Foreign Buyers’ Tax discrimination and unconstitutional limits on experts in ICBC cases

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Canada and British Columbia have a very unfortunate history of racist legislation intended to restrict Chinese immigration. This includes the Chinese Immigration Act (1885), which imposed a head tax, the Opium Act (1908) which was passed following anti-Asian riots in 1907 that involved destruction in Vancouver’s Chinatown as well as Japanese neighborhoods, and the Chinese Immigration Act (1923) which banned new Chinese immigration altogether.

It’s in this historical context that 2016 amendments the Property Transfer Act, which imposed the Foreign Buyers’ Tax, were challenged in court.

Jing Li, a citizen of the People’s Republic of China, moved to Canada in 2013 to study public administration at the University of Saskatchewan. In 2016 Ms. Li purchased a property in Langley British Columbia. After paying a deposit, the Foreign Buyers’ Tax was implemented and she was required to pay an additional $83,850 in tax, on a $559,000 property, because she was not a citizen, or permanent resident, of Canada.

The court challenge brought by Ms. Li argued that the Foreign Buyers’ Tax was outside of the jurisdiction of the Province of British Columbia, because “Naturalization and Aliens” are a matter of federal jurisdiction in Canada. She also argued that the tax was unconstitutional because it breached section 15 of the Charter which says: Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

A previous British Columbia court case concluded that section 15 of the Charter prohibits discrimination on the basis of citizenship because it’s a characteristic analogous to the others which are listed.

In rejecting her claim, the trial judge concluded that the Foreign Buyers’ Tax discriminated based on immigration status, and not citizenship because permanent residents are exempt from the tax.

The trial judge went on to conclude “While the majority of transferees after the Tax was enacted and until November of 2017 have been citizens of Asian countries, particularly China, that does not mean that the Tax adversely affected Asian buyers in particular.”

In reaching his decision, the trial judge refused to admit expert evidence from Professor Henry Yu, an Associate Professor at the Department of History at the University of British Columbia. Professor Yu’s report consisted of a historical review of discriminatory laws against Chinese in British Columbia and elsewhere.

In rejecting Professor Yu’s report, the trial judge said this “In my view expert evidence is not required to establish that such discriminatory laws were enacted in British Columbia many years ago. The history of such laws would be readily available to counsel and the courts and could have been a matter that was dealt with in argument.”

The second case discussed in the show is a decision by Chief Justice Hinkson which struck down recent changes, made unilaterally by the British Columbia government, which prevented a plaintiff from presenting more than three expert witnesses as part of a motor vehicle accident claim case.

The purpose of the rule change was to save ICBC money.

While the provincial government does have the authority to modify civil procedure rules, they are not permitted to do so in a way that would interfere with the core jurisdiction of a superior court.

The reason for this restriction on government authority is to protect the independence of the judiciary. This independence would be of little practical consequence if the government was able to modify procedures or move decision-making authority to other, less independent, bodies. This is of particular concern when the government is attempting to change the rules in a way to save itself money.

Chief Justice Hinkson concluded that the impugned Rules infringed on the court’s core jurisdiction to control its process because they restricted the core function of the court to decide a case fairly upon the evidence adduced by the parties.

Of note, despite this failed effort to only allow three expert witnesses in ICBC cases, the provincial government relied on six expert witnesses in the case concerning the Foreign Buyers Tax.


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Automated transcript of the show:


Adam Stirling [00:00:05] Time now for Legally Speaking on CFAX 1070 with Michael Mulligan, Barrister and Solicitor with Mulligan Defence Lawyers. Michael, good morning. How are you?

Michael T. Mulligan [00:00:13] I’m doing great. Good to be here.

Adam Stirling [00:00:14] Interesting legal news stories on the docket today. Up first, the foreign buyers tax a challenge to that tax unsuccessful at trial. Set this up for us.

Adam Stirling [00:00:25] Yes, indeed. So, this was a challenge brought to the tax, the person who is the representative individual, Miss Lee, who is a resident in Burnaby. She moved to Canada in 2013 in order to complete a master’s degree in public administration at the University of Saskatchewan. She entered into a contract to purchase a residence in Langley, put down a deposit, and then before she was required to complete this Foreign Buyers Tax came into effect, and it meant that she had to pay an additional $83,850.00, and so she would be the sort of the the plaintiff in this action. But it’s clear that what was intended is to ultimately, if the matter succeeds, to get the thing certified as a class action, to try to recover the money paid by all of various Mrs./Ms. Li’s that might have paid large amounts of money because of their immigration status.

