THE ADVOCATE 179
VOL. 79 PART 2 MARCH 2021
ESTOPPEL BY CONVENTION:
DOES THE TRUTH MATTER?
By Joel Nitikman, Q.C.
T his article attempts to explore an issue relating to estoppel by
convention, the answer to which I think has been given incorrectly
in some decisions and articles: If the parties know that
the convention is false, can there still be an estoppel?
BACKGROUND
Estoppel
An “estoppel” is a legal result that occurs when a court prevents a person
from taking a particular factual or legal position, even though, speaking
strictly, that position is true. In other words, it is where a court requires a
party to be bound by a statement even though it is false.1 It has been said
that “the fundamental purpose of an estoppel is to provide protection
against the detriment which would flow from a party’s change of position if
the assumption which led to it were deserted”.2
Estoppel by Convention
Estoppel by convention is an equitable doctrine.3 The estoppel will exist
when two (or more) parties enter into a transaction on the understanding
(that is, on the convention) that a certain fact or principle of law is true. If,
after the transaction is completed, one of the parties wishes to resile from the
transaction and rescind it or deny that it is binding on that party on the basis
that the convention is untrue, that party will be estopped from doing so.
The Elements of Estoppel by Convention: Ryan v. Moore
In the only Supreme Court of Canada decision dealing with estoppel by
convention, Ryan v. Moore,4 Bastarache J. set out the three criteria for its
application:
59 … After having reviewed the jurisprudence in the United Kingdom
and Canada as well as academic comments on the subject, I am of the
view that the following criteria form the basis of the doctrine of estoppel
by convention:
(1) The parties’ dealings must have been based on a shared assumption5
of fact or law: estoppel requires manifest representation by statement or