Estop and Think Before Relying on Future Estate Interests: An Update

Case Studies

Previously, in May of 2016, our firm discussed the decision of Cowper-Smith v Morgan, 2016 BCCA 200 [Cowper-Smith], which signaled a return to a stringent application of the doctrine of proprietary estoppel.  However, in keeping with recent Canadian decisions, which crafted more liberal criteria for applying the doctrine, the Supreme Court of Canada reversed the BC Court of Appeal’s decision in December of 2017.

Proprietary estoppel is an equitable doctrine that protects parties who detrimentally rely on assurances made by others about their property.  The doctrine is intended to prevent parties from profiting by misleading others.

In Cowper-Smith, the Defendant (Gloria) offered her brother (Max) an option to purchase her one-third interest in their mother’s estate if he returned from England to take care of their mother (Elizabeth).  Max agreed and cared for Elizabeth until she passed away, at which time he attempted to exercise his option to purchase Gloria’s interest in the estate.  Gloria refused to honor the option.

As Elizabeth was not deceased at the time of Gloria’s offer, Gloria did not own the one-third interest.  Instead, Gloria expected she would receive the one-third interest, and did in fact receive it, upon Elizabeth’s death.

While the BC Court of Appeal agreed that proprietary estoppel required a representation by a property owner, and reliance on this representation, they limited proprietary estoppel’s scope to actual owners of property.  As a result, Max’s claim for proprietary estoppel failed since Gloria’s interest in the estate did not legally vest until after Elizabeth’s death.

The Supreme Court of Canada disagreed with the BC Court of Appeal, holding that it would be unfair and unjust to permit Gloria to resile from her promise just because she did not yet have legal title to the assets in Elizabeth’s estate at the time she made the promise.  As a result, the Supreme Court of Canada held that proprietary estoppel would attach to Gloria’s interest in the assets as soon as she received them from Elizabeth’s estate.

The Supreme Court of Canada’s decision shows the court’s willingness to consider fairness and justice when applying equitable doctrines, and signals a principled approach to the doctrine of proprietary estoppel.