Stephanie Millet CLAIMANTS -and – DEFENDANT Justin David Murphy DECISION v. ORDER, 2011 NSSM 21

SCCH 342422 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Cite as: Millet v. Murphy, 2011 NSSM 21 Between: Stephanie Millet CLAIMANTS -and – DEFENDANT Justin David Murphy DECISION AND ORDER Adjudicator: David T.R. Parker Heard: March 31, 2011 Decision April 1, 2011 Counsel: Mike P Scott represented the Claimant The Defendant was self represented This matter came before the Small Claims Court previously wherein the Claimant appeared and presented evidence and the Defendant did not appear. Following the hearing an Order was issued by the court requiring the Defendant pay $11,202.91 inclusive of costs.

Within a few days of the issuance of the order the Defendant made application to the court to have the order set aside. The Defendants

had filed a defence previously, provided a reasonable excuse for not appearing and brought the application within a reasonable time. As a result the order was set aside in a new hearing date being March 31, 2011 was set. The Defendant acknowledged that he owed the money claimed by the Claimant who was to be paid by May 2010. The loan has not been re-paid. The Defendant said he did not have the money to pay the Claimant on May of 2010 due to some earning of income not meeting expectations and other matters involving day-to-day costs.

The parties had been having a relationship for over a year and a half and in February 2010 the Claimant moved into the Defendant’s home. In May of 2010 the parties parted ways. In October 2010 the Claimant presented the Defendant with a document formalizing their verbal agreement to pay back the loan of $9000 plus $1000 interest by May of 2010. The document went on to say that "I [meaning the Defendant] agreed to have the $10,000.00 loan repaid by August 1, 2011." At the same time in October 2010 there was some discussions between the parties whereby the Defendant would pay on the loan they monthly payments.

The Defendant was going to have a new tenant living at his home which would allow him to pay on the loan on a monthly basis. In November 2010 the Defendant did pay the Claimant $250.00 but that stopped as a result of a disagreement over a dog named Roma. The Claimant's counsel argues that October 4, 2010 document lack consideration as there was no benefit received by either the Claimant or Defendant. The Defendant did not disagree or challenge this argument but rather agreed that there was no benefit received by him.

After listening to the evidence of both parties it became clear that the Defendant simply had not paid the amount of money as agreed and felt he could not do so because financial and other circumstances in his life were not right at that time. The purchase of a motorbike was the reason the loan was made in the first place. It would also appear that the Claimant was concerned that she was not going to get paid at all and she required the money for continuing her education in Toronto Ontario.

In November of 2010 the Defendant did e-mail the Claimant saying that he would give her the motorcycle to sell to cover the debt. As noted earlier the Defendant and the Claimant in October did discuss the Defendant paying the Claimant a monthly amount which he would obtain from having another tenant living at his premises. A payment of $250.00 was made in November and accepted by the Claimant however no further payments were made. In this particular case I accept counsel's argument that the note dated October 4, 2010 does not apply in terms of the Defendant not having to pay the Claimant until August of 2011.

Notwithstanding the document was drafted by the Claimant she was very concerned that she would not get paid and wanted to have something in writing. The Claimant had moved out of the Defendant's premises in May of 2010 and had not received payment except for payment in November 2010. I have considered the concept of promissory estoppel, raised by Counsel with respect to the Defendant using the note of October 4, 2010 as a barrier to the Claimant enforcing the verbal agreement of payment being made by May of 2010.

The Defendant in this case did acknowledge there was no benefit received by him with respect to this note of October 4, 2010. The tenets and history of Promissory Estoppel are explored thoroughly in the decision of Justice Nathanson in the case: Campbell v. Inverness (County) [1990] N.S.J. No. 195 . In that case Justice Nathanson said: "The modern wellspring of the doctrine of promissory estoppel is the decision of Denning, J. in Central London Property Trust, Ltd. v. High Trees House, Ltd., [1956] 1 All E.R. 256 ; [1947] K.B. 130.

Although much of the decision is considered to be obiter, the case is recognized as authority for the principle there laid down. At pp. 134-5 (K.B.) it is stated: "... There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel are not really such. They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on. In such cases the courts have said that the promise must be honoured.

