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Estoppel - Promissory Estoppel

. Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada

In Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada (SCC, 2021) the Supreme Court of Canada considered basic principle of promissory estoppel where an insurer started to defend the estate of an insured and then, upon learning of new facts (which it could have known of if it exercised due diligence), repudiated coverage and ceased the defence:
[15] Promissory estoppel is an equitable defence whose elements were stated by Sopinka J. for this Court in Maracle, at p. 57:The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the [promisee] must establish that, in reliance on the [promise], he acted on it or in some way changed his position. [Emphasis added.]
The equitable defence therefore requires that (1) the parties be in a legal relationship at the time of the promise or assurance; (2) the promise or assurance be intended to affect that relationship and to be acted on; and (3) the other party in fact relied on the promise or assurance. It is, as we will explain, implicit that such reliance be to the promisee’s detriment.

[16] Promissory estoppel seeks to protect against the “inequity of allowing the other party to resile from his statement where it has been relied upon to the detriment of the person to whom it was directed” (Fort Frances v. Boise Cascade Canada Ltd., 1983 CanLII 47 (SCC), [1983] 1 S.C.R. 171, at p. 202). In the insurance context, estoppel arises most commonly where an insurer, having initially taken steps consistent with coverage, then denies coverage because of the insured’s breach of a policy term or its ineligibility for insurance in the first place. To prevent the insurer from denying coverage, the insured will attempt to show that the insurer is estopped from changing its coverage position based on its prior words or conduct.

[17] Although the nuances of the relationship between promissory estoppel and other forms of estoppel were not argued before us in this appeal, we observe that Trial Lawyers’ arguments may be better framed as supporting estoppel by representation rather than promissory estoppel (see Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53, at para. 5; Page v. Austin (1884), 1884 CanLII 6 (SCC), 10 S.C.R. 132, at p. 164). While the latter doctrine prevents the promisor from reneging on an assurance to alter the parties’ legal relationship, the former doctrine prevents a promisor from denying the truth of a prior representation (see, generally, B. MacDougall, Estoppel (2nd ed. 2019), at §§ 5.33 to 5.45). Given the similarities between the doctrines, however, we resolve this appeal applying only the principles of promissory estoppel upon which Trial Lawyers relies, while noting that similar reasoning would apply if the claim were grounded in estoppel by representation.

[18] As we will explain, Trial Lawyers’ estoppel argument must fail, primarily because RSA gave no promise or assurance intended to affect its legal relationship with Mr. Bradfield. RSA lacked knowledge, at the time it provided a defence to Mr. Devecseri’s estate, of Mr. Devecseri having breached the policy by consuming alcohol. This is fatal to Trial Lawyers’ position. Further, and even if constructive knowledge of the facts demonstrating a breach were sufficient for purposes of estoppel (which, as we will explain, it is not), RSA cannot be fixed with constructive knowledge of such facts in the circumstances of this case. RSA was under a duty to Mr. Devecseri to investigate the claim against him “fairly”, in a “balanced and reasonable manner” (Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 63, citing with approval 702535 Ontario Inc. v. Lloyd’s London, Non‑Marine Underwriters (2000), 2000 CanLII 5684 (ON CA), 184 D.L.R. (4th) 687 (Ont. C.A.), at para. 29). It did so. RSA was under no additional duty to Mr. Bradfield or other third‑party claimants to investigate policy breaches at all, much less on a different and more rigorous standard than that which it owed to its insured.

....

[21] To ground promissory estoppel, the requirement stated in Maracle that a promise or assurance must be intended to affect the parties’ legal relationship signifies that the promisor must know of the facts that are said to give rise to that legal relationship, and of the alteration thereto — in this case, that Mr. Devecseri would be covered to the full policy limits despite his having breached the policy. We acknowledge that the jurisprudence from this Court speaks of intention, not knowledge (Maracle, at pp. 57‑59; John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607, at p. 615). But the significance of intention depends entirely on what the promisor knows. A promisor, such as RSA, cannot intend to alter a relationship by promising to refrain from acting on information that it does not have. If RSA is to be taken, by having furnished a defence, as having intended to affect a relationship with Mr. Bradfield by extending coverage notwithstanding Mr. Devecseri’s breach, it must be shown to have known of the facts which demonstrate that breach.

