The Partition and Property Act (PPA) gives the court a broad discretion to order partition and sale of co-owned property.
Section 2 of the PPA provides in part:
(1) All joint tenants, tenants in common, . . . and all parties interested in any land may be compelled to partition or sell the land, or a part of it as provided in this Act.
(2) Subsection (1) applies whether the estate is legal or equitable or equitable only.
Under s. 7 of the PPA, the court has the discretion to order the sale of property, rather than partition.
Sections 2, 6 and 7 also give the court discretion not to order a sale.
“Partition” simply means the dividing of lands held in joint ownership into distinct portions so that they may be held individually. The usual purpose of a petition for partition and sale is to have the court order a sale of the property after firstly determining the respective equities of the owners.
The court has a broad discretion to fashion a remedy that brings the parties dispute to an end in the fairest and most appropriate possible way.
The use of the word “ may” in S. 2, 7 and 8 has been held to create such a discretion. Evans v. Evans (1951) 2 DLR 221 ( BCCA).
Chief Justice Hinkson in Lashman v Spencer 2022 BCSC 96 stated that the court has a broad discretion to determine whether an order for sale of the property would be in the interests of justice.
He followed the decision of Haigh v Kent 2016 BCSC 333 and stated orders for partition or for sale are discretionary. The onus is on the parties who do not wish to suffer partition or sale to demonstrate to the court that the interests of justice are such that the order for partition or sale, should not be made. The fact remains that the discretion is broad and unfettered and will turn on whether justice requires that such an order not be made.
S.6 PPA describes circumstances in which the court “shall” order a sale but with the limitation “unless it sees good reason to the contrary.”
Standing to Bring the Claim
S. 2 states the types of co-ownership that are subject to the PPA, but in addition to this, anyone seeking partition or sale must have an immediate right to possession of the land. Thus owners of future interests, such as the remainder following a life estate, cannot claim these remedies.
Additionally, in order to have standing under the PPA, the owner must have a “possessory interest” in the land which Blacks law dictionary defines as “an immediate right to possession of the land.”
In Aho v Kelly 1998 CarswellBC 1285 the court held that a one third owner of a life estate in the property had the right to capitalize the life estate and force a sale of the property under the PPA. The other two co-owners could not have partitioned the property while the life estate was in place, but the holder of the life estate could do so.
Where the Court Will Order Partition and Sale
S. 2 provides the gateway through which a party with an interest in land may have the court consider whether to order a partition or sale of the property. A party who does not wish to “suffer partition or sale” bears the onus of demonstrating to the court that justice requires that the sale for partition or sale not be made. Failing such a demonstration, the court must enforce the interested parties, prima facie right to partition or sale.
One of the leading decisions in British Columbia on PPA is Harmeling v Harmeling (1978) 5 WWR 688 (BCCA) that stated that the court should 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.
In Bindley Estate v Quartermaine Holding Ltd. 2017 BCSC 672 the court ordered partition and sale of the property that was owned equally between two parties, where one party wished to sell and the other refused. They were unable to agree on a price, and the petitioner estate wished to sell in order to wind up the estate of the deceased owner in a residential apartment.
The court stated that it is a matter of discretion under section 6 PPA and in exercising the court’s discretion, the court must act judicially and fairly. One consideration will be whether an overriding fairness and similar result can be obtained by some other reasonable process.
Where the Court Will Refuse Partition and Sale
1. Hardship or Injustice
In Mowat v Dudas 2012 BCSC 454 the court exercised its discretion to refuse an order for sale of a major condo development of 177 units owned by 135 different owners. Some owners wanted the property sold, while others vigorously opposed same.
The court found that a sale would force many vulnerable people out of their homes, including young children, single parents, the elderly and the infirm. Many could not afford a comparable property nearby and would be forced to move far away.
There are several cases such as Bergen v Bergen ( 1969) 68 WWR 196 , where the court refused partition or sale because it was found that the plaintiffs 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.
In Lou v Vesterinen 2017 BCSC 1556 the court refused an application for partition and sale by a trustee in bankruptcy due to the serious hardship that would have detrimentally affected two young children living in the home, one of whom was severely disabled.
2. Where the Beneficial Interest Is In Dispute
In Sedberg v Snyder 2017 BCJ 803 a 21 year marriage like relationship was litigated as to each joint tenants beneficial interest in the property. The parties agreed to list the home for sale as joint tenants and to share the proceeds.
The presumption that their interests were held equally however, was rebutted.
While the wife made significant contributions to the home, her contributions were considerably less than the husbands who owned the home outright when she was added as a joint owner. The wife made significant nonmonetary contributions, but also received rent-free accommodation. An equal division would have deprived the husband of his original investment and the benefit of his very large contribution throughout, with no juristic reason.
The sale proceeds were divided 70% to him, and 30% to her.
Partition proceedings often include claims such as resulting trust or unjust enrichment where the parties are both asking the court to determine the parties’ respective beneficial interests and to then order a sale of the property.
3. Minority Owners
As previously stated and generally speaking, if a party owns 50% of the property in co-ownership, and seeks the sale of the property, then the court must order a sale unless there’s a good reason not to do so.
The situation is quite different however when dealing with a minority owner.
S. 8(2) PPA states that the court may not make an order for partition if the other parties interested in the property, or some of them, undertake to purchase the share of the party requesting the sale.
S.8(3) states that if an undertaking is given, the court may order the valuation of the share of the property requesting the sale in the manner, as the court thinks fit, and may give directions.
In Haigh v Kent 2016 BCSC 333 the court found that a division of the property would not be just or practicable due to its unique nature and topography, its use, its history and factors such as subdivision approval and land-use, permitting and access issues. Sale and distribution would inflict on the defendants the serious hardship of ending seven decades and four generations of their families’ connection to the land.
In any event, an order for sale and distribution was prohibited since the defendants gave an undertaking to purchase the plaintiff’s interest.
In Lashman v Spencer 2022 BCSC 96 the court followed Rendle v Stanhope Dairy Farm Ltd. 2003 BCSC 1894 , which held that an undertaking given under section 8 PPA must be an unqualified undertaking followed by the determination of value. If the offer does not constitute an undertaking to purchase as contemplated by S. 8(2) of the act, then the court may order partition and sale.
In Kane v Hanslo 2017 BCSC 23293 , a claim for partition and sale of the property was referred to the trial list rather than being decided at a summary trial where the parties could not agree on the beneficial interest that each owned.
The court held that the pending trial of the action constituted “good reason”, within the meaning of S. 6 PPA not to order a partition and sale at that stage. It was therefore neither necessary nor expedient for the property to be sold at that time, and that the matter should proceed to trial to clarify the rights of the parties before it was determined what property should be sold and if so, on what terms.
Prior to the passing of the Partition Act in 1868, partition was a matter of right, and the court had no discretion to refuse partition or to order sale in lieu thereof. This state of the law produced numerous inconveniences and absurdities.
The Partition of Property act now provides that the court has broad and unfettered discretion whether or not to order partition or sale and each case will turn on whether justice requires that such an order not be made. Bradwell v Scott 2000 BCCA 576 at para 26-30.