Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether the $3,602,475 judgment debt against Dean Andres survived his discharge from bankruptcy under the Bankruptcy and Insolvency Act (BIA).

• Wild Rose Meats Inc argued the debt was not released due to “defalcation while acting in a fiduciary capacity” or, alternatively, because it resulted from obtaining property or services by fraudulent misrepresentation.

• The court examined if Mr. Andres owed and breached fiduciary duties, and whether his conduct constituted defalcation as defined in Canadian bankruptcy law.

• The pleadings and evidence did not establish that Mr. Andres’ conduct amounted to defalcation or fraudulent misrepresentation under the BIA.

• The court found that only specific wrongful conduct by a fiduciary, particularly involving dishonest handling of money or property, falls within the BIA exception.

• Wild Rose’s application was dismissed, and Mr. Andres’ discharge from bankruptcy was upheld.

Background and contractual relationships

Dean Andres, through his corporation Andres Incorporated, performed important roles for Wild Rose Meats Inc (“Wild Rose”) pursuant to a Consulting Agreement dated December 22, 2005. Andres Incorporated was a minority shareholder in Wild Rose and a party to a Shareholders’ Agreement of the same date. Under the Consulting Agreement, Andres Incorporated acted as an independent contractor, not as an employee or agent, and Mr. Andres personally guaranteed the corporation’s obligations. The Consulting Agreement contained non-competition and confidentiality covenants, and required Andres Incorporated to abide by the provisions of the Shareholders’ Agreement. Mr. Andres was styled as the “Chief Operating Officer” of Wild Rose until December 1, 2010, when he resigned and terminated the Consulting Agreement. Wild Rose pleaded that his principal responsibilities included securing supply of bison to Wild Rose and that he had access to Wild Rose’s contacts, pricing lists, and supplier lists.

Litigation history and default judgment

Wild Rose sued Andres Incorporated for breach of contract and Mr. Andres in his personal capacity for breach of fiduciary obligation. The Statement of Claim, filed April 18, 2011, collectively defined Mr. Andres and Andres Incorporated as “Andres,” which the court noted was unhelpful but could be understood as asserting breach of contract against Andres Incorporated and breach of fiduciary obligation against Mr. Andres. Wild Rose alleged that Mr. Andres breached his fiduciary obligations by competing against Wild Rose by selling bison to Wild Rose’s competitors and customers. Wild Rose applied for an injunction, which was granted on November 4, 2011 by Justice Romaine on the basis of the restrictive covenants in the Consulting Agreement and Shareholders’ Agreement, but not on the alleged breach of fiduciary obligations. Mr. Andres and Andres Incorporated failed to answer undertakings during litigation, were found in contempt of court, and their Statement of Defence was struck. On November 25, 2013, Wild Rose obtained a default judgment against Mr. Andres and Andres Incorporated for $3,602,475. On July 14, 2022, Mr. Andres filed an assignment into bankruptcy in the Court of King’s Bench for Saskatchewan, and was granted an absolute discharge from bankruptcy on April 10, 2025.

Legal issues and policy terms

The main legal question was whether Mr. Andres’ judgment debt survived his discharge from bankruptcy under section 178(1) of the BIA. Wild Rose argued the debt was not released because it arose out of “defalcation while acting in a fiduciary capacity” (s 178(1)(d)), or alternatively, because it resulted from obtaining property or services by false pretences or fraudulent misrepresentation (s 178(1)(e)). The court discussed the meaning of “defalcation,” referencing Canadian and U.S. case law, and concluded that defalcation in this context means wrongful conduct by a fiduciary in relation to money or property, and that exceptions to discharge must be interpreted narrowly.

Court’s analysis and findings

The court found that Wild Rose’s pleadings did not clearly establish that Mr. Andres acted in a fiduciary capacity distinct from Andres Incorporated, nor that he undertook in his personal capacity to act in the best interests of Wild Rose. There was no allegation or evidence that Mr. Andres diverted or dissipated money or other property, which is essential for a finding of defalcation. The court also found that Wild Rose did not plead fraudulent misrepresentation, and there was no evidence to connect any alleged false statements to the obtaining of property or services. The court held that the facts asserted by Wild Rose did not meet the requirements for either exception under the BIA.

Outcome and successful party

Wild Rose’s application was dismissed. The court held that Mr. Andres’ judgment debt to Wild Rose was released by his discharge from bankruptcy and did not fall within the exceptions in section 178(1) of the BIA. If the parties are unable to agree on costs, they may submit a brief of argument of three pages or less supported by a bill of costs. No amount was ordered or awarded in favor of Wild Rose. Mr. Andres and Andres Incorporated were successful in having the debt discharged.