The cases to which I particularly desire to refer are: Fenner v. Blake, [ [1900] 1 Q.B. 426 ], In re Wickham [ (1917), 34 T.L.R. 158 ], Re William Porter & Co., Ld., [ [1937] 2 All E.R. 361 ] and Buttery v. Pickard, [[1946] W.N. 25]. As I have said they are not cases of estoppel in the strict sense. They are really promises -- promises intended to be binding, intended to be acted on, and in fact acted on. Jorden v.

Money [(1854), 5 H.L.C. 185] can be distinguished, because there the promisor made it clear that she did not intend to be legally bound, whereas in the cases to which I refer the proper inference was that the promisor did intend to be bound. In each case the court held the promise to be binding on the party making it, even though under the old common law it might be difficult to find any consideration for it. The courts have not gone so far as to give a cause of action in damages for the breach of such a promise, but they have refused to allow the party making it to act inconsistently with it.

It is in that sense, and that sense only, that such a promise gives rise to an estoppel. The decisions are a natural result of the fusion of law and equity: for the cases of Hughes v. Metropolitan Ry. Co. [ (1877), 2 App. Cas. 439 , 448], Birmingham and District Land Co. v. London

& North Western Ry. Co. [(1888), 40 Ch. D. 268, 286] and Salisbury (Marquess) v. Gilmore, [[1942] 2 K.B. 38, 51],afford a sufficient basis for saying that a party would not be allowed in equity to go back on such a promise ..."(emphasis added) Four points ought to be noted from the words of Lord Denning (as he later was). First, in order to support a promissory estoppel, it is necessary that there be a promise which was "intended to be binding,intended to be acted on, and in fact acted on". This has been described as a promise as to the future conduct of the promisorupon which the promisee relies and acts.

Second, it is necessary that the promise made "was intended to create legal relations". This may, perhaps, imply that the partiesneed not have been already bound contractually to each other. A review of the facts of the case reveals that the parties were infact bound contractually (i.e. landlord-tenant) and, in addition, all of the cases cited by Lord Denning dealt with fact situationsin which the parties were bound contractually. The judgment does not expressly state what the law is on this point. Third, "[t]he courts have not gone so far as to give a cause of action in damages" for a breach of the promise.

The words appearto preclude a promissory estoppel creating a cause of action. If they do not preclude it, one can perceive that there may be doubtas to whether consideration is essential to the formation of contracts. Finally, it is necessary that the promise be one "which, to the knowledge of the person making the promise, was going to beacted on by the person to whom it was made, and which was in fact acted on". Thus the promisor must intend the promise toinduce the promisee to alter his or her position and the promisee must rely upon the promise and alter that position.

However,there is some disagreement in subsequent cases as to whether the promisee must, in altering position, act to his or her detriment. Lord Denning had occasion to consider the doctrine of promissory estoppel once again in Combe v. Combe, [1951] 2 K.B. 215,[1951] 1 All E.R. 767. In doing so, he re-stated the doctrine in the following manner: "... It may be part of a cause of action, but not a cause of action in itself.

The principle, as I understand it, is thatwhere one party has, by his words or conduct, made to the other a promise or assurance which was intended to affectthe legal relations between them and to be acted on accordingly, then, once the other party has taken him at his wordand acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previouslegal relations as if no such promise or assurance had been made by him, but he must accept their legal relationssubject to the qualification which he himself has so introduced, even though it is not supported in point of law by anyconsideration, but only by his word.

Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with thenecessity of consideration when that is an essential part of the cause of action. The doctrine of consideration is toofirmly fixed to be overthrown by a side-wind ..." (emphasis added) The effect of those oft-quoted words is to clarify or modify the doctrine as set out in Central London Property Trust, Ltd. v.High Trees House, Ltd. in several material respects. First, a promissory estoppel must be supported by a promise or anassurance. Second, the promise or assurance may be given by words or conduct.

Third, the promise or assurance must beintended to affect existing legal relations -- although nothing is said about whether such relations must be contractual relations.Fourth, a promissory estoppel may be part of a cause of action, but not a cause of action in itself. Note that nothing is said aboutwhether it is necessary for the promisee to alter position to his or her detriment. After Combe, the doctrine was considered in innumerable court decisions handed down in jurisdictions throughout Canada andthe Commonwealth. Lord Denning participated in some of them.

