A month and a half after the BC government introduced the additional 15 per cent Property Transfer Tax for foreign buyers of Vancouver real estate, a class-action lawsuit against the BC government has been filed in the BC Supreme Court over the new tax.
Lawyer Luciana Brasil of Branch MacMaster LLP told REW.ca that she had filed the class-action suit September 19. She said, "It's still very early days to know how many people will come forward, but I expect it involves a large number of people. We already have a lot of other people getting in contact, but they don’t have to declare themselves until the suit is certified.”
In a telephone interview with REW.ca September 20, Brasil confirmed media reports that the lead plaintiff is Jing Lee, a Burnaby student from China who bought a home using her family’s savings as a deposit and is now on the hook for around $84,000 in extra tax.
Lee bought a $559,000 home in Langley and could now lose her $55,990 deposit if she is unable to pay the additional tax, which she told media her family cannot afford as they had already given her all the funds they could raise, including money borrowed from other family.
However, the class-action suit is not limited to that group of local residents. The application of the tax on non-permanent residents or non-citizens who live in Greater Vancouver is just one of the aspects the class-action lawsuit tackles, Brasil told REW.ca.
Brasil explained that anybody affected by the tax, if they are a citizen of one of the 33 countries with which Canada has an international trade treaty, is also eligible to participate in the suit – although foreign nationals living outside BC must actively opt in to be included, she added.
The lawsuit document (PDF link in “Related”) alleges that the tax violates 32 treaties with those 33 countries by discriminating against foreign nationals based on their status.
Brasil told REW.ca that the suit is open “not only to anybody who has already paid the tax, but also to those who will continue to buy properties and will pay the tax in future.”
She added that under BC laws, anybody affected by the tax who is already living in BC, such as Lee and Benner, will be automatically opted in to the class action.
“The way class-action suits work in BC is under an opt-out system. So if you live in BC and fit in the class definition, you are automatically included in the class,” she said. “That doesn’t mean you automatically get anything at the end, and we may have to call upon BC residents to make a claim to get a refund. But in terms of membership, you’re already included, unless you choose to exclude yourself.”
However, she encourages all interested parties to register on Branch MacMaster class-action suit web page to be sent updates and information on how to make a claim, if the suit is successful.
Brasil said it could take six months to a year for the class-action suit to be certified by the BC Supreme Court, which is merely the first step in deciding whether the suit applies only to the lead plaintiff Jing Lee, or whether the firm is allowed to represent the entire class.
Lawyer Richard Bell of Bell Alliance told REW.ca that he thought it was likely that Branch MacMaster had done a thorough legal review of the case because there are many challenges in class-action lawsuits, and law firms only take them on if they seem likely to succeed. He also said it made sense that there were a number of different interests being represented within the single lawsuit, as "by taking the broadest possible approach, it is more likely that the courts will find at least one aspect that has legal merit."
Bell added, "This is new ground. When historically have we ever discriminated against foreign buyers of local real estate?"
Responding to the news of the suit, US Vancouver resident Nic Benner told REW.ca, "It is good news, but for now, it seems, nothing has really changed. BC is likely to spend the money [by settling the claims] and blame the foreigners for ruining their great plans to build affordable housing. It is all political."
The news of the lawsuit comes just one day after the BC government announced that it was investing an additional $500m in affordable housing across the province, funded by its new Housing Priority Initiatives Fund, which is partially made up of revenues from the new foreign buyer tax.
The class-action suit is yet to be certified and none of the allegations has been proven in court.