[22] As we explain below, the requirement that RSA be shown to have known of the facts demonstrating a breach leaves a narrow role for imputed knowledge in this context. Trial Lawyers seeks to broaden this role, arguing that constructive knowledge arising from a breach of a duty to investigate is enough. We disagree. As we explain below, to hold otherwise would be to unwisely and unnecessarily undermine the existing duty on insurers owed to insureds — and not to third‑party claimants like Mr. Bradfield — to investigate liability claims fairly, in a balanced and reasonable manner.

....

(1) Imputed Knowledge

[24] As we have explained, promissory estoppel requires that an insurer know the facts demonstrating a breach in order to be bound to any promise to cover, notwithstanding that breach. To be clear, that is all that is required: knowledge of the facts. Had, therefore, RSA known of the fact that demonstrated Mr. Devecseri’s breach (specifically, that he had consumed alcohol prior to the accident) but had failed to appreciate its legal significance (specifically, that this was a breach), knowledge of that legal significance could have been imputed to RSA. The leading authority from this Court and the jurisprudence developed in lower courts support this view. But, as will be seen, this jurisprudence does not assist Trial Lawyers here.

[25] In Western Canada Accident and Guarantee Insurance Co. v. Parrott (1921), 1921 CanLII 66 (SCC), 61 S.C.R. 595, an employee was injured while working at her employer’s unguarded laundry machine. The employer, whose insurance policy required that all the machines be equipped with a safety guard, sent the insurer a report of the accident that implied that the machine in question was not guarded. Further, two of the insurer’s agents either saw or were told that the machine was unguarded. Justice Idington held that, upon reading the employer’s report alone, it would be “inconceivable” that the insurer did not turn its mind to the breach (p. 598). It followed that the insurer was in possession of the relevant fact that demonstrated the breach. While the contention that the insurer did not understand the legal significance of this fact was rejected by Idington J. as unbelievable (at p. 600), it was also irrelevant: because the insurer knew of the relevant fact, the knowledge of its legal significance could be imputed to the insurer. In separate reasons, other members of this Court agreed that the insurer was taken, by its knowledge of the fact of the unguarded machine, to have full knowledge of its rights to deny coverage (at p. 601, per Duff J.; at pp. 602‑3, per Anglin J.; at pp. 606‑7, per Mignault J.), and the insurer was therefore estopped from denying coverage after having defended the action.

[26] Parrott demonstrates the narrow operation of imputed knowledge in this context. Where the insurer is shown to have known of the fact demonstrating a breach but has failed to appreciate its legal significance (that is, failed to discern that it indeed demonstrated a breach), a trier of fact may infer the insurer knew of its right to withhold coverage while intending to assure the insured that it would not act thereon (see Maracle, at p. 59; John Burrows, at p. 616). The employer’s reliance on the insurer’s conduct — in providing a defence and taking the matter to trial — as an assurance of coverage was reasonable in view of the insurer having actual knowledge of the fact of the unguarded machine.

[27] This view finds support in the lower courts. In Rosenblood Estate v. Law Society of Upper Canada (1989), 37 C.C.L.I. 142 (Ont. H.C.), aff’d 16 C.C.L.I. (2d) 226 (Ont. C.A.), the very nature of the claim — that a solicitor was aware that a property he was dealing with was over‑mortgaged — fell outside the scope of the insurance policy. Again, however, while the insurer knew of the solicitor’s awareness, it failed to appreciate its significance as demonstrative of a policy breach. And as in Parrott, that did not matter: it was taken, by virtue of its knowledge of the fact, as appreciating its significance (p. 156). Whether the insurer actually did appreciate the significance of the fact was irrelevant. In this sense, estoppel differs from waiver, which requires knowledge of the legal significance of the facts (Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, at p. 500). In Rosenblood Estate, the reliance of the solicitor’s estate on the insurer providing a defence as an assurance of coverage was reasonable in light of the insurer having actual knowledge of the mere fact that brought the claim outside the scope of the policy.

[28] This was echoed recently at the Court of Appeal for Ontario in The Commonwell Mutual Assurance Group v. Campbell, 2019 ONCA 668, 95 C.C.L.I. (5th) 344, aff’g 2018 ONSC 5899, 95 C.C.L.I. (5th) 328, at paras. 38 and 40, where, again, the nature of the claim itself fell outside the scope of coverage. The insurer thus had knowledge of facts supporting a denial of coverage from the moment it received a statement of claim. It was irrelevant that the insurer did not turn its mind to the applicable exclusion, and it was estopped from relying on that exclusion later to deny coverage.

