes, and asserted that his section 8 rights under the Canadian Charter of Rights and Freedoms had been breached. The Ontario Court of Justice decided the forfeiture application in favour of the Public Prosecution Service and denied Mr. Majidi's request to have the funds returned to him ([R. v. Vujisic, 2020 ONCJ 175](/on/oncj/2020/175)). [68] In cross-examination before me, Mr. Majidi confirmed much of the evidence referred to in the forfeiture decision. He confirmed that, during the raid, he spoke with the officer in charge of the raid on the phone and identified himself as the property manager. He told the officer that he used the main floor office, that he had no knowledge of the marijuana dispensary, that the larger of the two safes was related to a strip club he had an interest in, and that the smaller safe was his and was unconnected to GreenMedz. The police officer told him that they had called a locksmith and would be searching the safe because they had found marijuana and cash in unit 2. Mr. Majidi then provided the combination to the safe so that the police would not need to break its lock. He did this during the raid itself and after speaking directly with the police officer. [69] In the face of Mr. Majidi's evidence about this substantive discussion and interaction with the officer during the raid, I do not accept Mr. Majidi's claim that he had no direct knowledge of the November 7, 2017 raid. [70] Mr. Majidi was not successful in his efforts to recover the contents of the safe. The court held that he was aware that GreenMedz was an illegal dispensary, that he assisted GreenMedz by providing it with the storage area in unit 2, and that the contents of the safe were proceeds of crime and related to the offences with which the principal of GreenMedz was charged. [71] The parties disagree as to whether I may rely on these factual findings, given that they were rendered by a different court (the Ontario Court of Justice) in a matter in which the parties were not the same as they are before me. I do not need to rely in any way on the findings of the Ontario Court of Justice in the forfeiture decision. I find, based on the evidence before me, that Mr. Majidi knew that GreenMedz was an illegal dispensary. In the alternative, he exercised inadequate due diligence in satisfying himself that it was a legal dispensary such that he was willfully blind to its illegality. [72] I find that he knew it was an illegal dispensary because he instructed Mr. Ocilka to build the pulley system and shaft between units 4 and 2. As discussed above, I accept Mr. Ocilka's evidence that he constructed the pulley system and shaft at the request of Mr. Majidi so that money could be dropped from unit 4 down to unit 2 if there were a raid or robbery. I prefer that evidence over Mr. Majidi's equivocal denials of having given such instructions to Mr. Ocilka. It follows that Mr. Majidi would have had no reason to instruct Mr. Ocilka to build the pulley system and shaft had he not known that GreenMedz was engaged in illegal activity. [73] In the alternative, Mr. Majidi did not take sufficient steps to satisfy himself that GreenMedz was a legal marijuana dispensary, and as such was willfully blind to the illegality of its business. Earlier in the proceeding, Mr. Majidi provided affidavit evidence that the City had "cleared" GreenMedz as a legal medical marijuana dispensary. On cross-examination, however, he acknowledged that there was no such actual clearance. He testified that that portion of his affidavit was hearsay evidence, although not identified as such. He had never spoken with the City to confirm that GreenMedz was "cleared" as a licensed medical marijuana dispensary. Rather, GreenMedz had relayed to him that the City had cleared it, and he accepted that claim at face value, without asking GreenMedz for documentary proof or speaking with the City himself. GreenMedz also told him that the City said that the lease should indicate that GreenMedz was in the business of selling tobacco water pipes, and Mr. Majidi prepared the lease accordingly. [74] In my view, given that Mr. Majidi neither asked for documentary evidence of GreenMedz' alleged license to dispense medical marijuana, nor spoke with the City to verify that such a license had been granted to GreenMedz, there was no reasonable basis on which he could rely on GreenMedz's assurances. It was not sufficient due diligence on his part, as building manager and director and part-owner of 910, to simply accept GreenMedz's say-so on this essential point. It is also perplexing that he readily accepted their suggestion that he indicate in the lease that they sold tobacco water pipes. If indeed they were a duly licensed medical marijuana dispensary, one would think he could and would have described them as such in the lease. ### The use of unit 2 as an illegal strip club or brothel [75] Mr. Khoshbin further asserts that Mr. Majidi permitted one of 1111A Finch's units to be used as an illegal strip club or brothel, without telling Mr. Khoshbin. Mr. Majidi denies that he had any knowledge of any unit in the building being used in this way and states that Mr. Khoshbin was in fact aware of the strip club or brothel activity for over a year and did nothing about it. [76] Mr. Ocilka testified that Bliss' regular customers held poker nights in unit 2. At times, up to three or four poker nights were held there in a week. Alcohol was sold and purchased from the party organizers on-site. No licenses were obtained to serve alcohol. Revenue from the parties was used to pay bills and then provided to Bliss' partners. No rent or other payment was provided to 910. The record contains photographs showing such a poker party in unit 2 in April 2017. [77] Mr. Majidi was shown the photographs and asked if he had any knowledge in April 2017 that this was how unit 2 was being used. He answered that he did not recall any such use. He was unaware of the poker parties or the associated alcohol sales. He testified that Bliss kept a safe in unit 2 and had an office there, but did not otherwise use the unit. [78] Although Mr. Majidi testified that he did not know about the poker parties, he did offer evidence that, starting around October 2018, he made unit 2 available to Nicola Madel, a dancer at Bliss, for her to hold parties there. He testified that Ms. Madel wanted to change her "lifestyle choice" from being a dancer at Bliss to being an event planner. Mr. Majidi wanted to "be supportive" of that, so he let her use the unit to run parties. He told her that she could do what she wanted with the unit, and if she made money, she could pay him rent. He never charged or received any rent payments. [79] Mr. Majidi testified that it was a "very loose" arrangement without any lease or rental agreement, because Mr. Khoshbin had told him to keep the space available for his then-girlfriend, who was considering building a spa in the space. Mr. Majidi therefore needed to be able to get rid of whoever was using the space if indeed the spa plans materialized. [80] Mr. Khoshbin disputed the suggestion that he asked Mr. Majidi to keep a unit available for his girlfriend. He testified that Mr. Majidi had told him "on many occasions" that the unit was empty, and he (Mr. Khoshbin) was trying to fill it. He therefore connected the two of them, since she was looking to start a business and the building had empty units. [81] In any event, it is uncontested that Mr. Majidi provided Ms. Madel with a key to the unit (notwithstanding his evidence that he, despite being the property manager, did not have a key to the unit). Mr. Majidi never told Mr. Khoshbin of his arrangement with Ms. Madel, because it was "temporary" and "not important". [82] Mr. Majidi testified that Ms. Madel ran only "a couple of parties" then stopped for a while, and then resumed the parties. The arrangement lasted at least a year. The parties were innocuous. He went to one party, a Halloween party, that he described as a "normal party". Both women and men were present, including women who had recently had babies, which he appeared to view as an indicator that the parties were benign. [83] Mr. Ocilka painted a different view. He testified that unit 2 functioned as an overflow space, that patrons and dancers from Bliss could walk across the alley and access unit 2 while Bliss was operating, and that the space was regularly used for parties, private dancing, paid sex work, and the unlicensed service of alcohol. He described Ms. Madel's parties as including lap dances and other paid sexual acts by Bliss dancers. The upstairs loft in unit 2 was used as a private space by Bliss dancers and patrons for paid sexual acts. Mr. Ocilka testified that he had no knowledge as to whether Mr. Majidi knew that there was a brothel in unit 2, but said that he and Mr. Majidi would host parties "together" at which alcohol would be served, dancers would come, and sex acts would take place. He further testified that Mr. Majidi "was present sometime[s]" when sex acts took place. [84] Mr. Majidi denied ever knowing that unit 2 was being used as a brothel, strip club, or anything similar. He described what Mr. Ocilka said took place in unit 2 as "highly illegal". He testified that there was "no way" he "would sanction that" and that it was "crazy" and would lead law enforcement authorities to "come down on you so hard". [85] When asked to identify what precautions he took to ensure that there were no illegal activities in the unit, he offered that he attended the Halloween party hosted by Ms. Madel, as described above, and that he listened to other tenants, particularly one who complained about smoking in unit 2. He attended the Halloween party to look into the complaint about smoking in the unit. He did not attend any of Ms. Madel's other parties or take any other steps to protect against illegal activity. He did not know if Ms. Madel ever obtained liquor licenses. He did not take any steps to make sure she obtained them. [86] Mr. Khoshbin testified that before March 2020, although he had a sense from Mr. Ocilka of the kinds of things going on in unit 2, he did not understand the extent of the issue. His evidence was that he and Mr. Ocilka met in late 2017 or early 2018 when Mr. Ocilka was doing general contractor work at Mr. Khoshbin's parents' home. They got to know each other and would talk. One day, Mr. Ocilka mentioned that he used to own part of a strip club called Bliss. Mr. Khoshbin asked him where it was, and Mr. Ocilka told him it was at 1111 Finch. Mr. Khoshbin told him that he was a part-owner of a building at 1111A Finch, in response to which Mr. Ocilka "kind of froze" and did not say much. [87] Later, likely towards the end of 2018, Mr. Ocilka told him "everything": that he had met Mr. Majidi at Bliss, that Mr. Majidi was a regular customer at Bliss, and that a dancer there introduced Mr. Majidi to Mr. Ocilka and the other Bliss owners because Mr. Majidi had expressed an interest in buying into Bliss. The owners met and discussed issues they were having with their landlord. Mr. Majidi had the idea that he would buy the building next door (1111A Finch) and help Bliss move next door. Mr. Ocilka also told Mr. Khoshbin that Bliss was using unit 2 as a "quasi strip club" and for playing poker, and that liquor was being served there. [88] Mr. Khoshbin testified that he was "kind of in shock" when Mr. Ocilka told him this. He found what he was hearing "hard to believe" and "off-putting". Because of his family relationship with Mr. Majidi, he did not "know how to react". He did not want to confront Mr. Majidi or say anything to him. He did not want his mother, his aunt, or the family to know and did not want to create disunity in the family. He kept quiet about it and tried to "fix the situation" in a "non-confrontational way" by pressuring Mr. Majidi to lease the space out. He thought that if he could get a tenant into unit 2, Mr. Majidi would stop whatever activity was going on there. [89] In February 2020, Mr. Khoshbin asked Mr. Majidi for floor plans and a lease for unit 2. He testified that he was considering leasing the space to his then-girlfriend to use for a spa, or to a new marijuana business that he was starting with a business partner, in an effort to get the space occupied so that the illicit activities in unit 2 would have to come to an end. [90] His evidence was that Mr. Majidi delayed in sending the lease and floor plans. He suggested that the upstairs unit would be more suitable. Later that month, Mr. Khoshbin asked for keys to the unit. He asked again in early March. Mr. Majidi did not give the keys to him. At different times, Mr. Majidi said that he did not have a key, said that the key he had did not work, and told Mr. Khoshbin's friend, with whom he played hockey, that he had lost the key. Mr. Majidi told Mr. Khoshbin he would drop off the key, but never did. Mr. Khoshbin estimated that he asked for a key "over a dozen" times. He became worried. [91] On March 5, 2020, Mr. Khoshbin drove to the building with a locksmith. He entered unit 2. He testified that, although he had an "idea" about what was going on in unit 2 based on what Mr. Ocilka had told him, he did not know the "extent" of the issue. He was "in shock" by what he saw. It looked "like a strip club". The desk was decorated like