COURT OF APPEAL FOR ONTARIO

CITATION: Clarke v. Johnson, 2014 ONCA 237

DATE: 20140328

DOCKET: C55945

Weiler, Epstein* and Pepall JJ.A.

BETWEEN

Donald Clarke

Plaintiff (Respondent)

and

Martha Johnson, Victoria Johnson and Westley Clarke

Defendants (Appellant)

David S. Steinberg and Andrea M. Bolieiro, for the appellant

Richard Guy, for the respondent

Heard: September 11, 2013

On appeal from the order of Justice R. D. Gordon of the Superior Court of Justice, dated July 30, 2012, with reasons reported at 2012 ONSC 4320.

Pepall J.A.:

Introduction

[1] A cottage, a camp, a cabin, a country house, a ranch: these are the different names given to second homes across Canada. No matter the description, Canadians’ affinity for their recreational properties is deep, abiding and renowned. This appeal involves such a recreational property, a camp located on Lake Panage near the city of Sudbury in Northern Ontario. The appellant, Martha Johnson, owns the camp. Her former son-in-law, the respondent Donald Clarke, occupies the camp. He contributed funds and resources to the camp and, over the course of decades, has become emotionally attached to it. When he sought to bar his son from the camp, his mother-in-law sought to bar him. The trial judge determined that the appellant owns the camp but that the respondent has an equitable right to use the camp during his lifetime.

[2] This appeal considers whether equitable remedies were properly available to the respondent and whether the remedy that the trial judge granted was appropriate.

[3] For the reasons that follow, I am of the view that the trial judge’s conclusions were available to him and that the appeal should be dismissed.

Facts

[4] The appellant and her late husband, William Johnson, purchased an island in 1971 for $2,100. In 1979, a third of the island was transferred to each of William’s brother and sister and their respective spouses for a total of $1,400 ($700 per couple). The couples held their one-third interests as tenants-in-common. By informal agreement, each family was assigned use of a particular portion of the island. It was also agreed that ownership of the island would not pass to anyone other than a blood relative of the Johnson family.

[5] The appellant and William had a daughter, Victoria Johnson. She married the respondent. Together, they had two children: Misty, who was born in 1976; and Westley, who was born in 1977.

[6] In about 1974, with the blessing of Victoria’s parents, the respondent and Victoria built an A-frame structure on a portion of the island allocated to Victoria’s parents. In 1988, they had a pre-fabricated unit delivered to the camp site. The respondent was instrumental in actually assembling and finishing the camp.

[7] The pre-fabricated unit was bought for $15,471.46. The respondent claims he contributed $5,700 from RRSPs and Victoria’s father lent the respondent and Victoria $17,000. The respondent, Victoria, and the two children used the camp in the summer and often in the winter as well.

[8] Victoria and the respondent separated in 1991. Their separation agreement made no reference to the camp. The respondent had custody of the two children. He continued to use the camp with the children after the separation. The respondent’s uninterrupted use continued for more than 20 years. Victoria was not interested in the camp and has not been there since her separation from the respondent.

[9] William and the respondent worked together at the dairy business that William operated and partially owned. They were good friends. One day, the respondent raised the issue of his significant financial obligations and the loan which he and Victoria owed to William. William forgave the loan. This is not contested.

[10] Misty grew up and moved away. So did Westley. He moved to Western Canada and was absent for about 10 years.

[11] The respondent continued his uninterrupted use of the camp. He maintained and improved the camp as though it were a permanent structure. For more than 20 years, he has paid the bills including hydro, insurance, and property taxes, and has made improvements. These include building a new dock, a new shed, a gazebo, reconstruction of the sauna, a new roof and a new porch. He has used the camp without charge. From the record, it appears that the camp is insured for approximately $120,000. The respondent is now retired and approximately 61 years of age.

[12] William died in February 2009.

[13] Having lived out west for about ten years and having separated from his spouse, Westley decided to move back east in 2009. According to his mother, Victoria, he suffers from post-traumatic stress disorder and was committed to a hospital when he returned to Ontario.

[14] Like his father, Westley also wished to use the camp. The respondent had no difficulty with Westley using the camp from time to time provided it did not conflict with plans he had already made for its use. Unfortunately, he and Westley were unable to come to terms. Their relationship became strained. Misty, with whom Westley resided when he moved back east, maintained that he has a ‘Jekyll and Hyde’ personality and there was no way that anybody could share the camp with Westley. Ultimately, the respondent refused to allow his son to use the camp.

[15] It was the appellant’s view that the respondent’s use of the camp was premised on his willingness to share it with his children. The appellant was content for the respondent to stay at the camp so long as he stayed there with the children and they had a place at the lake to enjoy their summers.

