Tag: partition and sale
In a recent decision of the Queen’s Bench of Alberta, Verhulst Estate v. Denesik, 2016 ABQB 668, the Honourable Madam Justice Shelley considers whether a tenant in common can acquire another tenant in common’s interest through adverse possession.
Given the limited case law on this issue in Alberta, Madam Justice Shelley reviews the existing case law in the other Canadian provinces, including Ontario.
Mr. Denesik and Mr. Verhulst, were business associates who acquired three parcels of land as part of a joint venture in 1995. The parcels consisted of a 159 acre woodlot (the “larger parcel”), and two smaller river lots totalling 96 acres (the “river lots”). Denesik and Verhulst held title to all three parcels as tenants in common.
Denesik and Verhulst began logging the three parcels, and the proceeds from the logging operation were used to pay off the mortgage secured against the parcels. The logging operation ceased in or around 1996. Shortly thereafter, Denesik moved a mobile home onto the larger parcel. Denesik did not pay anything to Verhulst for his use and occupation of the property, however, he did pay the property taxes up until 2015. Verhulst lived in the city with his family, and held his interest in the parcels as an investment without in any way occupying the parcels.
Verhulst passed away in 2008. Verhulst’s Estate applied for an order of partition and sale in relation to the three parcels. Denesik then applied for a declaratory judgment for title to the land, based on a claim in adverse possession.
At First Instance
The matter was heard at first instance by Master Schlosser, who concluded there was no time at which Verhulst was dispossessed and Denesik ’s action of putting a trailer onto a portion of the larger parcel in 1996 was insufficient to establish a claim to the entirety of the larger parcel, much less the river lots [See, Denesik v Verhulst Estate, 2016 ABQB 36].
Denesik appealed the decision. The main issue for consideration on the appeal, not specifically addressed by the lower court, is whether a tenant in common can acquire another tenant in common’s interest through adverse possession.
Justice Shelley noted that Alberta was the only province in Canada (with the exception of Quebec) which did not have specific legislation enabling an adverse possession claim.
In Ontario, s. 11 of the Ontario Real Property Limitations Act, R.S.O. 1990 c L-15, provides a legislative scheme, which sustains adverse possession claims as between joint tenants or tenants in common [para 32]. See, Zigelstein v. Stobinski (1985) 51 O.R. (2d) 562.
In the absence of legislation enabling adverse possession in Alberta, Justice Shelley was required to consider the issue in the context of the Torrens land titles system. Ultimately, she found that given Alberta’s lack of explicit authorization for a claim between tenants in common, it would be extremely difficult if not impossible, to establish such a claim in Alberta [para 51].
Citing the Ontario decision in Zigelstein, Justice Shelley went on to say that even if an adverse possession claim is possible, for it to succeed, it is likely that the actions of one tenant in common would need to arise to the level of something akin to ouster. Not wishing to make use of the property does not equate to an intention to abandon ownership.
Justice Shelley dismissed the appeal, stating that Verhulst’s indifference arose out of his intended use of the parcels of land as an investment vehicle, and was not an indication that he had given up possession or an ownership interest.
Find this topic helpful? Please also consider these related Hull & Hull LLP Blogs:
- Joint Tenancy, Survivorship and Adverse Possession
- Severance of a Joint Tenancy by Course of Dealing
- Partition and Sale
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Partition and sale can become an issue in an estates context when the family cottage or other real property is gifted to the testator’s children as joint tenants or tenants in common and some of the siblings wish to be bought out of their interest.
Pursuant to the Partition Act, an application may be made to the Ontario Superior Court of Justice by anyone who has an interest in land. Where the land is held by joint tenancy or tenancy in common by reason of a devise or an intestacy, an application cannot be made until one year after the death of the testator or person dying intestate who owned the land. (See Partition Act, s. 3(2)).
Joint owners have a prima facie right to partition and sale but the Court has jurisdiction to refuse such an order. In particular, the Court has discretion to refuse partition and sale where there has been malicious, vexatious or oppressive conduct by the party seeking an order to partition. The Court does not have jurisdiction to order one joint owner to sell to another i.e. force a right of first refusal. (See Osborne v. Myette, 2004 CanLII 7051 (ON S.C.))
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