Your question is not without merit---the wording of the law can easily be misinterpreted. While s. 148(1) requires you to share half of the roadway the problem lies with the use of the word "free" at the end of the paragraph.
148 (1) Every person in charge of a vehicle on a highway meeting another vehicle shall turn out to the right from the centre of the roadway, allowing the other vehicle one-half of the roadway free.
The problem is that some folks interpret that to mean that you must give opposing traffic half of whatever portion of the road is free. But, that flies in the face of the rules of yielding and right-of-way.
Clearly, if there is a dividing line painted, you must stay within your lane and its self-explanatory----you must yield (and stop if necessary) if there is any obstacle in your lane that does not allow you to pass without going over the dividing line. The opposing driver does not have to yield to you nor move over to make room for your vehicle to go on to his half.
However, where there is no dividing line, the same rule should apply. The width of the road remains constant----regardless of whether there is parked or stopped cars (or any other obstacle) on the side. The interpretation most consistent with the general traffic regime is that the one with the obstacle MUST be the one who must yield to the other. In other words, the use of the word 'free' is indicating that you must not take up any portion of the opposing driver's half----his half must remain free.
If that were not the interpretation than it would create chaos in the law when both sides of the road are obstructed. If the width of the road changed, then which vehicle would have right of way when only 1 can safely pass if both have equal right to their 'half' of the available roadway? It would be chaos!
So, the first definition is the more consistent. Still, I agree that the section should be worded better to avoid such confusion.
While the courts have generally adapted the interpetation I have given in civil cases, to my knowledge, there has not been a definitive decision with regards to that section where there is NO dividing line. Rather, the cases have all had a dividing line.
So, your question is very valid.