[29] This point — that the provision of a defence by an insurer, despite its knowledge of a fact demonstrating a breach, supports an inference that the insurer intended to alter its legal relationship with the insured — is widely accepted in our law (see, e.g., Parlee v. Pembridge Insurance Co., 2005 NBCA 49, 283 N.B.R. (2d) 75, at para. 12; Fellowes, McNeil v. Kansa General International Insurance Co. (2000), 2000 CanLII 22279 (ON CA), 22 C.C.L.I. (3d) 1 (Ont. C.A.), at para. 69; Gilewich v. 3812511 Manitoba Ltd., 2011 MBQB 169, 267 Man. R. (2d) 40, at para. 42; Gillies v. Couty (1994), 1994 CanLII 960 (BC SC), 100 B.C.L.R. (2d) 115 (S.C.), at paras. 5 and 8; Federal Insurance Co. v. Matthews (1956), 1956 CanLII 261 (BC SC), 3 D.L.R. (2d) 322 (B.C.S.C.), at p. 345; see also Owen Sound Public Library Board v. Mial Developments Ltd. (1979), 1979 CanLII 1624 (ON CA), 26 O.R. (2d) 459 (Ont. C.A.), at p. 467). Also widely accepted is the proposition that, where an insurer knows of the facts demonstrating a breach, a failure to appreciate their legal significance as such — that is, as demonstrative of a breach — is irrelevant, so that such an appreciation may be imputed to the insurer, and the insurer estopped from denying coverage (see, for instance, Personal Insurance Co. v. Alexander Estate, 2012 NWTSC 19, 30 M.V.R. (6th) 282, at paras. 33‑35 and 41‑42; Snair v. Halifax Insurance Nationale‑Nederlanden North America Corp. (1995), 1995 CanLII 4400 (NS SC), 145 N.S.R. (2d) 132 (S.C.), at para. 62; Rowe v. Mills (1986), 1986 CanLII 5596 (NB QB), 72 N.B.R. (2d) 344 (Q.B.), at para. 12; Hassan v. Toronto General Insurance Co. (1960), 1960 CanLII 400 (ON SC), 22 D.L.R. (2d) 360 (Ont. H.C.J.), at pp. 368-69).

[30] In sum, where an insurer is shown to be in possession of the facts demonstrating a breach, an inference may be drawn that the insurer, by its conduct, intended to alter its legal relationship with the insured ⸺ notwithstanding the fact that the insurer did not realize the legal significance of the facts or otherwise failed to appreciate the terms of its policy with the insured.

....

(2) Constructive Knowledge

[32] Trial Lawyers urges us to find that RSA constructively knew of Mr. Devecseri’s breach, and is thus taken to know what it ought to or should have known. This submission is premised on what Trial Lawyers says is RSA’s breach of a duty to diligently investigate the claim against its insured. We would reject Trial Lawyers’ argument, and with it the possibility of recognizing constructive knowledge arising from a breach of a duty to investigate as grounding promissory estoppel, for two reasons.

[33] First, this argument entails a significant — and, in our view, unwise and unnecessary — modification of the obligation an insurer owes to the insured in the context of a liability claim. This duty exists because insurers have strong economic incentives to deny coverage, which this Court has sought to moderate in the public interest. As claims arise under a policy of liability insurance, insurers are bound by a duty to the insured to investigate each claim “fairly”, in a “balanced and reasonable manner”, and not engage in a relentless search for a policy breach (Fidler, at para. 63, citing 702535 Ontario Inc., at para. 29). The point bears reiteration: this Court has sought to temper the incentives of insurers in order to protect the interests of insureds, who are vulnerable when insurers act with “wilful tunnel vision” to look for policy breaches where there is “nothing to go on” (Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at paras. 102‑3).

