IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Ryser v. Rawlings,

 

2008 BCSC 1050

Date: 20080801
Docket: S101414
Registry: New Westminster

Between:

Donna Marie Ryser

Petitioner

And

Bryon W. Rawlings

Respondent


Before: The Honourable Mr. Justice Williams

Reasons for Judgment

Counsel for the Petitioner

T. Hewitt

Counsel for Respondent Rawlings

P. Boles

Date and Place of Trial/Hearing:

June 25, 2008

 

New Westminster, B.C.

Introduction

[1]                The petitioner applies under section 6 of the Partition of Property Act, R.S.B.C. 1996, c. 347, (the “Act ) for the following relief:

1.         The following residential lands and premises located at 11260 Paterson Road, North Delta, B.C.:

PID: 006-282-547, Plan 48030, New Westminster Land District, 261 Sec 13, TWP 4, PL 48030

(the “Lands and Premises”)

be offered for sale, by private sale, free and clear of all encumbrances of the parties save and except the Royal Bank of Canada first mortgage registered under number CA110043 and the reservations, provisos, exceptions and conditions expressed in the original grant thereof from the Crown.

2.         The Petitioners have exclusive conduct of sale and be at liberty forthwith to list the Lands and Premises for sale, for a period commencing forthwith until further order of the court, and be at liberty to pay to any such real estate agent or firm who may arrange a sale of the lands and premises a commission of not more than 7% of the first $100,000.00 of the gross selling price and 2.5% on the balance, such commissions to be paid from the proceeds of the gross selling price.

3.         THAT any such sale, and final calculation and distribution of sale proceeds is subject to further approval of the court unless otherwise agreed by all parties.

[2]                The respondent, Mr. Rawlings opposes the motion.  He contends that the proper outcome in the circumstances is to be attained by the application of s. 8 of the Act, rather than by s. 6, and has tendered an undertaking in accordance with s. 8.

[3]                The Royal Bank of Canada is a named respondent, but did not appear on this application.  In these Reasons, when I refer to the respondent, I am speaking of Mr. Rawlings.

Background

[4]                The petitioner and respondent were involved in a romantic relationship for a period of time.  The duration is the subject of some dispute.  Apparently, for a portion of the time they were involved, they lived together.

[5]                In the summer of 2005, they purchased the subject residential property, located in North Delta.  There is some dispute on the material as to what the actual price of the purchase was.  On the material, it appears to have been in the order of $490,000, and that the respondent paid the initial deposit from his own resources; the balance was paid by the proceeds of a bank mortgage, for which both parties are jointly and severally liable.

[6]                Evidently there was some agreement between the parties that each would make contribution to the costs of ownership. 

[7]                Subsequently, unhappy differences developed between these two persons and they separated.

[8]                The petitioner says that both parties expended considerable energy and resources to make a number of improvements to the property and that there was a resultant increase in value.  Presumably, there was also some increase in value as a consequence of the improving property market in this region.

[9]                There has been no reconciliation between the parties, and the petitioner now seeks to have the property sold and to have her proper share of the proceeds paid to her.

[10]            The material before the Court in this matter demonstrates that this has been a somewhat acrimonious situation for some time.

Position of the Petitioner

[11]            The petitioner says that there was an agreement between the parties that they would hold the property as joint tenants, and upon sale, the respondent would receive his initial deposit; the balance would be split evenly, presumably after the payment of the mortgage and other costs incidental to the disposition.

[12]            The petitioner contends that this is a matter to be governed by application by s. 6 of the Act.  That provision states:

In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if the party or parties interested, individually or collectively, to the extent of 1/2 or upwards in the property involved request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property, the court must, unless it sees good reason to the contrary, order a sale of the property and may give directions.

[13]            It is the petitioner’s contention that on the evidence, each of these parties has an equal share of the property, and, in accordance with s. 6, unless there is good reason to do otherwise, the Court should order a sale of the property.  In her submission, there is no reason to order otherwise.

Position of the Respondent

[14]            The respondent says that the appropriate determination of the present dispute should be made in accordance with s. 8 of the Act:

(1)        In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, then if any party interested in the property involved requests the court to order a sale of the property and a distribution of the proceeds instead of a division of the property, the court may order a sale of the property and give directions.

(2)        The court may not make an order under subsection (1) if the other parties interested in the property, or some of them, undertake to purchase the share of a party requesting a sale.

(3)        If an undertaking is given, the court may order a valuation of the share of the party requesting a sale in the manner the court thinks fit, and may give directions.

