Tag: Proprietary Estoppel

23 Jan

Podcast #538 – Supreme Court of Canada: Cowper-Smith v Morgan

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Today on Hull on Estates, Noah Weisberg and Rebecca Rauws discuss the recent decision of the Supreme Court of Canada in Cowper-Smith v Morgan , 2017 SCC 61, and the expanded scope of the doctrine of proprietary estoppel.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

Click here for more information on Noah Weisberg.

Click here for more information on Rebecca Rauws.

21 Dec

The SCC Pronounces on Proprietary Estoppel

Hull & Hull LLP Estate & Trust, Estate Planning, Hull on Estate and Succession Planning, Hull on Estates, Power of Attorney, Uncategorized Tags: , 0 Comments

A recent decision of the Supreme Court of Canada deals with the issue of proprietary estoppel.

In Cowper-Smith v Morgan, the court dealt with an arrangement between two siblings to provide care for their mother. Gloria assured her brother Max that if he moved back into the family home, he would acquire Gloria’s share of that property after their mother’s death.

At trial, the judge concluded that all the elements of proprietary estoppel were established:

(1) The sister promised the brother that he would be able to purchase her eventual interest in their mother’s property;

(2) The brother relied on the expectation that he would be able to do so; and

(3) Because of the detriment the brother suffered as a result of his reliance, it would be unfair and unjust in the circumstances to permit the sister to resile from her promise.

Gloria appealed the trial judge’s decision to the British Columbia Court of Appeal which, in a split decision found that, since Gloria owned no interest in the property at the time of the promise, proprietary estoppel could not arise.

On appeal, the majority of the Supreme Court of Canada found that the trial judge did not err in concluding that proprietary estoppel operates to enforce Gloria’s promise. Ownership at the time the representation or assurance was relied upon is not a  requirement of a proprietary estoppel claim:

[35]                          …With respect, the conclusion reached by the Court of Appeal majority conflates proprietary estoppel with the equity to which it gives effect. That Gloria did not own an interest in her mother’s property at the time of Max’s reliance is not dispositive in itself: see MacDougall, at p. 456; see also Thorner, at para. 61, per Lord Walker; Re Basham (deceased), [1987] 1 All E.R. 405 (Ch.), at p. 415. An equity arises when the claimant reasonably relies to his detriment on the expectation that he will enjoy a right or benefit over property, whether or not the party responsible for that expectation owns an interest in the property at the time of the claimant’s reliance. Proprietary estoppel may not protect that equity immediately. It may not protect the equity until considerable time has passed. If the party responsible for the expectation never acquires a sufficient interest in the property, proprietary estoppel may not arise at all; where there is proprietary estoppel, there must be an equity, but not vice versa. When the party responsible for the expectation has or acquires a sufficient interest in the property, however, proprietary estoppel attaches to that interest and protects the equity: see MacDougall, at p. 458; Wilken and Ghaly, at pp. 265-66; see also Watson v. Goldsbrough, [1986] 1 E.G.L.R. 265 (C.A.), at p. 267. Ownership at the time the representation or assurance was relied on is not a requirement of a proprietary estoppel claim.

[36]                           An equity arose in Max’s favour when he reasonably relied to his detriment on the expectation that he would be able to acquire Gloria’s one-third interest in their mother’s house. That equity could not have been protected by proprietary estoppel at the time it arose, because Gloria did not then own an interest in the property. But that does not mean that proprietary estoppel cannot attach to Gloria’s share of the house once she receives it. I conclude that it can.

Thanks for reading,

David Morgan Smith

Find this blog interesting? Please consider these other related posts:

Will the SCC Expand the Scope of Proprietary Estoppel? 

A Primer on Proprietary Estoppel 

Proprietary Estoppel Revisited: Cowderoy v Sorkos Estate 

19 Dec

Will the SCC Expand the Scope of Proprietary Estoppel?

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Trustees, Uncategorized, Wills Tags: , , , , , , 0 Comments

Last week, we discussed Cowper-Smith v Morgan, and considered when the presumption of undue influence is rebutted by legal advice. Today, we discuss the availability of the doctrine of proprietary estoppel in the circumstances of this case (the issue which the Supreme Court of Canada (“SCC”) has granted leave to hear on appeal from the British Columbia Court of Appeal (“BCCA”)).

Brief Recap
The trial decision found that the son of the deceased, Max, had relied to his detriment on a promise made by his sister Gloria.  Gloria had enticed Max to return from England to care for his ailing mother in her home by entering into an agreement to, among other things, sell Max her 1/3 interest in the home that she would inherit on her mother’s death. On the mother’s death, Gloria reneged. The trial judge, on the basis of proprietary estoppel, directed that Max was entitled to buy Gloria’s share of the property.

The BCCA decision (Smith J. dissenting on the proprietary estoppel finding), found that Max had not met the test in order to apply the doctrine. In short, the BCCA found that the remedy of proprietary estoppel could not arise as a result of assurances given by Gloria (a non-owner) with respect to her future intentions.

It is the question of whether the doctrine of proprietary estoppel applies in these circumstances that wil02FAEBOQ2Gl be considered by the SCC.

The full facts of the case can be found in last week’s blog.

The Availability of Proprietary Estoppel
The BCCA applied the elements of the modern doctrine of proprietary estoppel as (in para 73 of the decision):

  1. an assurance or representation by the defendant that leads the claimant to form a mistaken assumption or misapprehension that he or she has an interest in the property at issue;
  2. a causative connection between the assurance or representation and the claimant’s reliance on the assumption such that the claimant changes his or her course of conduct;
  3. a detriment suffered by the claimant that flows from his or her reliance on the assumption, which causes the unfairness and underpins the proprietary estoppel; and
  4. a sufficient property right held by the defendant that could be transferred to satisfy the right claimed by the claimant.