Many academics and jurists (including Lord Denning) treatedfurther modifications of the doctrine, particularly the nature of the legal relations (if any) existing between the promisor andpromisee as well as the question of detriment. It is not possible to analyze or even deal with any substantial number of thosesubsequent decisions in the limited confines of these reasons. I propose to limit my consideration to the leading decisions of theSupreme Court of Canada and the Appeal Division of the Supreme Court of Nova Scotia which, of course, are binding upon me.

No decision of the Supreme Court of Canada contains, as far as I can tell, a complete exposition of the doctrine of promissoryestoppel. It has not explicitly embraced systematically all of the elements of the doctrine set out in Central London PropertyTrust, Ltd. v. High Trees House, Ltd. and Combe v. Combe. However, during the almost forty-five years since High Trees, it hasissued a small number of decisions which directly or indirectly accept most of those elements. Of those, I will refer to three. Conwest Exploration Co. Ltd. et al v.

Letain (1963), (SCC), 41 D.L.R. (2d) 198 concerned a fact situation inwhich a contract (i.e. an option) existed between the parties. The majority of three decided against the optionor on grounds otherthan promissory estoppel, although one of them, Cartwright, J., was of the opinion that that defence was available in thecircumstances. Of the two dissenting members of the Court, only Martland, J. based his reasons on the doctrine of promissoryestoppel in holding at p. 202: "... What Conwest really seeks to do is to use equitable estoppel as a means of establishing that there was anextension of the option period.

But such an extension would involve the making of a new contract and for such acontract there was no consideration. The doctrine has never been extended this far and its application in similar circumstances was denied by the Courtof Appeal in England in Combe v. Combe, [1951] 2 K.B. 215. While it is true that in that case the party seeking toapply the principle was the plaintiff in the action, in my opinion its application is not dependent upon which partysues the other.

The basic question is as to whether, in the circumstances of the particular case, it is being used as adefence to the strict enforcement of contractual rights, or as a means of proving the existence of a contract madewithout consideration. It has no application to the latter type of case and consequently, in my view, should not be

applied here." (emphasis added) In John Burrows Ltd. v. Subsurface Surveys Ltd. et al. (1968), (SCC), 68 D.L.R. (2d) 354, [1968] S.C.R. 607there was an existing contract (i.e. pledge and promissory note).

Ritchie, J. on behalf of the Court, in dealing with a submissionbased on the defence of promissory estoppel, held at p. 360 (D.L.R.): "It seems clear to me that this type of equitable defence can not be invoked unless there is some evidence that one ofthe parties entered into a course of negotiation which had the effect of leading the other to suppose that the strictrights under the contract would not be enforced, and I think that this implies that there must be evidence from whichit can be inferred that the first party intended that the legal relations created by the contract would be altered as aresult of the negotiations." (emphasis added) In Canadian Superior Oil Ltd. et al. v.

The Paddon-Hughes Development Co. Ltd. et al. (1970), (SCC), 12 D.L.R.(3d) 247; [1970] S.C.R. 932; (1970), 74 W.W.R. 356 subnom. Canadian Superior Oil et al. v. Hambly et al. there was an existingcontract (i.e. oil and gas lease). Martland, J. on behalf of the Court cited, inter alia, Combe v. Combe and held that "a cause ofaction cannot be founded upon an estoppel". He also cited Conwest Exploration Co. Ltd. et al. v. Letain, (supra), and held at p.252: "This principle assumes the existence of a legal relationship between the parties when the representation is made.

Itapplies where a party to a contract represents to the other party that the former will not enforce his strict legal rightsunder it. In the present case, however, the contractual relationship between the parties has come to an end before anyrepresentation is alleged to have been made ..." (emphasis added) I will refer to only one of the decisions of the Appeal Division of the Nova Scotia Supreme Court. It is clearly on its face directlyon point.

Re Co-operative Trust Co. of Canada and Atlantic Steel Buildings Ltd. et al. (1982), (NS SC), 134 D.L.R.(3rd) 316; (1982), (NS CA), 50 N.S.R. (2d) 609 dealt with a circumstance where there was no existing contractbetween the parties (i.e. a mortgage and a mechanics' lien Claimant). Speaking on behalf of the Appeal Division, MacDonald,J.A. interpreted the decision of Ritchie, J. in the John Burrows case as agreeing with cases which hold that, before the doctrine ofpromissory estoppel can apply, the parties must be contractually bound to one another.