a strip club. There were benches and seats. He saw condom wrappers in the garbage can, women's underwear strewn about, and high heel shoes "all over" the floor. There was a futon upstairs that had clothing on it. A shower had been built in. There was a poker table and there were liquor bottles everywhere. He spoke with Ms. Madel, and, based on what she told him and what he had observed, determined that an adult entertainment business was being conducted in the unit. Mr. Majidi had never told him that the unit was being rented out for parties, let alone that it was being used for adult entertainment. [92] He confronted Mr. Majidi. They had an angry phone call and then exchanged a series of heated text messages. Mr. Majidi's response, in effect, was that Mr. Khoshbin should contact Mr. Majidi's lawyer. Mr. Khoshbin testified that he thought this was strange because he had just seen unit 2 and believed he and Mr. Majidi should talk about it, but Mr. Majidi's response made him feel that there would be no way to fix the issue. [93] Mr. Khoshbin tendered evidence consisting of a recording between Mr. Ocilka and Ms. Madel from around the time of Mr. Khoshbin's visit to 1111A Finch on March 5, 2020. I decline to consider the recording as evidence of the truth of its contents. Mr. Ocilka did testify at trial, but Ms. Madel did not. As such, her comments on the recording are hearsay. No explanation was given to me as to why she did not or could not testify. I therefore conclude that it was not necessary to admit this hearsay evidence. [94] Mr. Majidi disputed Mr. Khoshbin's allegations: he stated that unit 2 was difficult to rent out, was being reserved for potential future use by Mr. Khoshbin's girlfriend at Mr. Khoshbin's request, and was properly made available to Ms. Madel for innocuous parties on the understanding that she would pay him rent if she ever earned money. He denied that he ever knew about, or enabled, the use of unit 2 for paid sex and other illegal conduct. He disputed that he should have told Mr. Khoshbin about his ownership interest in Bliss or that his ownership interest tainted his judgment vis-à-vis 910 and 1111A Finch. [95] I find that Mr. Majidi knew that unit 2 was being used as a brothel or strip club space. Mr. Ocilka's evidence, which I prefer over that of Mr. Majidi, was that Mr. Majidi co-hosted parties in unit 2 at which dancers attended and during which sex acts took place. [96] In the alternative, if Mr. Majidi did not know about the brothel, then he should have done more to monitor the use of unit 2. It was only because of his lack of oversight that the unit came to be used as a brothel for an extended period. Rather oddly, Mr. Majidi was prepared to let Ms. Madel, a former Bliss dancer, use the unit to throw parties free of charge, but never followed up to ask if she had started earning money. Nor did he ever check on how she was using the property or what the parties consisted of, other than by attending one Halloween party. This was insufficient oversight, given his role as building manager and his obligations towards 910 and Mr. Khoshbin. [97] I am also perplexed by Mr. Khoshbin's role in these events. Mr. Khoshbin's evidence was that he learned about the brothel or strip club activity in unit 2 over a year before March 5, 2020, but did little about it. He kept quiet and did not confront Mr. Majidi, instead trying to find other, lawful tenants for the space so that the illegal activity would have to stop. I find that testimony difficult to reconcile with Mr. Khoshbin's earlier evidence that, when Mr. Majidi had asked him about bringing on a strip club as a tenant, he "quickly shut down the conversation" because he did not want anything to do with a strip club and did not want to be associated with a business like that, which would attract criminal elements. It is surprising and illogical that Mr. Khoshbin would have reacted so emphatically, and negatively at the hypothetical possibility of having a strip club as a tenant, but would have seemingly acquiesced to actual illegal strip club activity in the building for roughly one year, without voicing even the mildest of concerns to Mr. Majidi. [98] In my view, Mr. Khoshbin's response to Mr. Ocilka's revelation about the use of unit 2 supports Mr. Majidi's submission that Mr. Khoshbin was prepared for a time to live with the use of the unit as a strip club, but then changed his mind. ### Post-March 2020 events including the May 2020 discussion with Continuum's Florida employee and the June 2020 email to Continuum customers [99] The relationship between the cousins deteriorated quickly after Mr. Khoshbin's March 5, 2020 visit to 1111A Finch. On March 17, 2020, Mr. Khoshbin asked Mr. Majidi to step away from his involvement in the companies immediately so that they could work out his buyout. He reiterated this request three days later. He commenced litigation. On April 28, 2020, Mr. Majidi was removed as director of both Continuum and 910. [100] In May 2020, Continuum stopped paying Mr. Majidi and Mr. Khoshbin demanded that Mr. Majidi turn over his corporate property. Mr. Majidi did not immediately comply with this request. He kept working from April through June 2020. His evidence was that he did so because he was an employee and had a responsibility. Mr. Khoshbin had never operated the company. Mr. Majidi wanted to continue operating the business until the transition was complete, to preserve the value of the company during any transition period. While he "was willing to hand it over to" Mr. Khoshbin, the transition "had to be done properly". He also worried that if he walked out on the business, Mr. Khoshbin would blame him for jeopardizing the value of the business. [101] Mr. Khoshbin alleges that Mr. Majidi improperly told Continuum's Miami-based employee, Melina Perez, that there could be no future Continuum operations, after which Ms. Perez resigned. Mr. Majidi testified that some time in early May 2020, he told Ms. Perez "what was happening". He also told her that Mr. Khoshbin was looking for Mr. Majidi's sister to handle operations, because she lived in the U.S. Ms. Perez "was concerned whether she was going to have a job or not" and Mr. Majidi "answered honestly, 'I don't' know if you're going to have a job or not.'" She obtained employment elsewhere. Mr. Khoshbin later hired her back, at a higher salary. [102] I find Mr. Majidi's evidence on this point somewhat confusing. I can certainly understand that he wanted Ms. Perez to know that the business was in flux due to his conflict with Mr. Khoshbin, and that this might have implications for her employment. However, it is not clear from his evidence that he had this discussion with her only to relay that point. He also told her that Mr. Khoshbin was considering having someone else handle the business' U.S. operations, a point which seems unrelated to his dispute with Mr. Khoshbin and therefore unaccounted for by his explanation. [103] Nonetheless, I am not persuaded that his conversation with Ms. Perez was improper, or that it led to any decrease in Continuum's business. Even if there were a decrease in business during this time frame, it is not clear whether any of it is attributable to Ms. Perez's departure. [104] On June 17, 2020, Mr. Majidi sent an email to Continuum's customers saying that the company would be suspending shipping on July 1, 2020 and would notify customers when it could resume taking orders. The email was sent using a pseudonym that he and Mr. Khoshbin both used to communicate with customers. [105] Mr. Khoshbin testified that Mr. Majidi's email harmed Continuum's business; Mr. Majidi disagreed, testifying that he sent the email because at this stage"several things were happening". Ms. Perez had quit, and Mr. Majidi "was begging people in Miami to help" him ship out Continuum products. They were also "running out of" product. He asked Mr. Khoshbin to name him the director of the company and to tell him to whom to transfer things, and after receiving no response from Mr. Khoshbin for "weeks" he felt he had "run out of options." He did not want to harm the customers and wanted them to have notice that Continuum would be suspending its operations "for a period of time". [106] I am not persuaded that it was improper for Mr. Majidi to have sent the June 2020 email to Continuum's customers. He was, by all accounts, responsible for the day to day running of the company. His evidence, which Mr. Khoshbin did not contradict, was that the company was facing several problems including low product supply and difficulty shipping, and he could not get help from Mr. Khoshbin in responding to these issues. I find that this was a reasonable explanation. [107] Nor am I persuaded that the email led to a decline in business for Continuum. Even if the record demonstrated a decrease in business during this time frame, it would not be clear that it was attributable to Mr. Majidi's email, rather than the friction within the company, and/or COVID-related lockdowns. [108] By fall 2020, the parties were disagreeing over the use of money from Continuum's bank accounts. Mr. Majidi did not permit money from the accounts to be used to cover 1111A Finch's shortfalls. He demanded that his own expenses be paid out first. Mr. Khoshbin refused. Mr. Khoshbin wanted $135,000 for what he called maintenance expenses for 1111A Finch; Mr. Majidi was concerned that these expenses in fact related to renovation work that Mr. Khoshbin wanted to undertake before moving his new cannabis business into the building. Because of their dispute and the failure of 910 to meet its property tax obligations on 1111A Finch, the bank closed 910's bank accounts and declined to renew the mortgage. Mr. Khoshbin had to borrow money personally to pay out the mortgage, and had to set up new bank accounts with another bank. ### The misappropriation of cash from Continuum [109] Mr. Khoshbin further alleges that Mr. Majidi misappropriated "at least" $40,000 in cash from Continuum. It is common ground between the parties that Continuum sold products to two longstanding customers, Payvand Moghadam and his wife, for cash. Mr. Khoshbin's evidence was that he received "about $30,000" in cash from Mr. Majidi concerning those cash transactions. He alleged that that amount did not reflect his full 70% share of the money and that Mr. Majidi misappropriated at least $40,000 that was properly his. [110] Mr. Moghadam testified at trial. His evidence was that he purchased botulinum toxin products from Continuum for years, first from Khoshbin and then from Majidi. He paid in cash. He did not request invoices. Based on text messages, Mr. Moghadam spent $85,500 on purchases from Continuum. He estimated that the actual number was several hundred thousand dollars, although there were no text messages or documents provided to support this estimate. [111] Mr. Majidi denied Mr. Khoshbin's claim that he misappropriated cash from these sales. He testified that he remitted 70% of the cash from the sales to Mr. Moghadam to Mr. Khoshbin, except on one occasion when he used the cash to purchase and install a television for Mr. Khoshbin instead. [112] I am not persuaded that there was any misappropriation of cash. Mr. Majidi remitted cash to Mr. Khoshbin with some regularity. The evidence shows frequent text communications between the cousins about cash sales. Mr. Majidi would tell Mr. Khoshbin that he had cash for him, or Mr. Khoshbin would ask him if he had any cash from his sales to Mr. Moghadam and his wife. Mr. Majidi's wife also testified that she saw Mr. Majidi set aside cash in envelopes at their home, and once or twice saw him bring the envelopes to family dinners where he would give the envelopes to Mr. Khoshbin. [113] Nor am I persuaded that Mr. Khoshbin was not paid his fair share. Mr. Khoshbin produced no records of the value of the cash sales to Mr. Moghadam, the amounts he says he ought to have received from Mr. Majidi in respect of those sales, or the amounts he actually received. Mr. Moghadam provided text messages describing $85,500 in sales, but provided no documentary evidence to support any additional sales. I treat Mr. Moghadam's evidence with some circumspection. He is "close" with Mr. Khoshbin and his family and has known them for roughly 25 years now, as he indeed acknowledged in an affidavit in 2020. Yet he was evasive when questioned about their relationship at trial. In my assessment, that evasiveness suggests potential bias on his part and calls into question the credibility of his evidence regarding the value of his cash dealings with Continuum. [114] I therefore reject the claim that Mr. Majidi misappropriated cash from Continuum. ## Mr. Majidi's allegations against Mr. Khoshbin ### The closing down of Continuum [115] In June 2021, Mr. Khoshbin shut down Continuum. Mr. Majidi asserts that it was improper for Mr. Khoshbin to have done so amid litigation over the value of Continuum's shares. [116] It is uncontested that Continuum had been importing a product from China and selling it, primarily to physician customers in the U.S. The product was not approved by the FDA or any other regulator. It had no product label. Mr. Khoshbin's evidence was that this was a botulinum toxin product; Mr. Majidi testified that it was a botulinum toxin alternative. Around 2018, Continuum began buying Korean botulinum toxin products called Nabota and Botulax, instead of the Chinese product. They continued to sell most of their products to U.S.