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Listen to Will Challenge Litigation - Part 11

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the differences between quantum meruit and propriety estoppel. As with any add-on claims, the courts require solid corroboration. They also discuss claims of resulting trust and claims of constructive trust.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

Will Challenge Litigation Part 11 - Hull on Estate and Succession Planning - Podcast #136

Posted on October 28, 2008 by Hull & Hull LLP

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, here are Ian and Suzana.

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to episode 136 of our podcast on Tuesday, October 28, 2008.

Ian Hull: Hi Suzana.

Suzana Popovic-Montag: Hi there Ian, how are you today?

Ian Hull: Great thanks. It’s a big day. It’s my brother’s birthday so “happy birthday” to my brother.

Suzana Popovic-Montag: Happy birthday.

Ian Hull: And we’re going to, I’m sure he’s not listening, he’s stuck in the throws of a software development firm that is going crazy. 

Suzana Popovic-Montag: So you’re not going to sing?

Ian Hull: No, we’re not going to sing, we’ll definitely not sing. But we will invite everyone please, to come and hit our web page because we have had such great fun with feedback and just engaging in the social media world with people: estatelaw@hullandhull.com is where you can get your blog and hullandhull@gmail.com; we invite you to please feel free to send us an e-mail.

Suzana Popovic-Montag: Or feel free to leave an audio comment for us at 206-457-1985. We always appreciate hearing from people directly in terms of what they think.

Ian Hull: Absolutely. So where we left off last week was, and I actually got an e-mail from one of my colleagues about this question. And so we left off on this pointing out the difference. We talked about the concept of proprietary estoppel. We talked about the importance of not just throwing stuff at the wall to see if it sticks but pursuing claims that need to be pursued. We talked about how best to pursue it with good corroborative evidence. But what we left off was, we left it sort of with the listeners hanging, so to speak, is what’s the difference between the two? And I guess, let’s talk about the result. What is the different result that you achieve between pursuing a proprietary estoppel claim and a quantum meruit claim? And then let’s talk a little bit about what a quantum meruit claim is because then you can frame the kinds of approaches you want to take in respect of an add-on claim to a Will challenge.

Suzana Popovic-Montag:  Well Ian, I typically tend to think of a quantum meruit claim as a claim like an hourly paid claim for services rendered to someone without having been paid at the time, but with the expectation that at some later point they’d somehow be compensated. Is that sort of how you view it as well?

Ian Hull: No question. And the big difference between a quantum meruit claim and a proprietary estoppel claim is that a proprietary estoppel claim allows the Court to give you a home run. Whereas the quantum meruit claim restricts the Court because it is a fee for services claim. As you say, it’s an hourly wage based claim. How much did you work for the individual whose now died who promised to pay you when they died and didn’t? And the Court will calculate your hours. So it’s a very different claim and we’ll talk a minute about how we pursue those claims but I think the result is the key and where again we come back to being surgical about what kind of claims we want to take is that if we think we can get the home run play, and that is, get the whole house as opposed to just some repayment of hourly wages, the proprietary estoppel claim opens us up to a tremendous result. And again, we come back to the classic example of a nice, elderly gentleman who was helping a widow with her home and when she said, in one of the leading proprietary estoppel cases, this will all be yours, the Court was able to say, this is really all of yours and that meant the house as opposed to don’t worry, you’ll be looked after. And that could be construed as more of a quantum meruit claim.

So let’s talk a little bit about the history as we’re in the world of, our case law is always historic in every way. The history of quantum meruit claims, so that we can help better understand how we’re going to pursue those kinds of claims.

And we go back to the 1940s in Canada, the Supreme Court of Canada, where they started to develop the law out of England. And it basically came out of the same, the Degelman case its called and we’ll have the case in the Show Notes. But the case was much like my proprietary estoppel example in terms of the facts. And in Degelman the same sort of thing happened. A nice gentleman came to assist, in that case again, a widower and the comments were made and expectations were created that he would be paid for cutting the lawn and looking after the house and so on. And sure enough, when she died, he wasn’t. So the Court struggled with how we can deal with this unjust enrichment because the Court doesn’t like the idea that this person acted to his detriment and didn’t get paid. And so the Court basically sat down, and as you say, did an hourly wage basis analysis and said, took the Latin phrase quantum meruit, paid for work for services rendered approach, and said well, how many hours did you work and what’s a fair hourly wage? So the Degelman case established what is, I think, a really important add-on claim in a Will challenge because sometimes you can’t prove there’s lack of capacity. Sometimes you can’t prove you were promised the whole enchilada and the whole house. But you can prove your services rendered. And it comes back to this high standard that the Courts expect on corroboration and the fact that you’ve got to put such good evidence forward to the Court, or they’re not going to give you your claim.

