Rectification is a Discretionary Remedy

Rectification is a remedy that is increasingly used to correct errors in the way that commercial transactions have been documented when the mistakes result in unintended tax consequences for the parties involved. Rectification is not, however, always available.  In the recent Ontario Superior Court of Justice decision, Birch Hill Equity Partners Management Inc. v. Rogers Communications Inc., 2015 ONSC 7189, the Court declined to rectify a commercial transaction that resulted in an unexpected tax liability of approximately $4M even though the Application was unopposed.  The case is a good reminder that rectification is a discretionary remedy, the claim for which must be solidly supported by evidence demonstrating how the transaction that was documented deviated from the original intentions of the parties.