Proprietary Estoppel – A Court Enforced Promise
If you are in estate litigation, the phrase "but mom told me I was going to get …" seems to come up almost daily. Beneficiaries, upon learning that what they thought they had been promised is in fact going to someone else, will often become upset, turning to the legal system to correct what they perceive as wrong. The sad truth is however that under most circumstances, absent any other factors, there is not much that can be done for the beneficiary. Testators are free to do with their property what they wish, and can change their mind multiple times before they die (so long as they retain capacity). One exception to this however is the doctrine of proprietary estoppel. Through the doctrine of proprietary estoppel, if a claimant can show that they meet the requirements set out by the court, the testator’s promise can be enforced by the court, and in the process alter the testator’s estate plan.
Put in basic terms, a claim for proprietary estoppel arises when one person makes a promise to another, which the second person relies on, and in relying on the promise suffers some sort of detriment. The concept is perhaps best understood from Gillett v. Holt,  1 All ER 405, an example from the UK. In Gillett v. Holt, the doctrine of proprietary estoppel was successfully applied after a claimant, who worked on the testator’s farm for 40 years (for less than market wage under the promise that the farm would one day pass to them), was left nothing in the testator’s will. In looking at the claimant’s case, the court acknowledged that there had been a representation made by the testator that the claimant would get the farm, that the claimant relied on the testator’s representation, and that the reliance was to the detriment of the claimant as they worked for 40 years on the farm for less than market wage. Using the doctrine of proprietary estoppel, the claimant was entitled to the farm despite not being left it in the testator’s will.
Recently, in Schwark v. Cutting 2010 ONCA 61 (CanLii), the Ontario Court of Appeal affirmed the principles of proprietary estoppel. In discussing proprietary estoppel, the court states that the law surrounding proprietary estoppel is well settled, and provides a basic test to determine if it should be applied. In order to establish proprietary estoppel, the party relying on it must show:
1. Encouragement of the plaintiffs by the defendant owner;
2. Detrimental reliance by the plaintiffs to the knowledge of the defendant owner; and
3. The defendant owner now seeks to take unconscionable advantage of the plaintiff by reneging on an earlier promise.
Although proprietary estoppel is not confined to the estates world, it can offer a valuable tool should a testator not fulfil a promise to deliver certain property under their will. If the claimant can show that they meet the requirements (representation, reliance, and detriment), then through the doctrine of proprietary estoppel they can achieve an interest in the property.
Ian Hull – Click here for more information on Ian Hull.