A judge has ordered that a $150,000 deposit paid to buy a Vancouver home be forfeited because the buyer had repudiated the sales contact.
A judge has ordered that a $150,000 deposit that was paid for the purchase of a Vancouver home be forfeited to the seller after finding that the buyer, who was facing having to pay B.C.’s foreign buyer tax, had repudiated the contract.
In March 2021, Hongxia Zhang paid the deposit to buy the residence at 4615 West 4th Avenue. She agreed to the sale price of $2,950,000 with a completion date of April 26, 2021.
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Under the contract, time was of the essence and if the buyer failed to pay the purchase price by the completion date, the seller had the option to terminate the contract with the result being that the deposit would be non-refundable and forfeited.
Four days before the completion date, Zhang’s lawyer advised a notary for Anne Nijola Ambroziewicz, the seller, that Zhang wished to delay completion of the contract until she became a permanent resident of Canada.
Zhang wanted to avoid paying the 20 per cent foreign buyer tax levied by the provincial government. But Ambroziewicz declined to extend the completion date.
The next day Zhang’s lawyer advised Ambroziewicz’s notary that his client would not be able to complete the purchase and he would not be preparing or sending any closing documents.
Ambroziewicz’s lawyer took that to mean that the contract had been repudiated and that the deposit should be released to his client.
Zhang did not pay the purchase price on the completion date and Ambroziewicz’s lawyer made another demand that the deposit, which had been paid in trust to a real estate brokerage representing Zhang, be released.
The property was sold in September 2021 to another purchaser and after a third demand for the deposit was made resulting in Zhang declining to release the money, Ambroziewicz filed a lawsuit seeking forfeiture of the deposit to her.
In her response to the lawsuit, Zhang claimed that the main reason she hadn’t completed the sale was due to COVID-19, which prohibited her from entering Canada and that this was a so-called ‘force majeure’, an unforeseeable and unavoidable circumstance allowing her to evade liability.
At the court hearing in the case, Zhang told B.C. Supreme Court Justice Carla Forth that she’d been misled by her realtor that the foreign buyer tax would not apply if she’d been granted a confirmation of permanent residence in Canada.
She claimed that she did not learn until after she’d paid the deposit, but before the completion date, that she needed to be in Canada before the completion date to avoid the foreign buyer tax and explained that since she was in Hong Kong, she had to apply for a travel exemption, which was refused by Canadian immigration officials.
In her ruling, the judge noted that the main point of contention between the parties related to the interpretation of the contract.
Regarding Zhang’s claim that she was told the foreign buyer tax did not apply to her situation when in fact it did apply to her case, the judge said she could make no finding on that question since the real estate agent was not before the court.
“Even if she did receive that advice, it does not change the nature of the contractual obligation to the plaintiff,” said the judge, who accepted that the failure to complete the sale amounted to a repudiation of the contract.
The judge noted that there was no ‘force majeure’ clause in the contract resulting in the failure of Zhang’s claims about COVID as a defence.
“The application of the foreign buyer tax to the transaction did not alter the ‘nature or purpose’ of Ms. Zhang’s contractual obligation,” added the judge. “While it did make the contract more expensive for Ms. Zhang, it did not render the contract ‘radically different’ from what it would have been had the tax not applied.”
kfraser@postmedia.com
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