Law Times

Law Times • march 5, 2018 Page 7 www.lawtimesnews.com Massive real estate reforms in Lotus Land BY JEFFREY LEM B ritish Columbia has long been the hotbed of real estate speculation in Canada, and the new provincial NDP government seems commit- ted to putting its own stamp on real estate in that province. In B.C.'s February 2018 budget speech, the finance minister an- nounced Canada's most sweeping set of regulatory and tax restrictions on real estate. Every jurisdiction in Canada imposes a tax when a property's registered title changes hands. In Ontario, it is called the "land transfer tax." In Quebec, they are called "mutation duties." And, in British Columbia, it is called the "property trans- fer tax." Rates vary across the country, but in British Columbia, it used to be calculated as one per cent on the first $200,000, two per cent on the amount from $200,000 to $2 million and three per cent on the amount of more than $2 million — but not anymore. After the budget, the last part of this formula is set to be almost doubled to five per cent from three per cent, effec- tive immediately, making it much more expensive to buy in the uber-high-end luxury market in that province. British Columbia was also the first province in Canada to announce a mod- ern foreign buyer's tax, formally known as the "additional property transfer tax for foreign entities," specifically aimed at tax- ing foreign buyers of Vancouver residen- tial real estate. Effective immediately — but with a short grandfathering period for some transactions — B.C. increased that foreign buyer's tax to 20 per cent from 15 per cent. Fur- thermore, the geographic scope of B.C.'s foreign buy- er's tax, which had formerly been limited to the Lower Mainland (Greater Vancou- ver), has been significantly expanded to include the Capital Regional District, the Fraser Valley, the Central Okanagan and the Regional District of Nanaimo. British Columbia will now also intro- duce a new "speculation tax" that will not be targeted to foreign owners per se (B.C. already has a "foreign buyer's tax" for that) but that will, instead, apply to any "specu- lator" that does not otherwise pay tax in British Columbia. This new tax will apply to investments in Metro Vancouver, Fra- ser Valley, Nanaimo and Capital Regional Districts, Kelowna and West Kelowna. The tax rate will be an annual tax fixed at two per cent of assessed value, with a transition rate of 0.5 per cent for 2018 and exemptions for principal residences and long-term rental stock. British Columbia will also now require developers to collect and report infor- mation about the assignment of pre-sale contracts. These are purchase contracts with developers for units that are not yet built. Many of these pre-sale contracts are f lipped before the units are built and this is the information that the B.C. government really wants to collect. Now, to be fair, de- velopers already collect this information as a matter of their own bookkeeping, so the obligation to collect is not really a new or material burden. However, the report- ing of such data will be a new obligation for developers and, depending on how the government wants the data to be packaged and submit- ted, it may be a considerable administrative burden for developers. Although the formal collecting and report- ing obligation is new in Brit- ish Columbia, there is no new taxation per se attached to the f lipping of pre-sale contracts. However, there is already pro- vincial property transfer tax and federal capital gains tax exigible on such f lips, and it may be that this collection and reporting requirement is merely an attempt at better enforcing such existing tax obligations. Again, following the trend to aggres- sively tax the uber-high-end luxury real estate market in the province, British Columbia is now proposing to increase the existing "school tax" for residential properties with an assessed value in excess of $3 million. The school tax is a form of property tax on residential properties and vacant land, and the NDP budget pro- poses increasing that school tax by 0.2 per cent for properties with an assessed value between $3 million and $4 million and by 0.4 per cent for properties with an assessed value of more than $4 million. Perhaps one of the most dramatic changes proposed by the government in the budget speech was the introduction of a "beneficial ownership registry." British Columbia is proposing some sort of a pub- lic register that will show the beneficial ownership of all real estate holdings in that province. Beneficial ownership registers have been bandied about for a long time in Canada, typically in a corporate context, but, before British Columbia's announce- ment, no other Canadian jurisdiction has ever attempted to establish such a register, largely because they are fraught with com- plexity to create and maintain and come with numerous administrative and policy burdens and hurdles. The British Colum- bia Land Title Survey Authority, one of the best-run and most sophisticated land title authorities in the world, appears to have been tasked with the job of building this new register, but even it will have its hands full in trying to implement the beneficial owners register contemplated by the NDP government. Although this is clearly a B.C. issue for the time being, the rest of the country is waiting with bated breath for the imple- mentation of these reforms since, histori- cally, other provinces have, in due course, emulated B.C.'s anti-speculation reforms. What is certain for now, however, is that for lawyers practising in Lotus Land, residential real estate deals have never been more complicated. And for lawyers practising elsewhere in the country, deals might get more interesting really soon. LT uJeffrey Lem is the director of titles for the province of Ontario and an elected bencher for the Law Society of Ontario. This article ref lects the personal views of the author alone. Rhetoric vs. reality on self-represented litigants BY JENNIFER LEITCH C urrently, there is a tension