“Rectification is available where a document incorrectly expresses the parties’ true agreement. The purpose of rectification “is to give effect to the party’s true intentions, rather than to an erroneous transcription of those true intentions”. The premise underlying this remedy is that it would be unfair to hold a person to be bound by a transaction they never agreed to: Canada (Attorney General] v. Collins Family Trust, 2022 SCC 26 at para. 42 and Canada (Attorney General) v. Fairmont Hotels Inc, 2016 SCC 56 at paras. 12 and 13. It is not available where a party seeks a different agreement; it is meant for a situation where there is an error in recording the agreement entered into. That is, “… rectification aligns the instrument with what the parties agreed to do, and not what, with the benefit of hindsight, they should have agreed to do.” (Fairmont Hotels at para. 19).
Rectification may be granted on the basis of a common or unilateral mistake (Fairmont Hotels at paras. 14 and 15).
In order for the court to rectify on the basis of a common mistake, the moving party must show, on a balance of probabilities, that there was a prior agreement with ascertainable and definite terms, that it was still in effect at the time the agreement was executed, that the instrument fails to accurately record the agreement, and the instrument, if rectified, would carry out the prior agreement (Fairmont Hotels at para. 38 and Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19; [2002] 1 SCR 678 at paras. 37 to 41).
Rectification is also available when a unilateral mistake is made if the party resisting rectification knew or ought to have known about the mistake, and permitting the party to take advantage of the mistake would be fraud or the equivalent of fraud (Fairmont Hotels at para. 15, Performance Industries at para. 38). Fraud in this context can be “equitable fraud or constructive fraud” and may include unfair dealings and unconscionable conduct (Performance Industries para. 39). The inquiry is an objective one. “The question is what a reasonable observer would have thought in the circumstances, taking into consideration the evidence of the parties and the documentary evidence.” McCabe v Tissot 2015 ONSC 2557 at para. 46.”