The Power Of Estoppel In Land Acquisition

Estoppel is a legal doctrine that operates to hold a person to their promise. Most forms of estoppel act as a "shield" to bar another party's exercise of a right or entitlement.
Canada Real Estate and Construction
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What is Proprietary Estoppel?

Estoppel is a legal doctrine that operates to hold a person to their promise. Most forms of estoppel act as a "shield" to bar another party's exercise of a right or entitlement.

Proprietary estoppel functions to generate an interest in land. It is unique in that it can independently found a cause of action; there is no need for a pre-existing legal relationship.

In CowperSmith v Morgan 2017 SCC 61, the Supreme Court of Canada confirmed the necessary elements of a proprietary estoppel claim:

  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.

Once these three elements are satisfied, the Court has considerable discretion in granting relief. Remedies have included outright grants of property, easements, licenses for use and monetary compensation. The remedy must mirror the detriment experienced by the complainant; the complainant should only be compensated to the extent that their expectation is satisfied.

Can Proprietary Estoppel be used against the Crown?

Estoppel cannot be used to override a statutory provision or adversely impact government policy.

In Alberta, there are no laws expressly prohibiting or regulating the use of proprietary estoppel. Resultantly, a proprietary estoppel claim against the Crown in Alberta would not be explicitly contrary to statute.

Section 4 of the Alberta Public Lands Act prevents a claim of prescriptive easements over crown lands. Prescriptive easements necessarily differ from claims of proprietary estoppel as they do not involve representation and reliance. And proprietary estoppel can give rise to remedies other than easements. Notably, equivalent legislation prohibiting prescriptive easements in British Columbia was unsuccessful in baring a proprietary estoppel claim against the Crown.

While the Alberta Government has not been subject to a claim of proprietary estoppel, claims have been successfully brought forth in British Columbia.

In Reum Holdings Ltd. v. 0893178 B.C. Ltd., 2015BCSC [Reum Holdings Ltd.],the plaintiff (Reum Holdings) had been granted a permit for the development and use of a road over Crown land. The developed road was the only means by which the plaintiff could access their property. Notably, the permit could be cancelled at the absolute discretion of the Minister.

Over the following years, the provincial government made numerous representations that led Reum Holdings to believe they had a permanent interest in the tract of land. As a result, Reum Holdings expended funds to further construct and maintain the road. The Province later entered into a land exchange agreement, with a third party, that did not preserve Reum Holdings' permit access. In response, Reum Holdings registered a certificate of pending litigation (CPL) against the Crown title, in an effort to claim an ongoing right of access.

The Supreme Court of British Columbia was tasked with considering the merits of the CPL. The Court concluded that the plaintiff's claim for an easement over the land based on proprietary estoppel was a triable issue. While Reum Holdings Ltd. has not been adjudicated further, it affirms that the Crown is not immune to claims of proprietary estoppel at common law.

Can Proprietary Estoppel be Enforced Against a Third-Party Purchaser?

Proprietary estoppel generates an inchoate equitable interest in land; whether this interest is binding on a subsequent purchaser depends on whether the complainant seeks a court order establishing their legal right.

Equitable interests are only enforceable against third parties where notice has been provided. By contrast, registered legal interests are invariably enforceable against third parties.

Generally, the inchoate equity generated through promissory estoppel is enforceable only against the promiser: the individual making the representation. Once the court has granted a remedy in favour of the estoppel complainant, the right may be registered and enforced against third parties.

In the absence of a court ordered remedy, third-party purchasers may be subject to an inchoate equity where they have received actual or constructive notice. In this case, a court has discretion to enforce the claimant's right. Given the equitable nature of the action, the court would be obliged to consider the impact on the third party and modify the remedy as such.

Take away

In Alberta, there is no easement by prescription, no adverse possession and generally, property rights are sedulously protected by the law. However, this does not allow a landowner, including the Crown, to avoid risk if they make, or allow to be made, assurances or representations about the use of their land by others.

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.

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