6 Sale Of Property Where Majority Requests

CASE LAW

Court Must Order Sale under Section 6 Unless Justice Requires Otherwise

A co-owner is usually entitled to a sale under s. 6 unless there is some good and sufficient reason to the contrary. Where residential property was jointly owned by common-law partners, the appellate court refused to set aside the default judgment as it related to the order for sale of the property because it considered that the appellant could have had no success in defending against such a claim, as the proposed defence had no viability (Dosanjh v. Singh, 2011 BCCA 179).

Baseless Assertion of Trust No Good Reason to Not Grant Order for Sale

The appellate court found that the chambers judge below did not err in granting an order for sale of real estate owned by two brothers, Rick and Kelvin, pursuant to s. 6 of the Partition of Property Act. The brothers had become registered owners of the property as joint tenants following the 1988 transfer, for no consideration, of the interests of Rick and their mother, who had been registered owners as joint tenants. Kelvin formally severed the tenancy in 2018 by transferring his interest to himself and registering the transfer in the land title office. Section 6 of the Partition of Property Act required the court to grant the application in a case such as this, unless there was “good reason to the contrary”. Rick pleaded that Kelvin had been placed on title in 1988 as a trustee for Rick, contrary to the presumption created by s. 23 of the Land Title Act; the court said the onus was on Rick to assert some basis for his defence. It was the mother of the two brothers who gave up an interest in the property; she, not Rick, would have been the beneficiary of any resulting trust. The trial judge found that Kelvin was the legal and equitable owner of his half share (Soo v. Soo, 2020 BCCA 149).

Absent Evidence of Agreement, No Beneficial Interest Gifted, No Reason Not to Order Sale

The petitioner mother and the respondent son purchased a residence as tenants in common, with the mother paying about half the purchase price and the son agreeing to pay the mortgage. There was no written agreement. The petitioner occupied the ground floor suite, the respondent and his family the upper level. After moving out of the ground floor suite into assisted living the next year, the mother, who had multiple sclerosis, applied for an order for sale pursuant to the Partition of Property Act, s. 6. She had paid for repairs, her share of two years’ property taxes, and the respondent’s car. She said she needed her equity for her daily expenses. The court found the mother was the legal and beneficial owner of one-half interest in the property, there being no evidence as to the terms of any agreement between the parties respecting the property, and no evidence that the petitioner had gifted her beneficial interest to the respondent. The court granted the order for sale, there being no good reason to the contrary, and granted the petitioner sole conduct of the sale (Dixon v. Morgan, 2020 BCSC 1329).

Absent Formal Arrangement to Preserve Property, Sale to Province to Benefit the Public

The petitioner was the court-appointed executrix of the estate of JS, who died in June 2018. The estate owned a 75% interest in a 20-acre property that had been in the family of JS and the other nine owners (the respondents) for more than 100 years. There was a small private cemetery on the property that was registered under the then Cemeteries Act, R.S.B.C. 1948, c. 41 (now repealed and replaced). In 2019, the property was appraised at $400,000. The petitioner wrote to the other owners offering to sell the 75% interest to them for $300,000 plus GST, and advising that if they did not intend to make an offer on it, she would apply for partition and sale. The Province had expressed an interest in acquiring the property at an appraised value for the purpose of including it in the adjacent park. The petitioner applied under s. 6 of the Partition of Property Act for an order for partition and sale of the property. Six of the other owners opposed the application. Held, order for sale granted. Despite the apparent wishes of the parties’ ancestors, no formal arrangement had been made to preserve the property and to cover the cost of its continued ownership. None of the respondents resided on the property, and the evidence was not clear about how often any of them visited it. JS’s will provided her trustee with broad discretionary powers to keep, convert, or invest her estate, or any part of it, into money or any other form of property or security. It seemed that the respondents’ interests would be best protected by a sale of the property to the Province for inclusion in the park. The Province was the purchaser most likely to be interested in the property, to preserve the cemetery, and to preserve the property in its current condition for the benefit of the public, including the respondents. It remained open to the respondents to make an alternative proposal to the petitioner or to appear to oppose the terms of any sale if and when the matter came before the court for the approval of a sale (Smith Estate v. Hawkins, 2021 BCSC 80).

