



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 judges
    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
    Williams 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 Victorias parents, the respondent
    and Victoria built an A-frame structure on a portion of the island allocated to
    Victorias 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 Victorias 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 respondents 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 appellants view that the respondents 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 respondents 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 appellants son, Kenneth; Williams brother, Allan Johnson (and with his
    wife, another one-third owner); and the appellants 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 respondents 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 camps 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 respondents claim.  In any event, the trial
    judge had little doubt that the appellants enrichment and the respondents
    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 appellants
    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 respondents 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 respondents 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
    respondents 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. Clarkes 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 childrens 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 respondents 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 Allans 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 Williams sister.  Allan Johnson was
    Williams 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 Evelyns 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 judges
    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 appellants 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 respondents 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 appellants
    revocation of the respondents licence.  As the appellant revoked the
    respondents 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 appellants 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 respondents
    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 respondents 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 respondents 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 defendants 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 plaintiffs
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 defendants 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
Yeomans 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
Yeomans 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 respondents 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 appellants 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
    respondents 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 respondents 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 respondents unjust
    enrichment claim precluded the appellant from revoking the respondents 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 respondents 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] 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 defendants 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 camps 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 appellants enrichment
    and the respondents 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 appellants 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 respondents 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 respondents
    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
    respondents 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 respondents 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 respondents 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
    respondents 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
    everyones 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 appellants 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 respondents 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 appellants 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), 25 S.C.R. 237;
Collier
    v. Salisbury (Village)
(1999), 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 Burns 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 judges approach is also consistent with the Supreme Courts 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 judges 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 judges
    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 respondents 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 judges 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
    judges 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 judges remedy should be set aside.

[85]

In
    such an event, it does not necessarily follow that the respondents 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 Englands
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 respondents 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.


