It’s time to part ways - breaking up co-ownership of property

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

In Ontario, the Partition Act allows a co-owner of property to apply to the Court to break up the co-ownership.  If two or more parties own a piece of land, and one wants out, that co-owner is generally entitled either to an order dividing the property itself or, more often, an order requiring the sale of the jointly held property and the division of the proceeds.  The Court has a discretion to refuse to grant partition or sale in circumstances of “malice, oppression, and vexatious intent”, but the bar for exercising this discretion is high.  Also, the Court may in certain cases award one owner a greater share of the property or proceeds of sale than the other co-owner or owners, in spite of the presumption that tenants in common with unspecified ownership interests are entitled to equal shares of the property or proceeds.  A common argument in favour of unequal division is that one co-owner contributed more to the property than another and should be compensated for it (based on the law of unjust enrichment).

In one recent case, the Ontario Superior Court of Justice addressed the question of whether a property should be divided in pieces or sold.   Two former brothers-in-law were disputing how their co-ownership of a 100-acre farm parcel (consisting of 64 acres of agricultural land, and 36 acres of woodlot) should be ended.  Brother-in-law O made the application to the Court for an order to sell the property and divide up the sale proceeds.  Brother-in-law M, who lived part of the year in a small house on the woodlot portion, asked the Court instead to divide up the land itself.  M proposed that he receive the 36-acre woodlot along with a continuing interest in the 64-acre balance.  The 64-acre section would then be sold with O receiving the largest portion of the proceeds of sale to compensate for M getting the woodlot.

As is the case in most partition applications, the Court ordered that the entire property be sold and the proceeds of sale divided between the two co-owners because the land could not be reasonably partitioned.  Firstly, the Court found that the local municipality would impose restrictions on the land if it was severed that would affect the value of the land, something that would prejudice of O.  Secondly, M's proposal would result in what would effective be a forced sale by O to M of the woodlot portion of the property, something that the Court does not have jurisdiction to grant.  Thirdly, M's proposal would compel the two co-owners to continue, at least for a time, in an "ongoing, untenable relationship"; avoiding that situation is a primary purpose of the Partition Act.  The Court rejected M’s proposal, and also ordered that O's costs of the application be payable out of M's share of the proceeds from the sale of the property. 

In another recent case, the Superior Court dealt with a request for an unequal split of proceeds of sale.   A mother, the Applicant, and her daughter, the Respondent, disputed the division of the proceeds from the sale of a property they had owned together.  The mother had purchased the property in the early-1980s with her then common law spouse, the father of the Respondent.  The father died in 2009 and left his share of the property to his daughter.  The property was sold in 2015, and mother and daughter agreed to split on an equal basis a portion of the proceeds of the sale (representing the 2009 appraised value of the property).  The remaining proceeds were held in trust to be disputed.  The mother brought an application seeking an order dividing the remaining proceeds equally between her and her daughter.

Relying on unjust enrichment, the daughter claimed an unequal share of the remaining funds – three-quarters of the remainder for her, and one-quarter of the remainder for her mother.  The daughter had acted as Estate Trustee of her father’s estate, and took the position that the increase in the value of the property between 2009 and 2015 was attributable to “her money, time and effort.”  She had entered into an agreement with a farmer to clear the property and install tile drainage, which rendered 35 acres workable.  As such, she argued, the mother was unjustly enriched at the expense of the daughter, without legal justification.

The judge hearing the case disagreed.  While she found that the increase in value benefitted the mother, it also benefitted the daughter.  And the judge was unable to put a monetary value on the efforts contributed by the daughter.  With respect to the agreement reached with the farmer who cleared and tiled the land, the judge questioned “whether the time required to achieve the agreement took 30 minutes, 30 days, or 300 days of negotiations.”  The land clearing and tiling may have contributed to the increase in value of the property, but the daughter’s only contribution to this was negotiating, creating and signing two agreements.  The judge ordered that the remaining balance of the proceeds of sale be divided equally between mother and daughter. 

Read the decisions at:  Brother-in-law v. Brother-in-law and Mother v. Daughter.

Road Access Act saves landlocked neighbour from conviction on trespassing charge

Landowner W was charged with trespass, a provincial offence under the Trespass to Property Act, after he used a road he had constructed through a neighbour's property to reach his own landlocked property.  In her decision acquitting W of the charge, Justice of the Peace MacKinnon described the properties involved as follows:

This case involves three parcels of land, two of which front on Highway 609. Highway 609 is a two lane secondary highway in a rural area of Northwestern Ontario and runs in an east-west configuration.

