Estoppel By Convention

estoppel

Estoppel By Convention.

The Supreme Court of Canada has set out the criteria as to what establishes estoppel by convention in Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53. In paragraphs 53 and 54, the Court sets out how the forms of estoppel have been established in law.

 

An estoppel by convention,  is an estoppel by representation of fact, a promissory estoppel or a proprietary estoppel, in which the relevant proposition is established, not by representation or promise by one party to another, but by mutual, express or implicit, assent. This form of estoppel is founded, not on a representation made by a representor and believed by a representee, but on an agreed statement of facts, or law, the truth of which has been assumed, by convention of the parties, as a basis of their relationship. When the parties have so acted in their relationship upon the agreed assumption that the given state of facts or law is to be accepted between them as true, that it would be unfair on one for the other to resile from the agreed assumption, then he will be entitled to relief against the other according to whether the estoppel is as to a matter of fact, or promissory, and/or proprietary.

 

57      The Court, then, in para. 59, said that the following criteria form the basis of the doctrine of estoppel by convention:

 

(1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).

(2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position.

(3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.

 

58      With respect to estoppel by representation, the Supreme Court of Canada’s decision in Canadian Superior Oil Ltd. v. Hambly, [1970] S.C.R. 932, [1970] S.C.J. No. 48, which set out in para. 19, the factors giving rise to estoppel.

They are:

(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part the person to whom the presentation is made;

(2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made;

(3) Detriment to such person as a consequence of the act of omission.

 

59      It is to be noted, however, that estoppel by representation cannot arise from silence unless a legal duty is owed by the representor to the representee to make the disclosure. See: Ryan v. Moore, 2005 SCC 38at para. 76.

 

62      Blake therefore accepted the terms of the Wills and acted upon those terms, not just once but 4 times, when he sold the house, sold the California condo, took the art he wanted, and divided various household goods and personal effects, and signed the corporate documents. Thus, all the parties involved took steps based on the shared assumption that the Wills were valid. Their mutual conduct shows this. Blake was silent about litigating anything in connection with the Wills until September 2013, although his lawyer had contacted the Estate Trustees in early February 2012. The Estate Trustees acted in reliance of this shared assumption, paid the taxes, and did not apply for an Income Tax Clearance Certificate, as there were still unadministered corporate assets to be divided between Blake and Cody under the Wills.

 

63      Blake should not be allowed now to resile from all of the actions he took during the two-year period after Eleanor’s death. As Mr. Justice Brown said, in Lawless, supra, a prospective litigant cannot wait until he or she determines that a claim is winnable or viable.

 

64      Blake’s conduct, in my view, induced the Estate Trustees to continue the administration of the Estate, since they had no legal document to show that Blake was in any way objecting. They organized the payment to CRA to stop any penalties and interest from running on the amount owing. They placed themselves in a precarious position, not knowing that Blake would later want Orders removing them as Estate Trustees, accusing them of improper conduct and accusing Ms. Rintoul of negligence. They took a course of making distributions to Blake out of the Estate before receiving an Income Tax Clearance Certificate, for which they possibly could be personally liable.

65      In Hayes v. Montreal Trust Co., 1977 CarswellBC 69 (B.C.S.C.), the Court said in para.8, that a plaintiff:

… accepted what was done and co-operated with the executor for over a year in administering the estate in according with the will to the point where all legacies have been paid, the life interest has terminated and all that remains is distribution to the residual beneficiaries.

 

66      Blake took no steps until September 2013 to challenge the Will. He co-operated with the Estate Trustees in administering the Estate for over 2 years to the point where all that remains to be done is to divide the residue between him and Cody, which he now opposes.

 

67      In my view, whether one says that Blake is estopped from taking the position he now has by estoppel by convention or estoppel by representation, he falls within both categories, given the facts of this case. Blake had counsel in February 2012, who stated there was an issue regarding Eleanor’s capacity to make the 2011 Wills but never took the legal step to go forward with any challenge. Is this silence? Did Blake receive legal advice that he should or should not move forward? The fact remains that nothing happened and the administration of the Estate continued in legal silence until the Application was finally made.

 

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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