BC Trust – B.C. Supreme Court applies Fairmont to decline rectification relief

The trustees of Trust 1 determined not to distribute its 2012 trust income to Trust 2 (its sole beneficiary) based on CRA having designated the two trusts as one under s. 104(2). After the dispute was resolved by CRA agreeing to reverse the designation, the trustees were unsuccessful in obtaining a rectification order to declare that there could be a retroactive declaration by them of a 2012 income distribution. Weatherill J stated that “Fairmont Hotel…made clear that rectification is limited to cases where a written instrument has incorrectly recorded the parties’ antecedent agreement.” He also declined to exercise the court’s inherent jurisdiction in this regard.

Rather oddly, he concluded with the statement:

[T]here is nothing prohibiting the Trustees from executing a trust minute in respect of the petitioner’s 2012 income allocation. A court order is not necessary. If the petitioner decides to do so, it will be up to the CRA to decide whether or not to give that allocation retroactive effect.

Neal Armstrong. Summary of BC Trust v. Canada (Attorney General), 2017 BCSC 209 under General Concepts – Rectification.