[16] Once the respondent refused to make the camp available to Westley, the appellant advised him that Westley was entitled to use the camp and the respondent could not exclude him. The appellant sent the respondent two letters to this effect and advised that if the respondent continued to block Westley from using the camp, she would have to revoke his licence. The appellant waited for almost one year but the respondent’s conduct persisted. The appellant then issued a trespass notice to the respondent and Westley changed the locks to the camp. She urged the respondent to contact his son and work out a reasonable arrangement for their shared use. The respondent then sought and obtained an interlocutory injunction to restore the original locks and his occupancy of the camp.

The Trial

[17] The parties’ dispute proceeded to trial. The appellant; the respondent, Victoria; Misty; the appellant’s son, Kenneth; William’s brother, Allan Johnson (and with his wife, another one-third owner); and the appellant’s great-niece, Hellen Frost (the other one-third owner) all testified. Westley did not.

[18] The appellant, Victoria and Westley were aligned in interest. Aligned on the opposite side were the respondent, and though not parties to the litigation, Misty and the other surviving two-third owners of the island.

[19] Before the trial judge, the respondent asserted that he was the owner of the camp. Alternatively, he argued that he had an equitable right to continue to occupy the camp based on unjust enrichment and proprietary estoppel. The appellant argued that the camp was a fixture and therefore belonged to her and the equitable remedies of unjust enrichment and proprietary estoppel were inapplicable.

[20] The trial judge concluded that the parties intended that the camp be a permanent structure that was part of the realty and that ownership of the camp rested with the appellant. He determined that the respondent’s occupation of the property was at the instance of the appellant and could be terminated by her unless an equitable remedy was available to the respondent.

[21] The trial judge found that the respondent had established a claim for unjust enrichment and proprietary estoppel.

[22] Dealing firstly with unjust enrichment, he noted that a successful claim required proof of three elements: an enrichment, a corresponding deprivation, and an absence of juristic reason for the deprivation. He made various findings of fact. At para. 29, he found that the appellant had been enriched because she would gain control of the camp “notwithstanding that she has never made any contribution towards the camp’s construction, improvement or maintenance.”

[23] At para. 30, he found a corresponding deprivation on the part of the respondent:

Mr. Clarke was instrumental in the actual construction of the camp. I am satisfied, based upon his evidence, that he contributed funds to its original construction. In addition, he has paid the expenses related to it for over 20 years. He has physically maintained the camp and contributed not insignificantly to its improvement. There can be no question that there would exist a corresponding deprivation. That he has had use of the camp since its construction is not sufficient to displace this deprivation, particularly in view of the reasonable expectation that his use would continue until his death.

[24] The trial judge addressed the loan of $17,000, stating that having forgiven the debt or chosen not to pursue collection, it would be unfair for the appellant to rely on the loan to defeat the respondent’s claim. In any event, the trial judge had little doubt that the appellant’s enrichment and the respondent’s deprivation “far exceed the amount loaned so as to exist notwithstanding the loan issue.”

[25] Given that there was no suggestion of any other juristic reason for the appellant’s enrichment, the trial judge concluded that the three elements for a claim of unjust enrichment had been established.

[26] The trial judge then addressed the claim for proprietary estoppel. Relying on Schwark v. Cutting, 2010 ONCA 61 at para. 34, he noted that a successful claim for proprietary estoppel required proof of three elements:

(1) the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;

(2) in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner; and

(3) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.

[27] The trial judge determined that the appellant and William had induced, encouraged or allowed the respondent to believe that he would own the camp and ultimately it would be inherited by his children. The appellant and William gave the respondent and Victoria permission to build and lent funds to be used in the purchase and construction of the camp. The respondent was also given occupation first with his wife and then without and that occupation was never questioned. Moreover, the appellant and William acquiesced in the respondent’s occupation and long-term maintenance and improvement of the camp. In reliance upon the belief that he would be entitled to occupy the camp during his lifetime, the respondent contributed significantly to its construction, maintenance and improvement, all with the knowledge and consent of the appellant and William. The trial judge concluded that denial of the respondent’s use of the camp was unconscionable. At para. 38, he wrote:

The attachment between a person and his or her camp is unique and not easily described. Over time there comes to be an emotional attachment borne of the surrounding beauty, the investment of sweat equity, and the memories of times spent with family and friends. When one has been allowed to develop that attachment over the course of decades, and has directed personal and financial resources to the property in the reasonable belief that it would continue, it is unconscionable to deny that benefit.

