Newcomers to B.C. sue over Foreign Buyers' Tax after purchasing Kelowna home

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A couple who recently moved to Canada went to court after realizing they'd have to pay the Foreign Buyers' Tax on the home they'd purchased in B.C.'s Southern Interior.

The judge’s decision, which was published online earlier this week, said the couple immigrated to Canada four years ago, and settled in Kelowna.

The plaintiffs moved to B.C. from the U.K. for work. Robert Edward Shave was hired as an instructor at the University of British Columbia, Okanagan.

Once in the area, they started to look for a home, and hired a real estate agent and lawyer to aid in their purchase. They found a home they liked in June 2018, and agreed to buy it for $862,000.

What they claim they didn't know is that B.C.'s recently-expanded Foreign Buyers' Tax would apply, and they'd be expected to pay another $172,400. With interest, that amount reached $182,813.12 by July.

Shave and his partner, Kelly Jane Ashford, say they found out when they got a notice of assessment from the province stating the tax was still owed. No one had told them before that, they told the court.

Their timing was interesting. Had they bought a house in the area before February of that year, they would not have had to pay. When B.C. introduced the tax, it was initially just in the Metro Vancouver area. But it was expanded shortly after Shave and Ashford immigrated, and before they bought the house.

Upon receiving the bill, which was so high that in some parts of Canada it could cover the cost of a house, they sued both their realtor and the lawyer they'd worked with, alleging breach of contract and breach of fiduciary duty.

They also claimed the lawyer and realtor were negligent.

Their argument, as summarized by Justice Alan Ross, was that they should have been advised by both of the existence of the tax, and that they would be subject to it.

Shave and Ashford said they wouldn't have bought the property if they knew they'd have to pay a 20 per cent surtax. Instead, they would have waited to buy a home until their immigration status changed.

The judge outlined details of the contract, and what the realtor and lawyer discussed with the couple in person or over text message. 

Ultimately, the judge found everyone involved in the case negligent to some degree. He apportioned 75 per cent of the liability to the realtor and his firm, and 20 per cent to the lawyer and his firm.

But the plaintiffs, too, are to blame, and they'll be expected to pay the remaining five per cent of the total owed.

Still, Ross called them "largely successful" in the case, and said they're entitled to their costs of the legal action.