May 16, 2014

The Victoria Day long weekend marks the unofficial opening of cottage season.  Unfortunately, in Ontario, spring is delayed, the lakes are cold, and snow still lingers on the forest floor (trilliums be damned).  Nevertheless, a cottage case is just what the judge ordered to mark the start of the season.

Clarke v. Johnson is a 2014 Ontario Court of Appeal case.  Martha owned property on a lovely island which was used as a summer residence.  Martha’s son-in-law, Don, built a cabin on the island.  He maintained and used the cabin for 20 years, paying all of the associated expenses, including taxes and insurance.  Don also improved the cottage over the years with Martha’s knowledge and appreciation.  In fact, Martha allowed Don to continue to stay at the cabin even after he separated from Martha’s daughter.

Unfortunately, Don and his adult son, Westley, had a falling out.  Don barred Westley from using the cabin.  Martha was not pleased that her grandson no longer had access to the island and promptly banned Don and changed the locks.  Don brought an action to restore his access to the cabin based on Martha’s unjust enrichment and equitable estoppel (Martha could not deny access to Don based on her previous actions).

According to the trial judge, Don established his claim for unjust enrichment and proprietary estoppel even though Martha was the owner of the property.  However, the remedy crafted by the trial judge was somewhat unorthodox in that the judge ordered that Don had an irrevocable licence to use the cabin.  Monetary damages were inadequate given the “significant emotional attachment” that existed between Don and the cabin (an attachment that would not surprise any cottage owner).  A licence adequately balanced Don’s reasonable expectations against Martha’s ownership rights.  While the C.A. recognized that the imposition of a constructive trust generally made the claimant the beneficial owner of the property, the trial judge had appropriately crafted a narrower remedy (the C.A. also opined that an irrevocable licence was also an appropriate remedy for proprietary estoppel).  The irrevocable licence “represented the minimum equity to do justice in the circumstances”.  The remedy matched the reasonable expectations of the parties – Don could use the cottage for his lifetime, regulate its use and even bar Westley.  However, when Don could no longer use the cottage, it was Martha’s to gift to her grandson.

What’s the take away?  Cottages, cabins, chalets and summer homes are a wellspring of memories and litigation.  However, when faced with intractable family disputes, the courts will try and craft remedies that are both reasonable and proportionate.  The advantage of pleading unjust enrichment and proprietary estoppel is that both concepts are flexible and allow for flexible (read elastic) remedies.

Happy Litigating or, dare I say it, Happy Cottaging.