-based physicians. [117] Mr. Khoshbin testified that he had mistakenly believed that because the product was being sold to physicians in the U.S., who then administered it, Continuum was operating in a "grey zone" and its sales were not illegal. He believed that they were operating in a manner akin to a compounding pharmacy, and were acting legally. [118] However, in 2021, he obtained a legal opinion, through which he learned that his understanding was wrong: the product was a biological drug and should have been approved by the FDA, even for sale to physician customers. In the face of that opinion, he determined that Continuum could not, in fact, legally carry on its business. His evidence was that when he received the legal opinion, he "learned we were really offside" and that Continuum's business activities could "jeopardize" his other businesses and "be really serious for" him. He therefore moved to shut Continuum down "as soon as" he received the opinion. [119] He testified that his decision to close down Continuum was also based on related problems that Continuum had been experiencing with U.S. customs. There were several occasions on which Continuum products were detained at the Canada-U.S. border when being shipped to U.S. customers. For instance, in November 2018, U.S. customs stopped a package being sent to Miami; Mr. Majidi suspended shipments indefinitely to the customer in question, and asked Mr. Khoshbin whether he should be worried. Packages were also detained in March 2018 and July 2019. Eventually, Continuum began using a bonded warehouse called Cargo Express for its shipments, although this did not entirely eliminate the risk of product being detained at the border. [120] In the face of his June 2021 discovery that Continuum's business activities were illegal, he became worried about regulatory risk at the hands of the FDA and the risk posed by U.S. Customs. He therefore ceased Continuum's business activities. He told Mr. Majidi that he intended to call a shareholders' meeting to approve the liquidation and dissolution of Continuum, and that in his view the value of the business, given that it could not be legally conducted, was nil. [121] Mr. Khoshbin's evidence was that botulinum toxin sales to the U.S. formed the core of Continuum's business, which is why the legal opinion rendered it necessary to shut Continuum down. He testified that for almost all the time that it operated, Continuum only ever sold one product: the botulinum toxin product that gave rise to his regulatory and U.S. Customs-related concerns. He retreated somewhat from this claim in cross-examination, acknowledging that "[t]here was [sic] times" when Continuum sold other products, such as wrinkle serums. Additionally, Mr. Majidi sold non-botulinum toxin products from Prollenium with Mr. Khoshbin's permission at least through the summer and fall of 2017 and into 2018. However, I am satisfied that Continuum's business, at least from 2018 onward, consisted substantially of sales of botulinum toxin. [122] I do, however, have difficulty accepting Mr. Khoshbin's claim that he only learned in June 2021 that Continuum's activities were illegal. The legal opinion on which he based this assertion was obtained after this litigation was underway. The record makes clear that both he and Mr. Majidi were well aware all along that Continuum was not operating within the law. The suggestion that the legal opinion meaningfully changed his understanding on this point is not borne out by the evidence. While the legal opinion certainly offered a justification for closing down Continuum, it merely articulated and explained what Mr. Khoshbin and Mr. Majidi already knew to be true: Continuum's business activities were not legal. [123] Soon after Continuum began operating, its products began to be held up at the U.S.-Canada border. Mr. Majidi and Mr. Khoshbin together decided to use a bonded warehouse to circumvent the issue. Mr. Khoshbin was well aware of the ongoing use of the warehouse. After Mr. Majidi successfully tested out the use of the warehouse in January 2018, he notified Mr. Khoshbin, who responded"Thanks [sic] god." The following month, Mr. Majidi reported to Mr. Khoshbin that packages "have been getting through" and Mr. Khoshbin responded"Wicked. We are back in biz." Indeed, although he initially testified otherwise, the evidence suggests that Mr. Khoshbin was the one who suggested using a bonded warehouse to avoid difficulties at the border. [124] At trial, the parties characterized the use of the warehouse differently. Mr. Majidi denied that the warehouse was ever used as a "trick" to avoid U.S. Customs. He stated that products held in a bonded warehouse were cleared by Customs, but only after leaving the warehouse. That may well be the case. However, the contemporaneous evidence, in the form of extensive text messages between the cousins, makes clear that at the time, they both believed that the use of the bonded warehouse would decrease the risk of Continuum products getting held up at the border. This, in turn, makes clear that they both understood there to be a risk associated with Continuum's interactions with U.S. Customs. [125] Mr. Khoshbin testified that he had known "from the very beginning" that there were potential regulatory issues associated with Continuum — so much so that because of those regulatory issues, he "did not think" Continuum would last for more than a year and a half when it started. He and Mr. Majidi discussed that they had to use the bonded warehouse "with care" not advertise Continuum's work, and only sell to existing customers; they did not want to "attract any attention". [126] In March 2018, Mr. Majidi sent Mr. Khoshbin a text saying"I think Miami is done. FDA is inspecting one package." Mr. Khoshbin responded"Shit." Mr. Majidi asked"How bad is it? Any problems beyond not being able to ship." This exchange makes clear that the FDA inspection raised concerns for Mr. Majidi — so much so that he worried that the Miami business was "done" — and that those concerns potentially involved more than simply being unable to ship the product. [127] In September 2018, Continuum received a "Notice of FDA Action" indicating that the FDA was holding a package of its product for inspection. Mr. Majidi asked Mr. Khoshbin if he should ignore the letter. Mr. Khoshbin answered in the affirmative; his evidence was that responding to the letter would be the "worst thing to do" because it would merely elicit more questions about what Continuum planned to do with the package. [128] In October 2018, Continuum started using a botulinum toxin product from Korea. Previously, it had been using a product from China, which developed quality problems. Mr. Majidi had a lengthy text exchange with Mr. Khoshbin about the quality issues with the Chinese product, describing how the product was "like water" and "[didn't] work" that he had "lost count" of the number of complaints he had received from customers, and that sales had "dramatically dropped". They agreed to shift to a Botulax, which was not approved in the U.S. at the time. That same month, Mr. Majidi text messaged Mr. Khoshbin saying that he was "worried about importing" and "still can't bring in non-registered products." [129] In November 2018, Mr. Majidi exchanged text messages with Mr. Khoshbin indicating that he "got" 50 units of Botulax"into Miami." He asked Mr. Khoshbin if Mr. Khoshbin wanted him to remove the labels from the product. Mr. Khoshbin's evidence was that he discussed removing labels with Mr. Majidi because a product that is not approved by the FDA and is shipped with labels is more likely to get stopped and confiscated. On cross-examination, Mr. Majidi said he could not remember why he asked Mr. Khoshbin about removing the labels on the Botulax. I find that difficult to believe, when weighed against the evidence from Mr. Khoshbin and Mr. Moghadam that Continuum sold unlabelled products, and the uncontroverted documentary evidence of unlabelled Continuum products being apprehended at the border. [130] Mr. Majidi testified that, once Continuum shifted to using Botulax in October 2018, the Botulax was used primarily by Mr. Khoshbin and his mother and was not sent to U.S. customers. I reject this claim. It is uncontested that 90% of Continuum's sales were to U.S.-based physicians. Mr. Majidi would not have suggested that they switch to Botulax in response to customer complaints unless he intended for the Botulax to be provided to U.S. customers. Additionally, Mr. Majidi's texts to Mr. Khoshbin about successful exports of Botulax into Miami in November 2018 and June 2019 make clear that Continuum was exporting Botulax to U.S. customers, and that Mr. Majidi was centrally involved in that export. Mr. Majidi also asked Mr. Khoshbin for "doc names to sell to" and Mr. Khoshbin agreed to provide them. Given that about 90% of Continuum's sales were to U.S.-based physicians, it is almost certain that Mr. Majidi was asking for the names of physician customers in the U.S. This shows that Mr. Majidi and Mr. Khoshbin both intended for botulinum toxin products to be sold to physicians in the U.S. [131] In May 2019, they discussed shipment of another botulinum toxin product, Nabota, and Mr. Majidi voiced concern that the shipment "may be flagged for toxin." He asked Mr. Khoshbin if it would be "a problem shipping it there" as a result. Mr. Khoshbin answered"I have to look at laws." Mr. Majidi asked if he should wait to ship in that case. Mr. Khoshbin answered"No go for it." [132] When asked in cross-examination what he meant by that, Mr. Khoshbin said that he was "not sure". I find that difficult to believe. Mr. Khoshbin's response to Mr. Majidi makes it manifestly clear that he was aware that whether botulinum toxin products could be shipped to the U.S. was a legal issue that he would have to "look at". There is no other plausible way to interpret his text message. Notably, he did not look at the issue until 2021, roughly two years later and only after this litigation was underway. In my view, the May 2019 text exchange shows that both Mr. Majidi and Mr. Khoshbin understood there was some potential legal "problem" associated with the "toxin" content of a Continuum product that might preclude it from being shipped outside of Canada, and that Mr. Khoshbin nonetheless advised Mr. Majidi not to wait to ship the product. [133] In August 2019, the FDA went to the office of a U.S.-based physician customer of Continuum and asked for invoices for vials of product that had come from Continuum. Mr. Majidi reported this to Mr. Khoshbin and told him that the customer had told the FDA that the vials "came from Canada. Nothing about us." Mr. Khoshbin testified that he understood this to mean that the FDA was "not onto" them. In any event, the message makes clear that they were both aware that the fact that the product came from Canada was sensitive. [134] In January 2020, Mr. Majidi text messaged Mr. Khoshbin saying"Call me asap. FDA is calling customers." It turned out to be a non-issue. Yet Mr. Majidi was clearly concerned about, and wanted Mr. Khoshbin to know about, these FDA inquiries. Indeed, Mr. Khoshbin testified that FDA issues were a "known concern" that he and Mr. Majidi discussed "frequently". They worried about customers getting inspected and caught with Continuum product. [135] Both Mr. Majidi and Mr. Khoshbin testified that Continuum was never subject to any actual U.S. regulatory investigation. I accept that to be true. However, it is not relevant. What is relevant is that they both understood that it could face such investigation, and indeed took active steps over years to protect against precisely that risk. They both adequately understood Continuum's sales of botulinum toxin product to the U.S. to be illegal. They may not have known the specific ways in which it was illegal, or the particular enforcement consequences of its illegality, but they most certainly understood that was Continuum was doing was not legal — hence the text messages discussing FDA inspections, the removal of product labels, and shipping products that "may be flagged for toxin" for example. [136] I therefore reject Mr. Majidi's claim that there was nothing illegal about Continuum's activities, and I reject Mr. Khoshbin's claim that he did not know that Continuum's activities were illegal until the June 2021 legal opinion was provided to him. Mr. Khoshbin knew enough about the illegality of Continuum's business, just as he knew enough about the illegality of some of what was happening in unit 2 at 1111A Finch. ### The continuation of Continuum's business under the name Moontanar [137] Mr. Majidi alleges that Mr. Khoshbin in fact continued carrying on Continuum's business after ostensibly shutting it down in June 2021, under the name "Moontanar". He alleges that this reflected a "scorched earth" approach by Mr. Khoshbin, who would prefer to shut down a profitable business than pay anything to Mr. Majidi. Mr. Khoshbin denies that claim. [138] Mr. Majidi testified that he "had gotten wind" that Mr. Khoshbin had started a new company that was reaching out to Continuum's