Sunday, September 28, 2014

B.C. Court of Appeal Overturns Trial Judgement in Sabey v. Rommel

The British Columbia Court of Appeal overturned the trial judge’s decision to award the plaintiff, Jesse Sabey, the horse farm that had been owned by his friends Kim and Dietrich von Hopffgarten, in Sabey v. Rommel, 2014 BCCA 360.

Jesse Sabey used to ride horses and work at the von Hopffgartens’ farm. He and the von Hopffgartens were all involved in dressage riding. The von Hopffgartens had promised Mr. Sabey that they would leave him the farm, and indeed had tried to make codicils to their wills to do just that, but the codicils were invalid because they were not witnessed by two witnesses. The trial judge held that because Mr. Sabey had relied on the promises they made to him by working for them for less than market value and by making career choices to his detriment, he was entitled to the farm on the basis of the doctrine of proprietary estoppel. I wrote a post about the trial judge’s decision in greater detail previously.

Burgi Rommel, who was the beneficiary of Mrs. von Hopffgarten’s will, appealed the decision to the Court of Appeal. Two of the three judges hearing the appeal allowed the appeal, holding that the award to Mr. Sabey of the entire farm was disproportionate to the detriment he suffered.

Madam Justice Bennett, writing for the majority, set out the legal test as follows:

[25]         The foundation of a claim in proprietary estoppel is an equitable right arising out of the conduct of the parties. In Crabb v. Arun District Council, [1976] Ch. 179 at 192-93, [1975] 3 All E.R. 865 (C.A.), Scarman L.J. stated the test in a claim for a proprietary right on the basis of equity:
1.               Is there an equity established?
2.               If so, what is the extent of the equity?
3.               What is the relief appropriate to satisfy the equity?

A person making a claim on the basis of proprietary estoppel needs to prove three elements: an assurance or representation was made to him, that he relied on it, and that he did so to his detriment.

The majority agreed that Mr. Sabey had proven that the von Hopffgartens had made assurances to him that they would leave him the farm. The also accepted that he relied on those assurances to his detriment by working for them for two and a half years with less than market pay, and for working for Mrs. von Hopffgartens without any pay after her husband’s death. But the majority did not agree that he relied on their assurances when he made his career choices, specifically choosing to become an accountant instead of a professional dressage rider, and then choosing a small firm so he could ride at their farm instead of working for a larger firm that would have provided higher pay, but more travel. Nor did the majority accept the argument that in becoming an accountant and working at a small firm Mr. Sabey had acted to his detriment.

Although, Mr. Sabey established an equity, the majority held that the extent of the equity was not sufficiently great to warrant an award of the whole farm to Mr. Sabey. Madam Justice Bennett wrote at paragraph 80:

[80]         In my view, no equity arises as a result of Mr. Sabey deciding not to pursue professional dressage or limiting his employment prospects to firms that were close to the farm. The extent of the equity that arises in this case is Mr. Sabey’s two and a half years of underpaid work after the assurances were made and his continued work on the farm without payment after Dietrich’s death. If Mr. Sabey had not expected to inherit the farm, then he may not have continued to work on the farm. The trial judge erred in concluding that there were other bases on which an equity arose, and in failing to assess proportionality. As a result, the remedy he crafted is not due deference, and is, with respect, clearly wrong.       

Accordingly, the majority ordered that the case be remitted to the trial judge to consider the alternate claims made by Mr. Sabey on the basis of unjust enrichment, and express or implied trust.

Madam Justice MacKenzie dissented. She would have dismissed the appeal on the basis that the trial judge’s findings were supported by the evidence and that the decision was within the trial judge’s broad discretion. 

1 comment:

Dana Quantz said...

I must admit that I fall into Madam Justice MacKenzie's camp when analyzing the decision. How the majority's decision is not a reversal of the judge's findings of fact leaves me confused. Is there a precedent that says this decision is one of mixed fact and law? That might clarify my confusion.