[34] The duty owed to the insured to investigate fairly, in a balanced and reasonable manner, as recognized by this Court is at odds with the duty to investigate “thoroughly” and “diligently” urged upon us by Trial Lawyers (A.F., at paras. 121 and 123). Apparently relying on Coronation Insurance Co. v. Taku Air Transport Ltd., 1991 CanLII 16 (SCC), [1991] 3 S.C.R. 622, Trial Lawyers submits that the insurer is bound by a duty to “know the things that were within [its] grasp” (transcript, p. 24; see also A.F., at para. 124; Coronation Insurance, at p. 640). But Coronation Insurance is of minimal assistance here. First, the standard set in that case and in Canadian Indemnity Co. v. Canadian Johns‑Manville Co., 1990 CanLII 78 (SCC), [1990] 2 S.C.R. 549, related to insurers’ presumed knowledge of their own files and of issues of public notoriety. The coroner’s report at issue in this case was neither in the possession of the insurer nor notorious. More fundamentally, those cases concerned an insurer’s assessment of the risks associated with a prospective insured before even entering into an insurance contract. At that pre‑contract stage, this Court’s concern was to temper the insurer’s incentives to enter into a contract while turning a blind eye to the risks posed by the insured, only to then use the non‑disclosure of those risks as a basis for denying coverage as claims arose. The incentives operate differently where, as here, we are concerned with claims under an existing contract. At that stage, the insurer has every incentive to search for breaches in relation to a given claim. We fear that, far from tempering these incentives, Trial Lawyers’ submission would augment them, pushing insurers to go the extra mile to find policy breaches. For this reason, the submission must be rejected.

[35] Secondly, there is no basis in law for a third‑party claimant such as Mr. Bradfield to be able to ground an estoppel argument in any alleged breaches of an insurer’s duty to its insured. In other words, the duty to investigate fairly, in a balanced and reasonable manner, is owed only to the insured, not third parties. Were such a duty owed to third parties, it would sit uneasily, and indeed would undermine, the duties of utmost good faith and fair dealing that govern the relationship between the parties to an insurance contract — in this case, between RSA and Mr. Devecseri. This is because the obligations between the insurer and the insured are reciprocal; while the insurer has the aforementioned duty to investigate fairly, in a balanced and reasonable manner, the insured is also under a reciprocal duty to disclose facts material to the claim (Whiten, at para. 83, citing Andrusiw v. Aetna Life Insurance Co. of Canada (2001), 2001 CanLII 61004 (AB QB), 289 A.R. 1 (Q.B.), at paras. 84‑85; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 55).

[36] This reciprocity of obligation is worth stressing. This Court has taken care to strike a careful balance in stating and developing the duty of utmost good faith and fair dealing between insurer and insured with a view to facilitating the honest, fair, and expeditious resolution of insurance claims. Here, RSA owed Mr. Devecseri a duty to investigate the claims against his estate fairly, in a balanced and reasonable manner, and without being zealous or relentless in its search for policy breaches. Had he survived, Mr. Devecseri would have owed a reciprocal duty to disclose any information in his possession which might have voided his coverage — in particular, that he had consumed alcohol. If, after having received this disclosure, RSA had continued to provide a defence, Mr. Devecseri could have relied on that continued defence as an assurance of coverage that could prevent RSA from later changing positions. Had, however, Mr. Devecseri failed to disclose to RSA the fact of his having consumed alcohol, the breach of his duty to disclose would foreclose any later assertion by him and against RSA of estoppel.

[37] Trial Lawyers asks that we allow third‑party claimants to piggy‑back onto the relationship between insurer and insured, characterized as it is by mutual duties of utmost good faith and fair dealing, but in a way that strips the new relationship between an insurer and third‑party claimants of all such mutuality. So, while Mr. Bradfield claims he does not recall whether Mr. Devecseri consumed alcohol, it is worth bearing in mind that, had he known, he would be under no obligation to RSA to disclose that fact. And yet, Trial Lawyers would have this Court burden RSA with a duty to Mr. Bradfield to discover that selfsame fact. We see no justice in impressing RSA with such a duty while Mr. Bradfield owes no corresponding obligation. Further, and in any event, we note that promissory estoppel requires that the party seeking the aid of equity come with clean hands, which may also entail an obligation to disclose material facts, particularly in contexts such as insurance where parties are bound by reciprocal duties of utmost good faith (see, e.g., MacDougall, at §§ 5.289 to 5.292).

