A Kelowna, B.C., realtor and lawyer are on the hook for $172,400 after their client was blindsided by B.C.’s foreign buyer’s tax.
Real estate agent Dean Desrosiers and lawyer Roy Sommerey have been ordered by B.C. Supreme Court Justice Alan Ross to split payment of the sum, with Desrosier and Century 21 assigned 75 per cent of the hit and Sommerey 20 per cent.
Coming out of the legal battle with the tax off their plate are Robert Shave and Kelly Ashford, who moved to Kelowna on a work permit from the U.K. in January 2018 so Shave could take a job at UBC Okanagan.
They acquired Desrosier as a realtor and Sommerey as a lawyer when they decided to settle.
The couple first found a home in May 2018 but the deal fell through, then on June 27, 2019, they found a house for $862,000.
Desrosier sent them a contract but, despite knowing they were from the UK, didn’t indicate they were foreign buyers on the form. The couple signed the form and when Sommerey reviewed the documents he never noticed if there was anything indicating they were foreign buyers included.
This detail would have been significant. It was right around the time the couple moved to B.C. that the province brought in the foreign buyer’s tax, which requires non-resident purchasers in the Lower Mainland and Central Okanagan to pay an additional 20 per cent on their fair market value of the property.
“The purchase of the (Kelowna home) completed on July 25, 2018. The property transfer tax return prepared by Doak Shirreff and endorsed by the plaintiffs on July 24, 2018, states that the plaintiffs are permanent residents,” Justice Ross wrote in the decision.
“The evidence of the plaintiff Robert Shave is that neither he nor his wife closely read any of the documents that Mr. Sommerey presented for them to sign, including the property purchase tax form on which they indicated they were permanent residents. Shave’s evidence is that Sommerey told them that the documents were all normal practice.”
Shave and Ashford moved into their new home and in January 2020, they got a Notice of Assessment issued by the province in the amount of $172,400 for the unpaid foreign buyers’ tax owing on the purchase of their new home.
They, in turn, got lawyers and tried to have the assessment set aside on the basis that they later became permanent residents. They were not successful and the tax remained payable.
They then went to court to prove that Desrosiers and Sommerey owed contractual, fiduciary and professional duties to the plaintiffs.
“Those duties included the obligation to fully disclose all facts within their knowledge which might affect the plaintiffs’ decision to purchase the (Kelowna) property,” reads the decision.
Desrosier and Sommerey said they did owe a duty of care but it was limited by contract, and they did not breach the standard of care.
“The defendants also submit that the plaintiffs were contributorily negligent. Each defendant also seeks to foist fault onto the opposing defendant,” Ross said.
Ultimately Justice Ross said that Desrosiers held the bulk of fault in the situation, noting that “any reasonable realtor would understand that the risk or the requirement of paying an extra 20 per cent for a family home would be an extremely important piece of information for prospective purchasers.”
Shave and Ashford were allotted five per cent of the blame.
“The plaintiffs took reasonable steps and retained professionals to conduct their business. However, they did have a continuing obligation to ensure that they properly read and declared their residency status,” Justice Ross said.
Legal costs were also awarded to the couple.
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