customers and offering to sell to them the same products that Continuum had been selling. In mid-2021, he created a fictitious email account through which he contacted customers whom he knew were still sending PayPal payments to Mr. Khoshbin. He asked if they were still receiving packages of product, in the hope of soliciting information from them about the new company he believed Mr. Khoshbin had set up. Some customers reported receiving products. One of them told him that the products were coming from a company called Moontanar and provided an invoice he had received from Moontanar dated September 28, 2021. [139] Mr. Khoshbin denied any involvement in Moontanar. He testified that he understood Moontanar to be selling the same product Continuum had been, after Continuum shut down; he had heard from others that it began servicing Continuum's old customers. He did not know who was behind it and had never dealt with them in his business. He said he had nothing to do with Moontanar and had "zero desire" to get back into this business. [140] Yet in 2022, Mr. Khoshbin exchanged text messages with a business contact named Vadim Askmanov, who told him that he had been contacted by someone named "Moontaner" who said he had product he wanted to sell him. Mr. Askmanov asked Mr. Khoshbin if "Moontaner" was "ok to buy from". Mr. Khoshbin's response was "yeah that [sic] guy is ok". This evidence is squarely at odds with Mr. Khoshbin's claim that he knew nothing about Moontanar, had never dealt with it, and had no idea who was behind it. Mr. Khoshbin offered no explanation for the apparent discrepancy between his response to Mr. Askmanov and his testimony. Nor was he squarely asked for one. [141] It may well be that there is more to the Moontanar issue than Mr. Khoshbin's evidence disclosed. Nonetheless, there is no basis on which I can find, on a balance of probabilities, that Mr. Khoshbin continued Continuum's business under the name Moontanar. ### The deletion of Continuum's email accounts during litigation [142] In the course of shutting down Continuum Mr. Khoshbin in the summer of 2021, Mr. Khoshbin closed the two email accounts that the business had used. He testified he did so because he wanted to make sure that if customers emailed Continuum they would receive a "bounceback" message indicating that the business was closed. The result of closing the accounts was that the emails in both accounts were deleted. [143] Mr. Majidi stated that this reflected an effort by Mr. Khoshbin to get rid of email evidence after this litigation was underway; Mr. Khoshbin denied this, testifying that he did not know that closing the account would delete the emails. Mr. Majidi also suggested that the arrival of Moontanar, the closing of Continuum, and the deletion of evidence in the form of email correspondence to and from Continuum cannot be a coincidence. [144] I am not persuaded that Mr. Khoshbin deliberately deleted the emails. There is no evidence to establish that he intended for the emails to be deleted when he deleted the email accounts. ### The appropriation of Continuum funds by using PayPal [145] Mr. Khoshbin testified that, during the transition period after his March 5, 2020 conflict with Mr. Majidi, he received Continuum customer payments on PayPal. This is because there was no other way to charge customers and receive their payments due to the bank account issues. Mr. Majidi stated that it was improper for Mr. Khoshbin to have used PayPal to receive payments and alleged that Mr. Khoshbin kept some of the funds personally. [146] I do not give effect to Mr. Majidi's claim. Mr. Khoshbin testified that he accounted for all these payments properly and was entirely above board. No evidence was supplied to the contrary. The bank accounts were shut down because of the conflict between the parties. I accept that Mr. Khoshbin needed a way to receive customer payments and I accept that he accounted for the payments appropriately. --- # Liability ## Oppression [147] Mr. Majidi and Mr. Khoshbin allege oppression against one another. [148] The oppression remedy for federal corporations is outlined in section 241 of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html), which provides that any shareholder, creditor, director, or officer of a corporation may apply to the court for an order to rectify conduct that is oppressive or unfairly prejudicial, or which unfairly disregards their interests. [149] The Supreme Court of Canada has held that the oppression remedy is concerned with "harm to the legal and equitable interests of stakeholders affected by oppressive acts of a corporation or its directors" ([BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560](https://www.canlii.org/en/ca/scc/doc/2008/2008scc69/2008scc69.html), at para. 45). In assessing an oppression claim, I must consider, first, whether the evidence supports the reasonable expectation asserted by the claimant, considering such factors as general commercial practice, the nature of the corporation, the relationship between the parties, past practice, steps the claimant could have taken to protect itself, representations and agreements, and the fair resolution of conflicting interests between corporate stakeholders. Second, I am to consider whether the evidence establishes that the reasonable expectation was "violated by conduct falling within the terms 'oppression', 'unfair prejudice' or 'unfair disregard' of a relevant interest" on the part of the stakeholders (BCE, at paras. 68, 72). [150] Mr. Majidi alleges that his reasonable expectations as a director and 30% shareholder of 910 and Continuum were violated by oppression, unfair prejudice, or unfair disregard of his interests on the part of Mr. Khoshbin. [151] First, Mr. Majidi claims oppression based on what he terms his constructive dismissal without cause. I reject this claim. As I discuss below, Mr. Majidi was not an employee of either company. In the alternative, even if he was an employee, his separation from the companies was justified in light of his conduct. [152] Second, he claims oppression based on what he describes as his improper ouster as director of Continuum and 910. [153] I do not accept this claim. Mr. Khoshbin does appear to have resigned as a director of Continuum in January 2013. His evidence was that he did so for tax reasons relating to his role with Prollenium. However, as of May 2020, both Mr. Khoshbin and Mr. Majidi remained listed as directors of the company in its corporate profile. Moreover, If Mr. Khoshbin was a de facto director in any event, as his conduct and the overall facts in this case fit the criteria for a de facto director, as discussed in [Imagin Diagnostic Centres Inc. et al., 2010 ONSEC 18](https://www.canlii.org/en/on/onsec/doc/2010/2010onsec18/2010onsec18.html), at paras. 135–8. For example, Mr. Khoshbin was the main person with whom Mr. Majidi made decisions about Continuum's business, was responsible for appointing Mr. Majidi as a director of the business, and had control over its bank accounts. Finally, Mr. Majidi was ousted at a shareholder meeting at which Mr. Khoshbin properly voted the shares of his holding company, 837, by proxy. I see no impropriety in that vote. [154] In any event, as I discuss below, I find that Mr. Majidi committed significant breaches of his fiduciary duty to the corporations. He therefore cannot reasonably expect to have remained as their officer and director, even if his ouster somehow failed to meet the corporate formalities. It is settled law that a person who commits significant breaches of the fiduciary duty they owe to a corporation cannot reasonably expect to remain as an officer and director of that corporation ([Strauss v. Wright, 2017 ONSC 5789 (Div Ct.)](https://www.canlii.org/en/on/onsc/doc/2017/2017onsc5789/2017onsc5789.html), at para. 25; [Walker v. Betts, 2006 BCSC 1096](https://www.canlii.org/en/bc/bcsc/doc/2006/2006bcsc1096/2006bcsc1096.html), at paras. 24–25). This is particularly so where the person is a minority shareholder of the corporation ([2025925 Ontario Inc. v Maramusche Holdings Inc., 2023 ONSC 3041](https://www.canlii.org/en/on/onsc/doc/2023/2023onsc3041/2023onsc3041.html), at para. 202). [155] I am therefore of the view that Mr. Majidi could not have reasonably expected to continue to be an officer or director of 910 or Continuum, in all the circumstances. [156] Third, Mr. Majidi alleges that he was oppressed by Mr. Khoshbin having improperly shut down Continuum after the litigation was commenced. I disagree. I have found that both Mr. Majidi and Mr. Khoshbin were well aware all along that Continuum was not operating within the law. Mr. Majidi should therefore reasonably have expected that Continuum could get shut down at any time, whether at the behest of the FDA, or due to ongoing issues with U.S. Customs, or both. It simply cannot be that his reasonable expectations were disregarded by the decision to close down a business that he had known, from the beginning, was engaged in wrongdoing. [157] Fourth, Mr. Majidi further claims oppression on the basis that Mr. Khoshbin deleted Continuum's email accounts and associated emails during litigation. I reject this claim. As discussed above, I am not persuaded that Mr. Khoshbin deliberately deleted the emails. [158] Mr. Khoshbin, meanwhile, asserts in his counterclaim that Mr. Majidi violated his reasonable expectations as a 70% shareholder of 910 and Continuum. [159] First, he alleges oppression on the basis that Mr. Majidi did not reasonably manage 1111A Finch to generate rental income. I do not accept this claim. I have found that while Mr. Majidi improperly let Ms. Madel use unit 2 free of charge, and improperly concealed certain rent-related decisions from Mr. Khoshbin, he did not engage in the kind of concerted under-utilization of the property that Mr. Khoshbin alleges. [160] Second, Mr. Khoshbin claims oppression because Mr. Majidi authorized, allowed, or condoned illegal activities at 1111A Finch. I accept this claim, in part. [161] I find that Mr. Khoshbin had a fundamental, and reasonable, expectation that Mr. Majidi would not, in the course of his duties, allow, condone, or facilitate illegal activities to take place at 1111A Finch, the property for which he was responsible. [162] I further find that Mr. Majidi subverted these expectations through his conduct in relation to GreenMedz. Mr. Majidi knew that GreenMedz was an illegal dispensary. He facilitated GreenMedz's illegal activities by arranging for the construction of a disguised shaft and pulley system to connect units 4 and 2 to move cash or drugs in the event of a police raid or robbery. He did not tell Mr. Khoshbin about GreenMedz's illegal activity, even after the two police raids and after charges were laid against 910 under the Planning Act. [163] In my view, this conduct was oppressive. It was deliberate and wrongful. Mr. Majidi did not merely turn a blind eye to illegal activity: he facilitated it, and he concealed it from Mr. Khoshbin, the majority shareholder, even after the police became involved and regulatory charges were laid. This was a visible departure from standards of proper conduct and fair dealing with a fellow director and majority shareholder. It was a wrong of the most serious sort (BCE, at paras. 89–92). [164] However, I do not find that Mr. Majidi's conduct regarding the brothel activity in unit 2 subverted Mr. Khoshbin's reasonable expectations. [165] I have found that Mr. Majidi knew that unit 2 was being used as a brothel, or, in the alternative, should have done more to monitor how Ms. Madel was using unit 2. It was only because he failed to do so that the unit came to be used as a brothel for an extended period. In addition, Mr. Majidi did not tell Mr. Khoshbin about Ms. Madel's use of unit 2, whether for more innocuous parties or as a brothel. [166] That said, Mr. Khoshbin knew, well before March 5, 2020, that unit 2 was being used by Bliss and/or Ms. Madel as an "overflow" brothel space. Mr. Ocilka told him about this over a year before the events of March 5, 2020, and he did not say anything to Mr. Majidi, instead working to find a new tenant so that the illegal activity would have to stop. Mr. Khoshbin may well have had his reasons for pursuing a peaceful resolution of the issue rather than confronting his cousin. However, it cannot reasonably be said that Mr. Majidi's role in allowing the unit to be used as a brothel disregarded Mr. Khoshbin's expectations, when Mr. Khoshbin readily lived with the knowledge of how the unit was being used for about a year before matters erupted. [167] I therefore find that Mr. Majidi's conduct in respect of the unit 2 brothel was not oppressive or unfairly prejudicial to Mr. Khoshbin and did not unfairly disregard Mr. Khoshbin's interests. [168] Third, Mr. Khoshbin claims oppression on the basis that Mr. Majidi failed to divulge his interest in Bliss before entering into contracts that would benefit him or his interest in Bliss. 