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Partitioning Land: What Dentists Need to Know…

By June 3, 2015January 21st, 2022Michael's Operatory

Here’s the situation: you’re a dentist and either a joint tenant or a tenant in common with respect to certain real estate. You may own 1/3 or 1/2 of it. You may or may not live or work on that property, but you still own part of it. Now, it comes to a point where you want to either partition that property or have it sold. The other co-owners refuse. What can you do?

Well, under the Partition Act a joint tenant or a tenant in common may be FORCED to suffer a partition OR sale of land (section 2). The way this gets done is through a Court application (section 3). Here are the relevant sections:

Who may be compelled to make partition or sale

2. All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.

Who may bring action or make application for partition

3. (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.

So how have courts interpreted these sections? Well, in the case of Blue Estate (Re) [2008] O.J. No. 285, the Ontario Superior Court of Justice discussed the circumstances under which a judge would grant a sale or partition. Here is a part of the case (beginning at paragraph 31):

31 In Shemish v. Benarzi, 2006 CanLII 30602 (Ont.S.C.) Perell J. nicely summarized the law relating to partition and sale in Ontario. He noted, at paragraph 11 of his reasons, that the onus is on the party resisting partition and sale to demonstrate sufficient reasons for refusing the partition. Under section 2 of the Partition Act a tenant in common of land enjoys a prima facie right to partition and sale of those lands: Davis v. Davis, [1954] O.R. 23 (C.A.). Although the right to partition is not an absolute one, in the Davis case Laidlaw, J.A. held, at page 29, that a court should compel partition and sale “if no sufficient reason appears why such an order should not be made”, and he went on to describe how a court should exercise such discretion:

I do not attempt to enumerate or describe what reasons would be sufficient to justify refusal of an order for partition or sale. I am content to say that each case must be considered in the light of the particular facts and circumstances and the Court must then exercise the discretion vested in it in a judicial manner having due regard to those particular facts and circumstances as well as to the matters which I have said are, in my opinion, fundamental.

The cases reveal that there must be some malicious, vexatious or oppressive conduct to justify a court refusing to grant partition and sale: see the cases collected in Shemish, supra.

32 In exercising its discretion under section 2 of the Partition Act a court should take into account the effect of any agreement between the parties about the land in question: Latcham v. Latcham, [2002] O.J. No. 2126 (C.A.), at para. 4.

In Suddick v. Schewenger, [2007] O.J. No. 737, the Ontario Superior Court of Justice reviewed the issue of whether a court will order a sale or a partition:

33 Whether a partition or sale should be ordered is clearly a discretionary matter. However, there are settled principles to be applied. A joint tenant or tenant in common has a prima facie right to partition or sale of lands with a corresponding obligation on a joint tenant or tenant in common to permit partition or sale, and the court should compel such partition or sale if no sufficient reason appears why such an order should not be made. See the comments of Laidlaw J.A. in Davis v. Davis, [1954] O.R. 23 (Ont. C.A.) in which he stated:

There continues to be a prima facie right of a joint tenant to partition or sale of lands. There is a corresponding obligation on a joint tenant to permit partition or sale, and finally the Court should compel such partition or sale if no sufficient reason appears why such an order should not be made. I do not attempt to enumerate or describe what reasons would be sufficient to justify refusal of an order for partition or sale. I am content to say that each case must be considered in light of the particular facts and circumstances and the Court must then exercise the discretion invested in it in a judicial manner having regard to those particular facts and circumstances and well as to the matters which I have said are, in my opinion, fundamental.

34 As between ordering partition or sale, the authorities provide that partition is to be ordered unless it appears that partition cannot be made without prejudice to the interested parties, i.e., that the court thinks it more advantageous for the interested parties to have a sale rather than partition. In DiBattista v. Menecola (1990) 75 O.R. (2d) 443 (Ont. C.A.), Brooke J.A. stated:

The question of when and in what circumstances the court may order such a sale was considered broadly by Grant J. in Cook v. Johnston, [1970] 2 O.R. 1 (H.C.J.). That was an appeal by one of two joint tenants from an order of the master directing that there be partition and rejecting the application for sale. The land with which the court was concerned was island cottage property. After considering all of the circumstances, the characteristics of the land and the parties’ use of the land, the master held that it would be more advantageous to the parties if the land was partitioned and divided it accordingly. Grant J. agreed. An appeal to this court was dismissed.

