Approving a Sale of Co-Owned Properties: What the Purssell v. Purssell Decision Means for Partition of Property Act Proceedings

Background

The dispute concerned an inherited residential property in West Vancouver, owned equally by three siblings. Two of the siblings wanted to sell the property; the third sibling lived in it and wished to continue doing so.

In January 2026, Justice Lyster ordered that the property be sold, finding that the sibling wishing to remain could be accommodated through a “right of first refusal,” a solution proposed by the other two siblings, one of whom would have conduct of the sale.

The selling co-owners later took the position that a right of first refusal was never ordered, despite having told Justice Lyster that such a right “would achieve … an appropriate balance between the parties.” They applied for court approval of a sale to a third party and not to their sibling. At the court approval of sale application, they argued that their sibling did not have a “right of first refusal” and did not repeat what they had said to Justice Lyster. The judge hearing the approval application, who did not have a transcript of the earlier hearing, agreed with them and did not allow the third sibling to exercise her right of first refusal.

Our firm successfully appealed that decision. The Court of Appeal allowed our client to exercise her right of first refusal and varied the sale of the property, so that she was able to purchase the property on the same terms the third party had offered.

Court Approval

In partition of property proceedings, it is typical for a judge to order the sale of a property, with any acceptance of sale subject to, or conditional on, court approval. Court approval ensures that any sale, even contested, is accompanied by proper oversight. It also intends to force parties to pursue a sale with integrity and fairness in mind, since a judge must ultimately sign off on the transaction.

But what are the guidelines for a judge to consider when they need to decide whether a proposed sale is acceptable?

While general rules exist for court approval of sale applications, these applications don’t always arise in the same legal context. For example, the Supreme Court Civil Rules set out their own tests and requirements under Rule 13-5, which are commonly cited as the legal basis for approving a sale. However, the PPA process and Rule 13-5 have been described by the courts as distinct.

Notwithstanding this separation, several PPA approval decisions have imported factors from an Ontario insolvency case, commonly known as the “Soundair factors”:

1. Improvidence
2. All parties’ interests
3. The process’s efficacy and integrity
4. Unfairness

These four factors were cited in the Purssell chambers hearing, although they were never applied, perhaps because they are not always considered in modern insolvency cases. The BC Court of Appeal has laid out two separate requirements for insolvency approval-of-sale applications: mortgagees must “go about finding a buyer in a businesslike manner,” and the court must be satisfied that the proposed sale is “provident in all circumstances.” The BC Court of Appeal adopted these insolvency factors in Dosanjh v. Lalli, 2021 BCCA 204, a family law matter involving one spouse’s application to sell the family home to a non-arm’s-length party.

Although the Purssell decision did not expressly explain which principles would govern a PPA approval-of-sale proceeding, the decision in Dosanjh remains highly instructive. In that case, the court held that what qualifies as “provident” depends on the relevant circumstances, including the terms of the initial order for sale and the manner in which the sale process was conducted.

This guidance is particularly useful in PPA proceedings, where co-owners fight over a property. In these cases, court approval will almost always follow an earlier hearing that authorized the sale and set out related terms, such as who has conduct of the sale and whether the parties themselves may bid. That initial order will, in large part, dictate whether the proposed sale, and its process, has the level of integrity and fairness required for approval.

Conclusion

Although our firm argued that the chambers judge had failed to properly consider the applicable principles on an approval-of-sale application, the Court of Appeal declined to consider it. Instead, we succeeded on our first argument: that the judge had misinterpreted Justice Lyster’s original order.

While we were pleased with a successful result, we were deprived of express clarity in this discrete area of the law. However, we take this opportunity to share some of the principles here in the hope they offer useful guidance on what a judge may consider in an order for sale.

Parties seeking court approval of a sale should be prepared to demonstrate not only that the proposed transaction is commercially reasonable, but also that the party seeking approval honoured the terms, purpose, and fairness established in the original order authorizing the sale and establishing the process.

If you’re involved in a co-ownership dispute and are seeking advice on how a property can, or should, be sold, it’s best to consult a lawyer who can advise you on your legal rights and options. Our litigation team at Watson Goepel LLP is here to help. Contact one of our litigation lawyers for valuable guidance on your concerns and any related claims, including claims for partition and sale of property.

Disclaimer: This content is provided solely for informational purposes and is not intended for use in any legal proceeding. You should consult a qualified lawyer for advice tailored to your specific circumstances.

Key Takeaways