910's By-law 1 requires a director or officer to disclose conflicts of interest: > 4.11 Disclosure – Conflict of Interest – A director or officer of the Corporation who is a party to, or who is a director or an officer of, or who has a material interest in[,] any person who is a party to, a material contract or transaction or proposed material contract or transaction with the Corporation, shall disclose in writing to the Corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest. Disclosure, as aforesaid, shall be made at the time and in the manner required by the [CBCA], and a director so having an interest in a contract or transaction shall, unless expressly permitted by the Act, not vote on any resolution to approve the contract or transaction. [169] This provision mirrors the conflict of interest provision in section 120(1) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html): > 120 (1) A director or an officer of a corporation shall disclose to the corporation, in writing or by requesting to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer > > (a) is a party to the contract or transaction; > > (b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or > > (c) has a material interest in a party to the contract or transaction. [170] I accept Mr. Khoshbin's claim. Mr. Khoshbin was the 70% owner of 910. Mr. Majidi admitted that he never told Mr. Khoshbin about his 50% ownership interest in Bliss, even though he made the offer to purchase 1111A Finch while negotiating his purchase of shares in Bliss, and bought his interest in Bliss eight days before he entered into the final agreement of purchase and sale for 1111A Finch with Mr. Khoshbin. He did not tell Mr. Khoshbin that he was actively pursuing a rezoning application for 1111A Finch, including by retaining an urban planner and a paralegal, in the hope of bringing on Bliss as a tenant. He did not tell Mr. Khoshbin that he used $120,000 in Continuum's funds to pursue the rezoning application. He did not tell Mr. Khoshbin that he was letting Ms. Madel, a former Bliss dancer, use unit 2. [171] I find that Mr. Majidi's failure to disclose this information to Mr. Khoshbin was a clear breach of the conflict of interest disclosure obligation set forth in section 4.11 of 910's By-law 1 and section 120(1) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html). Mr. Majidi most certainly had a "material interest in" Bliss, which in turn was "a party to … a … proposed material contract or transaction with" 910. He was a 50% owner of a business, Bliss, that he was trying to bring on as a tenant of the property of whose owner, 910, he was a 30% shareholder. He had a material interest in the proposed tenancy. He did not tell the 70% shareholder of 910, Mr. Khoshbin, of his interest in Bliss or his resulting interest in the proposed tenancy. It was an interest that he was required to disclose. Mr. Khoshbin expected him to disclose any such interest: By-law 1 makes this clear, and he confirmed as much in his testimony. [172] Mr. Majidi submits that he had no obligation to disclose because the lease between Bliss and 910 was only a possibility. Any transfer of Bliss from 1111 Finch to 1111A Finch was "years away" and not being "actively" pursued. Bliss still had an existing lease. In his view, buying into Bliss and trying to get 1111A Finch rezoned for adult entertainment were "two wholly separate acts". [173] I disagree. The disclosure obligation attaches to any "proposed material contract or transaction with" 910. Bliss' potential tenancy was quite obviously a proposed material contract or transaction. It was a material transaction, because it would have brought in a tenant for one of the four units in the building. It was also a proposed transaction, and sufficiently concrete to have triggered the disclosure requirement. Mr. Majidi's evidence was that he asked Bliss' owners to agree to move Bliss' tenancy over to 1111A Finch when he first started speaking with them about buying into the company. He further testified that he would not have bought an interest in Bliss had the other owners not agreed to move to 1111A Finch. He also, by his own account, spent considerable time and effort trying to rezone 1111A Finch so that Bliss could move there, including by retaining two experts to help with the rezoning application, at a cost to Continuum of approximately $120,000. This evidence, including the fact that Bliss had apparently agreed to move if Mr. Majidi could rezone 1111A Finch, is difficult to reconcile with Mr. Majidi's insistence at trial that the discussions with Bliss about a potential tenancy were too hypothetical to trigger the disclosure obligation. [174] Nor do I accept Mr. Majidi's other responses to the claim of conflict of interest. As discussed above, I am not persuaded that 1111A Finch's value would have gone up had the rezoning been successful, such that Mr. Majidi was negotiating the lease with 910's interests at heart. I am not persuaded that Bliss would have paid back any of the costs associated with the rezoning application, such that 910 (or Continuum) was not paying the costs of these rezoning efforts that would benefit Bliss. Nor do I accept that Mr. Khoshbin was "okay with" bringing on Bliss as a tenant, as Mr. Majidi claims, such that there was no actual conflict. In my assessment, Mr. Majidi spent Continuum's money to benefit Bliss and to the detriment of Continuum (which loaned the money) and potential detriment of 910 (which would have entered into a lease with Bliss whose terms were negotiated by Mr. Majidi, who had an undisclosed interest in Bliss). [175] Mr. Majidi's failure to disclose his interest in Bliss, and his ensuing conduct that sought to benefit him or his interest in Bliss, constituted oppression under section 241 of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html). It manifested a deliberate disregard for Mr. Khoshbin's reasonable expectations that Mr. Majidi would disclose any conflicts of interest and would act in the best interests of 910 and Continuum. By not disclosing his interest and by acting the way he did, Mr. Majidi acted wrongfully and in a way that departed markedly from the standards of fair dealing between Mr. Khoshbin and him. It, too, was a wrong of the most serious sort (BCE, at paras. 72–80). [176] Mr. Khoshbin's fourth oppression claim is that Mr. Majidi improperly spent Continuum funds on non-Continuum-related business and to make advances to 910 only for shortfalls resulting from earnest business losses. [177] I accept this claim. As discussed above, I find that Mr. Majidi did not tell him about his use of approximately $120,000 of Continuum's money to pursue the rezoning application for 1111A Finch. The use of Continuum's money for this purpose in these circumstances amounted to a misappropriation. It violated Mr. Khoshbin's reasonable expectation that Mr. Majidi would not misappropriate funds from the companies he was entrusted to manage. Additionally, while Mr. Khoshbin had some understanding that 910 had financial shortfalls and that Continuum transferred money to 910 to cover those shortfalls, Mr. Majidi did not tell him about the extent to which Continuum was backstopping 910 financially. He did not tell (and in fact misled) Mr. Khoshbin about the extent to which rent at 1111A Finch was falling short of covering the building's mortgage obligations. This amounted to deception of the majority shareholder, which rises to the level of unfair prejudice under the oppression remedy framework. [178] Finally, as discussed below, I find that Mr. Majidi breached his fiduciary duty to the two companies. This court has held that where there is such a breach of fiduciary duty, the test for oppression has been met ([Vallée v. Pickard (2007), 28 B.L.R. (4th) 149 (Ont. S.C.J.)](https://www.canlii.org/en/on/onsc/doc/2007/2007canlii412/2007canlii412.html), at para. 39). ## Breach of fiduciary duty [179] Mr. Khoshbin also claims that Mr. Majidi breached his fiduciary duties towards Continuum and 910. [180] Section 122(1) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) provides that every director and officer of a corporation in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the corporation; and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. It is settled law that corporate directors owe a duty of loyalty, good faith, and avoidance of a conflict of duty and self-interest ([Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592](https://www.canlii.org/en/ca/scc/doc/1973/1973canlii23/1973canlii23.html), at p. 606-607). [181] I find that Mr. Majidi breached this duty. He did not act honestly and in good faith with a view to the best interests of Continuum and 910, or exercise the appropriate level of care. I base this conclusion on the following findings, all of which are discussed above: > a. Mr. Majidi's actions and inactions with respect to GreenMedz were improper and exposed 910 to significant legal liability. Indeed, as a consequence of GreenMedz's illegal business, there were two police raids on the premises, and 910 was subject to Planning Act charges. > > b. His inactions with respect to Ms. Madel's use of unit 2 as a brothel where, among other things, paid sex acts and illegal alcohol sales took place, likewise exposed 910 to significant legal liability. Moreover, because Ms. Madel paid no rent for her use of the space, including for relatively innocuous purposes such as the Halloween party, 910 also lost the opportunity to earn income. > > c. He had a conflict of interest vis-à-vis Bliss, which he did not disclose. His undisclosed interest in Bliss rendered it impossible for him to act in 910's best interests, given the extensive and surreptitious efforts he was taking to bring on Bliss as a tenant at 1111A Finch. There is no evidence before me to support his claim that the effort to have the building rezoned benefited 910. > > d. He misappropriated Continuum's funds to fund the ill-fated rezoning application. > > e. He deceived 910's majority shareholder, Mr. Khoshbin, about the extent to which rent at 1111A Finch was covering the building's mortgage obligation [182] In my assessment, Mr. Majidi's breaches of his fiduciary duties to the two companies are not just trifling or mechanical. They are significant. ## Constructive Dismissal [183] Mr. Majidi asserts that he was constructively dismissed as an employee of both companies after the events of March 5, 2020. I disagree. I find that he was not an employee of either company. In the alternative, if he was an employee, he was terminated for cause. [184] While Mr. Majidi had no written agreement with either Continuum or 910, the terms of his arrangement with each company are uncontested. He was a director, officer and 30% shareholder of each company. He held the title of "Managing Director" of each company, and was responsible for day-to-day operations, while Mr. Khoshbin functioned as a silent partner. Mr. Majidi was entitled to receive 30% of the profits for each company each year. This was paid to him in the form of a salary that he allocated to himself of $190,000 per year. If either company was so profitable that his 30% share of the profits exceeded his salary, he received his additional share of profits as a dividend. [185] The Supreme Court of Canada, in [671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983](https://www.canlii.org/en/ca/scc/doc/2001/2001scc59/2001scc59.html), has held that whether a particular relationship is an employment relationship turns on whether the person performing the work is "in business on his own account". This is to be assessed based on a non-exhaustive list of criteria, including the level of control that the employer has over the worker's activities, the degree of financial risk taken on by the worker, and the worker's opportunity for profit in the performance of their task (Sagaz Industries, at para. 47). [186] Mr. Khoshbin had virtually no day-to-day control over Mr. Majidi's activities. Mr. Majidi did not track or report the hours he worked to Mr. Khoshbin. He came and went as he wished. He did not receive regular performance reviews from Mr. Khoshbin. While Mr. Khoshbin did expect to be kept updated on what Mr. Majidi was doing, Mr. Majidi did not report to Mr. Khoshbin regularly or on the full range of issues arising from the operations of the two companies. [187] Having regard to Mr. Majidi's work as Managing Director of 910, I note that 1111A Finch was purchased in 2015, and Mr. Khoshbin did not set foot in the building until March 2020. Mr. Majidi very clearly "ran the show" during that time frame, with little or no input from Mr. Khoshbin. For example, Mr. Khoshbin had no control over which tenants Mr. Majidi brought on, what activities those tenants were engaged in, what rent they paid, the negotiation and renegotiation of their lease agreements, and physical renovations made to the property, including the construction of a shower stall in unit 2 and a shaft and pulley system between units 2 and 4. [188] Mr. Khoshbin played a more active role in Continuum's operations than he did in 910's. Still, Mr. Majidi was the main person responsible for much of Continuum's day-to-day work, and he operated with minimal, if any, supervision by Mr. Khoshbin. Mr. Majidi appears to have been the only one carrying out transfers of funds from Continuum to 910, and was the only one who knew about Continuum's payments to 910 for the rezoning application for 1111A Finch. He was also the one primarily involved in accepting customer payments, dealing with issues at the U.S. border, managing shipping logistics, communicating with customers, and