The respondent sought to rectify corporate resolutions after an accounting error resulted in an unintended tax liability under Part III of the Income Tax Act.
The application judge granted rectification, finding that the objective was to pay a tax-free capital dividend.
The Court of Appeal allowed the appeal, holding that rectification is not available to correct an agreement that failed to achieve an intended fiscal objective, as the executed documents accurately reflected the parties' agreement to pay a $1.4 million dividend.
