May 01, 2006

Partition of Property Act – When Friendship Turns to Enmity #395


By Gerry Neely
B.A. LL.B.

Two couples who were close friends jointly purchased a Gulf Islands cottage, each taking a one-half interest in the property. They disregarded advice to agree on a method of establishing the price of a half-interest if one couple decided to sell their interest and the other couple wanted to keep the property.

When the friendship deteriorated, one couple petitioned (under s. 6 of the Partition of Property Act, R.S.B.C. 1996, Chap. 347) the Supreme Court of BC for the sale of the property and the equal division of the proceeds between them. The other couple requested an order that the petitioners’ one-half interest be sold to them at a price to be fixed by the court, pursuant to s. 8 of the Act.

Section 6 says that, upon the request of an owner interested in one-half or more of the property, the court may order its sale rather than its division among the owners, unless there’s good reason to the contrary. Under s. 8, the court may order a sale upon the request of an owner of an interest in the property, but not if any other owner undertakes to purchase the selling owner’s share.

The question raised by these sections is whether s. 8 deprives an owner with at least a half-interest in the property of the right to sell on the open market. The judge concluded it did not; that s. 8 allowed a majority owner to purchase the interest of a minority owner who wanted to force a sale. The judge believed a sale on the open market provided the best measure of value and ordered the property be listed and sold, with either couple having the right to make an offer.1

Small Claims costs to losing claimant

While Small Claims Court is a less costly option for legal action, a claimant who loses can still face hefty expenses, as a condo purchaser who sued a brokerage and representative found. She claimed the representative’s assertion that a ceiling unit was both a heater and air conditioner was false, as she later learned it operated only as a heater. She sought $7,300 to install an air conditioning system.

The representative denied the claimant’s assertion and the judge concluded that, on a balance of probabilities, the claimant had failed to establish a false representation. However, even if she had succeeded in doing so, her claim would have failed because she had to demonstrate she suffered a loss. Damages in claims such as these are measured by the difference between the fair market value of the property at the date of sale, and the price paid (in this case, $187,000).

An appraiser, accounting for the lack of an air conditioning system, gave expert evidence that the condo’s fair market value was $190,000. The condo owner was ordered to pay out-of-pocket expenses of $3,411, including the appraiser’s bill.2

In a similar court ruling, two claimants were penalized $2,000 when they sued sellers and their brokerage firm for negligently representing that an addition was built without a building permit. The judge ruled this information had been disclosed to the claimants before they made their offer to purchase.1

  1. Machin v. Rathbone, SCBC, Victoria Registry, Reasons for Judgment, February 14, 2006.
  2. Stockman v. Morris, PCBC, Vancouver Registry, Reasons for Judgment, May 3, 2005. File number 2004-01275.*
  3. Huber v. Weiss and Lighthouse Realty Ltd., PCBC, Abbotsford Registry, April 18, 2005. File numbers C16596 and C16611 (Two actions were initiated and later consolidated).*

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