Executive Summary: Key Legal and Evidentiary Issues

• Central dispute concerned alleged oppression and wrongful dismissal claims by a minority shareholder/employee against the controlling shareholder and related corporations, met with a successful counterclaim for oppression and breach of fiduciary duty.
• Court found that the minority shareholder, Mr. Majidi, had misused corporate funds, failed to disclose conflicts of interest, and did not disclose that a tenant operated an illegal marijuana dispensary from corporate premises, supporting findings of fiduciary breach and oppressive conduct.
• Remedies on the merits included a compulsory sale of the plaintiffs’ 30% interests in the corporations to the defendant, as a court-ordered exit remedy arising from the oppressive and fiduciary breaches, together with reimbursement of certain condominium-related expenses to Mr. Majidi.
• In the subsequent costs decision, the court held that the defendant, Mr. Khoshbin, was clearly the successful party in the litigation, rejecting the argument that the plaintiff’s receipt of funds for his shares transformed him into the successful litigant.
• Although the plaintiff’s conduct might ordinarily justify substantial indemnity costs, the court reduced the scale to partial indemnity because the successful defendant had willfully and repeatedly disobeyed prior court orders requiring reimbursement of condominium expenses.
• The court ultimately fixed a lump-sum partial indemnity costs award of $450,000 in favour of the successful party, inclusive of legal fees, disbursements, and HST, after reviewing the reasonableness of the time spent, rates charged, and expert-related disbursements.

Factual background

The dispute in Majidi v. Khoshbin arose out of a breakdown in the business and employment relationship between Mr. Sina Majidi, together with his company Cell Space Technologies Corporation, and Mr. Ario Khoshbin and several corporations he controlled. The main corporate vehicles at issue were 9102213 Canada Inc. (“910”) and 8410097 Canada Inc., known as “Continuum”. Mr. Majidi and/or Cell Space held a 30% interest in these companies, with Mr. Khoshbin holding the controlling position. In addition to the corporate relationship, there was an employment dimension, as Mr. Majidi alleged he had been wrongfully dismissed. On the other side, Mr. Khoshbin alleged that, as a fiduciary and corporate insider, Mr. Majidi had engaged in misconduct harming the companies and their controlling shareholder. The parties’ falling-out led to a complex piece of litigation involving both oppression proceedings and a wrongful dismissal claim by the plaintiffs, and a corresponding counterclaim for oppression and breach of fiduciary duty by the defendants.

Claims, counterclaims, and core legal issues

On the plaintiffs’ side, Mr. Majidi and Cell Space commenced an action asserting oppression under the Ontario corporate law framework and alleging wrongful dismissal. They claimed that Mr. Khoshbin had treated them unfairly in the management and direction of 910 and Continuum, and that Mr. Majidi’s termination as an employee was unlawful. The plaintiffs sought relief that would vindicate their shareholder and employment interests. In response, the defendants, led by Mr. Khoshbin and his companies, advanced a counterclaim alleging that it was in fact Mr. Majidi who had engaged in oppressive conduct and had breached his fiduciary duties as a key corporate actor. The defendants asserted that he had misappropriated corporate funds, failed to disclose material conflicts of interest, and neglected to inform his business partner that a tenant in one of the corporate properties was operating an illegal marijuana dispensary. This tenant-related issue became significant as it underscored the seriousness of the nondisclosure and the potential regulatory and reputational exposure created for the corporate entities.

Findings on oppression, wrongful dismissal, and fiduciary breach

In reasons for judgment released on August 27, 2025 (Majidi v. Khoshbin, 2025 ONSC 3644), the court rejected the plaintiffs’ narrative. The judge dismissed the claims of oppression and wrongful dismissal brought by Mr. Majidi and Cell Space, finding that they had not established that Mr. Khoshbin’s conduct toward them, either as shareholders or as an employee, met the threshold for relief. By contrast, the court was persuaded that the defendants’ counterclaim for oppression and breach of fiduciary duty was well-founded. The court concluded that Mr. Majidi, as a fiduciary and participant in the management of the corporations, had misappropriated corporate funds and failed to disclose critical conflicts of interest, including the undisclosed relationship regarding a tenant who operated an illegal marijuana dispensary from property associated with the business. These findings demonstrated conduct that was not merely poor judgment, but a serious breach of the loyalty, honesty, and transparency owed by a fiduciary to the corporation and to the controlling shareholder. The court characterized this behaviour as oppressive and as a breach of fiduciary duty that justified robust remedial intervention.

Remedies on the merits, including the share sale and reimbursement

As a result of those findings, the trial judge crafted remedies intended to unwind the relationship and protect the interests of the aggrieved party. The court ordered that Mr. Majidi and/or Cell Space sell their 30% interests in 910 and Continuum to Mr. Khoshbin. This compelled buyout served as an exit mechanism, effectively separating the disputing parties and leaving control of the enterprises with the party the court had determined was wronged by the fiduciary misconduct. The judgment also required that Mr. Majidi be reimbursed for certain condominium-related expenses he had incurred on behalf of the corporation. Those expenses were the subject of several earlier interlocutory orders made by different judges, which had directed that the amounts be reimbursed. Over time, it emerged that compliance with those orders had been inconsistent, and this history would later affect the costs ruling. Although the share sale and reimbursement constituted important monetary aspects of the judgment, the costs decision does not specify the exact dollar amounts of the share valuation or the total condominium reimbursement. Accordingly, while it is clear that Mr. Majidi received some financial compensation for his interest in the corporations and for expenses he had advanced, the precise quantum of those merits-based monetary awards cannot be determined from the available text alone.

