Lora and Jeffrey started living together. As their 23 month relationship grew stronger Jeffrey promised Lora that when he died Lora would get his RRSPs worth about $1,750,000 as long as they were still living together. Jeffrey insisted that Lora sign a cohabitation agreement before he would keep his promise. Before the agreement was signed Jeffrey died. Was Jeffrey’s promise legally enforceable? At trial Justice Brown of the Ontario Superior Court of Justice (FN1) decided that Lora would get the money. Jeffrey’s estate appealed.
Lora sued the estate on a number of different grounds. I would like to focus on one which the Ontario Court of Appeal (FN2) addressed – was Jeffrey’s promise legally enforceable under the doctrine known proprietary estoppel? Let’s start by defining some terms.
Let’s assume Jeffrey made a promise to Lora. Proprietary estoppel is a legal doctrine which prevents Jeffrey from enforcing his legal rights with respect to property once he made a promise or representation not to do so. This is applied if Lora relied on the representation/promise and would suffer if Jeffrey or his estate enforced his legal rights. The court would force Jeffrey or his estate to keep the promise if it would be palpably unfair to allow him to strictly enforce his legal rights. Proprietary estoppel is an example where courts will look to equitable doctrines to address unconscionable wrongs.
Sometimes courts will use equitable remedies, like proprietary estoppel, to address a situation where the application of strict legal rights would be unfair. Under these circumstances the court may ignore a contract or a testamentary document and provide the plaintiff with a remedy. By applying equitable principals courts will sometimes enforce promises.
The Ontario Court of Appeal in Schwark Estate v. Cutting(FN3) reviewed a number of causes of action and remedies through which a promise may be enforced. In the course of that analysis the Court of Appeal summarized the essential elements of proprietary estoppel as follows:
- the owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the owner’s property;
- in reliance upon this belief, the claimant acts to his detriment to the knowledge of owner of the land; and
- the owner then seeks to take unconscionable advantage of claimant by denying him the right or benefit which he expected to receive.
So what does proprietary estoppel have to do with Lora and Jeffrey’s situation in the Belvedere v. Brittain Estate? Lora’s lawyers raised a number of equitable arguments (FN4) which the court dismissed. The Ontario Court of Appeal dismissed those arguments finding that Jeffrey’s estate was not unjustly enriched by Lora’s contributions and accordingly the trial judged erred in applying the doctrine of constructive trust. At that point the court considered the alternative remedy of proprietary estoppel.
The first issue addressed by the Court was whether this doctrine of enforcing promises relating to land could be used to enforce promises relating to RRSPs. The Ontario Court of Appeal noted that there is some controversy on this point, but it proceeded with the analysis on the assumption that it did apply. (FN5). A key issue in enforcing such a promise is that Lora had to rely on it to her detriment. Seeing that she did not rely on the promise and suffer any loss the court dismissed the proprietary estoppel argument.
So does that mean that promises are not legally enforceable? Maybe. The Ontario Court of Appeal decision makes room for such an argument if it meets the criteria set out in Schwark Estate v. Cutting. In an article published in the Estate and Trusts Quarterly, Ian Hull, a leading estate litigator stated (FN6), “While the doctrine of proprietary estoppel has deep roots in the British courts, the recent developments in the context of estates seem to point to a new and effective remedy available to claimants in the context of estate litigation”.
This short review of the case law should not be taken as legal advice. Based on my experience in dealing with these cases, they often turn on the specific facts. If you have a legal question relating to something similar, you are best advised to seek out competent legal counsel to determine your best course of action.
Charles B. Wagner is a partner at Wagner Sidlofsky LLP. This Toronto office is a boutique litigation law firm whose practice is focused on estate, commercial and tax litigation
FN1. Belvedere v. Brittain Estate 2007 CanLII 32666 (ON S.C.), (2007), 45 R.F.L. (6th) 81. Justice E.R. Browne of the Superior Court declared that Ms Lora Belvedere was entitled to a constructive trust in Mr. Brittain RRSPs at the time of his death, to be satisfied by payment to Ms. Belvedere of $1,750,000.
FN2. Belvedere v. Brittain Estate, 94 O.R. (3d) 655 (2009) OCA . To access the case on line see bit.ly/Belvedere/Brittain
FN3. Schwark Estate v. Cutting, 2010 ONCA 61. To access the case on line see http://bit.ly/Schwark
FN4. Lora’s lawyers argued that the estate of Mr. Brittain was unjustly enriched and that the trial judge was correct in finding a constructive trust on $1,750,000 of the estate assets in favour of Lora. Alternatively, Lora’s lawyers argued that the trial judge should have considered the remedies of a “resulting trust” and or “proprietary estoppel”.
FN5. See paragraph 67 of Belvedere v. Brittain Estate, 94 O.R. (3d) 655 (2009) OCA. To access the case on line see bit.ly/Belvedere/Brittain
FN6. Ian Hull and Suzana Popovic-Montag’s article “Proprietary Estoppel — An Innovative Claim Against the Assets of an Estate can be found in the Estate and Trust Reports, 3rd series 2009. The cite is 55 E.T.R. (3d) 44.