Canada: The Burden Of Proof To Rectify A Contract: The Ordinary Civil Standard Applies

Last Updated: January 9 2014
Article by Geoff R. Hall

Most Read Contributor in Canada, September 2018

The issue

Rectification is an important equitable doctrine allowing courts to rewrite contracts that erroneously record the agreement reached by the parties.  The basic requirements for rectification are well settled.  Where there is a mutual mistake, the party seeking rectification must show (i) that the parties had a common continuing intention prior to the making of the document alleged to be deficient; (ii) that that intention remained unchanged or existed at the time when the document sought to be rectified was signed; and (iii) by mistake, the parties signed a document that did not accurately reflect their common intention.

However, the issue of the onus of proof applicable to this test has been the matter of recent uncertainty.  Historically, reflecting a concern not to open the floodgates to rectification claims, the courts have required something more than the usual civil burden of proof – a standard not as high as the criminal onus, but most recently described as a standard of "convincing proof".  But contradictory messages from the Supreme Court of Canada in recent years cast doubt on the traditional rule.  In a leading rectification decision in 2002, the Supreme Court reiterated and applied the traditional rule.  In a non-rectification case decided in 2008, the Supreme Court stated unequivocally that there is only one onus of proof applicable in all civil cases, namely the balance of probabilities standard.  Since the 2008 case did not mention the 2002 decision, or indeed the issue of rectification at all, it was unclear whether the 2008 case implicitly overruled the 2002 decision on the onus of proof point.

In McLean v. McLean, the Ontario Court of Appeal concluded that there was an implicit overruling and that the normal civil standard now applies in rectification cases.  In coming to this conclusion, the Ontario Court of Appeal joined the only other provincial appellate court to have considered the issue, and treated the point as somewhat self-evident in light of the Supreme Court's unequivocal statement in 2008 that there is only one civil standard of proof.  However, in doing so, the Ontario Court of Appeal did not engage the policy issues that underlie the issue in the rectification context, and its methodology is somewhat questionable.

The contradictory messages from the Supreme Court of Canada

The Supreme Court of Canada's leading decision on rectification is Justice Binnie's judgment in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, which undertook a comprehensive review of the doctrine.  On the question of the onus of proof, Performance Industries applied the traditional rule and settled on the convincing proof standard among a variety of slightly different formulations:

"[A]ll of the foregoing must be established by proof which this Court has variously described as 'beyond reasonable doubt' (Ship M. F. Whalen [v. Pointe Anne Quarries Ltd. (1921), 63 S.C.R. 109], at p. 127), or 'evidence which leaves no "fair and reasonable doubt"' (Hart [v. Boutilier (1916), 56 D.L.R. 620] at p. 630), or 'convincing proof' or 'more than sufficient evidence' (Augdome Corp. v. Gray, [1975] 2 S.C.R. 354, at pp. 371-72). The modern approach, I think, is captured by the expression 'convincing proof', i.e., proof that may fall well short of the criminal standard, but which goes beyond the sort of proof that only reluctantly and with hesitation scrapes over the low end of the civil 'more probable than not' standard."  [Para. 41.]

In coming to this conclusion, Performance Industries was applying well settled law: as the foregoing passage illustrates, the principle that there is an enhanced onus of proof in rectification cases had been accepted in three previous Supreme Court of Canada decisions, the earliest dating back to 1916.

Interestingly given what has occurred subsequently, Performance Industries specifically rejected the contention that the onus should be the usual civil standard, citing the traditional concern about opening the floodgates to rectification claims and thereby undermining certainty of contract:

"Some critics argue that anything more demanding than the ordinary civil standard of proof is unnecessary (e.g., Waddams, [The Law of Contracts, 4th ed.Toronto: Canada Law Book, 1999], at para. 343), but, again, the objective is to promote the utility of written agreements by closing the 'floodgate' against marginal cases that dilute what are rightly seen to be demanding preconditions to rectification."  [Para. 42.]

Uncertainty about this holding was generated by F.H. v. McDougall, 2008 SCC 53, a case involving a civil claim for sexual assault authored by Justice Rothstein.  F.H. v. McDougall rejected the contention that a higher onus of proof is required where morally blameworthy or criminal acts are alleged in a civil case, and held that there is only one standard of proof in civil cases:

"Like the House of Lords, I think it is time to say, once and for all inCanada, that there is only one civil standard of proof at common law and that is proof on a balance of probabilities. Of course, context is all important and a judge should not be unmindful, where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences. However, these considerations do not change the standard of proof."  [Para. 40.]

F.H. v. McDougall was not a rectification case, and in fact did not even mention rectification or Performance Industries at all.  Its statement was clear and unequivocal – there is one standard of proof in civil cases – but its context was entirely different.  Thus after F.H. v. McDougall it was unclear whether it or Performance Industries set the onus of proof in rectification cases.  The question vexed a number of trial courts, but only recently has been taken up at the appellate level.

