Osler’s take on the Look Communications ruling

Karin Sachar, Douglas Bryce, Laura Fric

Oct 12, 2012

Barry Critchley, FP Street

Financial Post

October 12, 2012


Two weeks back, Justice Laurence Pattillo of the Ontario Superior Court of Justice ruled on whether former insiders (a group of directors and officers) can automatically expect to have their legal bills paid for by the company in the event they are sued.


Now at least one law firm, Oslers, has written up the case in which they say the facts “appear to have been exceptional.” Three Osler lawyers, Laura FricDouglas BryceKarin Sachar, wrote this week that the court has “set a new standard for obtaining court approval of claims for indemnity advancements made by directors and officers who had been sued by their former corporations. This is one of the few decisions that has resulted in a refusal to advance legal costs and may in practice expand the role of the Court in considering future requests.”

In their write-up, the three noted that “the Court held it must consider whether the requirements for indemnification were met, and in particular consider whether the presumption of good faith had been rebutted.”

Once that question had been asked and answered, the write-up added that “because the corporation had established a strong prima facie case that the directors and officers acted in bad faith, the Court denied advancement of indemnity under section 124(4) of the Canada Business Corporations Act.”


But the ruling has the potential to affect the way future legal actions may be handled. “It can be expected, however, that in some cases, courts will be unable to make such determinations based on paper records and instead require live witnesses before them where questions of credibility are involved.”

For the full article, click here.