[38] Viewed in light of the reciprocity of obligations between the actual contracting parties — the insurer and the insured — there is a certain absurdity to Trial Lawyers’ position. It would effectively mean that a contract of liability insurance provides greater protection to, and imposes fewer (indeed, no) obligations upon, third parties like Mr. Bradfield than it provides to and imposes upon the first‑party insured. This result effectively runs contrary to the clear expression of legislative intent in s. 258(11) of the Insurance Act, which provides that an insurer is entitled to assert any defences against the claimant as it could raise against the insured.

....

[50] The final hurdle for Trial Lawyers would lie in establishing detrimental reliance. While we need not decide whether detrimental reliance is made out on the facts of this case, we note that the parties advanced arguments on the extent to which detrimental reliance can be presumed in cases where litigation has progressed to an advanced stage (see Rosenblood Estate, at pp. 156-57). This Court has never opined on such a presumption of prejudice and we decline to do so here, but we nevertheless highlight that the cases upon which Trial Lawyers relies involved claims by the first‑party insured, not third‑party claimants. This distinction requires careful consideration in a future case.

[51] We also affirm that detrimental reliance by the promisee must be shown to assert promissory estoppel. The Court in Maracle did not refer to the requirement of detrimental reliance because the detriment in that case was self‑evident: the promisor allegedly stated it would not act on an expired limitation period and the promisee then allowed the limitation period to expire before bringing an action. Detrimental reliance has, however, always been a requirement for asserting promissory estoppel, or for that matter any form of estoppel. This is because, being an equitable doctrine, its goal is to address unconscionable, unjust, or unfair conduct (Ryan, at paras. 68 and 74; Cowper‑Smith v. Morgan, 2017 SCC 61, [2017] 2 S.C.R. 754, at paras. 20 and 28). And what makes it unconscionable, unjust, or unfair to resile from a promise or assurance is that the promisor has, by intention and effect, induced the promisee to change its position in reliance thereon, to its detriment. For that reason, asserting promissory estoppel requires evidence of prejudice, inequity, unfairness or injustice before courts will give hold a promisor to its promise or assurance (see Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439 (H.L.), at p. 448, aff’d in Conwest Exploration Co. v. Letain, 1963 CanLII 35 (SCC), [1964] S.C.R. 20, at pp. 27‑28, per Judson J.; Fort Frances, at p. 202, and Ryan, at para. 51, citing Amalgamated Investment & Property Co. (In Liquidation) v. Texas Commerce International Bank Ltd., [1982] 1 Q.B. 84 (C.A.), at p. 122).
. J.D. Strachan Construction Limited v. Egan Holding Inc.

In J.D. Strachan Construction Limited v. Egan Holding Inc. (Div Ct, 2021) the Divisional Court set out the test for promissory estoppel:
[28] The doctrine of promissory estoppel is well established. Its application is highly fact specific. Writing for the Supreme Court in Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, Sopinka J. explained (at p. 57):
The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607, Ritchie J. stated, at p. 615:
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641, at p. 647. McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances.
[29] Maracle involved an insurance claim dispute. In that case, Sopinka J. accepted (at pp. 58-59) that promissory estoppel could prevent an insurer from relying on a limitation period where there has been a promise to not rely on it. An insurer’s admission of liability and promise to pay is a factor from which a court may infer such a promise. However, for such an admission or promise to extend to a limitation period, Sopinka J. held (at p. 58) that something more than the admission itself is needed:
An admission of liability is frequently made in the course of settlement negotiations. This is often a preliminary step in order to clear the way to enter into a discussion as to quantum. Indeed, when an offer to pay a stated amount is made by one party to the other, an admission of liability is usually implicit. In this type of situation, the admission of liability is simply an acknowledgment that, for the purpose of settlement discussions, the admitting party is taking no issue that he or she was negligent, liable for breach of contract, etc. There must be something more for an admission of liability to extend to a limitation period. The principles of promissory estoppel require that the promissor, by words or conduct, intend to affect legal relations. Accordingly, an admission of liability which is to be taken as a promise not to rely on the limitation period must be such that the trier of fact can infer from it that it was so intended. There must be words or conduct from which it can be inferred that the admission was to apply whether the case was settled or not, and that the only issue between the parties, should litigation ensue, is the issue of quantum. Whether this inference can be drawn is an issue of fact. If this finding is in favour of the plaintiff and the effect of the admission in the circumstances led the plaintiff to miss the limitation period, the elements of promissory estoppel have been established. [emphasis added]
. Grasshopper Solar Corporation v. Independent Electricity System Operator