Suzana Popovic-Montag: That’s right. I mean, the truth is, we do have the benefit of an equitable Court, I’d say, in the sense of what you just said, nobody wants to see someone work for free on an expectation that they would receive something at the end of the day. And when you’re in these situations, the facts are really going to drive, I think, the result, in addition to the evidence that you can put forward in support of it. But if you’ve got someone who is mowing the lawn, buying groceries and taking someone to appointments and that, you can see where a Court might think more in terms of a quantum meruit kind of claim, because those are kind of services that are rendered, as opposed to the other situation where you’re claiming proprietary estoppel and you’re dealing maybe specifically with maintaining a house or a farm property or something to that effect, where it might make more sense that the whole enchilada, as you say Ian, was what was expected, what was intended, and what hopefully you’ll be able to prove in terms of entitlement at the end of the day.

Ian Hull: So now that we’ve got two efficient and can be very powerful add-on claims, we also have to keep in mind the two other historic claims and that is, claims of resulting trust and claims of constructive trust. And why don’t we start with the resulting trust because that was historically, in a chronological order, the one that was established first. And it is the one that had such a big impact when you have joint assets. So let’s spend a minute on the concept of resulting trust.

Suzana Popovic-Montag: Sure Ian, that’s a good idea. Now when we talk about a resulting trust, of course we’re talking about a situation where assets are held jointly and on the death of one of them there is an expectation, either of obtaining those assets by right of survivorship or by way of a resulting trust.

Ian Hull: And what the Courts have done is they’ve said if you have an asset and say this, even if it’s not jointly in some cases, if the asset is held by an individual. So you hold an asset that over the years you have allowed me to participate in and a classic example is a cottage property. So you hold it and over the years you’re the one that has put all the money in, you bought it, you kept it up. But from time to time, I used it or I at some level paid toward the costs, that kind of situation. The Courts will look at that illustration as something that may require a resulting trust because on my death, for example, like you said, say that cottage is jointly held between you and I. On my death, it would be by right of survivorship. But what if I held the property in my own name and you had paid me all the money to buy the cottage because you were lending me the money and you hadn’t shown anything on mortgage or anything like that. The bottom line was that you ended up, the title didn’t pass to you. That scenario can create a situation where a resulting trust argument needs to be pursued. And the joint accounts is the other classic.

So anyway what we’ll do in the next podcast is talk a little bit about the examples so that we can really lock down this concept of a resulting trust and then see where it developed in a constructive trust. And we remind everyone please, look forward to your feedback at hullandhull@gmail.com.

Suzana Popovic-Montag: Or estatelaw@hullandhull.com which is our blog. And, of course, our phone number, 206-457-1985.

Thanks very much, Ian.

Ian Hull: Thanks Suzana.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other Hull On podcasts, or to leave any questions or comments, please visit our website at hullestatemediation.com.

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Listen to Proprietary Estoppel

This week on Hull on Estates, David Smith and Rick Bickhram discuss proprietary estoppel.

Proprietary Estoppel - Hull on Estates Podcast #92

Posted on January 8^th, 2008 by Hull & Hull LLP

David Smith:  Hello and welcome to Hull on Estates.  You’re listening to Episode #92 of our continuing podcast series on Tuesday, January 8^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

David Smith:  Good morning Rick.

Rick Bickhram:  Good morning Dave.

David Smith:  My name is David Smith.  I’m one of the partners at Hull & Hull.  And I’m here today with my associate, Rick Bickhram.  And today, Rick, we thought we’d talk about an interesting equitable concept which is gaining considerable traction in a lot of the cases that we look at, and certainly is an established concept in the British estates Bar.  And that, of course, is this whole issue of proprietary estoppel and when it can be used.  Rick, just generally speaking, what is proprietary estoppel?

Rick Bickhram:  Good question, Dave.  The doctrine of proprietary estoppel is primarily used by a claimant who has been promised all or part of an estate and has acted to his or her detriment in reliance on that promise.

