5551928 Manitoba Ltd. v. Canada (Attorney General)

5551928 Manitoba Ltd. v. Canada (Attorney General)

The Court held that the chambers judge correctly applied Fairmont: the directors had a prior, definite and ascertainable common intention to exhaust the company's CDA (to pay the maximum tax-free dividend), the written resolution failed only by containing an incorrect numeric amount provided by the accountant, and...

Source-derived case information.

Citation
2019 BCCA 376
Parties
Respondent (petitioner): 5551928 Manitoba Ltd.; Appellant (petition Respondent): Canada (Attorney General)
Court
British Columbia Court of Appeal
Jurisdiction
Canada
Judgment Date
30 October 2019
Procedural Posture
Appeal From Rectification Order Concerning Corporate Dividend and Tax Penalty / Court of Appeal Judgment
Outcome
Appeal dismissed; rectification order of the Supreme Court of British Columbia upheld
Legal Topics
Rectification, Mistake, Capital Dividend Account (cda), Income Tax Act S.83(2), S.14(1), S.89(1), Remission, Professional Negligence
Source Language
english
Tax Law Equity Corporate Law Civil Procedure Rectification Mistake Capital Dividend Account (cda) Income Tax Act S.83(2), S.14(1), S.89(1) +2 more

Source-derived case record

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Parties

5551928 Manitoba Ltd.

Respondent (petitioner)

Canada (Attorney General)

Appellant (petition Respondent)

Procedural Posture

Appeal From Rectification Order Concerning Corporate Dividend and Tax Penalty / Court of Appeal Judgment

Legal Issues

  1. 1 Whether rectification is available where the instrument recorded a directors' resolution to distribute the maximum tax-free amount and the numerical figure was mistaken
  2. 2 Whether Fairmont (2016 SCC 56) precludes rectification when the motive was to obtain a tax advantage
  3. 3 Whether alternative legal remedies made equitable relief inappropriate

Ratio Decidendi

The Court held that the chambers judge correctly applied Fairmont: the directors had a prior, definite and ascertainable common intention to exhaust the company's CDA (to pay the maximum tax-free dividend), the written resolution failed only by containing an incorrect numeric amount provided by the accountant, and rectification to substitute the correct figure was therefore appropriate; alternative remedies were impractical and did not outweigh the equities favoring rectification.

Court Disposition

Appeal dismissed; rectification order of the Supreme Court of British Columbia upheld

Orders

  • Appeal dismissed
  • Order of the Supreme Court of British Columbia dated August 31, 2018 rectifying the directors' resolution affirmed