Two individuals who are equal co-owners of two rental properties wish to terminate the undivided ownership so that each of them becomes a full owner of a building. It is submitted that where an application is made to a court for partition, the court may either order partition in kind if the property can be conveniently partitioned or allocated, or sale under the provisions of Chapter X of the Code of Civil Procedure of Quebec relating to the sale of the property of others, and that if the later occurs, there is a sale under statutory authority described in para. (d) of the definition of "proceeds of disposition" in ss. 54 and 13(21), so that the rollover in ss. 44(1) and 13(4) are available, notwithstanding that the properties are not former business properties.
In finding that the rollover was not available, CRA stated:
[S]ince neither Mr. A nor Mr. B can claim in this case to be able to "take" the other's property pursuant to the C.C.Q. - the court only being able to order the partition of the property or its sale - we believe that the proceeds of disposition resulting from an application for partition are neither compensation for property taken under statutory authority nor the amount of the sale price of the property sold to a person who has given notice of an intention to take it under statutory authority.