[15]            Specifically, he says that he has made significantly greater contributions than has the petitioner and that this Court should recognize that state of affairs in accordance with s. 5 and s. 7 of the Law and Equity Act, (R.S.B.C. 1996), c. 253.  In the result, he says that the petitioner is not able to bring herself within the half ownership requirements of s. 6.

[16]            Further, as indicated, the respondent has filed in these proceedings an undertaking in accordance with s. 8(2) of the Act, committing to purchase the petitioner’s share and seeking directions of the Court to value that share.  He says that the petitioner’s application should be dismissed and that the Court should make an order directing the valuation of her share so that he may complete his purchase of it.

Discussion

[17]            The first step in analyzing this dispute is to determine whether the petitioner has a proper claim under s. 6.  That involves an examination of her status as a party “interested to the extent of ½ or upwards in the property involved”, and, if so, whether there is “good reason” to decline to grant her the order of sale.

[18]            On the face of the evidence, specifically the Certificate of Title, the petitioner is a party “interested, to the extent of one-half or upwards in the property.”

[19]            At the same time, there is some basis in the evidence to argue that the respondent has a claim to more of the sale proceeds than does the petitioner, having made the initial deposit and some other inputs.  Thus he takes the position that, by application of the Law and Equity Act, the petitioner is in fact not a 50% owner.

[20]            In order to resolve this dispute, it is necessary to consider the apparent conflict between the respondent’s position, based as it is in equity, and the provisions of the Land Title Act, R.S.B.C. 1996, c. 250.

[21]            In my view, the issue is determined by s. 23(2) of the Land Title Act.  This is the basis of the Torrens land system in British Columbia, and is the starting point of the analysis:

(2)        An indefeasible title, as long as it remains in force and uncancelled, is conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title ...

[emphasis added]

[22]            It is therefore a statutory presumption that the joint tenants registered on the title are each entitled to a 50% interest in the property.  That presumption operates between the parties as is well against the outside world.  The presumption can be displaced by two equitable principles:  (a) the presumption of advancement; or (b) the enforcement of an agreement between the parties in order to prevent an unjust enrichment if the face of the title is upheld.

[23]            I do not find that either of these is present.

[24]            In my view, the plain wording of s. 23(2) takes priority over the provisions of the Law and Equity Act.  Accordingly, I cannot find that the statutory presumption in s. 23(2) of the Land Title Act has been rebutted, and so each party, the petitioner and the respondent, should be taken to each have a 50% interest in the property.

[25]            It follows that the petitioner is a person qualified to bring her application under s. 6.

[26]            The second issue to be considered is whether there is some circumstance present here that would constitute “good reason” to decline to make the order sought.  The respondent says that the fact that the petitioner lived in the property for only a short time, something in the order of six months, and that she has not made further contributions, should be a basis to decline to grant her application.

[27]            In Bard v. Bird, [1993] B.C.J. No. 1644 (C.A.), Wood J.A. observed that the court’s discretion to order otherwise in such applications is a narrow one.  Generally, the authorities suggest that something in the order of a significant hardship will have to be demonstrated.  In my view, that is simply not present in this matter.  With respect to the fact that the petitioner no longer lives in the property and does not contribute to the cost, I observe that in his affidavits the respondent indicates his address to be the subject property, and so it seems a reasonable inference that he has continued to enjoy the use of it.  At any rate, the material that is before me does not permit a conclusion that there is the requisite good reason to decline to make the order sought by the petitioner.

[28]            Disposition of this application requires a careful consideration of these two different sections of the Act and the interplay between them.

[29]            Section 6 provides that the court must direct a sale of the property and a distribution of the proceeds where a party who requests the sale owns one-half or more of the interest in the property.  Simply because the other owner offers to buy does not disentitle an owner to an order for sale under s. 6:  Ching v. Ching, 2005 BCSC 1368 at ¶100.  Generally, an open market sale under s. 6 is preferred: Glendenning v. Thiessen (1994), 95 B.C.L.R. (2d) 21 (S.C.).

[30]            Section 8(1) governs situations where an individual with less than 1/2 interest seeks to force a sale.  Section 8(2) says that the court may direct a sale of the property and distribution of the proceeds, unless a party with a qualifying interest in the property undertakes to purchase the share of the party requesting the sale.

[31]            In Machin v. Rathbone, 2006 BCSC 252, Johnston J. held that s. 6 trumps s. 8: the owner of at least one-half interest in the land retains the right to sell on the market, and is not deprived of this right by s. 8(2).  At ¶24 he said:

It makes far more sense that the statute provide some protection to the owner of a majority interest, to enable that owner to avoid loss of his or her interest in land at the whim of a minority owner, than it does that the wishes of an equal owner could be thwarted as of right by the co-equal owner.

