The Ontario Superior Court’s recent decision in Daniel v. Rizzo et al., 2025 ONSC 2400, serves as a stark reminder that partition and sale applications under the Partition Act can become unnecessarily costly when parties fail to acknowledge clear legal entitlements. This costs decision, released by Justice Sheard on April 17, 2025, offers valuable lessons for transactional real estate lawyers about the importance of proper risk assessment and realistic advice when co-ownership relationships deteriorate.
The Background
Tara-Lee Daniel and Michael Angelo Rizzo co-owned two properties: a home in Niagara Falls and a cottage in Trent Lakes, Ontario. When their relationship ended, Daniel sought to extricate herself from both properties and the associated mortgage obligations. She brought an application under the Partition Act seeking orders for the listing and sale of both properties, notably without claiming any share of the sale proceeds. She simply wanted out.
The case became complicated due to a right-of-way issue affecting the cottage. When Daniel and Rizzo purchased the cottage, they signed Schedule C to the agreement of purchase and sale, acknowledging a potential driveway through the property and agreeing to cooperate in granting a surveyed right-of-way to neighbouring property owners. When Rizzo subsequently refused to honor this commitment, the neighbours commenced a separate action in Toronto and later intervened in Daniel’s partition application.
The Litigation Conduct
Despite acknowledging in his factum that Daniel had a prima facie right to partition and sale, Rizzo maintained his opposition to the cottage sale until midway through the hearing. He raised numerous grounds that Justice Sheard ultimately found to be “devoid of merit,” including claims about debilitating medical conditions constituting “oppression,” uncertainty about Daniel’s ownership interest (which he later conceded was 50% legal and beneficial), and alleged material facts requiring a trial.
Critically, Rizzo had undertaken in his affidavit to pay “all of Daniel’s reasonable legal fees” and to indemnify her for the Toronto proceeding. This undertaking became central to the costs analysis.
The Costs Awards
Justice Sheard awarded Daniel full indemnity costs of $59,290.02, comprising $50,206.78 in fees, HST of $6,526.78, and disbursements with HST of $2,557.24. The neighbouring intervenors received substantial indemnity costs of $22,000 all-inclusive.
In reaching these decisions, Justice Sheard applied the factors in Rule 57.01 of the Rules of Civil Procedure, focusing particularly on:
Reasonable Expectations: Given Rizzo’s undertaking to pay Daniel’s reasonable legal fees, the court found he could reasonably expect to pay full indemnity costs. The only issue was whether the quantum was reasonable.
Conduct Lengthening Proceedings: Rizzo acknowledged Daniel’s prima facie right to partition but nevertheless opposed the application on meritless grounds until the eve of trial for one property and midway through the hearing for the other. He ought to have conceded the entitlement to sale orders earlier, limiting the dispute to the terms of sale.
Refusal to Admit: Rizzo asserted material facts in dispute without evidentiary support, including questioning Daniel’s ownership interest (later conceded), claiming a business agreement regarding the cottage (contradicted by his own evidence), and raising a title insurance claim that had already been denied months earlier.
Expert Report Issues: Rizzo’s expert report was based on incorrect information provided by Rizzo himself, which the expert conceded during cross-examination by the neighbours’ counsel.
Offers to Settle: Daniel made multiple offers to settle under Rule 49, including offers on terms ultimately more favorable to Rizzo than the court’s order. Rizzo accepted the offer regarding the Niagara Falls property only on January 22, 2025, the day before the hearing, after most legal fees had been incurred.
Lessons for Transactional Lawyers
This decision offers several important takeaways:
Advise Clients Realistically About Partition Rights: Co-owners have a strong prima facie right to partition and sale absent compelling reasons otherwise. When clients face partition applications, honest assessment of defenses is critical.
Document Co-Ownership Agreements: While Schedule C created obligations regarding the right-of-way, clearer documentation of the parties’ intentions and obligations might have prevented the neighbours’ intervention and associated costs.
Consider Costs Consequences of Unreasonable Positions: Full indemnity costs are rare but available where conduct is “especially egregious.” Refusing to acknowledge clear legal rights or raising meritless defenses can trigger elevated cost awards.
Beware the “Team Approach”: Both Daniel’s and the neighbours’ costs were scrutinized for duplication of effort when multiple lawyers worked on files. While Daniel’s costs were accepted after a discount, the neighbours’ costs were reduced significantly due to excessive overlapping time between senior and junior counsel.
Settlement Value: Daniel’s offers to settle proved their value. Even though costs were ultimately payable due to Rizzo’s undertaking, the offers demonstrated the unreasonableness of his position and supported the full indemnity award.
The Daniel v. Rizzo decision reinforces that partition applications should generally be straightforward proceedings. When they become protracted litigation, courts will scrutinize the conduct that led to unnecessary expense and impose cost consequences accordingly. For transactional lawyers, the message is clear: advise clients early and honestly about co-ownership rights, document arrangements clearly, and recognize when fighting a partition application is futile.