setting up the bonded warehouse. [189] Additionally, Mr. Majidi had an opportunity to profit from the services he provided. He was entitled to 30% of either company's profits, and to the extent that his salary did not reflect those profits, he was entitled to receive his remaining share by way of dividend. Indeed, from this perspective, although his base pay of $190,000 was called a salary, it was a pre-payment of his anticipated share of profits, and was topped up as required, via dividends, to reflect his 30% profit share. I find that this compensation model, predicated on the companies' profits, strongly argues against his being an employee. [190] In my view, the "degree of financial risk" criterion under the Sagaz Industries test neither supports nor undermines Mr. Majidi's claim that he was an employee. It is true that Mr. Majidi would not have been asked to pay 30% of either company's losses, had there been such losses. But nor would Mr. Khoshbin have been liable for 70% of such losses. They were shareholders and would both have been protected in the event of loss. As such, I do not accept Mr. Majidi's argument that he was shielded from exposure for loss and, as such, was an employee. [191] For the reasons above, Mr. Majidi was not an employee of either company. As such, he cannot claim constructive dismissal from either one. [192] In the alternative, if Mr. Majidi was an employee, there was cause to terminate him. Under the [Termination and Severance of Employment, O. Reg. 288/01 Regulation to the Employment Standards Act, 2002, S.O. 2000, c. 4](https://www.ontario.ca/laws/regulation/010288), an employee may be terminated for cause if the employee "has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer." [193] I find that Mr. Majidi engaged in such behaviour in his role as Managing Director of both companies. In respect of Continuum, he used corporate funds to try to rezone 1111A Finch as an adult entertainment venue and to fund 910's financial shortfalls, all without the knowledge of Mr. Khoshbin, the majority shareholder. In respect of 910, he knew about, and facilitated, GreenMedz's activities as an illegal marijuana dispensary. He did not tell Mr. Khoshbin about GreenMedz's illegal activity, the police raids, or the subsequent charges under the Planning Act. Nor did he tell Mr. Khoshbin about his ownership interest in Bliss, his efforts to rezone 1111A Finch so that Bliss could come over as a tenant, or the fact that he was using Continuum's money to fund those efforts. Nor did he tell Mr. Khoshbin about the extent to which Continuum was backstopping 910 financially. Additionally, Mr. Majidi's evidence was that he did not always have a key to the building and that he provided keys to non-tenants like Ms. Madel. He accordingly did not maintain appropriate control over who had access to the building. [194] Taken together, this conduct supports that there was cause to terminate Mr. Majidi. It constituted willful misconduct or wilful neglect of duty. None of it was trivial in nature. None of it was condoned by Mr. Khoshbin. [195] Much of it was misconduct that Mr. Khoshbin learned about only after the events of March 5, 2020. That does not undermine the claim of termination for cause. An employer may rely on cause that was only discovered after the termination of an employee in justifying the termination, so long as cause arose before the termination ([Van den Boogaard v. Vancouver Pile Driving Ltd., 2014 BCCA 168](https://www.canlii.org/en/bc/bcca/doc/2014/2014bcca168/2014bcca168.html), at paras. 33–35; [2025925 Ontario Inc. v Maramusche Holdings Inc., 2023 ONSC 3041](https://www.canlii.org/en/on/onsc/doc/2023/2023onsc3041/2023onsc3041.html), at para. 195). [196] I do not find that Mr. Majidi's activities in respect of the illegal brothel in unit 2 constitute cause. As discussed above, Mr. Khoshbin was aware of the brothel activity for roughly a year before the events of March 5, 2020, and, by his own account, did not raise it with Mr. Majidi. By knowing about Mr. Majidi's misconduct and doing nothing to address it, Mr. Khoshbin is deemed to have condoned the conduct. He cannot now rely on it as cause for termination ([Doucet and Daupinee v. Spielo Manufacturing Incorporated and Manship, 2011 NBCA 44, 372 N.B.R. (2d) 1](https://www.canlii.org/en/nb/nbca/doc/2011/2011nbca44/2011nbca44.html), at para. 75, citing [McIntyre v. Hockin, [1889] O.J. No. 36 (C.A.) (QL)](https://www.canlii.org/en/on/onca/doc/1889/1889canlii1/1889canlii1.html)). [197] I accordingly find that if Mr. Majidi was an employee, he was terminated for cause. His termination took place on March 16, 2020, which is the date on which Mr. Khoshbin first asked Mr. Majidi to step away from the businesses entirely. --- # Remedy [198] The parties seek a range of remedies, including a declaration of oppression in favour of Mr. Khoshbin, buyouts, dissolution, reimbursement for condominium-related expenditures, unpaid wages, and damages for wrongful dismissal. I discuss each of the remedies sought below. ## Declaration of oppression [199] Mr. Khoshbin seeks a declaration under section 241(2) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) that Mr. Majidi acted oppressively, unfairly prejudicially to, or in a manner that unfairly disregarded the interests of Mr. Khoshbin and/or 837. For the reasons above, I grant a declaration that Mr. Majidi acted oppressively towards Mr. Khoshbin and/or 837. ## Buyout of Mr. Majidi's interest in 910 [200] Both parties seek an order under section 241(3) (f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in 910 to Mr. Khoshbin for its fair market value. They disagree on what the fair market value is and what deductions and discounts, if any, are to be applied to Mr. Majidi's 30% share of it. [201] The parties have tendered expert evidence valuing 910 and its primary asset, 1111A Finch. On the valuation of 910, Mr. Majidi relies on the expert evidence of Melanie Russell of Kalex Valuations Inc. ("Kalex"). On the appraisal of 1111A Finch, he relies on a report from Agnes Lee, the founder and principal of Acuity Professional Appraisals ("Acuity"). Kalex values the equity of 910, factoring in the appraised value of 1111A Finch provided by Acuity, at $562,000, and Mr. Majidi's (or Cell Space's) 30% share at $169,000. [202] Mr. Khoshbin's evidence on the valuation of 910 is provided by Ephraim Stolberg from Matson Driscoll & Damico Ltd. ("MDD"). He also tenders expert evidence from Samuel Linds of Colliers International ("Colliers") regarding the appraisal of 1111A Finch. MDD values the equity of 910 at $42,000, factoring in the appraised value of 1111A Finch provided by Colliers. MDD then applies a minority discount to that amount and deducts an amount for the loss of rents due to Mr. Majidi's alleged underutilization of 1111A Finch. [203] For the reasons below, I assess the buyout value of Mr. Majidi's 30% interest in 910 at $264,844.80. In arriving at this value, I have accepted some of the methodological approaches and factual assumptions of each of the Kalex and MDD reports. ### Valuation date [204] Mr. Majidi submits that 910 should be valued as at March 6, 2020, the day after Mr. Khoshbin's visit to 1111A Finch and the rupture of their relationship. Mr. Majidi states that by this date, he and Mr. Khoshbin had both expressed a wish to go their separate ways and have a buyout. It is therefore the most fair and logical valuation date. Moreover, a later valuation date, as requested by Mr. Khoshbin, would exaggerate the effects of COVID lockdowns and thus paint an unfair picture of the company's value. [205] Mr. Khoshbin submits that the valuation date should be July 31, 2020, which is the date by which Mr. Majidi had fully transferred control of both companies to Mr. Khoshbin. Before that date, Mr. Majidi had refused to transfer control despite being asked to do so. Mr. Khoshbin states that Mr. Majidi's actions between March 5, 2020 and July 31, 2020 (namely, his communications with Ms. Perez, Continuum's Florida employee, and his email to Continuum customers about shipping being suspended, both discussed above) resulted in a decrease in the value of the company. Valuing the companies before Mr. Majidi carried out these harmful actions would therefore be unfair. [206] Both parties acknowledge that the choice of valuation date has a significant impact on the assessed value of 910. [207] In my view, March 6, 2020 is an appropriate valuation date for both companies. [208] There is no clear-cut rule for setting a valuation date. I am to consider all the circumstances, and as part of this, I may consider the date of the oppressive conduct, the date on which the proceeding was commenced, or the date of the final judgment ([McInerney v. RJM Holdings Limited, 2019 ONSC 7179](https://www.canlii.org/en/on/onsc/doc/2019/2019onsc7179/2019onsc7179.html), at paras. 879–80). [209] Mr. Khoshbin first expressed his wish to buy Mr. Majidi's shares in the companies on March 6, 2020, and that in April 2020, he commenced his oppression application. In these circumstances, a March 6, 2020 valuation date strikes me as logical and reasonable. [210] Moreover, I reject the factual premise underlying Mr. Khoshbin's request for a later valuation date. As discussed above, I am not persuaded that Mr. Majidi's conduct in speaking with Ms. Perez in May 2020, or in emailing customers in June 2020, was oppressive or improper, or resulted in any decrease in business or the value of the companies. The actions that I have found to have been oppressive or to have unfairly prejudiced Mr. Khoshbin or disregarded his interests had all occurred well before March 2020. None of them took place after March 2020. This underscores my view that March 6, 2020 is an appropriate valuation date. ### Appraised value of 1111A Finch [211] Kalex and MDD rely on different property value appraisals for 1111A Finch, 910's largest asset. Kalex uses an appraised value of $2.4 million, arrived at by Acuity using the direct comparison valuation method. MDM uses an appraised value of $2,075,000, formulated by Colliers and reflecting the mid-point between the appraisal values yielded by the income and direct comparison methods. [212] I prefer the appraised value provided by Colliers, for two reasons. [213] First, it more accurately reflects the impact of COVID on commercial property valuations at the material time. 1111A Finch's value was assessed in early August 2020. Both parties agree that this was an unusual time in the real estate market due to COVID. Ms. Lee's evidence was that the Colliers appraisal overstated the detrimental impact of COVID on the value of 1111A Finch and commercial properties generally, because in fact the real estate market began to rebound in late July, which the Colliers appraisal does not reflect. [214] I respectfully disagree. The Acuity appraisal did not give sufficient weight to the impact of COVID on property values. Ms. Lee's evidence that the market began to bounce back in late July failed to distinguish between the residential and office real estate markets. I accept Mr. Linds' evidence that different sectors of the real estate market performed differently during this period. While the residential real estate market did rebound in late July, because people who could afford to buy larger homes did, and multi-family real estate "took off" office real estate did not rebound and, in Mr. Linds' view, is "still struggling to this day". I therefore find that office real estate did not rebound in late July 2020, and that as such the Colliers appraisal more correctly reflects the effects of COVID on the assessed value of 1111A Finch. [215] Second, I prefer the Colliers choice of valuation method. Both experts described two valuation methods that could be used in appraising 1111A Finch: the income method, which considers 1111A Finch as an income property and assesses its value based on the income that it could generate, and the direct comparison method, which looks at similar or somewhat similar comparator properties and considers 1111A Finch's value in reference to the values of those other properties. Both experts agreed that generally the income method is used for income properties and the direct comparison method is used for owner-occupied properties. However, different considerations can urge toward the use of one or the other approach. [216] Acuity assessed the value of 1111A Finch to be $2,050,000 using the income approach, and $2,400,000 using the direct comparison method. Ms. Lee's evidence was that the direct comparison method was more appropriate for 1111A Finch. She testified that the comparator properties that she found for 1111A Finch were more likely to be owner-occupied rather than income properties, which suggested that it is the type of property that is more likely to be purchased by an owner-occupier. [217] Colliers, meanwhile, assessed the value of 1111A Finch to be $2,060,000 using the income approach (this is very close to Acuity's assessment of $2,050,000), and $2,090,000 using the direct comparison method (which is much less than Acuity's assessment of $2,400,000). In Mr. Linds' opinion, the income approach was more suitable, because 1111A Finch was an income-generating building as of the effective date of the assessment, and, as a practical matter, its purchaser would be buying it to continue using it as such. Ultimately, Colliers assessed the property at $2,075,000, reflecting the midpoint between the income approach and direct comparison assessments. [218] In my assessment, the blended approach taken by Colliers is more suitable. 