Canadian Courts, like their American counterparts, have
developed a rule of deference to business decisions called the
"business judgment rule", whereby courts will defer to
the directors' business judgment as long as an appropriate
degree of prudence and diligence was demonstrated by the directors
in the making of the business decision.
The business judgment rule rests on the related notions that (i)
directors and officers of corporations often have business
expertise that the courts lack, and (ii) they should be free of
courts' interference in their deliberations to the extent
possible. In the 2004 case of Peoples Department Store Inc. (Trustee of) v.
Wise, the Supreme Court of Canada recognized that many
decisions made in the course of business, though perhaps ultimately
unsuccessful, are reasonable and defensible at the time and under
the circumstances in which they were made. Moreover, business
decisions are sometimes made under significant pressure and in