[28] As such, the trial judge was satisfied that the respondent had established his claim of proprietary estoppel.

[29] The trial judge then addressed the remedy at para. 40 of his reasons. He was satisfied that monetary damages were inadequate “given the very real and significant emotional attachment that exists between Mr. Clarke and the camp”, and imposed a constructive trust that, among other things, reflected the respondent’s interest in the property:

I am also satisfied of the required link between the contributions made by Mr. Clarke and the camp. In my view, an appropriate remedy is the imposition of a constructive trust to reflect Mr. Clarke’s interest in the camp property. That remedy coincides with the remedy appropriate to the finding of proprietary estoppel and reflects the legitimate expectations of the parties.

[30] The trial judge had no doubt, at para. 41, that the respondent and the appellant “expected and intended that both Westley and Misty would always be welcome to share in the use of the camp.” He determined, however, that the children’s use of the camp should be regulated by the respondent. Neither child would be prohibited from using the camp but their use would be regulated by the respondent. The trial judge confirmed the respondent’s licence to occupy the camp but made it subject to terms. The licence to occupy would continue until the respondent died or was no longer physically able to attend there; was personal to the respondent and his invitees; and could not be assigned or conveyed. The respondent was to maintain the camp in a good state of repair, and pay the taxes and utility costs associated with it. Lastly, he was to take no steps to materially alter the nature or quality of the camp during the term of the licence. Approximately one year later, on August 30, 2013, the order under appeal was amended to state that the licence was exclusive.

The Other Owners of the Island

[31] At trial, evidence was received from the other two-third owners of the island. Both Hellen Frost and Allan Johnson testified at trial and affidavits sworn by them and by Allan’s wife, Evelyn, were also made exhibits at trial.

[32] Hellen received a one-third undivided interest in the island in 1994 from her parents, Laila and Omni Rintamaki. Laila was William’s sister. Allan Johnson was William’s brother. Hellen swore an affidavit as did Allan and Evelyn. In her affidavit, Hellen stated that: “I am familiar with the background of this dispute and wish to say categorically, that I support Donald Clarke throughout. I do not want him evicted from the island or from his camp.” At trial, she confirmed that the contents of her affidavit remained true. Allan and Evelyn’s affidavit was similar and like Hellen, Allan stated at trial that the contents of that affidavit continued to be true.

[33] Moreover, the other two-third owners gave Donald written consent to cross their lands. The May 19, 2011 consent was made an exhibit at trial. Both Hellen and Allan confirmed that the respondent continued to have such permission. Indeed, Allan went further and testified that there was never any suggestion that the respondent did not own the camp.

[34] None of the two-third owners, as non-parties potentially affected by the judgment, sought to vary the relief granted by the trial judge. Nor did they seek to intervene on this appeal.

Grounds of Appeal

[35] The appellant appealed the judgment. Neither party challenged the trial judge’s conclusion that the appellant owns the camp and the respondent does not. Furthermore, at trial, the appellant conceded that the respondent was a licensee. On appeal, the appellant’s counsel (who was not trial counsel) stated that it was acknowledged and not disputed that the respondent was a licensee.

[36] The appellant advanced three grounds of appeal. Firstly, the trial judge erred in failing to find that the respondent’s licence had been revoked. Secondly, even if it were not revoked, the trial judge erred in finding that the respondent had established an equitable right to continue using the camp based on proprietary estoppel and unjust enrichment. Thirdly, the appellant submits that the trial judge erred in granting a remedy that exceeded the parties’ reasonable expectations.

Analysis

(a) Revocation of Licence

[37] The parties accepted that the relationship between them was that of a licensor (the appellant) and licensee (the respondent). A licence is a personal right between the owner of land and the licensee that allows the licensee to do some act upon the land that would otherwise constitute a trespass: Anne Warner La Forest, Anger & Honsberger Law of Real Property, 3rd ed., vol. 2 (loose-leaf, updated October 2012) (Toronto: Thomson Reuters Canada, 2013), § 16:40.10; Pilcher v. Shoemaker, 1997 CanLII 982, (BC SC), at para. 23. A licence is generally a personal right and is revocable. However, as explained in Anger & Honsberger, at § 16:40.10 where “the licensee has incurred expense on the strength of the licence, with the reasonable expectation of being allowed to remain …, equity may hold that the licensor is estopped from revoking the licence.”

[38] The appellant complains that the trial judge never addressed the appellant’s revocation of the respondent’s licence. As the appellant revoked the respondent’s licence on reasonable notice, the trial judge ought to have concluded that the revocation by the appellant was valid.

