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ARTICLE · 24 JANUARY 2020

Rectification Is Back—Is Rescission Next?

Field Law
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In 5551928 Manitoba Ltd. (Re) (2018 BCSC 1482; aff'd 2019 BCCA 376; herein referred to as "Manitoba"), the court allowed a claim for an order rectifying a directors' resolution.

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In 5551928 Manitoba Ltd. (Re) (2018 BCSC 1482; aff'd 2019 BCCA 376; herein referred to as "Manitoba"), the court allowed a claim for an order rectifying a directors' resolution declaring a dividend from the capital dividend account (CDA) of a private corporation. On October 30, 2019, the BCCA dismissed the attorney general's appeal. (For additional background on the lower court's decision and other recent decisions involving rectification, see "Rectification: Where Are We Now?" Canadian Tax Focus, May 2019.)

The BCSC's Decision in Manitoba

The attorney general appealed the BCSC's decision in Manitoba on the following grounds:

  • the BCSC misapplied the test for rectification by focusing on "intention as to [the] tax consequences" of the resolution rather than on whether it correctly recorded the unilateral act that the directors resolved to undertake; and

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