B.C. government wants to resolve foreign buyers tax lawsuit without full trial

B.C.'s provincial government says the constitutional challenge put forward by a foreign homebuyer on Metro Vancouver's 15 per cent foreign homebuyers tax is "of questionable merit" and can be resolved without undertaking a full trial.

The provincial government has responded to the potential class action lawsuit launched  last September by lead plaintiff Jing Li, a university student from the People's Republic of China now living in Burnaby.

Li says she was caught by the 15 per cent foreign buyers tax — which the province implemented last August to slow down the region's red-hot real estate market — which added $84,000 to the price of a townhouse she had attempted to buy in Langley.

In her claim, Li alleged the province had acted beyond its powers by applying the tax and alleged it had violated foreign treaties and international obligations the federal government had made to other nations.

In an amended claim submitted in February, Li further alleged the province had discriminated against her on the basis of national origin, contrary to the equality guarantee of Section 15 of the Canada's Charter of Rights and Freedoms.

The claim has generated considerable interest across the country, particularly in Ontario which launched its own foreign buyers' tax in April.

It has yet to be certified as a class action.

No rights infringed, province says

In early May, the province responded to Li's claims by saying the foreign buyers tax does not violate foreign buyers' rights.

In its response, the province says it acted well within its powers to apply taxes. It argues that any international treaties agreed to by the federal government would be irrelevant, unless they have been specifically implemented into domestic law via legislation.

On the Section 15 Charter challenge, the province argued the tax makes its distinction based on immigration status — not national origin — and is therefore not protected by the Charter.

Summary trial preferred

Furthermore, the province is making the unusual move of requesting a summary trial — where the judge can make a preliminary decision without a full trial — before the class action is certified.

The province says the class action certification process would add "unnecessary complexity and costs."

It adds the court would be forced to engage in a much broader range of issues than the case warrants, which, it says, would be "highly inefficient."

A timely resolution of the issue is imperative, the province says, adding time would dramatically increase potential costs for the province if the litigation were to go on.

If the claim is successful, the province would have to repay all the revenue it's collected through the tax — which could be in the hundreds of millions.

Uncommon move

David Rosenberg, a B.C. based lawyer and expert on class action litigation, says applying for a summary trial before certification is an uncommon step as the majority of class action suits proceed to certification first.

But the strategy occasionally succeeds and could do away with the entire trial, he said.

"If the court sees there's a discrete, clear legal point that could be decided and could dispose of the entire litigation, it may hear that application at an early stage," he said.

Rosenberg says this would also disadvantage the foreign buyers when it comes to costs.

If the summary trial goes ahead before the class action is certified, he said, the plaintiffs won't be protected from paying costs by B.C.'s no-cost class action regime. 

"That's a real danger to them that they may, if they lose the application, also have to pay costs and they may be significant," he explained. 

For now, none of the allegations has been proven in court.