[39] There are two bases on which this submission should be rejected. Firstly, this ground of appeal was not raised in the appellant’s notice of appeal and in any event, the appellant did not press this ground in oral argument. Secondly, as the appellant accepted in her written argument, the respondent “could only block a revocation by establishing some entitlement to equitable relief.” The trial judge properly concluded at para. 27 of his reasons that the respondent’s use was at the instance of the appellant and could be terminated by her unless there was an equitable remedy available to him. Accordingly, correctly in my view, the trial judge focused his attention on the merits of the respondent’s equitable claims and whether these claims estopped the appellant from revoking the licence. I would not give effect to this first ground of appeal.

(b) Proprietary Estoppel

[40] The appellant submits that the trial judge erred in his application of the three elements necessary to sustain a claim for proprietary estoppel. Most notably, the appellant argues that the trial judge misunderstood and misapplied the requirement of unconscionability. The appellant accepts that the relevant question in addressing the respondent’s proprietary estoppel claim is whether the appellant unconscionably took advantage of the respondent by revoking his licence to use the camp after he had denied Westley access to it.

(i) Evolution of the Doctrine

[41] Proprietary estoppel is an equitable doctrine. In Anger & Honsberger Law of Real Property, loose-leaf, 3d ed. (Toronto: Thomson Reuters, 2013), Anne Warner LaForest describes proprietary estoppel at p. 28-3:

The doctrine of estoppel by encouragement or acquiescence, or proprietary estoppel, is a means by which property rights may be affected or created, and it is invoked in situations where there is want of consideration or of writing.

[42] The doctrine was recognized as long ago as 1866 in Ramsden v. Dyson and Thornton (1866), L.R. 1 H.L. 129, and has repeatedly been accepted in Canada.

[43] In 1880, Fry J. in Willmott v. Barber (1880), 15 Ch. D. 96 established a five-part test for proprietary estoppel, the five elements sometimes being described as “five probanda”. At pp. 105-6 of Willmott v. Barber, Fry J. stated:

It has been said that the acquiescence which will deprive a man of his legal rights must amount to fraud, and in my view that is an abbreviated statement of a very true proposition. A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description? In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly… the defendant, the possessor of the legal rights, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right.

[44] Subsequently, rather than treating the five probanda as elements of a test, Scarman L.J. described them as “a valuable guide” in Crabb v. Arun District Council, [1975] 3 All E.R. 865 (C.A.), at p. 876. He also observed, at p. 877, that the word “fraud” as used in 1880 did not attract its more modern meaning:

“Fraud” was a word often in the mouths of those robust judges who adorned the bench in the 19th century. It is less often in the mouths of the more wary judicial spirits who sit today on the Bench. But it is clear that whether one uses the word “fraud” or not, the plaintiff has to establish as a fact that the defendant, by setting up his right, is taking advantage of him in a way which is unconscionable, inequitable or unjust. It is to be observed from the passage that I have quoted from the judgment of Fry J., that the fraud or injustice alleged does not take place during the course of negotiation, but only when the defendant decides to refuse to allow the plaintiff to set up his claim against the defendant’s undoubted right. The fraud, if it be such, arises after the event, when the defendant seeks by relying on his right to defeat the expectation which he by his conduct encouraged the plaintiff to have.

[45] In the U.K., there has been a retreat from the five probanda – “a Procrustean bed constructed from some unalterable criteria”, to use Oliver J.’s terminology in Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd., [1981] 1 All E.R. 897 (Ch. D.), at p. 918, and a move towards a more flexible approach to the doctrine. Taylor Fashions represented a “watershed in the development of proprietary estoppel” in the U.K.: see Gillett v. Holt, [2000] 3 W.L.R. 815 (C.A.), at p. 829, quoting Gray, Elements of Land Law, 2nd ed. (London: Butterworths, 1993), at p. 324. In Taylor Fashions, the court held that, in all the circumstances, it would be unconscionable for a representor to go back on the assumption which he had allowed the representee plaintiff to make. Justice Oliver stated, at p. 915-916:

Furthermore, the more recent cases indicate, in my judgment, that the application of the Ramsden v. Dyson principle (whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial) requires a very much broader approach which is directed to ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment rather than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.

[46] Lord Walker subsequently approved of Taylor Fashions in Yeoman’s Row Management Ltd. & Anor v. Cobbe, [2008] UKHL 55. He noted, at para. 56, that until clarified in Taylor Fashions, the five probanda had “over the years proved something of a stumbling-block in the development of equitable estoppel.” Lord Walker also observed, at para. 56, that courts had often tried to “force factual situations into the probanda even where they were “ludicrously irrelevant or inapplicable” to the case.” To establish proprietary estoppel in the U.K., three elements must be proven: encouragement or acquiescence; detrimental reliance; and unconscionability.

