Peoples v. Wise: A Turning Point for Directors’ Duties

The Supreme Court of Canada recently released its decision in Peoples Department Stores Inc. v. Wise, a decision that is now Canada’s leading case on directors duties. Many see the decision as welcome relief for directors because, on the facts of the case, the Court relieved directors of a duty to creditors. A closer look reveals a very different picture.

The case is significant for four reasons: (1) It holds that directors owe duties to more than just the corporation; (2) It establishes an objective standard of care for directors and rejects the subjective standard; (3) It appears to adopt a Delaware style business judgment rule; and (4) It provides a first comment on the relationship between corporate governance standards and director liability.