Realtor and lawyer found mostly liable for failure to advise client of foreign buyer’s tax
Keith Fraser
The Vancouver Sun
The B.C. Supreme Court in Vancouver. Photo by NICK PROCAYLO /PNG
A realtor and a lawyer in Kelowna have been found mostly responsible for failing to advise a couple from Britain that they would need to pay B.C.’s foreign buyer’s tax upon the purchase of a home in Kelowna.
Robert Edward Shave and Kelly Jane Ashford immigrated to Canada in January 2018, settled in the Okanagan community and hired a real estate agent and later a lawyer to purchase the new home.
Before February 2018, the 20 per cent foreign buyer’s tax only applied to homes purchased in Metro Vancouver. Afterward, purchases in other regional districts, including the Central Okanagan, were subject to the tax.
On Feb. 15, 2018, the pair met with Dean Desrosiers, a realtor with Century 21, and hired him to help them buy a new home.
At the time Desrosiers was aware that the couple had recently arrived in Canada and did not advise them about the existence or applicability of the tax, according to a B.C. Supreme Court ruling on the case.
In May 2018, the couple completed a contract of purchase and sale for a residential property in Kelowna which had them declaring that they were not Canadian citizens nor permanent residents.
They also retained Roy Sommerey, a lawyer with Doak Shirreff Lawyers, to assist them with the purchase of the home and told him that they were new to Canada. Sommerey responded with an email saying, ‘Welcome to Canada!”
The purchase didn’t go through, however, and the pair continued their search for a new home.
On June 27, 2018 they purchased a residential property in Kelowna for $862,000.
For the new sales contract sent to them, Desrosiers had indicated they should initial a clause to indicate they were citizens or permanent residents of Canada. He had misunderstood a statement made earlier by the two buyers.
The pair signed the contract and then hired Sommerey to help them finalize the purchase.
In his ruling in the case, Justice Alan Ross noted that Sommerey conceded that at the time he was first retained, he was aware the plaintiffs were new immigrants and that added taxes were applicable to non-resident Canadians.
Sommerey also conceded that he didn’t notice when he reviewed the contract for the first home that the plaintiffs had indicated they were non-residents. The sale on the second home completed on July 25, 2018.
The judge noted that neither Shave, who had secured a teaching job at the University of British Columbia, Okanagan, nor his wife had closely read any of the documents that Sommerey presented them to sign, including the property purchase tax form on which they indicated they were permanent residents.
In January 2020, the couple received a notice of assessment issued by the provincial government in the amount of $172,400 for the unpaid foreign buyer’s tax on the purchase of their new home.
They hired a lawyer and tried to have the assessment set aside but were unsuccessful after which they decided to file a lawsuit against the defendants.
The judge concluded that the realtor had a “clear and obvious” duty to advise the plaintiffs of the tax.
“Having determined that a duty existed, it is clear that, by failing to advise the plaintiffs, Mr. Desrosiers’ conduct fell below the standard expected of reasonably competent realtors.”
Any reasonable realtor would understand that the risk of paying an added 20 per cent tax for a family home would be an extremely important piece of information for prospective buyers, he said.
Regarding Sommerey, the judge concluded that his conduct did not meet the standard of care of a reasonably competent solicitor.
The judge found the realtor and the real estate agency 75 per cent liable, the lawyer and his law firm 20 per cent liable. The couple were five per cent liable for contributory negligence. The defendants will be responsible to pay their proportionate share of the $172,400 plus interest.
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