[47] The application of the doctrine of proprietary estoppel has received somewhat uneven treatment in Canada.

[48] This court considered proprietary estoppel in Schwark v. Cutting, 2010 ONCA 61 and, more recently, in Tiny (Township) v. Battaglia, 2013 ONCA 274. The court in Schwark identified the three elements necessary to establish a claim for proprietary estoppel but described the three-part test in different language in separate parts of its judgment (at paras. 16 and 34). That said, it is clear that the second articulation of the test was the articulation actually applied to the facts in Schwark. This was the test cited by the trial judge at para. 34 of this case, namely: (1) inducement, encouragement or acquiescence; (2) detrimental reliance; and (3) unconscionability. Without discussion, the court in Tiny Township cited the first articulation of the three-part test from Schwark.

[49] In Schwark and Tiny Township, the court appears to consider the five probanda described by Fry J. in Willmott v. Barber as constituting the test for determining the unconscionability element, as opposed to the test for proprietary estoppel itself: see Schwark, at para. 29; Tiny Township, at para. 138. Schwark does not, however, explicitly apply the five probanda in arriving at its conclusion on unconscionability. Tiny Township does apply the five probanda to determine unconscionability, but the evidentiary record could not support such a finding (at para. 139).

[50] In contrast, jurisprudence from British Columbia, like that of the United Kingdom, has retreated from the five probanda due to their attendant inflexibility. In Trethewey-Edge Dyking District v. Coniagas Ranches Ltd., 2003 BCCA 197, Newbury J.A., in a concurring judgment, stated that the five probanda, including the requirement of a mistake as to legal rights, had now been overtaken by a “broader and less literal approach” to proprietary estoppel (at para. 64). She relied on the Taylor Fashions decision, amongst others.

[51] Subsequently, in Erickson v. Jones, 2008 BCCA 379, the British Columbia Court of Appeal followed Newbury J.A.’s analysis in Trethewey and endorsed a more “modern approach” to the ambit of proprietary estoppel than that espoused by Fry J. in 1880. This approach mirrored that described in Taylor Fashions and Yeoman’s Row.

[52] A summary of the principles governing proprietary estoppel based on the modern approach include the following:

• proprietary estoppel may form the basis of a cause of action;

• it is not essential that the five probanda be satisfied;

• rather, three elements must be established:

(i) the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;

(ii) in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner; and

(iii) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive;

• detriment includes expenditures but countervailing benefits may also be considered;

• reliance may be express or inferred;

• if an equity arises, the court has a broad discretion to fashion an appropriate remedy.

[53] That said, one must be reminded of Oliver J.’s observation in Taylor Fashions at p. 913:

I am not at all convinced that it is desirable or possible to lay down hard and fast rules which seek to dictate, in every combination of circumstances, the considerations which will persuade the court that a departure by the acquiescing party from the previously supposed state of law or fact is so unconscionable that a court of equity will interfere. Nor, in my judgment, do the authorities support so inflexible an approach.

(ii) Application

[54] In addressing this appeal, I will consider both the historical approach to proprietary estoppel described in Willmott v. Barber and the more flexible approach adopted in Taylor Fashions and applied by the British Columbia Court of Appeal in Erickson.

[55] Although the courts in Crabb, at p. 876, and Schwark, at para. 27, suggested that the five probanda continued to serve as a “valuable guide”, in the case under appeal, the five probanda were not expressly enumerated by the trial judge. That said, a conclusion based on the five probanda was available to him on the record. First, the trial judge concluded that the respondent was mistaken in his belief that he had an ownership interest in the camp. Second, the respondent expended considerable resources on the faith of this mistake. Third, the appellant would have known that the rights she claimed to the camp were inconsistent with the rights asserted by the respondent. Fourth, the record supports the conclusion that the appellant either knew of or was wilfully blind to the respondent’s mistaken belief that he had an ownership interest in the camp. The respondent openly and exclusively occupied the camp after he separated from his wife, worked and spent money on it, and used it with and without his children. Indeed Allan Johnson, the appellant’s brother-in-law, testified that there was never any suggestion that the respondent did not own the camp. Fifth, the trial judge explicitly found that the appellant and her husband encouraged the respondent to expend resources in constructing, maintaining and improving the camp and acquiesced in his continued use and maintenance.

[56] Although the trial judge did not expressly address the five probanda, he did expressly identify and apply the modern approach to proprietary estoppel and, in that regard, relied on the second articulation of the test as discussed by this court in Schwark.