In Ontario, the modern approach was established in the case of Schwark v Cutting, 2010 ONCA 61. Three factors must be present for proprietary estoppel:

  1. 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;
  2. in reliance upon this belief, the claimant acts to his detriment to the knowledge of the owner; and
  3. the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.

The Matter for Debate
The BCCA found, in a 2-1 decision, that the doctrine of proprietary estoppel did not apply. The BCCA found that the trial court unreasonably expanded the scope of the doctrine by finding that Max could rely on Gloria’s assurance that he could buy her 1/3 interest in the property.

The majority found that Gloria’s assurance did not equate to unconscionable conduct: her obligations arose solely based on her mother’s actions and death and, as such, Max never had a proper basis to rely on Gloria’s promise: the property was not hers to give away at the time the assurance was made.

The dissenting opinion of Justice Smith proposed a solution to this dilemma by noting that, because of her cognitive deterioration, there was no possibility that the mother would have changed or rescinded the transactions that conveyed the property to Gloria on her death.  As such, “Gloria’s ownership of the Property by the right of survivorship and the Declaration of Trust was therefore certain, despite not actually being owned by Gloria at the time of the promise to Max.”

It will be interesting to see how the SCC approaches this issue.

Thanks for reading,

Ian M. Hull

Other Articles You Might Enjoy

A Primer on Proprietary Estoppel

Proprietary Estoppel Revisited: Cowderoy v. Sorkos Estate

Proprietary Estoppel – A Court Enforced Promise

12 Mar

Proprietary Estoppel – A Court Enforced Promise

Hull & Hull LLP Estate & Trust Tags: , 1 Comment

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, [2000] 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

11 May

Withdrawing Permission is Not Unconscionable

Hull & Hull LLP Estate & Trust Tags: , 0 Comments

In the most recent issue of our firm’s newsletter, The Probater (shortly to appear on our website), Suzana Popovic-Montag deals in depth with the issue of Proprietary Estoppel.  As Suzana explains, this equitable remedy provides a useful alternative basis for the estates litigator to advance a claim against an estate but only in the presence of the right set of circumstances.  In short, a promise made with the intention to induce and on which a promisee relies to his or her detriment may be actionable in equity.

In the estates context, a promise of marriage or a promise to make a Will, which promise is never acted upon to the detriment of the claimant, may give rise to a claim predicated upon Proprietary Estoppel. 

The recent Ontario Court of Appeal decision of Schwark v. Cutting (to which Suzana refers), although not an estates case, provides a useful overview of the remedy and, more specifically, assists in advising when the remedy is not available.  In short, the claimants/Respondents in this case sought to invoke the remedy when the owners of neighbouring lakefront property no longer permitted the claimants to have access through their property to Lake Erie.  Although the claimants were successful at trial, the Court of Appeal unanimously granted the appeal by the water lot owners on the basis that: (i) the claimants knew they had no legal right to use the water lots, (ii) there was no evidence of "holding out or inducement…which could be said to have caused the Respondents to believe they had some right or benefit over the water lots" and (iii) "there is nothing unconscionable about a property owner, who, having permitted his neighbour to use his property for a time, withdraws that permission"

Again, please check our website soon and read Suzana’s Probater article for a more detailed discussion of this issue.

David M. Smith – Click here to learn more about David Smith.

 

21 Oct

Will Challenge Litigation – Part 10 – Hull on Estate and Succession Planning #135

Hull & Hull LLP Estate & Trust, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Litigation, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, TOPICS Tags: , , , , , , , , , , , , , 0 Comments

Listen to Will Challenge Litigation – Part 10

This week on Hull on Estates, Ian and Suzana discuss extraneous claims that can arise during a will challenge. In particular, they talk about propriety estoppel and other situations where someone worked to their detriment in the context of an estate dispute. For these kinds of claims, you require solid corroboration. Next week, Ian and Suzana will address the differences between quantum meruit and proprietary estoppel.

If you have any comments, send us an email at hullandhull@gmail.com or call us on the comment line at 206-457-1985 or leave a comment on our blog.

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14 Oct

Will Challenge Litigation – Part 9 – Hull on Estate and Succession Planning

Hull & Hull LLP Estate & Trust, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Litigation, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, TOPICS Tags: , , , , , , , , , , , , , 0 Comments

 

Listen to Will Challenge Litigation – Part 9

This week on Hull on Estates, Ian and Suzana discuss other claims that can be made concurrent to a classic will challenge. In particular, they talk about quantum meruit claims and how these can be interpreted differently depending on the situation.

If you have any comments, send us an email at hullandhull@gmail.com or call us on the comment line at 206-457-1985 or leave a comment on our blog.

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08 Jan

Proprietary Estoppel – Hull on Estates #92

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Listen to Proprietary Estoppel

This week on Hull on Estates, David Smith and Rick Bickhram discuss proprietary estoppel.

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06 Nov

Trust Claims and Non-Married Spouses – Hull on Estates Episode #84

Hull & Hull LLP Archived BLOG POSTS - Hull on Estates, Hull on Estates, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED Tags: , , , , , , , , , , , , , , , , , , , , , , , , , 0 Comments

Listen to Trust Claims and Non-Married Spouses

This week on Hull on Estates, David Smith and Megan Connolly reference the case Belvedere v. Brittain Estate to discuss constructive trust claims made against an estate by a non-married spouse.

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