Class Action Filed in Relation to BC's Foreign Buyer Tax

By Alexandra Cocks, McCarthy Tetrault

A proposed class action was filed a mere six weeks after the British Columbia government introduced amendments to the Property Transfer Tax Act to impose an additional 15% tax on the purchase of residential property by foreigners in the Greater Vancouver Regional District (the “Foreign Buyer Property Tax”).  This legislation, and the role of foreign buyers in Vancouver’s housing market, has received significant news coverage in the local and national media.

On September 19, 2016, the plaintiff, Jing Li, filed a proposed class action against the BC government on behalf of nationals of countries party to a treaty with Canada who purchased residential property in the Greater Vancouver Regional District, and who paid or will pay the Foreign Buyer Property Tax. The plaintiff also proposes subclasses comprising those subject to the tax who are nationals of other countries listed. The plaintiff is a citizen of the People’s Republic of China. She entered into a contract to purchase property in Langley, British Columbia for $559,000 prior to the imposition of the tax. She claims that she is obligated to pay an additional $83,850 pursuant to Foreign Buyer Property Tax, or to forfeit her deposit on the property.

The plaintiff alleges that the Foreign Buyer Property Tax violates multiple international treaties, and that the BC government has been unjustly enriched by the receipt of the tax proceeds. She also argues that it is unconstitutional in that only the federal government has the authority to legislate in respect of “foreign affairs, aliens, international trade, and trade and commerce”. She seeks an order of restitution of all amounts collected by the BC government on account of the tax. There is no ruling expected in the near future on whether to certify the proposed class. It is unclear at this point whether certification materials have been filed.

If certified, the case could eventually involve all who have paid the tax. If the plaintiff is successful on the merits, the tax could be struck down. With a BC provincial election scheduled for May, a cynic could be forgiven for thinking that the tax is intended to have more of a political impact than a lasting legal one.