Costs principles and assessment framework

Following the release of the main decision, the parties were unable to agree on costs, and they exchanged written submissions leading to the February 19, 2026 costs endorsement in Majidi v. Khoshbin, 2026 ONSC 743. In that endorsement, the court applied section 131 of the Courts of Justice Act and rule 57.01 of the Rules of Civil Procedure. These provisions require the court to consider multiple factors when fixing costs: the result achieved, amounts claimed and recovered, complexity and importance of the issues, the principle of indemnity, the reasonable expectations of the unsuccessful party, and any other relevant circumstances. The judge also relied on the Court of Appeal’s guidance in Apotex Inc. v. Eli Lilly Canada Inc., emphasizing that a court must critically examine the claimed costs against these factors and then “step back” to assess whether the resulting figure is fair and reasonable overall. Within this framework, the court also considered rule 49.13, which permits the consideration of all offers to settle, even those not in strict compliance with the formal Rule 49 procedures, when determining costs. Mr. Majidi argued that, because he ultimately received more money for his shares and expense reimbursement at trial than what had been offered in settlement, he should be treated as the successful party and obtain costs. The court rejected this reframing of the case’s outcome.

Successful party and scale of costs

In the costs endorsement, the court definitively identified Mr. Khoshbin as “very clearly the successful party at trial”. The judge recognized that, although the trial judgment had required a purchase of the plaintiffs’ shares and reimbursement of some expenses, these orders were remedial consequences of Mr. Majidi’s wrongful conduct rather than indicators of success on his claims. The court therefore declined to view the share buyout as an “award” in favour of the plaintiffs. Accordingly, Mr. Majidi’s contention that he had been “awarded over $1 million” and thus should be considered successful for costs purposes was not accepted. The court held that, in light of the dismissal of the plaintiffs’ oppression and wrongful dismissal claims and the success of the defendants’ counterclaim for oppression and breach of fiduciary duty, the presumptive entitlement to costs rested with the defendants, with the onus on the unsuccessful party to show why that presumption should be displaced. Having established entitlement, the court then addressed the appropriate scale of costs. Given the seriousness of the fiduciary breaches and oppressive conduct found against Mr. Majidi, the judge acknowledged that there would ordinarily be a basis to consider substantial indemnity costs, which are reserved for cases involving “reprehensible, scandalous or outrageous conduct”. However, the situation was complicated by the fact that, over several years, Mr. Khoshbin had failed to comply with multiple court orders requiring him to reimburse the condominium expenses. At least four separate judges had directed such payment, and one explicitly observed that “compliance with a court order is not optional”, while another rejected any suggestion that the reimbursement direction was a mere “throwaway line” rather than a binding order. Against this backdrop, the costs judge found that Mr. Khoshbin’s ongoing failure to obey these orders was improper and abusive of the court’s process and that this misconduct was a relevant factor under rule 57.01.

Quantum of costs and overall outcome

Despite the concerns about non-compliance with prior orders, the court determined that the actual quantum of costs claimed on a partial indemnity basis was reasonable. Mr. Khoshbin’s partial-indemnity legal fees totalled $327,525.90 plus HST, and his disbursements amounted to $102,811.45 inclusive of HST. The disbursements largely related to expert evidence, including appraiser and business valuator reports that were necessary to advance the litigation and assist the court. There was also expert work on the regulatory framework for Botox, which, while not ultimately relied upon in the reasons, was considered a necessary response to positions taken by the plaintiffs about the legality of Continuum’s business. The court noted that Mr. Majidi did not contest the reasonableness of these figures and that his own litigation costs were broadly comparable, which indicated that the time spent, the hourly rates, and the complexity of the case were consistent with both parties’ expectations. On a full accounting, the defendants’ partial-indemnity costs, including fees, disbursements, and HST, came to $472,915.72. After stepping back and considering all the circumstances—including the seriousness of the misconduct found against Mr. Majidi, the countervailing concern about Mr. Khoshbin’s non-compliance with earlier cost and reimbursement orders, and the need for a result that was both fair and within the reasonable expectations of the unsuccessful party—the court fixed a lump-sum partial-indemnity costs award at $450,000. This figure was ordered payable by Mr. Majidi to Mr. Khoshbin and was expressly inclusive of all legal fees, disbursements, and HST. In the overall litigation, the clearly successful party was thus Mr. Khoshbin and his corporations: they succeeded on their counterclaim for oppression and breach of fiduciary duty, defeated the plaintiffs’ oppression and wrongful dismissal claims, obtained a forced buyout of the plaintiffs’ 30% shareholdings, and secured an enforceable costs award of $450,000. The precise monetary value of the share purchase and of the total condominium reimbursement cannot be determined from the available text, but the determinable quantified amount ordered in favour of the successful party is the $450,000 lump-sum costs award.