| From: | Lionel Smith, Prof. <lionel.smith@mcgill.ca> |
| To: | Robert Stevens <robert.stevens@law.ox.ac.uk> |
| Harrington Matthew P. <matthew.p.harrington@umontreal.ca> | |
| CC: | obligations@uwo.ca |
| Date: | 05/03/2019 14:43:12 UTC |
| Subject: | Re: Parol evidence rule apply to shareholder resolutions? |
Personally, I find the idea that one of the Europe’s legal traditions is ‘right’ and the other is ‘wrong’ to be a little far-fetched, certainly at this level of doctrinal detail. Particularly is this so when, despite differences in terminology, the outcomes seem so similar. The ‘headline’ approaches (eg subjective vs objective) often hide a great deal of detail that complicates the story.
Surely rectification is confined to documents because that is what we rectify. If we just disagreed as to what had been orally agreed, we would have a disagreement but there would be no separate analytical category. It would be like any case in which people disagreed about facts. (This I think is the sense in which there is no ‘doctrine of rectification’ in Quebec civil law: it is just an argument about the agreement: Jean Coutu Group (PJC) Inc. v. Canada (Attorney General), [2016] 2 SCR 670, 2016 SCC 55, http://canlii.ca/t/gvzzg , which refers to a contemporaneous decision restating the common law in Canada.)
In any event I think Robert’s discussion of objective vs subjective, while it may be perfectly relevant in the context of a contractual, is less relevant when we are not dealing with agreements. A will does not arise by an agreement, nor typically does a trust. This was precisely the holding in Re Butlin’s Settelement [1976] Ch 251 where only the settlor’s intention was relevant to rectification even though the trustees were parties to the deed. A fortiori in the case of a deed with only one party.
If rectification of a will is not possible at common law, how could we deal with the case of the will made at the point of a gun but which was formally correct? In common law Canada we allow rectification without a statute and..we got that law from England and Wales. See eg (all after the imposition of requirements of form and before the enactment of the statutory jurisdiction in the Administration of Justice Act 1982):
Guardhouse v Blackburn (1866) LR 1 P&D 109, 114-5 (a leading case rejecting, it seems to me, precisely the argument made by Robert)
Sugden v Lord St Leonards (1876) 1 PD 154, 224-31, 238-2 (CA, 5 judges, unanimous) (parol evidence admitted to grant probate to a lost will)
Re Morris [1971] P 62
Re Reynette-James [1976] 1 WLR 161 held that while a will could be rectified by striking words out (and this was done), it was not possible to rectify by adding words. It was this latter holding, correct or not (arguably inconsistent with Sugden?) that appears to have generated the impetus for statutory reform.
Re Phelan [1972] Fam 33
So if we come back to Matthew’s shareholder resolution: does it take effect by an agreement, which would need to be objectively construed and would surely look to the text of any document on which people voted? Or can we rectify if those who voted in favour were subjectively mistaken about the legal effect of what they were doing?
Hence the next topic: can the decision in the Brexit referendum be rectified?
From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Date: Tuesday, March 5, 2019 at 08:02
To: Lionel Smith <lionel.smith@mcgill.ca>, "Harrington Matthew P." <matthew.p.harrington@umontreal.ca>
Cc: ODG <obligations@uwo.ca>
Subject: Re: Parol evidence rule apply to shareholder resolutions?
It depends what you think "rectification" allows you to do.
So, at common law q contract is found in an objectively manifested offer and acceptance between two parties. it is not found in the subjective intentions of two persons even where they coincide.
So, if we 'rectify' a written document that does not (usually because of a slip) reflect what the parties had actually agreed, what do we then give effect to?
My view is that rectification operates as a kind of partial rescission. We tear up the agreement that the document alone represents their entire agreement, and give effect to the agreement (the objective offer and acceptance) that there would be absent that. But we're still giving effect to an objectively manifested offer and acceptance, not to the parties' subjective intentions, as only the former is an agreement. If rectification were about giving effect to subjective intentions as some seem to think, why is it a doctine confined to documents? If we can give effect tot the parties' subjective intentions, why generally have objective offer and acceptance as a necessary condition?
Similarly, rectification of a trust deed is possible. We give effect to the trust that there would be absent the reduction to a single document.
Rectification of wills, at common law, is not however possible. There is no informal will to give effect to, and the testator's subjective intentions are not a will. Legislation can alter this because it can determine what a will "is." Reectification of court judgments should be similarly narrow.
The position in civil law may (indeed I suspect is) different because of a different conception of what it is we are giving effect to. If you think, following the will theory, that contracts bind because that is what the parties subjectively will, then there is no need for a doctrine of rectification. We just find out what the parties subjectively intend and give effect to that. So you don't need it.
I think one legal tradition is getting this right, the other wrong.
From: Lionel Smith, Prof. <lionel.smith@mcgill.ca>
Sent: 05 March 2019 12:43:22
To: Harrington Matthew P.
Cc: obligations@uwo.ca
Subject: Re: Parol evidence rule apply to shareholder resolutions?
Although the civil law does not know rectification by that name, it has a category of juridical act, which can be defined as a “manifestation of intention on the part of one or more persons with a view to producing legal effect.” Every contract is a juridical act, but so is a will, a contractual offer, or the acceptance of a contractual offer.
Although the common law does not (yet) have the category of juridical act, it actually allows, in my view, rectification of any juridical act, since it allows rectification of a trust deed, potentially of a will (though this is complicated by formalities issues and some statutory intervention), and of the judgment of a court.
So on this view, the answer is that a shareholder resolution should be subject to rectification. Note that on the traditional view this means that the text of a document recording the resolution is subject to rectification. The exercise does not change what was done; it changes the record to comply with what was actually done.
As to the parol evidence rule, I am no expert but I think that even where the rule is strictly applied, an application for rectification must necessarily stand as an exception or it could never get off the ground. So too with wills, to take ip Robert Stevens’ point: if the allegation is that my formally correct will was made while a gun was pointed at me, that evidence can be evaluated and the will impugned if the evidence is accepted. In that context this comes out as the traditional distinction between the court ‘sitting as a court of probate’, ie deciding whether a document is a will (where the gun-pointing claim could be assessed), and ‘sitting as a court of construction’ which is logically afterwards and involves construing the document that has been proved to be a will (at which stage parol evidence is not admissible). Even if it is only implicitly done, I think we need to draw the same distinction for contracts and other juridical acts recorded in writing: you can’t construe the writing until you know what it says, and a claim for rectification goes to that quesiton.
Lionel
On Mar 5, 2019, at 07:01, Harrington Matthew P. <matthew.p.harrington@umontreal.ca> wrote: