Look Communications alleged that former directors and officers of the corporation had 'improperly conferred upon themselves substantial monetary benefits', so it sued them. The defendants argued that they were entitled to advance funding of their defence costs under the terms of Look's by-laws and various indemnification agreements. The company pointed to s 124(4) of the Canada Business Corporations Act, which precludes indemnification of defence costs where the defendants have not acted in good faith. The judge at first instance found that Look had established a strong case that the individuals in question had acted in bad faith and that the company therefore did not need to fund the costs of defending its suit against them. On appeal, the directors and officers argued that s 124(4) applies to derivative actions only: the marginal note that accompanies the provision does read 'Indemnification in derivative actions' and there is case law on the equivalent Ontario provision (involving some of the parties to the Look litigation, as it happens) that confines its scope in just that way. This wasn't a derivative action, so...

Nope, said Sharpe JA of the Court of Appeal: Cytrynbaum v Look Communications Inc, 2013 ONCA 455. Section 124 is a complete code on indemnification, and it would be a mistake to narrow the clear (and broad) words of the actual provisions by placing undue weight on the marginal note to one sub-section. These notes can be a useful indicator of legislative intent, but don't read too much into them, essentially. In any event, it wouldn't make sense to apply one set of rules to derivative actions and another to actions brought by the corporation itself. The judge below did not err in finding that Look had made out a strong prima facie case that the defendants had acted in bad faith, or in applying that standard. Justice Sharpe thought that, on the evidence, Look was likely to succeed at trial.   http://www.canlii.org/en/on/onca/doc/2013/2013onca455/2013onca455.html