In Fairmont (2014 ONSC 7302), the taxpayer was successful
on an application for rectification of certain corporate
transactions (see our previous post
On appeal, the Crown argued that the lower court had misapplied
the test for rectification because the parties had not determined
the specific manner in which their intention to avoid tax would be
carried out. In the Crown's view, the lower court's
judgment sanctioned retroactive tax planning.
The Court of Appeal disagreed:
 In these circumstances, relying on this court's decision
in Juliar, the application judge held that the respondent was
entitled to rectify the relevant corporate resolutions to correct
the mistaken share redemptions. This result, the application judge
noted, would avoid the imposition of an unintended tax burden that
the respondent had sought to avoid from the outset, as well as an
unintended tax revenue windfall to the CRA arising from the
mistaken share redemptions.
 On the factual findings of the application judge, set out
above, and the binding authority of Juliar, we see no basis for
intervention with the application judge's discretionary
decision to grant rectification.
 Juliar is a binding decision of this court. It does not
require that the party seeking rectification must have determined
the precise mechanics or means by which the party's settled
intention to achieve a specific tax outcome would be
realized.Juliar holds, in effect, that the critical requirement for
rectification is proof of a continuing specific intention to
undertake a transaction or transactions on a particular tax
 In this case, on the application judge's findings, the
respondent had a specific and unwavering intention from the outset
of its dealings with Legacy to ensure that the Legacy-related
transactions were tax neutral and, to that end, that no redemptions
of the relevant preference shares should occur. Nonetheless, by
mistake, the redemptions were authorized by corporate
 Contrary to the appellant's argument, in these
circumstances, it was unnecessary that the respondent prove that it
had determined to use a specific transactional device – loans
– to achieve the intended tax result. That the respondent
mistakenly failed to employ an appropriate transactional device to
achieve the intended tax result does not alter the nature of the
respondent's settled tax plan: tax neutrality in its dealings
with Legacy and no redemptions of the preference shares in
 At the end of the day, therefore, Juliar and the
application judge's factual findings, described above, are
dispositive of this appeal. It is not open to a single panel of
this court to depart from a binding decision of this court.
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