David Smith:  So that’s really a classic equitable concept, isn’t it?  It’s where the Court is looking to fashion a remedy based on principles of fairness, when you boil it down, and principles of equity, to correct a situation which it would be unjust to leave as is.  And, of course, in the estate context, we’re always looking initially at the Will.  And I assume, Rick, that the situation where this arises is where someone’s been promised an inheritance in an estate by a testator and then subsequently discovers that they’re not receiving that inheritance?

Rick Bickhram:  That is correct, Dave.

David Smith:  Now Rick, this…I want to flesh this whole concept out a little bit more.  How does it differ from promissory estoppel, which is a term that we encounter in other areas of civil litigation?

Rick Bickhram:  Great question, Dave.  A promissory estoppel is pretty similar to the definition of proprietary estoppel.  If we look at the textbook definition of promissory estoppel, a claimant can rely on promissory estoppel where there is a clear promise by the deceased, and that promise affected their legal relationship and the promisee or representee acted to his or her detriment.  The difference between proprietary estoppel and promissory estoppel is that proprietary estoppel can be used as a sword and shield.  Proprietary estoppel can give rise to a cause of action.  Whereas promissory estoppel cannot give rise to a cause of action.

David Smith:  Okay.  And that’s really critical, isn’t it, for us, as litigation lawyers, isn’t it, Rick?  I mean, we’re always looking for opportunities to advance claims and defend or advance our clients’ interests.  And I think in a situation where…the classic example is someone’s cut out of a Will.  Well, were they relatives?  Were they…did they have an expectation of receiving a benefit?  The first thing we always tend to look at is, is there a Will challenge here, and is there a benefit to challenging a Will?  But in a lot of these cases where proprietary estoppel is useful, there’s a couple of points.  One is, the Will may not be one that can be challenged in any event because it may be a perfectly valid Will.  And the other problem may be that the person who rendered services to the deceased may not be a beneficiary under a prior Will, in which case, there’s no benefit to advancing a Will challenge in any event.  And so when we go through the flow chart of decisions or possible remedies available to any client, and we come to the conclusion that a Will challenge is not a viable option, in these circumstances we then look to other options.  And certainly, you know, proprietary estoppel is related to the concepts of quantum meruit, constructive trust, all of those other kinds of remedies that are a little better known in the Ontario Court system.  Proprietary estoppel is simply another means by which we can rely on the Court of equity to correct an injustice.  And that’s it at its highest.  But if we boil it down to its various components, Rick, what’s the first and most pivotal element of a proprietary estoppel claim?

Rick Bickhram:  Well, the first element of a proprietary estoppel claim is that the claimant must have incurred an expenditure or otherwise have prejudiced himself or herself or has acted to his or her detriment.

David Smith:  What’s an example of that, Rick?

Rick Bickhram:  Well, for instance, if the deceased represented to the claimant that if the claimant had built a road, she would leave them one third of her estate.  The claimant then built the road in reliance on that representation and the claimant is able to verify or back that up with corroborating evidence, then I think that satisfies the first element that he acted to his detriment by building that road and prejudiced himself as a result of the deceased’s representations.

David Smith:  And let’s pick up on this acting to your detriment or prejudicing yourself concept.  I mean, to my mind, any time you act to your detriment or prejudice yourself, you’re basically saying look, I spent time doing something for you, mister testator, that ate into time that I could otherwise spend doing something else.  So instead of investing in the stock market in my spare time as a day trader, I spent my time working for you because I understood that you were going to give me an entitlement.  I relied upon that to my detriment.  And my reliance was reasonable, right Rick?  Isn’t that a pretty key component of this?

Rick Bickhram:  Oh, that’s very important, and a good point, Dave.  And I guess as a general rule of thumb, your expectation should always have some type of benchmark where it can be considered reasonable from an objective point of view.

David Smith:  And so, of course, that brings us to the question of proof which we’ll talk about in a minute.  But if we think about, again, the equitable concept here.  On the one hand, you’ve got the innocent, naïve if you will, worker bee doing all of this work for the benefit of the testator.  And on the other hand, there’s a bit of a value judgment about the testator in the sense that if the person doing the services relies…reasonably relies…on representations made, and if the testator breaches the arrangement, then really it’s a bit of a damning indictment, isn’t it, of the testator who leads the promisee to expect an entitlement which he or she doesn’t receive.

Rick Bickhram:  And I guess that’s why it’s sort of an equitable remedy.  There is no formal contract.  It sounds like a contract, but there is no actual written document.  And that’s why we ask that the Court of equity step in here and correct the injustice that has been done by the testator’s breach.