Estate Administrator Cannot Prevent Sale of Real Property They Do Not Own in Their Personal Capacity

The petitioner’s late father, SN, originally owned two strata lots in a building in East Vancouver (the “Property”). He died intestate in October 2018. SN gifted to the petitioner an undivided one-half ownership interest in Unit 110 around 1993, and an undivided one-half interest in Unit 208 in early 2000. In 2015, he gifted the other half interest in Unit 208 to his daughter, YT. He retained the remaining half interest in Unit 110 until his death. In February 2020, his widow, HC, was granted administration of the estate. SN’s ownership interest in Unit 110 was transferred to her in her capacity as administrator. The petitioner wanted to sell the Property for financial reasons. He said he and his wife were unemployed and wanted funds to start a business. The respondents were opposed. HC was residing in Unit 110. She was 78 years old and had a variety of chronic health issues. Two of her three daughters, YT and SH, both of whom had mental health conditions and received disability income, resided in Unit 208. On the evidence of HC and YT, they provided mutual support and care for each other and for SH. The central issue on two companion petitions was whether the petitioner could force the sale of the Property under the Partition of Property Act over the respondents’ objections. Held, for the petitioner. Unless there is good reason not to do so, the sale of property under s. 6 of the Act must be ordered if a petitioner has at least a 50% ownership interest in the property. The court retains a broad and unfettered residual discretion under s. 6 to refuse a sale when required by the ends of justice. While the respondents do not technically bear the burden of proof, for all practical purposes, they should adduce evidence to establish a good reason why the Property should not be sold. The petitioner had met the statutory prerequisites for seeking a court-ordered sale pursuant to s. 6. He was the registered owner of an undivided half interest in the Property as a tenant in common with the respondents: he and HC, in her capacity as administrator, co-owned Unit 110; he and YT co-owned Unit 208. As the threshold requirements of ss. 2 and 6 of the Act had been met, the next question to address was whether there was any good reason not to order a sale. HC co-owned Unit 110 as administrator of the estate. In that capacity, her role was to distribute the assets of the estate after all debts were settled. She provided no legal authority to support the conclusion that an administrator can prevent the sale of real property that they do not own in their personal capacity pursuant to s. 6 of the Act. There were multiple unresolved conflicts in the evidence about how much money SN had gifted to his four children, whether and to what extent the parties currently experienced or would suffer financial hardship if the Property were sold, the nature and quality of SN’s former relationships with his children, the alleged poor treatment of HC by SN and the petitioner, and the parties’ failed efforts to resolve their disputes. The evidence did not support the conclusion that HC would face significant hardship if Unit 110 were sold. She did not dispute having real estate holdings outside Canada and admitted that she recently sold an apartment in Taiwan. On her own evidence, she had a substantial beneficial interest in SN’s $400,000 “legacy funds” in China. There was no good reason not to order a sale of Unit 110. Similarly, the court was not persuaded on the evidence that YT would face significant hardship if Unit 208 were sold. Any hardship had to be weighed against the prejudice to the petitioner if it were not sold. He had been unemployed since mid-2019, and his wife had been unemployed since early 2017. They had a young son, were renting accommodation in Toronto, and had been unable to benefit from his ownership interest in the Property (Tseng v. Tseng, 2021 BCSC 27).

Compliance Required with Agreement Establishing Legal Framework and Interests Outside of the Statute

The petitioners (a married couple holding joint title to a 33-acre property) sought an order that the property be sold with conduct of sale to them, pursuant to s. 6 of the Partition of Property Act, as they claimed their interest in the property was greater than one-half, which the court refused to accept. The petitioners acknowledged that two of the petitioner husband’s siblings each had a beneficial interest pursuant to the original joint inheritance from their parents and their subsequent dealings among themselves. The court declined to follow Dosanjh v. Singh, 2011 BCCA 179, finding the circumstances in this case were less predictable and not comparable. Even if the petitioners were minority interest holders entitled to seek an order for sale pursuant to s. 7, the court said the parties had created their own legal framework and obligations outside of the Act by entering into a 2009 agreement that set out their agreed-upon respective interests and obligations and contemplated eventual subdivision. Having now accepted a valid offer to purchase the property subject to their being in a legal position to sell it, the petitioners had not complied with terms of the 2009 agreement including presenting the respondents with an offer to sell to them, and the option to subdivide remained open despite previous failed attempts to do so. The court dismissed the application, saying the terms of the 2009 agreement must be complied with before the petitioners could seek an order for partition (Arden v. Arden, 2021 BCSC 2177).

“Good Reason to the Contrary”

In Holman v. Brooke, 2022 BCSC 526, the court refused to order partition and sale of an unstratified duplex, owned for two decades as a “forever home” by members of the Vancouver queer community, in the “queer-friendly” Grandview-Woodlands neighbourhood. The court examined an unenforceable 2001 draft agreement to inform its “good reason” analysis under s. 6 and relied on expert opinion to urge partition through a party wall agreement (which the court discussed at length but said it was unable to order because it is a private contractual matter). The court said (at para. 51):

The petitioner did not put forward any authority for the proposition that value maximization is an important or relevant consideration for the Court in an application for partition and sale, particularly where the property is markedly not an investment property, and where the parties intended to maintain and own separate residences, as here. That is particularly so where the property is, was, and will be a long-term residence, where it was intended as such by both parties, and where an order for sale will result in the eviction of the respondent. Further, even viewed as an investment, the petitioner’s $94,250 investment has already considerably appreciated in value: even if she is limited to selling her half, burdened by a party wall agreement, for the appraised value of $1.41 million, she will enjoy a felicitous profit of $1,315,750.

