On October 30, 2019 the British Columbia Court of Appeal (“BCCA“) dismissed the appeal of the Attorney General and upheld the order of the Supreme Court of British Columbia (“BCSC“) rectifying a directors’ resolution declaring a dividend from the “capital dividend account” of a private corporation. For additional background on the superior court decision under appeal, and other recent decisions involving rectification, please see the author’s previous case comment.
The Manitoba Ltd. decision is a welcome development in the law for taxpayers who may require equitable relief to fix unintended tax arising from mistakes. It was initially feared by advisors that the Supreme Court of Canada’s landmark decision in Fairmont Hotels would eliminate rectification in the tax context.
The case law
surrounding equitable relief in the tax context continues to evolve. However, there
is no doubt that the courts have reconciled Fairmont
Hotels and are comfortable granting rectification or rescission if the
circumstances merit such relief. For taxpayers or advisors faced with
unintended tax consequences due to a mistake, rectification remains available
following Fairmont Hotels under
certain limited circumstances.
 5551928 Manitoba Ltd. v Canada (Attorney General), 2019 BCCA 376 [“Manitoba Ltd.“] aff’g. 2018 BCSC 1482.
 Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56 [“Fairmont Hotels“].