[57] The trial judge properly identified the three elements required to establish a claim for proprietary estoppel. First, he found that the appellant and William both induced and encouraged the respondent to believe that he would own the camp. There is also no dispute that the appellant acquiesced in the respondent’s use.

[58] Second, the trial judge found that the respondent, in reliance, contributed significantly to the construction, maintenance and improvement of the camp with the knowledge and consent of the appellant and William.

[59] Third, the trial judge then concluded that denying the respondent use of the camp was unconscionable. He found that the respondent had directed significant personal and financial resources to the property in the reasonable belief that his usage would continue, and that denial of such a benefit under the circumstances amounted to unconscionability.

[60] In her factum, the appellant claims that her conduct can be considered unconscionable only if the respondent had reasonably expected to be able to deny his children access to the camp, and this could not have been the case because the trial judge found that both parties had expected that the children would always be welcome to share in the use of the camp. This submission should be rejected. This expectation does not mean that the respondent’s use of the property was conditional on not being able to regulate access. Moreover, the reasonable expectation that is protected here is the expectation that the respondent can continue to use and regulate use of the camp as he has for decades. The children would always be welcome to share in the use of the camp but that usage would be regulated by him.

[61] In my view, the trial judge correctly concluded that the respondent had established a claim for proprietary estoppel. While it is now preferable to adopt the modern approach to proprietary estoppel, the record in this case could also support an application of the historical approach.

(c) Unjust Enrichment

[62] Before discussing the remedial implications of proprietary estoppel, I next explain why the trial judge also correctly concluded that the respondent’s unjust enrichment claim precluded the appellant from revoking the respondent’s licence to use the camp.

[63] The appellant submits that the trial judge erred in concluding that the appellant was unjustly enriched by the revocation of the licence. She argues that the trial judge failed to consider the $17,000 loan and erred in concluding that there was no juristic reason for the enrichment. The appellant submits that the juristic reason was the respondent’s breach of the parties’ expectations relating to his use of the camp.

[64] To establish unjust enrichment, a plaintiff must prove an enrichment; a corresponding deprivation; and the absence of a juristic reason for the enrichment: Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980, at p. 987. In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, Cromwell J. framed the absence of juristic reason at para. 40 as “no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case.”

[65] The trial judge found that there was an enrichment and a corresponding deprivation, noting at para. 29 that the appellant had never made any contribution towards the camp’s construction, improvement or maintenance.

[66] At para. 31, he considered the $17,000 loan. Although the loan was relevant to the enrichment inquiry, the trial judge found that the appellant’s enrichment and the respondent’s deprivation “far exceed the amount loaned so as to exist notwithstanding the loan issue.” There was evidence to support this finding.

[67] The parties’ expectations do not inform the findings of facts relating to enrichment and deprivation, as these elements require a “straightforward economic approach”: Kerr, at para. 37. Here the trial judge expressly found that the respondent had made significant contributions to the camp. While this might be offset to a degree by occupation rent, the trial judge again made an express finding that it was not. In the face of those findings, the first two elements of unjust enrichment are satisfied.

[68] Turning to the issue of absence of juristic reason, it is at this juncture that the parties’ reasonable or legitimate expectations are to be considered: Kerr, at para. 9. In that decision, at para. 34, Cromwell J. observed that the legal principles embedded in the law of unjust enrichment must be applied in the particular factual and social context out of which the claim arises. If there is no established basis such as a contract or a gift on which to deny relief to the party who has suffered a detriment, a trial judge should then consider whether there is another reason to deny relief. At this second stage of the analysis, a trial judge may take into account the parties’ legitimate expectations and moral and policy-based arguments as to whether particular enrichments are unjust. Overall, the test for juristic reason is flexible, and the relevant factors will depend on the situation before the court: Kerr, at paras. 43-44. A trial judge is best positioned to perform the juristic reason analysis; however, the analysis should not be “purely subjective” with unacceptable “immeasurable judicial discretion”: Kerr, at para. 43.

[69] Applying these principles to this case, the trial judge observed at para. 32 that, other than the appellant’s argument based on the loan, there was “no suggestion of any other juristic reason for the enrichment” of the appellant. In the absence of an established category to anchor the juristic reason analysis, the trial judge found that there was a reasonable expectation that the respondent’s use would continue until his death. He therefore concluded that the respondent had established his claim for unjust enrichment.

[70] On appeal, the appellant now asserts that the juristic reason was the respondent’s breach of the parties’ expectations and his refusal to grant Westley access to the camp.