David Smith:  As I understand it, too, Rick, the third component that we think about is that we have to obviously deal with proving this.  We have to prove that the testator encouraged the promisee to do the work which was done, and the testator must have known of the work incurred or the expenditure incurred, and consciously made a decision not to honour the equitable obligation to provide a benefit.

Rick Bickhram:  Absolutely, Dave.  And it’s interesting that you say that, because there is a case, a 2006 decision by the Nova Scotia Supreme Court, wherein the claimant here had built a causeway across an island that was owned by the deceased.  The deceased had promised the claimant here, the son, that he would receive an interest in that island if he had built the causeway. Now, during the deceased’s lifetime, she attended her solicitor’s office.  While at her solicitor’s office, she put the deed, or put an interest of the island into her two other children’s.  So not the claimant.  She put it into her daughter’s name and to her other son’s name.  The Courts, in the situation…well the claimant brought an action on the grounds of proprietary estoppel.  And the Courts here dismissed Ronald’s claim.  And the reason for dismissing Ronald’s claim was because there was insufficient evidence.  Ronald, who was the deceased’s son, the claimant here, he was unable to demonstrate that the deceased had promised him the island and he had built the causeway because of that promise.  Primarily what he was…or the evidence that the Court was looking for…was some form of corroboration of the alleged promise.  And the only evidence that the claimant, Ronald, had in this situation, was his own evidence.

David Smith:  And let’s finish up the podcast, Rick, by talking about evidence.  You know, Section 13 of the Evidence Act, requires corroboration in claims made against estates, for the very good reason that unless there is corroboration, it’s open to unscrupulous plaintiffs to advance claims which may be completely without merit.  Of course, there’s lots of good claims where regrettably there is no corroborating evidence.  And it would seem, given the rigidity of Section 13 of the Evidence Act, that those are unfortunately situations where the Court quite likely will be compelled to reject the claim if there’s no corroborative evidence.

In terms of the kind of corroboration we look for, obviously paper is the best thing we can have.  If there’s any kind of paper which evidences the nature of the arrangement between the plaintiff and the defendant, it’s really good to have something of that nature.  I might point out also that there’s other cases that you can have where you might be able to argue proprietary estoppel.  A case that comes to mind is one in which a deceased, during his lifetime, befriends a woman late in life.  She’s younger in age, she comes in and agrees to live with him as husband and wife.  He buys her an engagement ring, although he never actually marries her.  And when he dies, leaves her out of the Will.  Now, of course, other remedies would be available to someone in that case.  She’d be able to advance, presumably, a support claim under Part V of the Succession Law Reform Act.  Although consider a case where she lived in a relationship with him as a common-law spouse for less than 3 years.  In that case, she couldn’t make a claim as a spouse, she wouldn’t get a benefit under the Will or on an intestacy rather, because she’s not married to him.  And so this would be an interesting instance where proprietary estoppel would be an attractive remedy because the argument would be that she acted to her detriment in reliance upon a promise, the promise being that he would marry her.  And by not marrying her, she lost any entitlement that she would otherwise have on an intestacy.  And so there, from an evidentiary point of view, you can see that the engagement ring, evidence of friends as to how he treated her and whether he introduced her as his wife to others.  Those witnesses would obviously be relevant and would corroborate the intention to provide her with some benefit.

Rick Bickhram:  That’s a great point, Dave.

David Smith:  One other point from an evidentiary point of view, just to wrap it up, Rick, is an issue where there may be a prior Will that’s unsigned, which benefits the person who then renders the services.  That Will is of no value on a Will challenge, but it’s very valuable evidence to corroborate the later intention to benefit the person who renders the services.

Rick, do you have any other thoughts before we wrap up in terms of the kind of evidence we’d want to look for?

Rick Bickhram:  As you said earlier on, paper evidence is absolutely great.  We could always use that, or lawyers in general could use that, in demonstrating the testator’s intent at one point.  Also it would be helpful if there was some type of witness, if there were witnesses that were unbiased, who could give or account for a promise or an assurance that the testator once…or that the testator had put out for the person who was using proprietary estoppel.

David Smith:  All good points, Rick.  And certainly I think we’ve touched on this topic.  It’s an interesting topic.  There’s lots more we can say about it obviously but it’s been a lot of fun and we’ll look forward to podcasting again, Rick.

Rick Bickhram:  Thank you, David.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.

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