Partition and Sale Rejected-Hardship

Forced Sale of Jointly Owned Property

Forced Sale of Jointly Owned Property

In Mowat v Dudas 2012 BCSC 454, the court exercised its discretion to refuse an order for a forced-sale of the Cypress Gardens condo development of 177 units owned by 135 different owners.

Each was a co-owner of the entire stratified complex. Some owners wanted the property sold , while others vigorously opposed same.

The court basically examined each of the numerous respondents circumstances and declared that each case must be examined separately to determine whether good reason existed to refuse the sale.

The court found that a sale would force many vulnerable people out of their homes, including young children, single parents, the elderly, the infirm, and people a very limited financial means. Many could simply not afford a comparable property nearby and would be forced to move far away.

Joint ownership of property whether it be in joint tenancy, tenants-in-common, or as a strata owner in a complex, is becoming increasingly common and more complex as time goes on.

It was only just over 40 years ago that we began to see strata lot ownership, which in itself has developed into a very complex area of law.

The following extract is a very good summary of the legal notions of serious hardship and the court’s discretion under the partition of property act of British Columbia

Discretion Under the Partition of Property Act

[141] All the parties to this petition agree that the Court has a discretion not to order a sale under the Partition of Property Act. The use of the word “may” in ss. 2, 7 and 8 has been held to create such a discretion: Evans v. Evans, [1951] 2 D.L.R. 221 (B.C.C.A.).

[142] Section 6 describes circumstances in which the Court “shall” order a sale, but with the limitation “unless it sees good reason to the contrary.” As set out above, s. 6 has no application in the present case, as it has not been shown that the owners of a 1/2 or upwards interest are in support of the petition.

[143] Counsel have referred me to a number of trial decisions in which the nature of the discretion not to order a sale has been considered, including Hayes v. Schimpf, 2004 BCSC 1408; Machin v. Rathbone, 2006 BCSC 252; Zackariuk Estate v. Chepsiuk, 2005 BCSC 919; Dunford v. Sale, 2007 BCSC 1422; Zimmerman v. Vega, 2011 BCSC 757; Richardson v. McGuinness, [1996] B.C.J. No. 2636 (S.C.); Riser v. Rawlings, 2008 BCSC 1050; and Jabs Construction Ltd. v. Callahan (1991), 61 B.C.L.R. (2d) 383 (S.C.). The most useful statements of principle, however, are found in the following decisions of our Court of Appeal.

[144] A useful starting point is Harmeling v. Harmeling (1978), 90 D.L.R. (3d) 208 (B.C.C.A.), a decision of our Court of Appeal sitting in a five-justice division. There the Court rejected any approach that would limit the discretion to cases where there was a want of good faith, or vexatious intent or conduct or malice in taking the proceedings. Rather, as Seaton J.A. wrote for the majority at p. 212:

In my view we should not limit the discretion in that manner. I think that we ought to accept without qualification the general statement that there is a prima facie right of a joint tenant to partition or sale and that the Court will compel such partition or sale unless justice requires that such an order should not be made.

[145] The nature of the discretion was further clarified in Bradwell v. Scott, 2000 BCCA 576. There, the section under consideration was s. 6, but the Court opined that the exercise of discretion under that section would not be significantly different from the discretion under the other sections of the Partition of Property Act. The Court held at paras. 43-45 that the exercise of discretion would depend on the particular facts of each case:

It does not appear from my reading of either the majority or minority reasons for judgment in Harmeling that the section then equivalent to our present s. 6 was under consideration. Rather, the section considered by both judges who wrote in Harmeling, as indicated above, was s. 3 (now s. 2), and in particular the words “may be compelled.” We are bound by the majority opinion that those words confer a discretion to refuse an order where “justice requires that such an order should not be made.”

This case, however, turns on the interpretation of s. 6, and the meaning to be given to the words “unless it sees good reason to the contrary.” Having said that, I am unable to see any real difference between the discretion conferred by this language and that described by Mr. Justice Seaton as arising under s. 3 (now s. 2).

To the extent that “serious hardship” was said in Dobell [Dobell v. Oman, [1998] B.C.J. No. 504, (6 March 1998), Vancouver Registry, A972782 (B.C.S.C.)] to be the test for “good reason to the contrary” I would respectfully disagree. Serious hardship to a respondent may be a proper ground for refusing an order for sale, as might lack of “good faith, vexatiousness or maliciousness” on the part of the petitioner. But these are not the exclusive measure of “good reason.” I agree with Mr. Justice Seaton that we should not limit the discretion by creating a general rule that might serve to justify refusal in any given case. The facts and circumstances of each case must be examined to determine whether a good reason, of whatever sort, exists for refusing the order.

[Emphasis added.]

[146] At paras. 34-35, the Court also addressed the question of onus or burden of proof:

In para. 9 of the chambers judge’s reasons (quoted above at para. 13) he said that it was not possible to determine who was at fault for the various confrontations and altercations which occurred between the parties. The Scotts contend that in leaving this issue unresolved, the chambers judge effectively placed upon them the onus of proving that the Bradwells were not entitled to equitable relief. They say this is an error because as the parties seeking equitable relief, it was for the Bradwells to establish their entitlement to same. As they failed to establish their entitlement, it is the Bradwells who should bear the risk of non-persuasion.

This argument is closely related to the Scotts’ jurisdictional argument, dealt with above, and in my respectful view it must fail for essentially the same reasons. There is no requirement under s. 6, either as a condition precedent to jurisdiction, or otherwise, for the petitioner to prove that he comes to court with “clean hands”, and is otherwise entitled to equitable relief. The section says the court must order sale of the property “…unless it sees good reason to the contrary”. This language is neutral in terms of onus. It is for the court to assess the evidence and to determine whether justice requires that such an order be denied. In practical terms, it would be for those opposing the application to put before the court evidence tending to establish a good reason for refusing it. In any event, I can see nothing in the statute or in the cases decided under it, to support the Scotts’ submission.

[Emphasis added.]

Serious Hardship

[147] As set out in Bradwell, serious hardship is one circumstance that may provide a proper ground for refusing an order for sale, although it is not the exclusive measure of when that discretion may be exercised.

[148] Phillips v. Phillips (1980), 24 B.C.L.R. 194 (C.A.) is an example of the kind of serious hardship that may justify the exercise of discretion to refuse partition or sale. The property in that case was jointly owned by a husband and wife. After separation, the wife continued to live in the property with the children, but the husband applied for partition and sale to raise money to pay off his loans. The trial judge found that the husband’s application was not vexatious, and granted the order. The Court of Appeal allowed the wife’s appeal and set aside the order for partition and sale on the basis that if the order were allowed to stand, the wife and children would be left without a home and would have to relocate. Although Phillips was a case involving a husband and wife, the Court of Appeal applied the general principles relating to partition and sale as set out in Harmeling.

[149] Similarly, in Bergen v. Bergen (1969), 68 W.W.R. 196 (B.C.S.C.), Seaton J. refused partition or sale because he held that the plaintiff husband’s conduct was economically oppressive. The premises were of a relatively low value, and if the property was sold, the wife would not have been able to provide adequate accommodation for herself and her children.

[150] In the present case, there is evidence that many of the respondents would suffer hardship if there were an order for sale of the Land.

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