[71] At para. 41, the trial judge stated that no doubt the appellant regarded the respondent’s ongoing maintenance and improvement of the camp as something that would eventually benefit the children. The trial judge did not doubt that the parties “expected and intended that both Westley and Misty would always be welcome to share in the use of the camp.” That said, at trial, the appellant did not establish that it was a condition of the respondent’s licence that he would share the camp with his children, and that denial of unregulated or unfettered access to Westley constituted a breach of the licence. As the respondent points out, no one expected that he and Westley would be unable to reside together in harmony. As noted in Kerr, at para. 124, the question is whether the parties’ expectations show that retention of the benefits is just. Even if the aforesaid juristic reason argument was not being made for the first time on appeal, it would hardly be just for the appellant to retain the benefit of the respondent’s labour and financial contributions to the camp merely because she expected Westley would always be welcome, and has been disappointed in that regard. This is not akin to the example that Cromwell J. provided in Kerr, at para. 123, of a situation where a claim might be defeated on the basis of the parties’ reasonable expectations, because those expectations are evidence of a bargain between the parties.

[72] In my view, the trial judge was correct in concluding that the respondent had established his claim for unjust enrichment.

(d) Remedy

[73] This brings me to the issue of remedy. The choice of an appropriate remedy involves the exercise of discretion on a principled and reasoned basis.

[74] The trial judge was satisfied of the required link between the contributions made by the respondent and the camp. He also determined that monetary damages were inadequate given the emotional attachment that existed between the respondent and the camp. He therefore considered, and rejected, a remedy based on the cost to the respondent.

[75] The trial judge determined that the appropriate remedy was the imposition of a constructive trust. In his view, this relief also reflected the legitimate expectations of the parties. As such, he considered that this was the only way to effect justice in the case. The trial judge therefore confirmed the respondent’s licence and permitted him to occupy the camp until he died or was no longer physically able to attend there. Approximately one year later, on motion, the order was amended to state that the licence was exclusive.

[76] The appellant submits that the trial judge granted a remedy that undermined everyone’s reasonable expectations and gave the respondent more than he ever reasonably expected. She asserts that the parties had no reasonable expectation of lifetime use by the respondent coupled with the power to exclude others. The remedy granted derogated from the appellant’s rights as owner and diminished the rights of the other two-third owners of the island.

[77] The respondent counters that his reasonable expectation was that he would occupy the cottage during his lifetime and his family would use it until he died. If it was a condition of his occupation that he share usage with Westley, it was never articulated and was not understood as such. This is because there was no expectation that he would ever be unable to share the camp with Westley. To compel the respondent to share use of the camp with his son would be to deprive him of his use of the camp, given the interpersonal difficulties between them. He maintains that the other two-third owners of the island support his position.

[78] A successful claim for unjust enrichment may attract a monetary or a proprietary remedy. The first remedy to consider is always a monetary award and in most cases, it will be sufficient to remedy the unjust enrichment: Kerr, at para. 47. A proprietary award may be required when a monetary award is inappropriate or insufficient: Kerr, at para. 50. “Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour”: Kerr, at para. 50.

[79] In the case under appeal, the trial judge considered a monetary remedy and rejected it as inappropriate in the context of the facts before him. He also addressed the link between the respondent’s contributions and the camp, and determined that a constructive trust was the appropriate remedy. While the imposition of a constructive trust generally makes the claimant the beneficial owner of the property or a portion thereof, the trial judge crafted a narrower remedy in this case which accords with the appellant’s intention that the property would not leave her family. In Principles of Property Law, 5th ed. (Toronto: Carswell, 2010), at p. 237, Professor Bruce Ziff states that a proprietary remedy for unjust enrichment may take a number of forms:

A finding of unjust enrichment does not invariably lead to the imposition of a constructive trust. Another option open to a court is to award monetary compensation. And the granting of an interest in land need not amount to the fee simple estate; in some circumstances a more limited interest (e.g., a life estate) may be the most appropriate response. [Footnote omitted.]

Professor Ziff does go on to state, at p. 316, that “[r]ecognizing the existence of an irrevocable licence is one way that a court can respond to unjust enrichment”.

