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Equity - Proprietary Estoppel

. Oakville (Town) v. Sullivan

In Oakville (Town) v. Sullivan (Ont CA, 2021) the Court of Appeal stated the principles behind proprietary estoppel:
[32] Proprietary estoppel is an equitable doctrine that can create or affect property rights when there is a want of consideration or of writing: Clarke v. Johnson, 2014 ONCA 237, 371 D.L.R. (4th) 618, at para. 41, citing Anger & Honsberger, Law of Real Property, at para. 28:10.20. As noted in Clarke, at para. 52, three elements must be established:
(i) the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;

(ii) in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner; and

(iii) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive[.]
. Granger v. Granger

In Granger v. Granger (Ont CA, 2016) the Court of Appeal sets out the elements of proprietary estoppel, a principle which may operate to grant a beneficial property interest in real estate without express documentation:
[24] Relying on this court’s decision in Clarke v. Johnson, 2014 ONCA 237 (CanLII), 371 D.L.R. (4th) 618 (C.A.), the trial judge set out the following test for a claim of proprietary estoppel:
i. the owner of the property induces, encourages or allows the claimant to believe that he/she has or will enjoy some right or benefit over the property;

ii. in reliance upon his/her belief, the claimant acts to his detriment to the knowledge of the owner; and

iii. the owner then seeks to take unconscionable advantage of the claimant by denying him/her the right or benefit which he/she expected to receive.
. Cowper‑Smith v. Morgan

In this family estate litigation, Cowper‑Smith v. Morgan (SCC, 2017), the Supreme Court of Canada held that an agreement between siblings that an undertaking by a son to care for a parent in exchange for a future property right of the daughter was enforceable:
[15] An equity arises when (1) a representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over property; (2) the claimant relies on that expectation by doing or refraining from doing something, and his reliance is reasonable in all the circumstances; and (3) the claimant suffers a detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on her word: see Thorner v. Major, [2009] UKHL 18, [2009] 1 W.L.R. 776, at para. 29, per Lord Walker; see also Sabey v. von Hopffgarten Estate, 2014 BCCA 360 (CanLII), 378 D.L.R. (4th) 64, at para. 30; Clarke v. Johnson, 2014 ONCA 237 (CanLII), 371 D.L.R. (4th) 618, at para. 52; Idle-O Apartments Inc. v. Charlyn Investments Ltd., 2014 BCCA 451 (CanLII), [2015] 2 W.W.R. 243, at para. 49; Scholz v. Scholz, 2013 BCCA 309 (CanLII), 340 B.C.A.C. 151, at para. 31. The representation or assurance may be express or implied: see Wolff v. Canada (Attorney General), 2017 BCCA 30 (CanLII), 95 B.C.L.R. (5th) 15, at para. 21; Sabey, at para. 33; B. MacDougall, Estoppel (2012), at p. 446; Snell’s Equity (33rd ed. 2015), by J. McGhee, at p. 335. An inchoate equity arises at the time of detrimental reliance on a representation or assurance. It is not necessary to determine, in this case, whether this equity is personal or proprietary in nature. When the party responsible for the representation or assurance possesses an interest in the property sufficient to fulfill the claimant’s expectation, proprietary estoppel may give effect to the equity by making the representation or assurance binding.

[16] Proprietary estoppel protects the equity, which in turn protects the claimant’s reasonable reliance: see S. Bright and B. McFarlane, “Proprietary Estoppel and Property Rights” (2005), 64 Cambridge L.J. 449, at p. 452. Like other estoppels, proprietary estoppel avoids the unfairness or injustice that would result to one party if the other were permitted to break her word and insist on her strict legal rights: see Taylors Fashions Ltd. v. Liverpool Victoria Trustees Co., [1981] 1 All E.R. 897 (Ch.), at pp. 909, 915-16 and 918. As Lord Denning M.R. put it in Amalgamated Investment & Property Co. (In Liquidation) v. Texas Commerce International Bank Ltd., [1982] 1 Q.B. 84 (C.A.), at p. 122:
When the parties to a transaction proceed on the basis of an underlying assumption — either of fact or of law — whether due to misrepresentation or mistake makes no difference — on which they have conducted the dealings between them — neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.
See also Ryan v. Moore, 2005 SCC 38 (CanLII), [2005] 2 S.C.R. 53, at para. 51; MacDougall, at pp. 15-16.

[17] Where protecting the equity of the case may demand the recognition of “new rights and interests . . . in or over land” (Crabb v. Arun District Council, [1975] 3 All E.R. 865 (C.A.), at p. 871, per Lord Denning M.R.), proprietary estoppel can do what other estoppels cannot — it can found a cause of action: see MacDougall, at p. 424; McGhee, at pp. 330-33. Where the ingredients for a proprietary estoppel are present, the court must determine whether it is appropriate to satisfy the equity by recognizing the modification or creation of property rights “in situations where there is want of consideration or of writing”: Anger & Honsberger Law of Real Property (3rd ed. (loose-leaf)), by A. W. La Forest, at p. 28-3.