He concluded by holding that some priorlegal relationship must exist. In addition, he considered that it was doubtful whether "the prerequisite of detriment" had beenestablished. A careful reading of this decision and the cases cited therein strongly suggest that the legal relationship which MacDonald, J.A.had in mind was a binding legal relationship. If so, the rule is that some binding legal relationship must exist between the partiesbefore the doctrine of promissory estoppel can be relied upon. There was a binding legal relationship in existence in both HighTrees and Combe v.

Combe, and one can understand why Lord Denning may have used the simple phrase "legal relations" inthe context of a binding legal relationship. Logic also supports this position. If the legal relationship need not be a binding one,there is no need to require that the promise or assurance intended to affect that legal relationship be binding as well because if itwas not either party could change position at will without fear of the consequences. The most obvious and usual type of binding legal relationship is a contractual relationship.

But other legal relationships mayalso have the quality of being a binding legal relationship. In my opinion, these views are consistent with, or at least not inconsistent with, the decisions in John Burrows, CanadianSuperior Oil, and Co-operative Trust Co. Another rule of the doctrine of promissory estoppel is that the promisee must alter position as a result of the promise orassurance given by the promisor. But there seems to be a question as to whether the alteration of position must be to thedetriment of the promisee.

Of the four Canadian cases discussed, only Co-operative Trust Co. deals with this point with a baremention of "the prerequisite of detriment". In my opinion, there is no longer any question -- the promisee must alter position tohis or her detriment. But, having said that, I also say that I have great difficulty contemplating any circumstance in which apromisee would suffer no detriment and yet initiate court action against the promisor.

The last rule of the doctrine of promissory estoppel which I want to discuss is whether a promissory estoppel creates a cause ofaction as well as being able to be used to defend an action. This is often stated colourfully as whether promissory estoppel can beused as a sword as well as a shield. This issue can be taken as settled, at least for the time being, as a result of High Trees, Combev. Combe, and the minority decision in Conwest Exploration.

It is worthwhile to note that in the last-mentioned case Martland, J.indicated that the application of the rule is not dependent upon which party sues the other but, rather, depends whether thedoctrine of promissory estoppel is being used as a defence to the strict enforcement of the promisee's rights. All the foregoing cases and discussion have led me to conclude that High Trees and Combe v.

Combe are alive and well and ineffect in Canada in general and in Nova Scotia in particular, with their original statements of the doctrine of promissory estoppelsubstantially intact." One of the questions which I have considered in the case at bar would be was the promise to pay the loan by August 1, 2011 by thepromisor/Defendant actually a promise. Another question would be was the promise, if that is what it is interpreted as, to be acted uponby the promise/Claimant. The question is what did the promisor or promisee have to do?

In this particular case the promisee did not haveto do anything, she did not have to act as was the situation in the high trees case where the tenants/promisees agreed to remain in a verydangerous situation when the landlord made a promise to reduce their rent.

Was a promise by the promisor intended to be binding? The promise was to repay the loan by a certain date. If it was intended to be binding it would appear to be binding on the promisor himself. This was not a promise requiring the promisee not to enforce the original loan agreement of payment of the loan in full by May 2010. The promise was not acted upon. In fact the promisor/Defendant started repayment of the debt but then stopped. By stopping payment one can conclude that the promisor did not intend to pay back the debt as promised. Did he, the promisor go back on his promise?

Was this a promise to do something that was already promised? Was this a situation of a contract or an agreement involving past consideration? If so there can be no agreement. The argument the Claimant used was that there was no binding agreement with respect to the October 4, 2010 document as there was simply no consideration let alone past consideration which of course never amounts to good consideration. To have promissory estoppel there has to be a promise by the promisor intended to be acted upon by the promisee and in fact acted upon. This is not the case here.

Therefore in conclusion I would say there is no defence of promissory estoppel nor is there a defence that there is a valid contract on October 4, 2010. I would also say that if there was a contract on October 4, 2010 to have the loan repaid by August 1, 2011 there was a collateral contract that monthly payments would be made. One payment was made however no further payments continued. On that basis alone the Claimant could show there was a breach of contract by the Defendant. The original agreement was that the $10,000.00 will be paid by May of 2010 and the only amount paid to date has been $250.00.

