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REMEDIES - Equitable remedies - Rectification

Thursday, August 22, 2019 @ 8:37 AM  

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Appeal by 208 Alberta from a decision of the chambers judge dismissing its application for rectification of a Purchase and Sale Agreement and Escrow Agreement. The rectification request essentially sought to remove from those agreements the right of the vendor HXR to receive $2.5 million held in escrow and provide that right to the appellant, contrary to the explicit wording of the agreements, based upon an alleged oral agreement in Mandarin. The appellant agreed to purchase shares from HXR and Song. The Purchase and Sale Agreement provided that this agreement superseded all prior agreements, understandings, negotiations and discussions, whether oral or written, among the parties. The Escrow Agreement provided that except for the provisions of the Sale Agreements this agreement superseded all other agreements and could not be varied or amended by oral agreement or by representations or otherwise other than in writing. The rectification application sought to reverse the payment provisions of both the Purchase and Sale Agreement and the Escrow Agreement. The chambers judge found the alleged oral agreement was between the parties’ agents, who did not have sufficient authority to bind their principals. The chambers judge found he was unable to conclude that the necessary clear, cogent and convincing evidence was available to substantiate an oral agreement. He also found that no knowledge by key players of such an agreement was a factor in his concern over the lack of such necessary evidence. The chambers judge also commented that the escrow agent’s knowledge of the alleged oral agreement was essential to any finding regarding its existence and validity, saying that any other finding would introduce an unacceptable element of uncertainty into the role of an escrow agent.

HELD: Appeal dismissed. The evidence was clear that the agents did not enter into any agreement. If the chambers judge was in error on the facts or the law on this point, it had no effect on the result reached. The chambers judge committed no error of law with respect to his analysis of standard of proof and the requirement for appropriate evidence of the alleged oral agreement. The chambers judge correctly found that the proposed rectification was not as simple as proposed and would involve a detailed analysis and re-writing of other provisions affecting the parties.

Stikeman Elliott LLP v. 2083878 Alberta Ltd., [2019] A.J. No. 915, Alberta Court of Appeal, F.F. Slatter, J. Antonio and K.P. Feehan JJ.A., July 10, 2019. Digest No. TLD-August19019009