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VOL. 79 PART 2 MARCH 2021
be established. The claim of the party raising the estoppel is not that he
believed the assumed version of facts or law was true, but that he believed
(and agreed) that it should be treated as true.18
Why Is There Any Debate? Canacemal Investment
In light of this wealth of authority for the proposition that estoppel by convention
can apply even if one or both parties knew that the convention was
false, why is there even any debate on the point?
The answer is that in Ryan v. Moore, in the closing words of para. 59
above, the Court cited with approval para. 35 of Canacemal Investment Inc.
v. PC/Realty Corp., where Melnick J. of the B.C. Supreme Court said: “Where
a party knows or has reason to know of the inaccuracy of the assumed facts,
the doctrine, in my view, cannot be available since the party can no longer
fairly assume the truth of the facts”.19 The fact that para. 59 cites this paragraph
leads to the thought that the Supreme Court of Canada must have
accepted this passage as being correct.
Marion and Thiessen point out that para. 35 of Canacemal Investment
imposes a requirement on estoppel by convention that is absent from other
decisions (and one might note that Melnick J. did not cite any authority for
this proposition).20
What About Grundt and Capro Investments?
In Ryan v. Moore, Bastarache J. at para. 69 referred to Grundt v. Great Boulder
Property Gold Mines Ltd.,21 without suggesting that there was any important
distinction between it and Canacemal Investment. Yet there is a critical difference.
At pp. 676–77 of Grundt, Dixon J. for the majority said:
It is important to notice that belief in the correctness of the facts or state
of affairs assumed is not always necessary. Parties may adopt as the conventional
basis of a transaction between them an assumption which they
know to be contrary to the actual state of affairs. … Parties to a deed sometimes
deliberately set out an hypothetical state of affairs as the basis of
their covenants in order to create mutual estoppel.22
Given that Ryan v. Moore cites Grundt, I suggest that the Supreme Court
of Canada in Ryan cannot be said to have adopted the last part of Melnick
J.’s comments at para. 35 of Canacemal Investment.
MacDougall cites Canacemal Investment but concludes that it is not the
law in Canada, stating:
§3.42 There is no necessity for belief in the actual truth of the facts contained
in the common assumption. The parties, or one of them, may of
course know that the belief is mistaken. What is important is that there
be a joint assumption that the facts or law as agreed is the basis for the
creation, continuation or modification of their legal relationship.
§3.43 The fact of an agreed assumption is sufficient.23