THE ADVOCATE 185
VOL. 79 PART 2 MARCH 2021
Perhaps even more importantly, at para. 59 of Ryan v. Moore, Bastarache
J. (right after citing para. 35 of Canacemal Investment) cites para. 31 of Capro
Investments Ltd. v. Tartan Development Corp., where Aitken J. said:
The doctrine of estoppel by convention has been considered in the cases
of Amalgamated Investment & Property Co. (In Liquidation) v. Texas Commerce
International Bank Ltd. (1981), 1982 Q.B. 84 (Eng. C.A.), Furness
Withy (Australia) Pty. Ltd. v. Metal Distributors (U.K.) Ltd. (1989), 1990 1
Lloyd’s Rep. 236 (Eng. C.A.) and Norwegian American Cruises A/S v. Paul
Mundy Ltd., 1988 2 Lloyd’s Rep. 343 (Eng. C.A.). As described in those
cases, estoppel by convention arises where (1) the parties to a contract
have a put a particular construction on their contract through the course
of their dealings which is based on a commonly held assumption of either
fact or law (whether or not such assumption is correct); (2) the contract as
understood by the parties has regulated their subsequent dealings; and
(3) it would be unjust or unconscionable if one of the parties resiled from
the convention and relied on the strict wording of the contract.24
This passage has been cited with approval in a number of different decisions,
25 including a recent B.C. Supreme Court decision.26
Given that the court in Ryan v. Moore cited Capro Investments, Grundt and
Canacemal Investment without adverting to the significant difference
between the first two and the third, my view is that it cannot be said to have
adopted one position or the other on this issue. The validity of my thesis
must rest on the fundamental nature of estoppel by convention (which
implies that Grundt and Capro Investments are correct and Canacemal Investment
is wrong) and the various decisions that have decided this point.
Hamel-Smith
In addition to Canacemal Investment, another apparently contrary authority
is Hamel-Smith v. Pycroft, where Justice Peter Gibson said that “once a common
assumption is revealed to be erroneous the estoppel would not apply
to future dealings between the parties”.27
But that sentence talks about “future dealings”; it does not appear to
apply to the particular transaction that is subject to the estoppel.28 My proof
of this is the following sentence from Dixon v. Blindley Heath Investments
Ltd.: “If and when the common assumption is revealed to be mistaken the
parties may nevertheless be estopped from departing from it for the purposes
of regulating their rights inter se for so long as it would be unconscionable
for the party seeking to repudiate the assumption to be permitted
to do so”.29 In other words, the estoppel continues to apply for the particular
transaction even after the truth is revealed.
I believe that further proof that knowledge of the truth will not prevent
a current estoppel is found in Ryledar Pty Ltd. v. Euphoric Pty Ltd., where
Justice Tobias for the New South Wales Court of Appeal cited with approval