The respondent, as president and chairman of the appellant corporation, ruled at an annual shareholders' meeting that certain proxy votes could only be used to vote for the management slate of directors, based on the advice of corporate counsel.
This ruling was later overturned in court, and costs were awarded against the respondent.
The respondent sought indemnification from the corporation for his legal costs under s. 136(1) of the Ontario Business Corporations Act.
The Supreme Court of Canada held that the respondent was entitled to indemnification because he acted honestly and in good faith with a view to the best interests of the corporation, particularly by reasonably relying on the advice of corporate counsel.