Disproportionate Investment in Property by One Party Not Basis to Deny Order for Sale

In Jenor Steel Inc. v. 466372 B.C. Ltd., 2022 BCSC 1135 (Chambers), the petitioner sought an order for partition and sale under s. 6 of the Partition of Property Act of approximately 1.63 acres in Chilliwack it co-owned as a tenant in common with the respondent as well as an accounting of the revenues and expenses associated with the use of the property and other relief, including that $4.5 million of the sale proceeds to be paid into court pending the accounting. The respondent opposed the order for sale.

The corporate parties each owned a 50% interest in a drill manufacturing business (“SDSI”). The parties had purchased the property for the purposes of a drill manufacturing plant.

By November 2013, SDSI was struggling. The principals of the holding companies (“TS” of the petitioner and “RR” of the respondent) agreed to sell the property to pay off its debts. Litigation ensued when the respondent’s principal refused to sign an offer from a potential buyer. The primary lender to SDSI obtained a judgment against both of the holding companies and their principals personally. RR arranged for one of his other companies (“SH Ltd.”) to pay off the judgment and take an assignment of it.

After an 18-day trial, two actions between the parties were dismissed in October 2019, with the petitioner filing this petition in September 2020.

In opposing the order for sale, the respondent claimed that intertwined business interests with SH Ltd. would suffer significant hardship if the property were sold and asserted a greater equitable interest in SDSI, while conceding the legal interest was 50-50.

The court granted the order for sale, the order for an accounting, and the request that $4.5 million be paid into court, saying a disproportionate investment in the property by one party is properly addressed through an accounting and is not a basis on which to deny an order for sale under s. 6.

Determinable Interests in Common Law Condominium are Subject to PPA, but Court Approval of Sale Declined

CGT Management Corp. v. Mackenzie-Moore, 2022 BCSC 2195 was a dispute over a proposed sale of a “common-law condominium” in North Vancouver. Cypress Gardens is a 177-unit residential complex consisting of 20 separate buildings, located on 9.5 acres of land in North Vancouver. Its unique ownership and governance structure fall outside the Strata Property Act regime but are something akin to it. This ownership structure has since been prohibited by s. 73(4) of the Land Title Act, but Cypress Gardens is exempted pursuant to s. 73(5).

The structure is created through the filing of individual titles for “undivided fractional interests” in the lands of determinable grants of fee simple that are bound, through a right of reverter of the fee, to comply with various covenants, rules, and management structures. In particular, the Form A title document for each undivided fractional interest is subject to a Form E “Transfer of Undivided Interest in Land and User Agreement” with a “User Agreement” attached as a schedule. The parties variously call aspects of these transfer documents the “Right of Reverter” and the “User Agreement”. The court referred to these interrelated transfer documents as the “Transfer”. All owners are shareholders of CGT, the company that manages the complex, and have contractually granted CGT certain powers of a strata council under the now-repealed Condominium Act. CGT also holds the right of reverter over the lands, which creates a limit of the owners’ fee simple interest as tenants in common and binds them to comply with the terms of the Transfer. The Transfer, the structure, and the nature of the right of reverter in Cypress Gardens are discussed in greater detail in Mowat v. Dudas, 2012 BCSC 454, a previous unsuccessful attempted sale of the complex.

In 2022, at an extraordinary general meeting, approximately 68% of the co-owners voted in favour of the sale of the lands to a certain developer. CGT and the petitioners, representing 56% of the owners, now petitioned under the Partition of Property Act for an order to sell the lands. The responding co-owners opposed the sale.

Held, petition dismissed. The court, after considering Mowat as well as a court-approved petition for sale of a similar “common law strata” in McRae v. Seymour Village, 2014 BCSC 714, said (at para. 29) that it “has yet to formally resolve the issue of whether the PPA properly applies to an application by a tenant in common of a determinable interest in a property”. The petitioning co-owners had standing, but CGT, holding only a right of reverter and no ownership interest, did not. As those co-owners collectively held more than a 50% interest in the lands, s. 6 of the PPA applied, and the onus was on the respondent to show “good reason” why the court should not order the sale.