[80] That said, the remedy for unjust enrichment typically consists of a monetary award or a constructive trust. Given the companion claim of proprietary estoppel, it is unnecessary in this case to rely on remedies available for unjust enrichment as clearly an irrevocable licence is an appropriate remedy for proprietary estoppel: see Jarvis v. Toronto (City) (1895), 1895 CanLII 37 (SCC), 25 S.C.R. 237; Collier v. Salisbury (Village) (1999), 1999 CanLII 20757 (NB CA), 208 N.B.R. (2d) 60 (C.A.); and J.E. Martin, Modern Equity, 19th ed. (London: Sweet & Maxwell, 2012) at p. 947; MacDougall, Estoppel (Markham, Ont.: LexisNexis 2012), at p. 505; see also Scholz v. Scholz, 2013 BCCA 309, 46 B.C.L.R. (5th) 98, at paras. 30-31, citing Trethewey, at paras. 63-84. As stated in E.H. Burn & J. Cartwright, Cheshire and Burn’s Modern Law of Real Property, 18^th ed., (New York: Oxford University Press, 2011), at pp. 936 - 937:

The doctrine of proprietary estoppel has undergone a remarkable development over the last 50 years; and this has occurred largely in the context of licences.

The advantage of proprietary estoppel is its great flexibility. Once it is established that an estoppel is working in favour of a licensee --- that is an equity has arisen --- the court will decide which of the available remedies is most appropriate. As has been said many times in the cases:

The court must look at the circumstances in each case to decide in what way the equity can be satisfied.

Moreover, the remedy may be negative or positive; personal to the licensee or an interest in the property that will protect him against third parties; the enforcement of the licence by means of a right of occupation, or only the right to reimbursement of expenditure incurred by the licensor [sic licensee].

[81] In my view, the trial judge made no error in the exercise of his discretion in confirming the personal licence granted to the respondent and making it exclusive. He was mindful of the context of the case that unfolded before him over the course of a three-day trial and strove to accommodate the parties’ expectations. His choice of remedy represented the minimum equity to do justice in the circumstances. The respondent would not be entitled to the rights of an owner including the right to devolve the camp as part of his estate. Rather, consistent with expectations, he could regulate use during his lifetime or until he could no longer attend at the camp.

[82] The trial judge’s approach is also consistent with the Supreme Court’s comments in Kerr, at paras. 71 and 73, that it has “often emphasized the flexibility of equitable remedies” and that the remedy “should mirror the flexibility inherent in the unjust enrichment principle itself, so as to allow the court to respond appropriately to the substance of the problem put before it.” The same flexibility should be applicable to proprietary estoppel.

[83] In Kerr, at para. 158, Cromwell J. stated that a trial judge’s reasoned and careful exercise of judgment as to the appropriate monetary award to remedy an unjust enrichment should be treated with deference. Absent an error in principle, I see no reason not to accord such deference to a trial judge’s exercise of discretion in structuring an equitable remedy. A reading of the trial transcripts also supports such deference. The remedy responded to the reasonable expectation found by the trial judge that the respondent’s use would continue until his death. Furthermore, he was given the right to regulate usage. Neither child would be prohibited from using the camp but their use would be regulated by the respondent. Moreover, the other two-third owners of the island “categorically” supported the respondent. In my view, the trial judge carefully crafted an appropriate and minimally intrusive equitable remedy so as to do justice in difficult familial circumstances. I see no basis on which to interfere.

[84] Lastly, the trial judge’s remedy was based on existing circumstances. As indicated, these consisted of an unwritten agreement that the island remain the property of blood relatives of the Johnson family. The appellant submitted that the trial judge’s remedy failed to take into account the eventuality that the island could be sold by all co-owners to a third party who is not a family member or by an order of partition and sale. The appellant submitted that this was an additional reason why the trial judge’s remedy should be set aside.

[85] In such an event, it does not necessarily follow that the respondent’s licence to use the camp for life, being a personal right that is incapable of being transferred, would continue. The authors of Megarry & Wade (Charles Harpum, Stuart Bridge & Martin Dixon, Megarry & Wade:The Law of Real Property, 8th ed. (London: Sweet & Maxwell, 2012)) voice the opinion at § 16-006 that “it is not obvious that a licence declared to be irrevocable by reason of estoppel should create an equitable interest in land when a contractual licence does not.” By this, I believe that the authors mean that an irrevocable licence created by estoppel does not create a proprietary interest in land that is capable of being registered on title so as to bind third parties. However, this is not free from doubt since the authors’ discussion is in the context of England’s Land Registration Act 2002 (U.K.) c. 9. Inasmuch as the question is a hypothetical one that was not fully argued, I do not purport to decide it.

Disposition

[86] For all of these reasons, I would dismiss this appeal. I would order the appellant to pay the respondent’s costs fixed in the amount of $21,800 inclusive of disbursements and applicable taxes.

Released:

“KMW” “S.E. Pepall J.A.”

“MAR 28 2014” “I agree K.M. Weiler J.A.”

• Epstein J.A. took no part in the reasons for judgment.