As to when sale should be ordered, Grant J. followed the authorities which he referred to in his judgment. He said [pp. 1-2 O.R.]:

In Morris v. Morris (1917) 12 O.W.N. 80, Middleton, J., in dealing with a similar matter stated at p. 81: “Sale as an alternative for partition is quite appropriate when a partition cannot be made.”

In Gilbert v. Smith (1879), 11 Ch. D. 78, Jessel, M.R., at p. 81 stated:

“The meaning of the Legislature was that when you see that the property is of such a character that it cannot be reasonably partitioned, then you are to take it as more beneficial to sell it and divide the money amongst the parties.”

In Lalor v. Lalor(1883), 9 P.R. 455 (Ont.), Proudfoot, J., who was deciding whether partition or sale should be ordered, stated:

“I do not think any party has a right to insist on a sale; and it will not necessarily be ordered, unless the Court thinks it more advantageous for the parties interested.”

In Ontario Power Co. v. Whattler (1904), 7 O.L.R. 198, Meredith, C.J., reviewed the legislation in the Province giving jurisdiction to the Court to order a sale instead of partition. In reference to the form for such remedies then adopted by the Consolidated Rules, he stated at p. 203:

“That form must be read in the light of the legislation by which jurisdiction has been conferred on the Court to order a sale instead of a partition; and the provision as to proceedings being taken for partition or sale is, I think, a compendious mode of saying that proceedings are to be taken to partition unless it appears “that partition cannot be made without prejudice to the owners of, or parties interested in, the estate,” but that if that is made to appear proceedings are then to be taken for the sale of the lands.”

and

Chief Justice Meredith also stated [p. 199 O.L.R.]:

The law of this Province, as I understand it, is practically the same as by sec. 3 of the Partition Act of 1868 the English law was made, and, referring to the power of the Court under that section, Jessel, M.R. said: “That meaning of the Legislature was, when you see that the property is of such a character that it cannot be reasonably partitioned, then you are to take it as more beneficial to sell it and divide the money amongst the parties”: Gilbert v. Smith (1879), 11 Ch. D. 78, at p. 81. See also the same case sub nom. Pitt v. Jones(1880), 5 App. Cas. 651.

35 I take it from the authorities that if there is to be partition or sale, the prior right is to partition unless there is some reason why it ought not to be ordered.

Finally, the case of Leskovar v. Jerome Etkin Ltd., [1989] O.J. No. 1651 shows how that Ontario District Court ordered the sale of property as between two business people. The person requesting the sale was a part owner in land and he also ran a franchise business on the land. The person opposing the sale of the land was a part owner of the land. Salhany D.C.J. found no serious hardship and ordered the sale of the property. The Court’s reached that conclusion as follows:

In Re Yale and MacMaster (1974) 3 O,R, (2d) 547, relied on by both parties, it was held by Galligan J. (as he then was) that in a partition application, the court was entitled and is under a duty to consider the relative hardship that the granting or refusing of an order would cause to the parties having an interest in the property. He acknowledged that in Davis v. Davis [1954] O.R. 23, a decision of the Ontario Court of Appeal, it was held that the court was not entitled to refuse partition and sale unless the respondent showed want of good faith, malice, oppression or vexatiousness on the part of the applicant. However, he concluded that the Davis case was no longer good law in view of subsequent appellate decisions. Those decisions, which Galligan J. reviewed in detail, all involve instances where one spouse was seeking to partition matrimonial property and the court was concerned with the effect which partition might have on the other spouse, particularly one who had custody of the children of the marriage.

In this case, we have two experienced and successful businessmen. Assuming for the moment that the duty upon the court is that enunciated by Re Yale and MacMaster, I fail to see what serious hardship the respondent Billenger will suffer if the application is granted. It is possible that he may lose out in the bidding war with the applicant. But I do not see how that can be said to be a hardship to him particularly where there is no suggestion that he does not have the financial ability to compete with the applicant. Nor has it been demonstrated to my satisfaction that he will lose the franchise if the applicant ends up buying the property, particularly in view of the applicant’s undertaking not to terminate it.

Accordingly, the application will be granted. Counsel my speak tome about the terms of sale and the issue of costs. That may be done by letter or by conference call instead of appearing personally, if counsel prefer.

DMC