Look Communications Inc. sued its former director, Gerald McGoey, and his holding company, Jolian Investments Limited, for breach of fiduciary duty.
The claim arose from the board's approval of $20 million in "Contingent Restructuring Awards" (CRAs) to directors, officers, and employees following the sale of the company's primary assets.
The court found that McGoey breached his fiduciary duty by approving excessive CRAs, particularly the equity cancellation payments based on an inflated share price and an unwarranted $2.4 million compensation payment to himself.
The court also found a breach regarding the advancement of legal fees for directors' defense against CRA-related claims.
The court rejected McGoey's defense of reliance on legal advice, as the advice was general and did not cover the quantum or allocation of payments.
The court ordered restitution and imposed a constructive trust over the funds received by McGoey/Jolian.