There, the Court ordered that before dividing the proceeds of the sale, amounts should be deducted to cover any costs incidental to the sale of the property.  The respondents were entitled to bid on the open market sale.

[32]            In Ching v. Ching, supra. Allan J. held that s. 6 is mandatory (unless there is good reason to the contrary), while s. 8 is discretionary.  The two sections relate to separate factual situations.

[33]            Section 6 must be applied “unless there is good reason to the contrary”, which has been interpreted to mean that the respondent must demonstrate that justice requires that the order not be made: Dunford v. Sale, 2007 BCSC 1422; Harmeling v. Harmeling (1978), 90 D.L.R. (3d) 208 (B.C.C.A.).

[34]            A party who does not wish to “suffer partition or sale” bears the onus of demonstrating to the court that justice requires that the order for partition or sale not be made.  As mentioned, the court’s discretion is quite narrow: Bard v. Bird, supra.  Failing such a demonstration, the court must enforce the interested party’s prima facie right to partition or sale: Zachariuk Estate v. Chepsiuk, 2005 BCSC 919.

[35]            In the present matter, I have concluded that the petitioner is a person properly qualified to seek relief under s. 6, and I am unable to find that the respondent has established that there is good reason to do otherwise than order a sale of the property.  His claim to more than 50% of the proceeds of sale is not a proper reason for the court to refuse to grant the order under s. 6. 

[36]            That being so, the proper course is to make the order under s. 6;  s. 8 is not engaged in these circumstances

[37]            The equal division of the proceeds of sale to which the parties are entitled may be subject to an accounting of their respective financial contributions to the property, according to the principles of fairness: Bajwa v. Pannu, Smith v. Davis, [1987] B.C.J. No. 54 (S.C.), Farrar v. Walker, [1982] B.C.J. No. 965 (S.C.); Aleksich v. Konradson (1995), 5 B.C.L.R. (3d) 240 (C.A.).  The court can and will order that Mr. Rawlings be reimbursed for his contributions to the property, out of the proceeds of the sale.

[38]            To impose a requirement for an accounting would constitute an additional financial burden on these parties that, in my view, should be avoided if possible.  I note that the petitioner does not seek such an order, and it is to be hoped that the matter will not require such a measure.

Conclusion

[39]            I find that, for the purpose of the present application, the petitioner is to be considered as a party whose interest in the property is one-half.  Furthermore, I am unable to conclude that there is good reason to do other than order a sale of the property in accordance with s. 6, and so there will be an order directing that the property be sold pursuant to that section.  I decline to make an order under s. 8.

[40]            In the course of submissions, counsel made reference to the proposition that, although the property may be listed for sale with a realtor, some arrangement could be made whereby Mr. Rawlings would be permitted to purchase it without real estate fees being incurred.  Obviously this is a worthwhile practical suggestion, given that it is apparent that he wishes to acquire title.  However, I have some reservations as to whether a listing agreement can be fashioned which would allow that outcome.  I also doubt that this Court has the authority to make an order that would compel such a transaction.  Accordingly, I do not intend to make that any part of the order; however, if it can be arranged, it would not in any way be objectionable.  The submissions of counsel with respect to the precise terms to be incorporated in an order were not particularly detailed, and so the order that I will make will be somewhat general.

[41]            The order that I make is as follows:

1.         The following residential lands and premises located at 11260 Paterson Road, North Delta, B.C.:

PID: 006-282-547, Plan 48030, New Westminster Land District, 261 Sec 13, TWP 4, PL 48030

(the “Lands and Premises”)

shall be offered for sale, by private sale, free and clear of all encumbrances of the parties save and except the Royal Bank of Canada first mortgage registered under number CA110043 and the reservations, provisos, exceptions and conditions expressed in the original grant thereof from the Crown.

2.         The Petitioner shall have exclusive conduct of sale and be at liberty forthwith to list the Lands and Premises for sale, for a period commencing forthwith until further order of the court, and be at liberty to pay to any such real estate agent or firm who may arrange a sale of the lands and premises a commission of not more than 7% of the first $100,000.00 of the gross selling price and 2.5% on the balance, such commissions to be paid from the proceeds of the gross selling price.

3.         Any such sale, and final calculation and distribution of sale proceeds is subject to further approval of the court unless otherwise agreed by all parties.

[42]            If further conditions are to be sought, the parties are at liberty to bring the matter back before me.

[43]            It is my understanding that the petitioner did not seek costs as part of the application, but rather asked that any further relief be adjourned generally.  Accordingly, any such application will be adjourned as requested.

“J. W. Williams, J.”