Negligent law firm must cover client's Foreign Buyers Tax on North Vancouver home
Court orders high-volume conveyancing firm Bell Alliance to pay $74,700 in damages to Brazilian national
Vancouver law firm Bell Alliance must pay a former client $74,700 after a judge found its negligence prevented her from avoiding B.C.’s Foreign Buyers Tax.
Brazilian national Carolina Tellini sued the law firm, founding partner Richard Bell and Sunjeet Grewal – the new-call associate who handled the title transfer on her home – claiming that she would have delayed the transfer had she been properly advised of her options.
The transfer went through on January 16, 2017, but the provincial government allows foreign nationals who obtain permanent residence within a year of a transaction to claim a refund of their FBT. Tellini became a permanent resident of Canada on Feb. 22, 2018, narrowly missing the 12-month deadline to get her money back.
In a recent decision, B.C. Supreme Court Justice Lindsay Lyster sided with Tellini, concluding that the defendants fell below the standard of a reasonably competent real estate solicitor in a number of respects.
“As a result of their negligence, Ms. Tellini paid Foreign Buyers Tax that she would not otherwise have had to pay,” Justice Lyster wrote. “While it is impossible to know for certain how long she would have waited, I find, on a balance of probabilities, that she would have waited at least as long as her current mortgage approval remained in place, which was three months from the date of approval, on March 13, 2017. Had she waited later than February 22, 2017, Ms. Tellini would still have had to pay the property transfer tax and Foreign Buyers Tax at the time the transfer was filed, but would have qualified for a refund of the Foreign Buyers Tax under s. 21(2) of the Regulation, as she became a permanent resident on February 22, 2018.”
In a statement to Court Report Canada, Tellini’s lawyer Bryan Baynham said his client was “very pleased with the result.”
“It's been a long and difficult fight for her,” added Baynham, associate counsel at Harper Grey LLP.
Counsel for the defendants did not respond to a request for comment.
According to the ruling, Tellini first hired Bell when she purchased the home with her common-law spouse after the pair moved with their four children from Brazil in July 2015, before the provincial legislature passed the FBT.
However, the couple split soon after their international move, and Tellini got back in touch with Bell about transferring the property into her name alone. He then referred the file to Grewal.
According to the decision, Grewal first learned about Tellini’s immigration status – she was in Canada on a work visa – at a meeting in December 2016, and passed on the bad news that the client would be exposed to the 15-per-cent FBT on the value of her former spouse’s half-interest in the home, amounting to about $54,000.
But for Justice Lyster, the key moment in the case came during a Jan. 3, 2017 phone conversation after Tellini learned that the value of her home had risen 38 per cent based on a fresh property assessment, boosting the FBT payable by more than $20,000.
Tellini claimed Grewal advised her during the call that she would still be able to complete the transfer on the basis of the old assessment if she moved quickly, and that the lawyer guaranteed she would not owe any more taxes.
Grewal told the court she could not remember the call, but was adamant that she would never have provided such absurd advice. While Justice Lyster found Grewal a credible witness, the judge wrote that she preferred Tellini’s evidence where there was a discrepancy, in part because of the lawyer’s failure to take notes of their communications.
“With respect, Ms. Grewal had only been called to the bar in September 2016, five months before the completion of the transfer. She was in over her head with this transaction. She had already made a series of mistakes by this point, and admits she made a mistake in not searching for a new assessment or advising of the risk of reassessment. She likely wanted to reassure a client to whom she had already admitted she made a mistake in their December 21, 2016 meeting,” the ruling reads. “There is no evidence she sought advice or assistance from Mr. Bell or any other more senior lawyers at Bell Alliance, or that Mr. Bell or anyone at Bell Alliance reached out to Ms. Grewal to provide her with the support she needed at this early stage of her career. That is most regrettable, and must be seen as a significant factor in the series of errors Ms. Grewal made.”
The judge found that the conversation changed Tellini’s mind about waiting to complete the transfer, which ultimately went through on Jan. 16, 2017.
Relations between solicitor and client later deteriorated when Tellini received a notice of reassessment from the province demanding an extra $24,000 based on the updated property value and Grewal opined that it would have to be paid, despite the unfairness of the FBT’s application to Tellini’s case.
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