On the south side of Highway 609 there is a parcel of land belonging to [M]. The west side of the [M] property fronts on the Wabigoon River. To the east of the [M] property is property belonging to [B] which is the North part of Lot 5, Concession 5. Its north boundary is Hwy 609, and its south boundary is on the north side of the defendant’s ([W]’s) property.

The defendant’s property is to the south of both the [M] and [B] properties. Its western boundary includes grasslands and the shore of the Wabigoon River. North is the [B] property and east is another property.

It is not disputed that the defendant purchased his lot as a landlocked property. He arranged for an easement over the [M] property from Highway 609, and received authority from the province for an entrance from the highway. He built a road south from Highway 609 through the [M] property but eventually turned southeast onto the [B] property and crossed it to his lot. [emphasis added]

A dispute arose surrounding the portion of this road on the [B] property.

At trial, W admitted that he had purchased his landlocked property as having water access only; it was his intention to purchase access from his neighbours (which he did from neighbour M, but not neighbour B).

The fact that W had constructed a road in part on lands owned by B and the fact that W had used that road were not in dispute.  What was at issue in the trial was whether W had a right or authority conferred by law which allowed W to go on the road through B's property.

Justice of the Peace MacKinnon examined whether W had a right or authority based upon the Road Access Act.  She noted:

The Act sets out strict prohibitions against landowners taking matters into their own hands and blocking or obstructing access roads, and requires an application to a Superior Court judge for an order closing the road. Landowners may only block a road when there is an alternate route for the landlocked owner to access their land. Such alternate routes must be in existence contemporaneously. A charge against a landowner who violates the Act, is a provincial offences matter with fines of up to $5,000 (s.61 POA).

MacKinnon, J.P. then found that W's road through B's property was a "road" for the purposes of the Road Access Act, meaning that W had a legal authority to use the road at the time for which he was accused of having trespassed.  The road was not owned by a municipality or dedicated as a public highway.  The road served as an access to landlocked property.  W had a "limited and temporary statutory right to use the road".  In fact, MacKinnon J.P.'s decision says that until such time as a closing order is obtained by B from the Superior Court as required by the Road Access Act, W would not be a trespasser on the road.

On top of the prosecution for trespass, W also faced (or faces) a civil claim from B related to the road through B's property.  It would be interesting to know how the decision to dismiss the trespass charge will affect the civil proceeding.  Was it correct to find that W could establish a right to trespass on B's property by building his own road, even after he had asked for and was denied permission to do so? The Road Access Act may protect use of existing roads, but does it effectively empower a landlocked landowner to use a new road as long as that landowner can manage to get the road built on the neighbour's lands?  And will the court hearing the civil claim be bound by the ruling made by the Justice of the Peace in the trespass case, even if it is incorrect?

Read the decision at: R. v. Weber.

Lack of an "honest belief": BC Court orders neighbours to remove encroaching barn and shed

One neighbour (G) has a barn and a shed that protrude onto another neighbour's (N's) property.  The barn is used for stabling horses and the shed is used for storage and has an attached chicken coop.  The situation ended up in BC Supreme Court where N proposed two options: 1) shared use of the barn and the shed; or, failing that, 2) an order for removal of the encroaching structures within 6 months.  According to the Court, each neighbour accused the other of being unreasonable and uncompromising about the encroachments.

G sought an order that there is an easement permitting the encroachments.  Although G knew about the encroachment before purchasing the property, G suggested that reliance had been placed on the representations made by the previous owner of N's property when G dealt with the barn and shed (choosing to maintain and improve the buildings, rather than remove them).   The Court ruled that G would not obtain an easement, largely on the basis that G did not have an "honest belief" about having the easement in the first place:

G purchased their property knowing specifically that the barn and shed and surrounding land encroached on their neighbour’s property. They now seek to obtain by court order what they did not bargain for in the first place. In essence, the G position is that the simplest and easiest solution from their point of view is for the court to grant them an easement over the N property or to allow them to buy the encroaching area, for modest compensation.

The Court ordered that the barn and shed encroachments, including buildings and fencing, be removed from N's property within 9 months.  The Court declined to order that half of the cost of doing so be borne by N, finding no reason to do so. 

Read the decision at: Gueldner v. Nichele.