1111A Finch is not a property that can cleanly be identified as either an income property best appraised through the income approach, or as an owner-occupied property best appraised via the direct comparison method. I take seriously Mr. Linds' observation that the property is currently an income property and that this suggests it will be purchased as an income property in the future. But I am also struck by Ms. Lee's observation that the comparator properties she used in her analysis were more often owner-occupied than income properties. Given that 1111A Finch does not fall squarely into one or the other category, and recognizing that there is an empirical benefit to using all reasonable approaches in an appraisal, I consider it appropriate to rely on a midpoint between the two assessments. [219] I prefer to rely on the midpoint of Colliers' two assessments, rather than Acuity's two assessments, because the two Colliers assessments are much closer together. They have a spread of $30,000 rather than the $350,000 spread seen with Acuity's assessments. The fact that Colliers' two assessments are relatively close suggests that they are accurate assessments, and that the midpoint between them is an appropriate assessment of the value of the property. [220] I accordingly assess the value of 1111A Finch at $2,075,000 in the assessment of the fair market value of 910. ### Occupation rent [221] The Kalex report includes, in its assessment of the value of 910, $21,000 reflecting occupation rent. Mr. Majidi submits that Mr. Khoshbin used a condominium unit on Cumberland Road in Toronto that was owned by 910 and had been purchased in July 2015 (the "Toronto Condominium"). He further states that there is no evidence that 910 intended for Mr. Khoshbin to occupy the Toronto Condominium without compensating 910. It is therefore appropriate to include in the valuation of 910 the value of the rent that Mr. Khoshbin should have paid. [222] I agree. In my view, this amount is properly included in the value of 910. [223] Mr. Khoshbin testified, somewhat perplexingly, that he did not live in the Toronto Condominium. He only furnished it and "used it" on weekends "sometimes" over a period of a year or less. It is unclear how this does not constitute part-time living. In any event, Mr. Khoshbin's "use" of the Toronto Condominium meant that it could not be rented to paying tenants. As such, there was a clear opportunity cost to his use of it. [224] Mr. Khoshbin suggested in his testimony that some rent money was being deducted from his share of Continuum's profit. However, his evidence on this point was vague, and no documentation was provided to support it. It was also contradictory to his evidence at examination for discovery. I accordingly find that he did not pay anything to 910 in respect of his use of the Toronto Condominium. [225] I am provided with no evidence to suggest that 910 agreed that Mr. Khoshbin could live in the Toronto Condominium, whether part-time or otherwise, rent-free. [226] In these circumstances, I find that Mr. Khoshbin occupied the Toronto Condominium rent-free, without any agreement from 910 that he could do so. It is therefore appropriate that the occupation rent be factored into the assessed value of 910. In my view, the $21,000 figure used by Kalex is reasonable. I accordingly accept Kalex's factoring in $21,000 for occupation rent in the assessment of the fair market value of 910. ### Minority discount [227] The parties also disagree over whether a 20% minority discount should be applied to Mr. Majidi's interest in 910. A minority discount is typically applied to the value of a minority block of shares on the open market. It is applied to reflect the fact that the existence of a majority shareholder in the company fundamentally restricts the level of control over the business that any purchaser would have. The MDD valuation, provided on behalf of Mr. Khoshbin, applies such a discount. The Kalex valuation does not. [228] I find that it is appropriate to apply a 20% minority discount. Although a minority discount is presumptively applied when shares held by a minority shareholder are being bought out, it will typically not be applied in an oppression remedy case in which a minority shareholder is the one to have been oppressed. This is based on the principle, articulated by the Court of Appeal for Ontario in [Mason and Intercity Properties Ltd, Re (1987), 59 O.R. (2d) 631 (C.A.)](https://www.canlii.org/en/on/onca/doc/1987/1987canlii173/1987canlii173.html), that "majority shareholders, who have created an intolerable situation for a minority shareholder sufficient to justify the invocation of s. 247, must, except in unusual circumstances, expect to pay for the shares of the minority shareholder at their fair value without minority discount." [229] Mr. Majidi argues that even though he only has a minority stake of 30% in the companies, the discount should not be applied, because Mr. Khoshbin will not be acquiring a minority share in the companies, as he already owns 70% of the shares of each of them. As such, he will not suffer from the restricted level of control over the business that a typical purchaser of a minority share would experience. Mr. Majidi relies on [Pilch v. TemboSocial Inc., 2014 ONSC 5590, 122 O.R. (3d) 270](https://www.canlii.org/en/on/onsc/doc/2014/2014onsc5590/2014onsc5590.html), in which the court held (at para. 50): > A minority discount reduces the price attached to minority shares because they do not represent control of the corporation. Where, however, a court directs the compulsory purchase of shares by existing shareholders who thereby consolidate their existing shareholdings -- such as in dissent, appraisal, winding-up and compulsory purchases under the oppression remedy -- the rationale for a minority discount does not apply. [230] I disagree. Mr. Khoshbin is not "buying" control of the companies, as the purchasing shareholder was in Pilch. To the contrary, Mr. Khoshbin already has control of both companies. Per Pilch, where the party buying the shares has become a majority shareholder only by virtue of the share purchase, and was not a majority shareholder before, a minority discount is not to be applied,. But where, as here, the purchaser already was a majority shareholder and is simply "consolidating his position and buying control", a minority discount is proper ([Levine v 1751060 Ontario Inc., 2016 ONSC 3691, 132 O.R. (3d) 269 (S.C.)](/on/scj/2016/3691), at para. 83; [Kummen v. Kummen-Shipman Ltd., [1983] M.J. No. 110, 19 Man. R. (2d) 92 (C.A.)](https://www.canlii.org/en/mb/mbca/doc/1983/1983canlii3647/1983canlii3647.html), at para. 16). [231] Moreover, I have found that Mr. Majidi was the oppressor in this case and Mr. Khoshbin did not engage in any oppression. This distinguishes this matter from Pilch, in which the minority shareholder proved oppression, which in turn engaged the policy rationale for not imposing a minority discount. As the oppressor, Mr. Majidi is not, in my view, entitled to claim the ordinary protection against a minority discount afforded to a minority shareholder. [232] I therefore find that a minority discount is properly applicable. MDD has applied a 20% discount. Mr. Majidi provides no evidence to challenge the quantum of that discount, and in my assessment, it is reasonable. Accordingly, I discount Mr. Majidi's 30% interest in the value of each of the companies by 20%. ### Deduction due to underutilization [233] Mr. Khoshbin submits that a deduction should be applied against Mr. Majidi's 30% interest in 910 to reflect the foregone rent revenue due to his underutilization of 1111A Finch. I have found that Mr. Majidi did not engage in such underutilization. I therefore do not apply this deduction. ### Conclusion [234] Accordingly, I find that 910 is properly valued based on a March 6, 2020 valuation date, using an appraised value for 1111A Finch of $2,075,000, and including $21,000 in occupation rent. I further find that Mr. Majidi's 30% share of this value is properly subject to a minority discount of 20% but not to any deduction for underutilization of the property. [235] It is undisputed that 910 owes debts to Cell Space and Mr. Majidi of $117,526 and $97,918, respectively. These amounts are also properly included in the calculation. [236] Based on these findings, I calculate Mr. Majidi's 30% interest in 910 as follows: | | | |---|---| | En bloc fair market value of all shares (based on Kalex's valuation as at March 6, 2020 of $562,100, but decreased to reflect Colliers' valuation of 1111A Finch of $2,075,384) | $205,837 | | Mr. Majidi's 30% interest | $61,751 | | Less 20% minority discount | ($12,350.20) | | Mr. Majidi's 30% interest after discount | $49,400.80 | | Plus shareholder loan to Cell Space | $117,526 | | Plus shareholder loan to Mr. Majidi | $97,918 | | **Total** | **$264,844.80** | [237] I grant an order under section 241(3) (f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in 910 to Mr. Khoshbin for that amount. ## Buyout or dissolution in respect of Continuum [238] Mr. Khoshbin and Mr. Majidi disagree on the appropriate remedy in respect of Continuum. Mr. Khoshbin says that dissolution of the company is appropriate and asks this court to recognize his 2021 wind-up of Continuum's affairs. Mr. Majidi disagrees and seeks to be bought out of his 30% interest in Continuum. ### Buyout versus dissolution [239] Mr. Khoshbin seeks an order under section 241(3) (l) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) dissolving Continuum as of December 31, 2021, or, in the alternative, effective immediately. In his submission, dissolving Continuum is the appropriate remedy because Continuum did not comply with FDA requirements and operated outside of a regulatory framework, as Mr. Majidi himself knew. The court will not enforce an agreement for an illegal partnership, and Mr. Majidi cannot legitimately seek to have Mr. Khoshbin buy him out of an income stream that was obtained from illegal activities. Mr. Khoshbin states that upon dissolution, Mr. Majidi would be entitled to his share of the undistributed profits of Continuum through to the date that Mr. Khoshbin shut it down, less deductions. [240] I disagree. In my view, a buyout of Continuum is more appropriate. [241] In exercising my broad remedial powers in the face of oppression, I am to bear in mind that the purpose of the oppression remedy is "corrective" ([Wilson v Alharayeri, 2017 SCC 39, [2017] 1 SCR 1037](https://www.canlii.org/en/ca/scc/doc/2017/2017scc39/2017scc39.html), at para. 27). An order under section 241(3) exists "solely to 'rectify the matters complained of', as provided by" section 241(2). Such an order "should go no further than necessary to correct the injustice or unfairness between the parties" (at para. 27). [242] Dissolution is perhaps the most extreme remedy available under the oppression remedy. While I have found that Continuum's business was illegal, I have not found that Mr. Khoshbin was oppressed by Continuum's illegal conduct. To the contrary, he was well aware of it and was a party to it. He understood that its sales of botulinum toxin products to the U.S. were illegal and that Continuum might face regulatory investigation. He took steps over many years to protect against that regulatory risk. It would be inconsistent with the remedial purpose of the oppression remedy to grant the remedy of dissolution to Mr. Khoshbin concerning conduct that did not oppress or unfairly disregard his interests (and to which he was a party). Granting dissolution would go further than is necessary to correct the oppression or unfairness between the parties. A buyout of Mr. Majidi's interest in Continuum is therefore the more appropriate remedy. [243] I accordingly grant an order under section 241(3) (f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in Continuum to Mr. Khoshbin. ### Valuation [244] Mr. Majidi and Mr. Khoshbin have tendered expert evidence from Kalex and MDD, respectively, valuing Continuum. Kalex values the equity of Continuum at $4,097,000 (based on a midpoint of its low and high valuations), and Mr. Majidi's (or Cell Space's) 30% share at $1,229,000. MDD values the equity of Continuum at $2,876,500 (based on a midpoint of its low and high valuations). MDD then applies various discounts and deductions, including a minority discount, a deduction for the personal funds spent trying to have 1111A Finch rezoned, and a deduction for Mr. Majidi's alleged unreported cash receipts. MDD values Mr. Majidi's 30% share in Continuum at $270,508. [245] For the reasons below, I assess the buyout value of Mr. Majidi's 30% interest in Continuum at $614,418. In arriving at this value, I have accepted some of the methodological approaches and factual assumptions of each of the Kalex and MDD reports. ### Valuation date [246] As is the case with 910, Mr. Majidi and Mr. Khoshbin take different views on the appropriate valuation date. For the reasons above, I find that March 6, 2020 is the preferable