Adam Stirling [00:01:29] It’s an enormous sum, one would suspect.

Michael T. Mulligan [00:01:32] There’s no doubt about that. There’s a lot of money on the line here. The counsel that are acting for Ms. Li, and ultimately trying to get the matter certified, include Ms. Brasil, who’s as a leading class action counsel with Vancouver and Joe Arvay, amongst others. And so, the decision that just came out was a decision in what’s called a summary trial. Maybe a little bit of explanations are required for that. But what happened is that the lawyers for Ms. Li tried to, wanted to, get this certified as a class action to represent all the people that would have paid a whole bunch of money in this foreign buyers tax. And the procedure that the court decided upon was that before deciding whether the thing should be certified as a class action, they should have one of these, quote, summary trials. And the idea with a summary trial is that it’s sort of an expedited process, if a case is one which can be properly dealt with based on affidavit evidence rather than the usual procedure of calling live witnesses for everything. So, it generally works where you’ve got not a great deal of factual dispute, you have a legal dispute. Not you know, he said she said case, but instead, you know, what does she said mean? Right.

Adam Stirling [00:02:47] All right. So, yeah, uncontested facts and so, Okay, I understand.

Michael T. Mulligan [00:02:49] So that’s what it is. So, both sides proceeded in that fashion and put a bunch of evidence before the judge in the form of affidavits. Now, one of the interesting elements of that is that both sides showed up with a litany of expert reports and bare that in mind when we talk about the next story. So each side showed up with a group of expert reports and the case dealt with really two arguments; one argument that Ms. Li was making or counsel were making was that the law in British Columbia, this foreign buyers tax was outside of the Provincial Jurisdiction because of the division of powers between the provinces and the federal government. And the essence of that argument is that the Federal Government has, although we use more arcane language, responsibility for essentially immigration issues. All right. So, they argued that, look, this was really some effort to control immigration and therefore, the province didn’t have authority to deal with this. That didn’t succeed. But I think perhaps the more interesting argument here is an argument dealing with the claim that the legislation, the foreign buyers tax is discriminatory in the context of Section 15 of the Charter. Section 15 of the Charter says this “Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin color, religion, sex, age or mental or physical disability.” And then there’s some exceptions to that for some sort of affirmative action programs effectively. So, the argument was here, look, this foreign buyers tax appears to be an effort to discriminate based on national or ethnic origin or in analogous ground because it, it has disproportionate effects, with respect to Chinese buyers of real estate.

Adam Stirling [00:05:01] So the effect is that they are disproportionate is incidental and not the purpose, in other words.

Michael T. Mulligan [00:05:06] Well, both were argued. They argued both at has that it expressly does that. And then it also had that incidental disproportionate effect. Both were argued. Now, there are a few things that are interesting in terms of how that played out. And first of all, with respect to the experts, that each side wanted to call or present evidence from, one of the defence or one to sorry, one of the plaintiff’s experts was a Professor Yu, who is a professor in the Department of History at the University of British Columbia. And that professor had prepared an expert report which detailed the history and review of discriminatory laws against Chinese people in British Columbia and elsewhere. And it was a review of those things, and I must say there is a very unhappy, long history of exactly that. Now, the there is a test for whether it expert evidence should be permitted. It’s a two-part test. The first part of the test deals with these factors. Is the purported expert evidence relevant? Is it necessary? Is there some exclusionary rule? And then does the person have some special expertise? And then after that, there can be a weighing of whether the risks or benefits of letting it in would mitigate in favour of letting in it or not. But the trial judge here concluded that this evidence, the evidence from the professor about this history of discrimination, discriminatory laws, didn’t make it past the first part of that test, which deals with the issue of relevance and necessity. And the essence of that conclusion was that he said this: “The history of such laws would be readily available to counsel and the courts and could have been a matter that was dealt with an argument.” I circled the word ‘could have’ those words ‘could have’.

Adam Stirling [00:06:58] Implying it wasn’t.