[18] Consensus as to the elements of proprietary estoppel has proved elusive: see Thorner, at para. 29, per Lord Walker; MacDougall, at pp. 444-47. Recent decades have seen a softening of the five criteria, or “probanda”, set out by Fry J. in Willmott v. Barber (1880), 15 Ch. D. 96, at pp. 105-6 — and cited by this Court in Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1970 CanLII 3 (SCC), [1970] S.C.R. 932, at pp. 938-39, and Sohio Petroleum Co. v. Weyburn Security Co., 1970 CanLII 137 (SCC), [1971] S.C.R. 81, at pp. 85-86 — as judges have moved away from strict requirements that would constrain their ability to do justice in the circumstances of a particular case: see Clarke, at paras. 41-53; Sykes v. Rosebery Parklands Development Society, 2011 BCCA 15 (CanLII), 330 D.L.R. (4th) 84, at paras. 44-49; Erickson v. Jones, 2008 BCCA 379 (CanLII), 299 D.L.R. (4th) 465, at paras. 52-57; Crabb, at pp. 876-77, per Scarman L.J.; Taylors Fashions, at pp. 915-18.

[19] But flexibility must not come at the expense of clarity and predictability. As Professor MacDougall has commented:
While the five probanda ought to be replaced as the criteria for the estoppel, a structured formulation for establishing the need for proprietary estoppel serves the purpose of providing a useful and reasonably clear-cut method for predicting the estoppel. The replacement of such a structure by a single factor of “unfairness” or “unconscionability” leads . . . [to] too open-ended and amorphous a doctrine that only encourages litigation, particularly given the already very flexible and open-ended nature of the effect of the estoppel. [p. 447]
[20] I agree. Unfairness or injustice — sometimes referred to as “unconscionability”, albeit not in the sense in which that term is used in contract law (see Ryan, at para. 74) — are not stand-alone criteria; they are what proprietary estoppel aims to avoid by keeping the owner to her word.

[21] It has commonly been understood in Canada that proprietary estoppel is concerned with interests in land: Delane Industry Co. v. PCI Properties Corp., 2014 BCCA 285 (CanLII), 359 B.C.A.C. 61, at para. 49; Burgsteden v. Long, 2014 SKCA 115 (CanLII), 378 D.L.R. (4th) 562, at para. 25; Clarke, at para. 52; Eberts v. Carleton Condominium Corp. No. 396 (2000), 2000 CanLII 16889 (ON CA), 136 O.A.C. 317, at para. 23; Bellton Farms Ltd. v. Campbell, 2016 NSCA 1 (CanLII), 394 D.L.R. (4th) 262, at para. 46. Still, as Professor MacDougall has noted, “[a] limitation to land is arguably arbitrary . . . . It arises from the somewhat chance circumstance that proprietary estoppel . . . originated as a device to get round form requirements that mainly constrained the creation of or transfer of rights to land”: p. 450; see also Wettstein v. Wettstein, 1992 CarswellBC 1421 (WL Can.) (S.C.), at paras. 56-57. The British Columbia Court of Appeal has acknowledged the question of whether proprietary estoppel “also extends to other proprietary rights”, although this was not at issue in the case before it: Sabey, at para. 32. The English courts have gone much further, allowing proprietary estoppel claims in relation to chattels, insurance policies, intellectual property rights, commercial assets, and other forms of property: see S. Wilken and K. Ghaly, The Law of Waiver, Variation, and Estoppel (3rd ed. 2012), at pp. 263-64; MacDougall, at pp. 452-53; see also Thorner, at paras. 48 and 66, per Lord Walker, and para. 104, per Lord Neuberger.

[22] We need not decide, in this case, whether proprietary estoppel may attach to an interest in property other than land; Max’s expectation was that he would enjoy a right over the family home, namely, the right to acquire Gloria’s eventual interest in it. Nor need we determine whether equity more broadly enforces non-contractual promises on which claimants have detrimentally relied: see, e.g., Waltons Stores (Interstate) Ltd. v. Maher (1988), 76 A.L.R. 513 (H.C.), at pp. 524-25, per Mason C.J. and Wilson J. As I will explain, proprietary estoppel may prevent the inequity of unrequited detriment where a claimant has reasonably relied on an expectation that he will enjoy a right or benefit over property, even when the party responsible for that expectation does not own an interest in the property at the time of the claimant’s reliance.



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Last modified: 05-01-23
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