Case Name and citation: Peoples Department Stores Inc. (Trustee of) v. Wise,  3 S.C.R. 461, 2004 SCC 68.
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Court: Supreme Court of Canada.
Date: October 29, 2004.
Trial Decision: The Wise brothers’ fiduciary duty was breached, which led to the court trial.
Appeal Decision: The Quebec Court of Appeal overturned the decision made.
Background: According to the peculiarities of the appeal, it is a contractual case.
Two parties are the objects in the case under review. The Wise Store Inc. owned by three brothers was a chain of retail stores. It had a competitor, the Peoples Department Store, and the brothers acquired this network in 1992 (Peoples Department Stores Inc. (Trustee of) v. Wise, 2004). After a few years, the Wise faced financial difficulties, and to overcome them, the owners decided to use the Peoples Department Store as a subject for a loan of funds to assign them later. In 1995, the brothers declared bankruptcy, and their debt was $18 million (Peoples Department Stores Inc. (Trustee of) v. Wise, 2004). A lawsuit was filed against The Wise Store Inc. due to their violation of the credit scheme.
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According to the Supreme Court, the company’s interests were not related to the ones of creditors. The powers of the Wise brothers did not allow them to use financial assets in the scheme that they created and to owe this amount to the Peoples Department Store. The conducted business examination showed that the duties of the director did not provide for the procedures that were applied to the lender.
The Wise brothers’ company had an obligation to the Peoples Department Store, but it was not a fiduciary provided for by law regarding the heads of organizations and creditors. The responsibility of the owners for the debt was obvious, but the requirements for punishment were groundless. The legislation was drafted in such a way that the relationship between directors and creditors did not concern criminal law, and business processes were the basis of these processes.
The duties of the directors of the main company were discussed by the court, and the decision was made that the owners’ actions were not criminal and could be interpreted differently. The rules of business ethics were affected, but in case the court had punished the Wise brothers, it would have been a biased decision since the directors’ schemes were due to a desire to save the corporation. The claims of the parties could be considered from the point of view of corporate ethics, but criminal motives were not traced.
Unsuccessful business decisions and consequences are not considered in the context of offenses. The interests of parties regarding the use of assets are their internal policies are the task of directors, and the management is to control these operations.
Cases Judicially Considered
This case became the basis and a legal point for reviewing the mode of interaction among business participants and, in particular, credit operations within corporations. The results were applied in subsequent cases of relevance to similar issues. The trial was one of the examples of difficulties arising within companies.
Peoples Department Stores Inc. (Trustee of) v. Wise,  3 S.C.R. 461, 2004 SCC 68.