Michael T. Mulligan [00:06:59] Implying that it wasn’t. And I think that is some history which is important to know about when analyzing this case and that you’re quite right. Advised that it wasn’t. And the judge didn’t allow in that evidence. That I think, in my view, very much colours this legislation and how we ought to approach it, in really summary fashion. Some of that very unfortunate legislative history in Canada and in British Columbia include some things that people will probably be familiar with. We had in there were acts passed, including an act passed which imposed a head tax. People have probably heard about that, which the express purpose of that was to reduce Chinese immigration. We actually passed another act which expressly simply stopped Chinese immigration. It prohibited it. We have a very unsavoury history of things in British Columbia, including in 1907., there was a mob of several thousand men who broke all of the windows in Chinatown, rioted there. And then we had, and this is another interesting thing when you look at the history of drug laws in Canada, one of the other things which occurred, following that riot, in Vancouver, was that there was a Royal Commission struck to look into that. Some of the language in that included, and I looked into drugs as well, because one of the things which was argued about reasons why we ought not to allow Chinese immigration was the connection and danger of the use of opium. Very interestingly, that commission that looked into things following that anti-Chinese riot in Vancouver, referenced things including the quote, baneful influences that are, quote, “too well known to require comment”. And it’s accepted.

Adam Stirling [00:08:56] I’m sorry. It’s too clear for me to explain here. Like that’s … it’s so obvious. I’m not going to bother to tell you.

Michael T. Mulligan [00:09:01] It’s so obvious we are all prejudice that we don’t want Chinese people moving here. I need not even mentioned that. That’s all very clear.

Adam Stirling [00:09:09] wow…

Michael T. Mulligan [00:09:09] That led to a 1908 the Opium Act, and that was where the early origins of our drug laws. There is, I think, a general consensus that there was a racial motivation to those early drug laws intended to target Chinese immigrants to Canada. Victoria had a very unfortunate history, in particular, we had a 1922 school trustee in Victoria, tried to take all Chinese students out of regular classes and segregate them into a separate school.

Adam Stirling [00:09:41] George Jay.

Michael T. Mulligan [00:09:42] Yeah. The Chinese community protested and took the children out of the schools for an entire year.

Adam Stirling [00:09:48] yeah.

Michael T. Mulligan [00:09:48] That’s the background to the sort of background that the professor had information about, and the judge said, could have been argued about in submissions. It’s not otherwise discussed in the decision, but that is are very unfortunate history and, in my view, that history should inform how we are analyzing these things.

Adam Stirling [00:10:12] Yes

Michael T. Mulligan [00:10:14] It is not how this case analyzes it. This case ultimately the judge parses out the issue of somebody’s country of origin and says, no, this particular provision doesn’t simply deal with citizenship. It permits an exception if somebody is a permanent resident or about to become a permanent resident and uses that as a basis to say not his isn’t legislation which would be in breach of the what we’ve talked about in terms of Section 15 and having an impact on people based on their national or ethnic origin. And the judge concludes that even though numerically it may be a very disproportionate impact on people of, that are Chinese, that he says this is not a numbers game and even though that might be so, the judge concludes that people from China would be equally free to apply for citizenship or permanent resident status. Therefore, this legislation is not something which would be in violation of Section 15. An interesting conclusion, almost certainly not the end of the matter. Many of these would clearly be a test case.

Adam Stirling [00:11:38] Yes.

Michael T. Mulligan [00:11:39] They are almost certainly intended to go up the ladder. My guess would be Mr. Arvay is off drafting a fact and right now for the Court of Appeal and maybe even that Leave Application to the Supreme Court of Canada. But that’s a very unfortunate background of racially motivated legislation in Canada and British Columbia. And I think given that background, we should be quite irrespective of the legal analysis of it. Very, very slow to be passing legislation, which is going to have a disproportionate negative impact on Chinese immigrants. That we have to be very careful about. There just needs to be some added, I think, sensitivity to that impact. And it’s a circumstance where, at least in my judgment, the assessment of whether this is a popular thing or not ought not to end the inquiry, because, of course, when you had people rioting, breaking windows in Chinatown or trying to exclude Chinese students from schools, those may well have passed some popularity test back in 1907 or 1922. We ought to have a different approach to that in 2019.