In Grasshopper Solar Corporation v. Independent Electricity System Operator (Ont CA, 2020) the Court of Appeal considers the doctrine of promissory estoppel:
Promissory estoppel

[67] Promissory estoppel typically involves a promise by one party not to rely on its strict contractual rights. Where such a promise has been made with an intention that the other party will rely on it, and that party relies on the promise to his or her detriment, the party who made the promise is estopped from acting inconsistently with it. As with a shared assumption, although the promise does not vary the terms of the contract, the party who made the promise may be precluded from resiling from it to the extent necessary to protect the position of the party who has relied on the promise to his or her detriment.

[68] The classic case is Central London Property Trust v. High Trees House, [1947] K.B. 130. In that case, in the context of a 99-year lease, a landlord agreed to accept reduced rent from a tenant for an indefinite period of time as a result of reduced demand during WWII. Lord Denning held that the landlord’s dispensation came to an end when full occupancy resumed but could also have been terminated at any time by notice. That is, the landlord could require the terms of the lease to govern future payments but was estopped from recovering past rent he had promised to discount.
. High Tower Homes Corporation v. Stevens

In High Tower Homes Corporation v. Stevens (Ont CA, 2014) the Court of Appeal set out the essence of promissory estoppel:
[57] The Supreme Court set out the principles of promissory estoppel in Maracle v. Travelers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50 at p. 57:
The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.
[58] The promise can be inferred from the circumstances, but must be unambiguous: see Engineered Homes Ltd. v. Mason, 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641.

[59] Promissory estoppel is equitable relief. Therefore, the party seeking to invoke it must show that its “past record in the transaction is clean”: see Toronto (City) v. Polai, 1969 CanLII 339 (ON CA), [1970] 1 O.R. 483 (C.A.), at pp. 493-494; see also Servello v. Servello, 2014 ONSC 5035 (CanLII), 245 A.C.W.S. (3d) 330, at paras. 107-108, 117.
. Bradfield v. Royal Sun Alliance Insurance

In Bradfield v. Royal Sun Alliance Insurance (Ont CA, 2019) the Court of Appeal usefully compared 'waiver by conduct' [see above] and promissory estoppel:
Estoppel

[42] The essential elements of estoppel are that:
1. As in the case of waiver, the insurer must have knowledge of the facts that support a lack of coverage; and

2. Unlike waiver, there must be “a course of conduct by the insurer upon which the insured relied to its detriment.” Rosenblood Estate, at p. 18.
[43] In Rosenblood Estate, a credit union claimed its solicitor was dishonest, resulting in losses to the credit union. The credit union sued the solicitor, who was insured by the Law Society. The Law Society retained counsel to defend the claim against the solicitor. Two years later, the Law Society advised the estate that it was denying coverage on the grounds that the loss was caused by dishonesty, which was excluded from coverage, and that the insured solicitor was in breach of the policy by failing to give timely notice of possible claims.

[44] The court in Rosenblood held that the insurer was estopped from denying coverage, as the insurer had all of the relevant facts necessary to decide whether to defend the fraud claim but nonetheless elected to defend the claim.

[45] The insurer in Rosenblood should have appreciated the significance of the information in its possession that constituted a policy violation. Despite this information, it elected to defend the claim. The insured relied to its detriment on the insurer’s agreement to defend the claim. As such, the insurer was estopped from relying on a policy breach and was required to defend the claim.
. Cosentino v. Roiatti

In Cosentino v. Roiatti (Div Ct, 2006) the Divisional Court considered promissory estoppel where the defendant client claimed that the plaintiff solicitor would only take his fees from recovery:
[25] It is the position the Roiattis that the doctrine of promissory estoppel was indeed applicable in this case. The doctrine of promissory estoppel applies whenever one party has, by his words or conduct, made a promise or assurance which was intended to affect their legal relationship which is acted upon by the other party to his or her detriment. See Tudale Explorations Ltd. and Bruce, 1978 CanLII 1471 (ON SC), [1978] 20 O.R. (2nd) 593 (Ont. Div.Ct.); Maracle v. Travellers Indemnity Company of Canada, 1991 CanLII 58 (SCC), [1991] S.C.J. 43.


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