A Vancouver law firm that gave bad advice to a client about having to pay the foreign buyers tax on a North Vancouver property has been ordered to pay damages of almost $75,000.
Carolina Poniaczyk Tellini sued the legal company Bell Alliance and lawyer Sunjeet Grewal claiming their negligent advice resulted in her having to pay over $82,000 in taxes, which could have been avoided if she had been provided with competent advice.
In a March 26 decision, B.C. Supreme Court Justice Lindsay Lyster agreed with her, awarding Tellini $74,700 in damages for the foreign buyers tax she had to pay.
According to court documents, Tellini and her common-law husband moved from Brazil to Canada in 2015. At that time, Tellini decided to buy a home in North Vancouver, paying the down payment, while the mortgage was in both spouses’ names.
When she and her husband separated the following year, he agreed to transfer his interest in the property to her.
In the interim, however, the B.C. government had brought in the foreign buyers tax in July 2016, requiring people who aren’t citizens or permanent residents of Canada to pay an additional tax of 15 per cent on their share of any property bought or transferred in the province.
Tellini hired Bell Alliance, described as a “high volume conveyancing firm” to give her legal advice about transferring her husband’s share of the property to her.
When she met with Grewal, a lawyer at the firm, at the end of 2016, she was asked for the first time about her immigration status, according to court documents and was told she would have to pay the foreign buyers’ tax on the share of the property being transferred. Lawyers estimated the tax at about $54,000.
While Tellini told the lawyer she was in the process of applying to become a permanent resident, she was never advised to wait to complete the transfer or asked if it was urgent, she testified.
While she was considering what to do, in early January 2017, Tellini received a new property assessment, indicating the value of the property had jumped 38 per cent.
When she phoned the lawyer, Tellini said she was told if she acted quickly she could still be assessed the tax on the 2016 property value.
Tellini went ahead with the transfer, borrowing money from a friend to pay the extra cost of the tax. But a year later, she received a notice from the government, saying she still owed almost $24,000 in taxes. It was only then she realized the foreign buyers tax had been assessed on the 2017 property value, she testified. A month later she received permanent resident status – which would have entitled her to a refund if it had come within a year of the transfer.
Grewal and Bell Alliance argued that it was not their advice, but Tellini’s choices, that resulted in her having to pay the foreign buyers tax, according to court documents.
But Lyster ruled the lawyers “fell below the standard of a reasonably competent real estate solicitor” by failing to ask key questions and advise her about key options.
“A reasonably competent real estate solicitor faced with the prospect that their client was going to have to pay a significant amount of unanticipated taxes because they are not yet a permanent resident would have canvassed those issues with their client in order to be able to consider whether there was a way to restructure or reschedule the transfer,” wrote Lyster.
She added that Grewal had only been called to the bar five months earlier and was “in over her head with this transaction” but had not received advice from any senior lawyers. “That is most regrettable, and must be seen as a significant factor in the series of errors,” wrote Lyster.