valuation date. ### Discount rate [247] The parties agree that the choice of discount rate is the main reason for the differences in their respective valuations of the en bloc fair market value of the equity in Continuum. In simple terms, a discount rate is a way of quantifying the costs of pursuing future projects. Both parties have relied on the weighted average cost of capital (WACC) to determine the applicable discount rate. In broad strokes, the WACC offers a means of calculating the costs of capital used for future investments by considering the costs of debt (i.e., interest) and the costs of equity (i.e., dividends). Kalex says the appropriate discount rate to be applied when valuing Continuum should be in the range of 19.59% to 21.53%. MDD says it should be much higher, at 29.1% to 30.5%. [248] I prefer the approach taken by MDD, because it more appropriately factors in the risks associated with Continuum's business and the likely difficulty Continuum would experience obtaining debt financing. [249] Kalex's choice of lower discount rates is largely grounded in its view that a purchaser of Continuum could fund between $840,000 and $957,000 of the purchase price through debt. The cost of debt financing is much lower than the cost of equity financing. Where debt financing is available, the WACC decreases, and, in turn, future cash flows are discounted at a lower rate. [250] MDD takes the view that Continuum could not carry any debt, and would have to fund any future projects entirely in equity, given its lack of working capital or tangible assets and the nature of its business. In MDD's view, the difficulty of obtaining debt financing means that a higher WACC, and, in turn, a higher discount rate, is appropriate. [251] MDD's approach is more consistent with the evidence and my factual findings. The evidence is that Continuum had limited working capital or tangible assets. Indeed, Ms. Russell acknowledged that, as of March 6, 2020, Continuum's tangible asset backing was only $22,000. This would make debt financing harder to obtain. Moreover, as discussed above, I have found that Continuum's activities were illegal. This, too, would limit its ability to obtain debt financing. MDD's approach, in calling for a higher discount rate, factors in these risks, while Kalex's does not. [252] Even apart from the issue of debt versus equity financing, I am of the view that a higher WACC is appropriate for a business as risky as Continuum. Risk is typically implicitly factored into WACC because shareholders will demand greater returns for riskier investments, leading to a higher cost of equity, and lenders will often demand higher interest rates for riskier investments, leading to a higher cost of debt. Given the illegal nature of Continuum's business activity, a higher WACC, and in turn higher discount rate, of the kind applied by MDD, is in my view appropriate. [253] MDD's evidence is that if it were to apply its own (higher) discount rate to Kalex's numbers, it would decrease Kalex's assessment by $1.1 to $1.3 million. I accordingly rely on Kalex's assessment of the en bloc fair market value of the equity in Continuum, but discount it by $1.2 million to apply MDD's discount rate. ### Cash flow for the rest of 2020 [254] The Kalex and MDD valuations take differing approaches to the cash flow for Continuum for the rest of 2020. [255] MDD assumes that Continuum would have a cash flow of zero for the last three quarters of 2020. It maintains this assumption even in its September 2024 updated report, based on its assumption that Continuum's revenue went down after March 2020. That assumption is based in large part on Mr. Majidi's discussion with Ms. Perez, the Continuum employee in Florida, and his email to Continuum's customers about the suspension of shipping. As discussed above, I am not persuaded that that discussion or that email led to a decrease in Continuum's business. As such, I do not accept the premise underlying MDD's approach to Continuum's cash flow for the balance of 2020. [256] I prefer Kalex's approach. Kalex based its analysis of Continuum's fair market value on the assumption that its cash flows for the last three quarters of 2020 would be similar to those it experienced in the first quarter of 2020. This approach is logical, especially given that I have rejected the claim that there was a decrease in Continuum's business after March 2020. The evidence shows that Continuum's actual sales in 2020 were $870,000 and its net income was 50% higher in 2020 than in 2019. Kalex's assumption about cash flow is therefore more accurate and conservative when compared to the actual data. ### Minority discount [257] As is the case with 910, Mr. Majidi and Mr. Khoshbin take different views on whether a minority discount should be applied to Mr. Majidi's 30% interest in Continuum. For the reasons above, I consider a 20% minority discount to be appropriate and apply one here. ### Deduction for personal funds spent on rezoning application [258] Mr. Khoshbin submits that a deduction should be applied to reflect the personal funds Mr. Majidi spent on the rezoning application for 1111A Finch. MDD has allocated $80,862 of these expenses to Mr. Majidi personally and deducted them from Mr. Majidi's share against the value of Mr. Majidi's 30% interest in Continuum. [259] I agree with this approach. As discussed above, I have found that Mr. Majidi's use of over $120,000 of Continuum's money for this purpose amounted to a misappropriation. I therefore find that this deduction is appropriate. ### Deduction for unreported cash receipts [260] Mr. Khoshbin submits that a further $59,850 should be deducted from the value of Mr. Majidi's 30% interest in Continuum to reflect the cash he improperly withheld from Continuum's cash sales. I disagree. As discussed above, there is insufficient evidence for me to find that Mr. Majidi appropriated cash from Continuum. ### Conclusion [261] Accordingly, I find that Continuum is properly valued based on a March 6, 2020 valuation date, using the (higher) discount rates of 29.1% to 30.5% applied by MDD and the cash flow assumptions for the rest of 2020 applied by Kalex. I further find that Mr. Majidi's 30% share of this value is properly subject to a minority discount of 20% and a deduction for the personal funds spent on the rezoning application for 1111A Finch, but not any deduction for misappropriated cash. [262] Based on these findings, I calculate Mr. Majidi's 30% interest in Continuum as follows: | | | |---|---| | En bloc fair market value of all shares (based on Kalex's valuation as at March 6, 2020 of $4,097,000, but decreased by $1.2 million to reflect the discount rate calculated by MDD) | $2,897,000 | | Mr. Majidi's 30% interest | $869,100 | | Less 20% minority discount | ($173,820) | | Mr. Majidi's 30% interest after discount | $695,280 | | Less funds spent on rezoning application | ($80,862) | | **Total** | **$614,418** | [263] I grant an order under section 241(3) (f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in Continuum to Mr. Khoshbin for that amount. ## Reimbursement for amounts spent on the Toronto Condominium [264] Mr. Majidi seeks to recover various expenses he incurred on behalf of 910 in respect of the Toronto Condominium. Mr. Majidi sold the Toronto Condominium to an arm's length purchaser on June 1, 2021, with Mr. Khoshbin's agreement. The net proceeds from the sale, of $342,171.44, were paid into court to the credit of this proceeding. [265] It is clear that the amounts Mr. Majidi claims in respect of the Toronto Condominium are owed to him. That amount is $136,219.27. It is calculated based on the following: > a. Interim occupancy of the unit was granted effective July 8, 2019. Mr. Majidi paid $7,879 on the interim occupancy date. He believes he also paid $1,560 in prorated interim occupancy costs, for a total of $9,439. > > b. Thereafter, he made monthly interim occupancy payments of $3,014.74 each for 11 months. > > c. On July 8, 2020, the closing date, he paid an additional $63,978.44 owed. > > d. Thereafter, he paid monthly common expense fees of $728.28 from August 2020 to May 2021, for a total of $7,282.70, and monthly mortgage payments of $2,484.11 from September 2020 through May 2021, for a total of $22,356.99. [266] Mr. Khoshbin has paid $4,828 of the $136,219.27 owed. [267] Mr. Khoshbin submits that Mr. Majidi owes $12,000 in costs awarded on December 9, 2020, which he did not pay because he wished to set it off against the amount owed to him for the Toronto Condominium. If that costs award remains outstanding, its amount, plus associated interest, is to be set off against the amount owed to Mr. Majidi for the Toronto Condominium. [268] Finally, Mr. Khoshbin submits that the amounts owed to Mr. Majidi for the Toronto Condominium are already factored into the MDD valuation of Continuum in the form of a shareholder loan. This is true. However, the valuation of Continuum on which I have relied as my starting point above is the Kalex valuation, which does not fold these amounts into the valuation of Continuum as MDD does. [269] In the result, Mr. Majidi is owed $131,391.27 for the Toronto Condominium, representing the difference between the $136,219.27 owed and the $4,828 paid by Mr. Khoshbin to date, subject to any additional set-offs between the parties arising from unpaid costs awards by Mr. Majidi. ## Reimbursement for amounts spent on the Florida Condominium [270] Mr. Majidi also seeks reimbursement for expenses he incurred for a condominium located in Sunny Isles Beach, Florida. He and Mr. Khoshbin decided to buy the condominium unit because most of Continuum's customers were in the U.S., and Mr. Majidi had to travel there frequently to receive and ship products to customers. Mr. Majidi accordingly incorporated ECKO Holding LLC ("ECKO"), in which he and Mr. Khoshbin held 30% and 70% interests, respectively. The condominium was purchased in 2017. ECKO owns it. Mr. Majidi has been renting it out since January 2023. [271] Mr. Majidi seeks to recover various expenses he covered for the Florida condominium, consisting of maintenance and management fees and taxes. Net of rents he has received on the property, these expenses total U.S. $23,317.64. [272] I decline to award these amounts. The Florida condominium is owned by ECKO, which incurred the expenses at issue and must be the one to advance any claim to recover them. Mr. Majidi is a shareholder in ECKO. If he wishes to recover the expenses on ECKO's behalf, he needs to bring a derivative action to try to do so. ## Unpaid wages and damages for constructive dismissal [273] Mr. Majidi claims unpaid wages for the two months he worked at Continuum without pay. He states that he continued to work through to the end of June 2020, but did not get paid for May and June 2020. Accordingly, he seeks $31,700, representing two months of wages at an annual salary of $190,200. [274] I reject this claim. As discussed above, I have found that Mr. Majidi was not an employee and that even if he was an employee, he was terminated for cause. As such, he is entitled to any unpaid wages up to his termination date. I have found that Mr. Majidi was terminated on March 16, 2020, the date on which Mr. Khoshbin, through his counsel, first asked him to step away from the businesses entirely. On his evidence, he was paid through to the end of April 2020. As such, he has no claim for unpaid wages. [275] Mr. Majidi also claims that he is entitled to damages in lieu of reasonable notice. He submits that he is entitled to a 12-month reasonable notice period. He quantifies this amount at $156,461, based on 12 months of salary less his mitigation income during that time of $33,738.41. [276] I disagree. Because he was not an employee, he is not entitled to damages in lieu of reasonable notice. --- # Order Granted [277] Accordingly, I grant the oppression application by Mr. Khoshbin and 837 against Mr. Majidi and Cell Space. I find that Mr. Majidi breached his fiduciary duties to Mr. Khoshbin, 910, and Continuum. I dismiss Mr. Majidi's oppression and wrongful dismissal claims. [278] I grant the following: > a. a declaration under section 241(2) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) that Mr. Majidi acted oppressively towards Mr. Khoshbin and/or 837; > > b. an order under section 241(3) (f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in 910 to Mr. Khoshbin for its fair market value of $264,844.80 as at March 6, 2020, which amount includes the debts owed by 910 to Cell Space and Mr. Majidi; > > c. an order under section 241(3)(f) of the [CBCA](https://laws-lois.justice.gc.ca/eng/acts/c-44/index.html) requiring Mr. Majidi and/or Cell Space to sell their 30% interest in Continuum to Mr. Khoshbin for its fair market value of $614,418 as at March 6, 2020; and > > d. an order that Mr. Majidi be reimbursed $131,391.27 for expenses he has incurred in respect of the Toronto Condominium, subject to any additional set-offs between the parties arising from unpaid costs awards by Mr. Majidi. [279] The parties are to work together to resolve the issue of costs. If they are unable to resolve costs within 30 days, they are to email my judicial assistant, and I will set a schedule for the delivery of cost submissions. --- **Parghi J.** **Released: August 27, 2025**