Canada: You May Have To Keep Your Promises

Last Updated: February 7 2018
Article by Predrag Tomic

Some people are good for their word. Others are not. Depending on the circumstances, a promise you make may not be legally enforceable. However, in the words of the outgoing Chief Justice of the Supreme Court of Canada in the recent judgment in Cowper-Smith v Morgan, 2017 SCC 61, equity enforces promises that the law does not.

That case involved a promise made by a sister to her brother in the context of making arrangements for the care of their elderly mother. The Court was asked to consider whether the doctrine of proprietary estoppel bound the sister to her promise after the mother's death.

At a very high level, the mother's will gifted her estate equally to her three children. At some point, the mother became unable to live on her own and care for herself. One son, Max, who lived in England at the time, agreed to move back to British Columbia to live with and care for his mother in her house. He did so after his sister, Gloria, agreed that he would be entitled to reimbursement of expenses, use of the mother's car, and the ability to acquire Gloria's 1/3 interest in the house after the mother's death. On the basis of that promise, Max moved to Victoria and upheld his end of the bargain. After the mother's death, Gloria reneged on her promise. Max started a lawsuit, in part claiming that he was entitled to buy Gloria's 1/3 interest in the house based on the doctrine of proprietary estoppel.

Max succeeded at trial, the judge agreeing that he had established his claim in proprietary estoppel. Gloria appealed. The British Columbia Court of Appeal sided with her on that particular issue, concluding that proprietary estoppel was not available because at the time of the promise, she did not own an interest in the house (since the mother was alive). Max appealed to the Supreme Court.

The Supreme Court confirmed the three elements of proprietary estoppel:

1) A representation or assurance on the basis of which the claimant expects to enjoy a right over property;

2) Reasonable reliance on that representation or assurance; and

3) Detriment to the claimant as a result of that reliance.

The Court easily found that Gloria had represented to Max that if he moved back, he could acquire her interest in the house after their mother's death. The Court also held that Max's reliance was reasonable – there was sufficient evidence the children were led to believe they would be inheriting an equal share of their parents' estates. In the Court's view, Gloria's expectation of the inheritance was not so speculative so as to render her promise meaningless.

The case turned on whether at the time of Max's reliance, Gloria had to have owned an interest in the property in question. The Court of Appeal held that for the estoppel to arise, the promisor must have had an interest in the property when she made the promise.

The majority of the Supreme Court disagreed, concluding that an equity arose in Max's favour the moment he relied on Gloria's promise. Proprietary estoppel protected that equity, and according to the Supreme Court, it attached to Gloria's interest when she became entitled to her share of the estate. In other words, the protection provided by the promissory estoppel could be deferred indefinitely until the promisor actually acquired an interest in the subject property. However, until then, it was largely meaningless.

Once the elements of proprietary estoppel are established, the Court has significant latitude in crafting a remedy. In this case, the Supreme Court allowed Max to purchase Gloria's interest in the home based on its appraised value in 2011, shortly after the mother's death. The property had increased in value by the time of the Supreme Court's decision.

Some lessons

As with every case, the Cowper-Smith case provides some useful lessons:

  1. Once a deal was struck, Max should have reduced it to a written agreement. Often people hesitate to insist on formal contracts with family members, but time and time again, the cases show the potential downsides of not documenting intentions properly.
  2. Max took on a considerable amount of risk with his reliance on Gloria's promise. The Supreme Court (and to an extent the Court of Appeal) touched on the fact that it was entirely possible that Gloria would have never acquired a 1/3 interest in the house. Proprietary estoppel would not have been available in that case. For example, if the house was sold during the mother's lifetime to pay for her expenses, there would be little for Max to enforce against. Remember that a gift under a will does not itself create a legal interest in property – it merely provides an expectation. Max lucked out in that the property subject to the promise still existed at the time of his mother's death.
  3. Plan proactively. Disputes around compensation due to a family member who assumes primary care of an elderly parent are not uncommon. When considering your own estate plan, consider how family caregivers will be recognized and compensated. We encourage parents and children to have the discussion early so that misunderstandings are minimized when the parent is no longer able to communicate his or her intentions.

Predrag (Peter) Tomic is a wills and estates lawyer with a focus on complex estate and trust litigation, estate planning and probate matters.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions