In 1996, the taxpayer (a Canadian-resident individual) purported to sell shares of a Canadian company ("Vienna"), while retaining the rights to dividends and the voting rights, to an Austrian private foundation (privatstiftung) which had been contemporaneously formed and funded in Austria by his father, and with family members including the taxpayer named as beneficiaries. The selling price was equal to 1/2 the fair market value of the shares (i.e., 1/2 of $1.33 per share, or $0.665 per share). When the parties subsequently were advised that it was not legally possible to transfer shares excluding certain of the rights attaching to those shares, they amended the agreement (perhaps in 1998, but purportedly on a retroactive basis) so as to provide that the Vienna shares (including all of the rights attached to the shares) had been sold in 1996 at a price of $1.33 per share, and with the voting rights and the dividend rights on the shares then immediately being assigned by the foundation to the taxpayer for $0.665 per share.
C. Miller J found that these amendments were legally effective on a retroactive basis in light inter alia of a clause in the original sale agreement which provided that any parts of the agreement that were found to be unenforceable would be replaced so as to give effect to the business intent. Respecting a submission that the sale agreement instead was void for mistake, he stated (at para. 54);
With respect to the Vienna shares, there was no mistake that Mr. Sommerer owned the Vienna shares, and that he could transfer them; he simply could not carve out certain rights. But the parties could easily rectify the situation, which they did.