The Legislature Strikes Back: The Effect of Ontario’s Bill 152 on the Statutory Duty of Care in the Peoples Decision

Abstract

In this article, the author critically analyzes the Supreme Court of Canada’s decision in Peoples Department Stores Inc. v. Wise. This decision interpreted s. 122(1) of the Canada Business Corporations Act in a way so as to declare that it was “obvious” that the duty of care placed on directors and officers is owed to a broad range of beneficiaries, including creditors. The author argues that the decision, while defensible, was neither “obvious” nor was it appropriate. The amendments to the Ontario Business Corporations Act may come closer to the intentions of Parliament in passing the Canada Business Corporations Act. Furthermore, the rules of statutory interpretation are employed to demonstrate that the broadened duty of care found by the Supreme Court may actually cause directors and officers to be more self-interested, rather than putting the interests of the corporation ahead of their own. Such a change in approach may lead to statutory absurdity or a violation of the presumption against tautology. Therefore, a narrower duty of care, owed only to the corporation, as enacted by the Ontario legislature, should be recognized.