between the rhetoric and reality of civil litigation prac- tice in cases involving self-represented liti- gants. A recent Court of Appeal decision of Sanzone v. Schechter, 2016 ONCA 566 highlights this tension. A summary judgment in favour of the defendant den- tists was overturned on the basis that, while the self- represented plaintiff 's failure to provide an expert report detailing her injuries was problematic, the rep- resented defendants had not, in turn, put their best evidentiary foot forward. Specifically, an affidavit from defendants' counsel outlining the procedural steps un- dertaken in the case and a further affidavit challenging the credentials of a dentist whose opinion was prof- fered by the plaintiff were considered insufficient to establish that there was no genuine issue for trial. The troubling aspect of this case is not that the defen- dants did not fulfil their own evidentiary requirements. Rather, it is that this occurred in the context of a case involving self-represented litigants. The unspoken con- cern is that lawyers, with significantly more knowledge and expertise than the non-lawyers they are advocating against, will use that knowledge unfairly against less knowledgeable non-lawyers. The consequence of this is that legitimate claims will not be heard on the merits and/or decisions are based on something less than the best evidence. Recent empirical data suggests that summary judg- ment motions are disproportionately brought against self-represented litigants and that lawyers are more of- ten than not successful in those motions. One of the questions that this raises is how procedural steps are be- ing used against self-represented litigants and what pro- fessional considerations do lawyers have in engaging in steps that would likely be challenged if the other party had legal representation. In Sanzone, the court acknowledged that, while represented litigants are entitled to expect that the same rules and practices of evidence will apply to self- represented litigants, represented parties had better ensure that they, too, are following the rules. In other words, it is not fair for represented parties to take ad- vantage of the rules (and the self-represented litigants' corresponding unfamiliarity with those same rules) when they in fact are not prepared to meet the same requirements. In reaching this conclusion, Justice David Brown stated that "[b]y resorting to rule 20 to compel the self- represented appellant to deliver an expert report, with- out meeting their own evidentiary obligations as mov- ing parties under the rule, the defendants used the rules in a procedurally inappropriate manner." As a conse- quence, Brown suggested that the motions judge should not have granted summary judgment in the defendants' favour. Lawyers may point to this being the responsibility of the adjudicator (namely to ensure that the parties "meet" their case). However, presenting different standards of evidence that are ref lective of the capabilities of oppos- ing parties weakens the legitimacy of the cases decided in that context. A further problem is the creation of a hierarchy of case law and precedent — case law might be distinguishable on the basis of the presence or absence of self-represented litigants. Moreover, there is a corre- sponding risk that in cases involving self-represented litigants there are lower standards of evidence. Such developments would be inconsistent with the administration of justice. A party's obligation to present its best case and test the evidence of an opposing party is paramount to the efficacy and legitimacy of the adver- sarial system. As an assumption, it helps to provide some reassurance that the system that we have will, more of- ten than not, reach the right result in the circumstances. To suggest that, in certain cases, a party will choose not to present its strongest evidence simply because the other party is unrepresented and thereby lacks the full capacity to challenge any case undermines the overall quality of the decisions reached. More generally, when lawyers undertake tactics in cases involving self-represented litigants that they would not use in cases with opposing counsel, it un- dermines the public's view of the profession. And the consequence is a further weakening of the perception of the profession's commitment to fairness and justice. As a profession, we cannot be said to promote justice if we do not act justly. While inequities in experience and resources between parties in the civil justice system is nothing new, there needs to be a better accounting of how lawyers and non-lawyers are to engage in the civil justice system where those inequities are greater. All of this requires a renewed and serious commit- ment by the members of the profession to fair fights. It also requires more active engagement from professional regulators who must re-constitute the lawyer's ethical commitment to advocacy in the context of a new real- ity of the civil justice system — the vast increase in self- represented litigants. Additionally, it is not sufficient to suggest that law- yers continue to act as if there is an opposing counsel that will challenge their conduct or a judge that will en- sure fairness between the parties. After all, we are a self-governed profession that is in need of some new rules respecting how we might con- duct ourselves in cases where it is very likely that we have a distinct and significant advantage over our un- represented opponents. This is particularly deleterious where the conse- quence of taking advantage of these situations is some- thing less than the best or just possible outcome in the circumstances. LT uJennifer Leitch, JD, LLM, PhD is a lawyer and research fellow at the Canadian Forum on Civil Justice as well as an adjunct professor at Osgoode Hall Law School and University of Toronto Faculty of Law. Previously, she practised civil litigation at Goodmans LLP. u SPEAKER'S CORNER COMMENT The Dirt Je rey W. Lem Je rey W. Lem

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