The Claimant will succeed in this part of her claim and will also succeed on the other aspects of the claim with respect to motorcycle parts, jacket and reasonable of pocket costs as well as prejudgment interest. The next issue before this court is the counterclaim by the Defendant and Claimant by way of the counterclaim. The counterclaim involves a dog by the name of Roma. While this is a claim of the Defendant, the Claimant is saying that she actually owns the dog not the Defendant. These are very difficult cases as emotions are often involved.

The court tries not to consider the vehemence of the parties claim but rather to look at the facts to determine who has proprietary rights. The facts of this case indicate that most indices of ownership rest with the Defendant/Claimant by way of counterclaim. I shall go through them now. The dog Roma is a particular breed of dog known as a Cane Corso which is rather large purebred dog. The Defendant Jason Murphy prior to the purchasing of Roma had a similar dog not the breed as Roma but a large animal nevertheless.

The dog Roma lived at the Defendant's premises from the time it was purchased in March 2010 until November 2010 when it took up residence at the Claimant's grandmother's home. The Claimant left the Defendant's home in May 2010 but never took the dog until November 2010. The Claimant said that it was more convenient during that time of May to November to have the dog reside at the Defendant’s premises as there was a large fence enclosure for the dog.

The question that was raised by the Defendant was why in November was it better for the dog to be at the Claimant's grandmother's residence and not back in May when the Claimant left the Defendant's residence. The dog was registered with the Halifax Regional Municipality in the name of Justin David Murphy. This does not indicate ownership but it is just one other indicator. This is also the case with respect to the name on the invoices from the veterinarian’s hospital which indicate that Justin Murphy is to be billed for expenses incurred at the hospital.

The Defendant also produced food bills for the dog from the time it was purchased in March until it left the Defendant's home in November 2010. I also believe the Defendant when he talked about the reason for initially being interested in this dog and how his mother directed him to a website regarding a new dog. I have also considered the e-mail from the Defendant to the Claimant saying he would like his dog back and that it should continue to live with his dog Tundra on a permanent basis.

He said in an e-mail to the Claimant "I would be willing to exchange the bike for Roma on the same date and location." The Claimant also made all the arrangements with the breeder before the dog was viewed and picked up by the Claimant and Defendant. All these are indicators of ownership The indicators of ownership with respect to the Claimant were that she actually paid for the dog.

While this is a very meaningful indicator of ownership I accept the Defendant's version that he had banked hours and was going to pay for the dog when he had all the money to do so if he in fact like the dog when they went to see it at the breeder’s. The Defendant said the Claimant went to the bank and got out of thousand dollars which was the asking price for the dog and he said in reflection that may have been a bad move as it made it easier to commit to the purchasing of the dog. He said and I accept this that he negotiated with the breeder and that they ultimately did pay $800.00.

The Defendant suggested that the dog was never returned to him when she took it in November. The Defendant said that the Claimant for the time she moved out of his house in May of 2010 in November 2010 would often take the dog home to her grandmother's for a night or two as the Defendant did shift work. He said this was convenient for him and also and he never wanted to hurt the Claimant by not allowing access to the dog. The Defendant said however that in November he started dating another friend and he felt that the Claimant was scorned and that is the reason she kept the dog.

That may or may not be true but it does seem unusual that the method of accessing the dog for a day or so from May to November suddenly changed to full-time control of the dog. The Defendant said he never went and tried to get the dog from the Claimant during all that time as the Claimant told him that if the entered on to her grandmother's property she would contact the police and have the Defendant charged. The Defendant said he was an officer with Halifax Regional Municipality and as such did not want to cause potential problems with his employer. I accept his evidence here as well.

For all these reasons Roma is the Defendant,s dog and should be returned to him, however he should pay back the Claimant $800.00 for the dog

Roma. It Is Therefore Ordered That the Defendant pay the Claimant the following sums: $10,000.00 main debt $ 363.71 regarding motor cycle parts $ 437.00 regarding jacket $ 362.68 interest $ 80.50 service costs $ 28.50 Courier costs $ 39.90 Photocopying $ 3.67 Postage costs $ 179.35 court costs $ 800.00 cost for Roma $ -250.00 Credit $12,002.91 Total It Is Further Ordered That the Claimant Stephanie M`illet deliver up the Cane Corso dog called Roma to the Defendant Justin David Murphy