The Ontario Court of Appeal's resolution of the contradictory messages

In McLean v. McLean, the trial judge had applied the Performance Industries convincing proof standard to deny a rectification claim.  The Ontario Court of Appeal reversed, holding that the trial judge had applied the wrong standard.  The court accepted the argument that Performance Industries had been superseded by F.H. v. McDougall, and rejected the contrary arguments that if F.H. v. McDougall had intended to overrule Performance Industries on the onus of proof point the Supreme Court would have said so, and that F.H. v. McDougall was distinguishable as a civil claim for sexual assault.  In deciding as it did, the Ontario Court of Appeal agreed with the only other provincial appellate court to have considered the issue, although without actually citing the authority in question: in Taylor v. Kemkaran, 2012 MBCA 92 at para. 108, the Manitoba Court of Appeal had come to the same conclusion.

It is striking that both the Ontarioand the Manitobacases simply applied the conclusion of F.H. v. McDougall that there is a single standard of proof in civil cases, and that neither undertook any analysis of the underlying policy issues in the rectification context.  The onus of proof is much more than a theoretical issue.  On a practical level, the onus can dictate who wins and loses a case.  Many criminal accused are acquitted because the Crown cannot meet the very high onus of proving guilt beyond a reasonable doubt.  McLean v. McLean itself demonstrates the point: when the convincing proof standard was applied at trial, the party claiming rectification lost; on appeal, when the balance of probabilities standard was applied, she won.  On a policy level, the standard of proof recognizes that there is always the risk of judicial error through incorrect findings of fact, and reflects how the legal system deals with that unfortunate but unavoidable reality.  In a criminal case, where the issue is whether the presumption of innocence has been displaced and where a person's liberty may be at stake, few chances are taken and a high burden is imposed on the Crown to prove its factual allegations.  When the stakes are just money, there is a greater tolerance of error.  In the rectification context, the longstanding traditional rule reflects a policy concern not to undermine written agreements, and a determination that in close cases the written agreement should prevail.  It may well be the right thing to jettison that approach and even the playing field between a written agreement and a rectification claim, but simply citing F.H. v. McDougall's conclusion that there is a single burden of proof in civil cases – determined in an entirely different context – does not engage the relevant policy debate in any way.  It is somewhat surprising that the longstanding principle that there is an enhanced burden of proof in rectification cases has simply been discarded by two provincial appellate courts without any serious consideration of the rationale underlying the principle.

It is also difficult to believe that F.H. v. McDougall actually intended to abolish the traditional rule in the rectification context.  The Supreme Court of Canada has repeatedly emphasized that overruling one of its prior decisions is not a step to be taken lightly (see Ontario (Attorney General) v. Fraser, 2011 SCC 20 at para. 56).  Can it truly be the case that F.H. v. McDougall intended to overrule at least four Supreme Court of Canada precedents, including one only six years old, without even mentioning the point?  It seems more likely that the rectification context was simply not considered.  The author of the majority judgment in Perfomance Industries (Justice Binnie) did not sit on F.H. v. McDougall.  Indeed, because of changes in the Court's personnel between 2002 and 2008, only two justices sat on both cases (Chief Justice McLachlin and Justice LeBel).  Moreover, the Supreme Court's own application of F.H. v. McDougall has been less than dogmatic: in Merck Frost Canada Ltd. v. Minister of Health, 2012 SCC 3 at para. 94, the Court held that context may require a party to bear a "heavy onus" even if the standard of proof is the balance of probabilities.

The methodology of finding Performance Industries to have been implicitly overruled is also questionable.  In Craig v. Canada, 2012 SCC 43 at paras. 18-23, the Supreme Court of Canada held that an intermediate appellate court should not find a Supreme Court precedent to be implicitly overruled by subsequent Supreme Court case law that does not expressly overrule the precedent, but rather should write reasons explaining why the precedent is problematic and leave it to the Supreme Court of Canada to make the decision to overrule or not.  The circumstances in Craig were somewhat different, but it might have been preferable for McLean v. McLean to have followed the Craig approach, applying Performance Industries (which was directly on point) while noting that, although not expressly overruled, Performance Industries is difficult to reconcile with the Supreme Court's subsequent decision in F.H. v. McDougall.

Significance

Unless an appeal is taken to the Supreme Court of Canada, McLean v. McLean appears to represent the end of the longstanding principle that rectification cases must be proven to a standard higher than the usual civil standard, or at the very least represents a growing consensus among provincial appellate courts that the principle no longer exists.  Whether this will open the floodgates to rectification claims and undermine the certainty of written agreements – the historical policy concern driving the traditional rule – remains to be seen.

Case information

McLean v. McLean, 2013 ONCA 788

Court Docket: C56293

Date of Decision: December 27, 2013

To view the original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions