The applicants, former officers of the respondent corporation, brought applications for advance funding of their legal fees to defend an action alleging complex commercial fraud.
The applications were brought pursuant to the corporation's Unanimous Shareholders Agreement and section 124 of the Canada Business Corporations Act.
The court applied the strong prima facie case test to determine if advance funding should be denied due to bad faith.
The court dismissed the application of the former CEO, finding a strong prima facie case of fraud had been established against him in a related Mareva injunction motion.
The court granted the application of the former COO, as the evidence did not establish a strong prima facie case of fraud against him.