The 80% vote approval required under the Strata Property Act did not apply; however, the ownership support, whether 69% at the EGM or 56% of owners petitioning for sale, fell significantly short of what the owners would reasonably expect, given the governance structure, to authorize court approval of an en bloc sale. This, by itself, was sufficient reason not to approve the sale. There were other factors militating against the sale. In exchange for their exclusive right of use, occupancy, and sale of their undivided fractional interest, the owners collectively agreed and covenanted with each other, through the Transfer and as a critical aspect of their form of land ownership, they would not apply to sell each other’s interests in the lands and units under the PPA. The physical conditions of the complex did not warrant a sale. The complex was now into its sixth decade and would need substantial funds for its maintenance and repair over the next decade. However, the evidence did not establish that the complex was unsafe for habitation, or that the owners were not prepared to consider and approve special levies for ongoing maintenance. The respondents living at the complex relied on its unique amenities and location for family, health, or other personal reasons and would face significant hardship if forced to sell. The sale to the developer was not provident; it was highly contingent, one of the contingencies being a change in zoning, and the chance the developer would proceed with the purchase was unknowable, and within the developer’s sole discretion. Finally, the sale was not pursued in a transparent manner. CGT should not have signed the sale agreement without first obtaining authority from the owners or the court.

Joint Tenancy Severed Pursuant to Common Law in Wake of Acrimonious Separation Preceding Death

In Preskar Estate v. Wagner, 2023 BCSC 80, the plaintiff son of the defendant mother brought an action seeking a declaration that the joint tenancy had been severed and that the property was co-owned by the plaintiff and the defendant, each as to an undivided one-half interest as tenants in common.

The defendant and the plaintiff’s father, P., were in a marriage-like relationship that commenced in 1994. During the relationship, in 1999, the plaintiff was born. The defendant also had another son from a prior relationship, to whom P. assumed a parental role. The defendant and P. never married. In 2002, the defendant and P. purchased real property in Vernon. The property was registered at the land title office as being held in joint tenancy. In 2006, the defendant and P. separated. Following separation, P. remained living in the property, and the defendant lived elsewhere.

In 2007, P. commenced a family law action against the defendant. He filed a certificate of pending litigation against the property. The defendant did likewise, when filing a counterclaim. The litigation became dormant and was never resolved before P. died in 2020.

As part of the process of applying for probate of P.’s estate, counsel for the plaintiff sent correspondence to counsel for the defendant, seeking an acknowledgment that the joint tenancy of the property had been severed. The defendant, however, had already transferred the property to herself as the surviving joint tenant by virtue of the right of survivorship.

Held, judgment for plaintiff. The defendant and P., not being married, were unable to avail themselves of the provisions of the Family Relations Act, R.S.B.C. 1996, c. 128 relating to the division of family property. Further, because they commenced litigation but never entered into a separation agreement or final order, there was no alternative effective triggering event. Accordingly, the issue of whether the joint tenancy was severed had to be determined based on common law principles.

The key takeaway from the authorities is that ascertaining whether or not a joint tenancy has been severed is a factual question to be determined by the trial judge. In an Ontario appeal court decision, the court spoke of ensuring that a right of survivorship does not operate unfairly in favour of one owner (or owners) where the co-owners have shown, through their conduct, a common intention to no longer treat their respective shares in the property as an indivisible, unified whole. The court used the example, in the context of negotiations between spouses in the midst of a marriage breakdown, how even failed or uncompleted negotiations can lead to severance because “the negotiation of shares and separate interests represents an attitude that shows that the notional unity of ownership under a joint tenancy has been abandoned” (at para. 52, quoting Hansen Estate v. Hansen, 2012 ONCA 112).

Here, based on the totality of the affidavit evidence on the summary trial, it was clear that the defendant and P. had an acrimonious separation and that each was asserting independent claims in respect of the property. Those claims included a claim by the defendant for relief pursuant to the Partition of Property Act. That was a course of dealing consistent with severance of joint tenancy.

Joint Appraisal and Accounting of Contributions Ordered in Partition and Sale Application

In Ostrikoff v. Ostrikoff, 2023 BCSC 77, the petitioner sought an order for partition and sale of the home inhabited by her brother, the respondent, which she co-owned. She also sought conduct of sale and an accounting of the parties’ respective contributions to the property.

The parties had been owners of their mother’s home in joint tenancy with their mother, with the respondent residing on the property since 2007 and continuing to do so after their mother’s death, paying for costs of property upkeep and improvements. The petitioner came to suspect the respondent was, without her consent, drawing on a line of credit registered against the property to finance improvements thereon. To protect her interest, the petitioner severed the joint tenancy so that the parties became tenants in common. She now sought an order for partition and sale, with the respondent having the option of purchasing her interest.

The court directed that at this stage, in order to properly value the petitioner’s interest, the parties first obtain a joint appraisal of the property, which appraisal was to address the extent, if any, to which the improvements listed by the respondent had increased the value of the property. The court also ordered that the respondent list and document amounts withdrawn from the line of credit and amounts he had personally expended for improvements within 60 days, failing which the petitioner could renew her application for sale of the property.