If a parent promises to give the family farm to their child one day but then reneges, it is not uncommon for the courts to step in and use the doctrine of proprietary estoppel to make good on the broken promise. In the UK, for example, the courts dealt with broken promises related to family farms in Winter v Winter, [2023] EWHC 2393 (Ch) and Guest v. Guest, [2022] UKSC 27; in both cases, the doctrine of proprietary estoppel was satisfied and remedies were provided to children who had once been told that they would inherit the family farm, but were then cut out of their parents’ wills.
In comparison, if a parent goes back on a promise to sell the family farm to their child, establishing proprietary estoppel may be implausible, depending on the extent of the parties’ negotiations, as demonstrated by the Ontario Court of Appeal’s recent decision in Metske v Metske, 2025 ONCA 418.
Metske is a case of failed succession planning. After deciding to sell the family’s dairy farm, the parents approached their son about purchasing it. While the son’s family wanted to buy the farm, initially they could only afford to purchase the dairy herd. They took this step, with the father co-signing the loan, and began operating the dairy farm. The parties then discussed a tentative succession plan whereby the son’s family would eventually purchase the farm; however, the terms of the sale were never finalized. The son and his wife also learned that they could not qualify for the financing necessary to purchase the farm on their own, based on the farm’s fair market value, but did not share this information with the parents. Eventually, over several years, the relationship between the parties deteriorated to the extent that the son and his family was asked to leave the farm. The parents subsequently sold the dairy farm to a third party.
At trial, the judge awarded the son’s family $405,000 in damages for proprietary estoppel, finding that the parents had made a representation that they would transfer the farm on “favourable terms.” On appeal, this determination was overturned, with the Court of Appeal holding that any comments made by the son’s parents about future ownership of the dairy farm did not amount to an enforceable assurance, and that the trial judge made a palpable and overriding error.
The test for proprietary estoppel was confirmed by the Supreme Court of Canada in Cowper-Smith v Morgan, 2017 SCC 61; a claimant must establish that:
- the defendant made a representation to the claimant which resulted in the claimant expecting to enjoy a right or benefit over the affected property;
- the claimant reasonably relied upon the defendant’s representation; and
- the claimant suffered a detriment as a result.
In Metske, the Court of Appeal held that proprietary estoppel was not made out for two reasons. First, there was no representation or assurance to ground a finding of proprietary estoppel. Justice Pomerance observed that a representation or assurance is “the lynchpin of the analysis;” without it, proprietary estoppel cannot be established. Moreover, a representation or assurance must be clear, unambiguous, and intended to be taken seriously in order to satisfy the test. While the trial judge found that the parents had “donative intent” and made a representation that the farm would be transferred to their son on “favourable, but undefined, terms,” the Court of Appeal held that these determinations were erroneous. Rather, the evidence established that the parents had consistently indicated that the son would have to pay fair market value to acquire the dairy farm.
There was also no clear representation regarding the terms on which the farm would be transferred, as the parties had not agreed on the purchase price, how it would be determined, or the terms on which the purchase price would be paid. As noted by the Court of Appeal, “[t]hese were not just details about how succession would occur; these were details about whether succession would occur.” While the Court of Appeal also acknowledged that estoppel may arise, even if important details related to a transfer are missing, to be enforceable the promise “must be sufficiently clear to ground a common understanding between the parties.” A willingness to negotiate and agreement to pursue an agreement in the future will be insufficient to ground a finding of proprietary estoppel unless there is an actual assurance that the affected property will be transferred. As noted by the Court of Appeal, “[a] promise to negotiate is, by its nature, inchoate. It might or might not result in a meeting of the minds. Unless or until it does, there is no agreement upon which a party can reasonably rely.”
On a related point, the Court of Appeal also held that the son’s family could not reasonably rely on any representation made by his parents in light of the deterioration of the parties’ relationship and the fact that the son’s family was unable to obtain financing to purchase the dairy farm. Recognizing that the succession plan failed because the son could not buy the dairy farm, even on “favourable” terms, the son’s family was not entitled to damages.
The court’s decision in Metske demonstrates that using proprietary estoppel to enforce a promise to sell property may be more challenging than using the doctrine to enforce a promise to gift property. In the words of Justice Pomerance, musings about the succession of a family business “do not always give rise to enforceable promises.”
Thank you for reading – have a fantastic day!
Ian.