Adam Stirling [00:12:56] Well, that’s behind the movement to rename George Jay School.

Michael T. Mulligan [00:12:59] Yes

Adam Stirling [00:12:59] It was those actions in the riots that followed thereafter. All right. Legally Speaking here on CFAX 1070 will continue in just a moment. Stay with us.

Commercial [00:13:18] COMMERCIAL BREAK

Announcer [00:16:52] This is Adam Sterling on CFAX 1070.

Adam Stirling [00:16:55] Legally Speaking continues with Michael Mulligan, Barrister and Solicitor with Mulligan Defence Lawyers. Michael, in the last story you describe to us. Was it a four-part test for expert evidence? Is there a limit on the number of experts we can have in a trial and does that figure into our next story?

Michael T. Mulligan [00:17:09] Yeah, that’s an excellent question. So, in the last story we talked about, I would like to note that the Province of British Columbia called a total of, or presented evidence from, a grand total of six experts in their effort to defend the constitutionality of the Foreign Buyers Tax. That brings us to our next story. The province of British Columbia also tried to recently limit the number of experts that a person could call, or present evidence from, in an effort to establish their ICBC claim basically. And they tried limiting that to three experts, half the number they saw necessary to defend that last action we just talked about. And so that brought a challenge, a constitutional challenge. And here’s where that rub came. The. There is certainly some authority for the provincial government to make laws dealing with the administration of justice in the province. And the language of the Constitution in that regard speaks about the administration justice in the province, including the construction, maintenance and organization of provincial courts,

Adam Stirling [00:18:18] mmhmm.

Michael T. Mulligan [00:18:19] Both civil and criminal jurisdiction and includes procedure in civil matters in those courts. Now. That is not the only provision that might bear on who can decide how many experts could be called in a car accident case, because we have another section of the Canadian Constitution, Section 96, which on sort of a bear reading of it, speaks about the authority of the Federal Government to appoint superior court judges. But much more has been read into that. And I think it’s important that more be read into that. Superior Court Section 96 Court Judges have some special constitutional protections. For example, they could only be removed from office if there was a joint resolution of the House of Commons and Senate. They’re quite well protected and with good reason because they are making decisions often which would involve the government. So, you really don’t want somebody there who’s at the general whim of the government.

Adam Stirling [00:19:18] Indeed and they must not show fear or favour.

Michael T. Mulligan [00:19:20] Right You can also imagine how those kinds of protections would be awfully hollow if the province or federal government could just say, well, that’s an interesting creature that Section 96 Court Judge. We don’t much like the degree of independence they’re showing. You know what? Why don’t we just create a tribunal, will appoint people on a 12-month contracts and we’ll just have them decide all various important issues involving us. They would be much more compliant. Well, no, you can’t do that. And that …those kinds of important restrictions have been read into by courts. What is the meaning of Section 96? You can’t just undermine all of those protections, which essentially allow us to have an independent judiciary not subject to the whims of the government, without a bunch of people that are on some tribunal concerned about being fired next Thursday because their decision wasn’t too popular. And so that, those protections that protect the independence of judges extend to making decisions that deal with the through the core functions of that Superior Court. Because, again, you can’t bypass that as a government. You can’t say, well, look, I don’t really like all these awards, these independent judges are making, those cost a lot. We have a dumpster fire at ICBC. You know what? Why don’t we just create a, you know, tiny award tribunal and tell the tiny award and say that the tiny award tribunal shall make all decisions dealing with claims against ICBC.

Adam Stirling [00:20:53] I see where you’re going with this.

Michael T. Mulligan [00:20:55] That’ll save a lot of money.

Adam Stirling [00:20:56] There are larger implications than merely the number of experts allowed here, aren’t there?

Michael T. Mulligan [00:21:00] There are. And I must say, we are all, we should all be thankful, that we have this sort of an independent judiciary and that that independent judiciary guards their very independence, because, after all, no one else is doing it because in but for these sort of constitutional protections, all with well-meaning intentions.

Adam Stirling [00:21:25] Yes.

