Partition and Sale Refused Due to Serious Hardship

Partition and Sale Refused Due to Serious Hardship

Lou v Vesterinen 2017 BCSC 1566 refused an application for partition and sale by  trustee in bankruptcy due to “serious hardship” of the two young children living in the home, one of whom was severely disabled.

It is a good example of where the court will exercise it’s discretion to refuse partition and sale where hardship exists to the owner of the property.

The court’s discretion under the PPA:

[105] Section 2 of the PPA provides in relevant 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. . . .

[106] Under s. 7 of the PPA, the court has the discretion to order sale of property, rather than partition.
[107] Sections 2, 6 and 7 also give the court discretion not to order a sale.

[108] In Harmeling v. Harmeling (1978), 90 D.L.R. (3d) 208 (B.C.C.A.), a case decided under what is now s. 2 of the PPA, the court declined to limit the discretion to cases where the proceedings were brought with a lack of good faith, malice or vexatious intent. Seaton J.A., writing for the majority, stated at p. 212:

. . . In my view we should not limit the discretion of that manner. I think 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.

[109] In Bradwell v. Scott, 2000 BCCA 576, the Court explained that there was no real difference between the discretion conferred under ss. 6 and 2 of the PPA:

43 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”.

44 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).

45 To the extent that “serious hardship” was said in Dobell 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].

[110] Serious hardship is a circumstance that may constitute a proper ground for refusing an order for sale: Mowat v. Dudas, 2012 BCSC 454 at para. 147.

[111] In Mowat at paras. 162 to 167 and 191, the court concluded that it would be unjust to make the order for sale where a substantial number of residents of a common-law condominium, many of whom were elderly, infirm or of very limited financial means, would be put out of their homes without the means to find suitable replacement housing.

[112] Here, the petitioner had a prima facie right to an order for sale of Glenroy Drive. The question is whether, in all the circumstances, there is good reason for the court to refuse that order.

[113] Glenroy Drive is the family home of the respondent, Mr. Vesterinen, the respondent’s adult daughter and her two young children. Nichola Sobie rents a three-bedroom basement suite at Glenroy Drive, for which she pays rent of $700 a month to her mother. She works as a retail clerk and relies upon the respondent for child care for her two children, ages eleven and four.

[114] The respondent’s daughter has a history of bipolar disorder and schizophrenia for which she receives ongoing treatment. From 1997 through 2004 she was repeatedly hospitalized for psychosis or depression. Since then, her condition has stabilized. She attributes her ability to function in the community and as a mother to the support she receives from the respondent and the stable accommodation she enjoys at Glenroy Drive.

[115] The petitioner submits that while an order for sale may result in some inconvenience, the respondent has not shown that she, or members of her family, would suffer serious hardship. I disagree. The respondent’s daughter earns a limited income, is a vulnerable person, relies upon her proximity to her mother for both childcare and emotional support, and would likely encounter difficulty in finding similar accommodation within her means. I find that an order for sale would result in serious hardship to the respondent’s family.

Conclusion on Petitioner’s Application

[116] In my view, this is a case where there is good reason to refuse an order for sale. In reaching that conclusion, I take into account both by finding of serious hardship and my finding that the respondent’s beneficial interest in Glenroy Drive substantially exceeds Mr. Vesterinen’s beneficial interest.