Dear Colleagues:

 

The Supreme Court of Canada has just released a wide-ranging judgment dealing with Proprietary Estoppel, see Cowper-Smith v Morgan, 2017 SCC 61 https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16898/index.do. The narrow issue to be decided was whether the fact that the promisor promised to convey a piece of property that they did not yet own meant that the reliance by the promisee had been unreasonable. The court decided that the reliance was in fact reasonable on the facts of the case. The leading UK authority is discussed and ODGers, such as Bruce MacDougall and Ben McFarlane (amongst others), are relied on by the court. Citing Thorner, the courts accepts that:

 

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.

 

The court also accepts that the remedy need not be the full expectation of the plaintiff. As the court notes:

 

47     … . A claimant who establishes the need for proprietary estoppel is entitled only to the minimum relief necessary to satisfy the equity in his favour …. Since the equity aims to address the unfair or unjust detriment the claimant would suffer if the owner were permitted to resile from her inducement, encouragement, or acquiescence, "there must be a proportionality between the remedy and the detriment which is its purpose to avoid" … .

 

48     This approach recognizes that, while proprietary estoppel arises where the claimant's expectations are frustrated, the reasonableness of the claimant's expectations must be assessed in light of, among other things, the detriment the claimant has actually suffered … . Courts of equity must therefore strike a balance between vindicating the claimant's subjective expectations -- which, in their full context, may or may not reflect a reasonable valuation of the claimant's detriment -- and correcting that detriment, which may be difficult or even impossible to measure … . In no case, however, may the claimant obtain more than he expected…

 

The court also indicated that this judgment was not the vehicle through which to addresss the unification of promissory and proprietary estoppel along the lines of  Waltons Stores:

 

21     It has commonly been understood in Canada that proprietary estoppel is concerned with interests in land … .

 

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.) … .

There are spirited partial concurrences (by BROWN and CÔTÉ  JJ) which dispute the majority’s conclusion: (1) that the remedy should be valued at the date the property should have been conveyed as opposed to the date of the judgment and (2) that the court has the power to order the defendant as executor to convey the property in specie to herself so that the proprietary remedy the court orders in favour of the plaintiff will be effective.

 

I’ll be interested to hear what others think about the judgment.

 

Sincerely,

 

 

Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)