Michael T. Mulligan [00:21:26] When the government is trying to save money, put out dumpster fires and the like. It is very, very tempting to want to move the levers and switches of legislation in order to advantage oneself. And that is what was going on here. You’ve seen sort of reports of, oh, how this is going to cost 400 million dollars, how the government planned to save this large amount of money. How is it that they thought they were going to see that large amount of money? Well, certainly some of that calculation may come from, you know, well, what is the cost of hiring that medical expert or the medical expert to respond to the plaintiff’s medical expert. But some of it, no doubt comes from a calculation of, gee whiz, if we allow people to call all of these experts to prove just how injured they are and what it’s going to cost for them to recover from that. That’s going to be expensive. And so, the government tried on this unilateral effort to say no, more than three experts can be called to do that, half the number the government seems to think is necessary when they’re defending a claim. Well, the Chief Justice Hinkson.

Adam Stirling [00:22:36] Yes.

Michael T. Mulligan [00:22:37] Just concluded that that’s not constitutionally permissible. That decision that the unilateral decision to prevent people from calling more than three experts, to prove their motor vehicle claim, interfered with the core function and jurisdiction of the Superior Court. And I must say, it’s a very interesting read, the judgment is or discusses the history of that and the history of the court and also some of those sorts of fundamental things about, you know, what is the core function of the court. And ultimately the conclusion is this: I find that the impugned rule infringes on the court’s core jurisdiction to control its process because it restricts a core function of the court to decide a case fairly upon the evidence adduced by the parties, the effect of the impugned rule is to require the court to play and enter and….play a function in place of its traditional non adversarial role, contrary to the principle of party presentation.

Adam Stirling [00:23:44] Hmm.

Michael T. Mulligan [00:23:44] The idea there is that that caused that period, well, maybe the court could appoint some other expert to deal with something. The court has had no, right at the core of their jurisdiction is to permit people to put before the relevant evidence, including experts if necessary, to prove their case so that an independent judge can make a decision.

Adam Stirling [00:24:03] Yes.

Michael T. Mulligan [00:24:03] And if you make a rule saying you are not permitted to do that in a fulsome way that goes to the core jurisdiction of the court. You need only imagine how you could extend this a little bit further. If you simply made a rule saying if you’re making an ICBC claim, you can’t call any medical evidence. That would probably save a whole lot of money, but…

Adam Stirling [00:24:20] Well save a lot of money is just not giving awards at all. Right. But then that we defeat the purpose of insurance, that is, take care of people who have been injured and harmed and must be made whole.

Michael T. Mulligan [00:24:29] Yeah. I mean, it strikes me that sort of, if somebody is looking to save money on litigation costs, right if that’s really the motivation. One of the ways that could be done would be to give ICBC a clear mandate to: when you conclude that there is a legitimate claim, to offer the person an amount of money equal to what you conclude they’re likely to be awarded if they wound up going to trial. If you took that approach, you’d probably have fewer trials.

Adam Stirling [00:24:56] I always wonder how do you know what you’d get from trial without going to trial if trial is the only way to know what you would get?

Michael T. Mulligan [00:25:01] There’s a good answer to that.

Adam Stirling [00:25:02] oh is there. okay

Michael T. Mulligan [00:25:02] Hire a lawyer and…

Adam Stirling [00:25:05] alright.

Michael T. Mulligan [00:25:05] …I’m just joking there. They’re actually used to be in a paper format, they used to be…there’s a book use to be referred to as the sort of the meat chart where you could look up actually in an index, various kinds of injuries and you could look up and see what various, what courts have awarded for this particular thing in the past. And you would then see what it is. Now that’s going to be online, but it’s not going to be a giant mystery. If you look at and say, look, you know, what have courts awarded for somebody who has a compound fracture of both legs…

Adam Stirling [00:25:34] and there will be list for it…

Michael T. Mulligan [00:25:35] Here it is, here’s the range of what it is, and then you could compute, you know, what is this person lost in wages and that sort of thing, and you can come to a rational answer. And happily, I should say most cases settle; only a small number of them actually go to trial because you can usually, rationally, assess what that’s going to be.

Adam Stirling [00:25:51] All right. Michael Mulligan, Barrister and Solicitor with Mulligan Defence Lawyers. Pleasure, as always. Thank you for your time. We look forward to next week.

Michael T. Mulligan [00:25:58] Thank you.

Automatically Transcribed on October 31, 2019 – MULLIGAN DEFENCE LAWYERS