Legal Blog

Proprietary Estoppel

Cowper-Smith v. Morgan 2017 SCC

Family: mother, 2 brothers, and one sister. Mother’s main asset was the family house. The will that ultimately governed distributed all assets to the 3 children equally. Sister previously promised brother that she would sell her interest in the house to him at fair market value if he would return to Canada from England to look after their ailing mother. He did so, mother ultimately died, and sister reneged on her promise and proposed to sell the house even though brother was currently living in it. Proprietary estoppel prevents the inequity of a detriment that occurs when a claimant has reasonably relied on an expectation that the claimant will enjoy a right or benefit over property. The court extended the protection even when the party responsible for the expectation did not own the interest in the property at the time of the claimant’s reliance. The court left open the question whether proprietary estoppel could attach to an interest in property other than land. The court held that the brother’s reliance on the sister’s promise was reasonable under all the circumstances. There were 2 other questions: (1) Did the sister obtain an interest in the land? As executor, she wanted to sell the land and divide the proceeds. The court got around this by ordering an in specie distribution. (2) What was the date on which fair market value would be calculated? The court held that the FMV would be calculated as of the date that the claimant would reasonably have expected to be able to purchase the land (i.e. when the estate could have been wound up in the normal course were it not for the litigation). The court did not want to give brother a benefit on the money that he did not have to pay immediately and therefore ordered that he pay pre-judgment interest on that amount and any expenses that the estate incurred in maintaining the property from the FMV date.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.