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A B.C. township sold off a man’s property over $6,700 in unpaid taxes. Now it’s been ordered to pay him $350K

An Okanagan township that sold a man’s property at a tax auction without any notice of the sale or the steps necessary to prevent it deserves to face “significant consequences,” according to a B.C. judge.

Anthony Brent Morgan owed about $6,700 in property taxes on his land just west of Armstrong when the Township of Spallumcheen put it up for auction in September 2017, according to a recent B.C. Supreme Court judgment.

The vacant lot, which Morgan had purchased for $160,000 seven years earlier, sold for just $11,300. Morgan was not told about the sale, or the fact he had one year to redeem his loss and save the property by paying the money he owed, the judgment says.

By the time Morgan discovered what had happened, it was too late.

According to the judgment, the township acknowledged it failed to meet its legal obligations to notify Morgan under the Local Government Act, and argued he deserved to be compensated for the market value of the property in 2018, when title was transferred to the new owner.

But Justice Gary Weatherill said that wasn’t enough.

In his May 6 judgment, Weatherill ruled that Morgan was owed damages equal to the current value of the land, minus the taxes owed. That amounts to $352,316 — about 54 per cent more than what the township was suggesting, and more than double what Morgan originally paid for the land.

“The exercise of the legislative power to sell property at a tax sale for pennies on the dollar … brings with it a duty on the local government to, among other things, ensure the property owner and charge holder know about the sale and are given ample opportunity … to redeem the property,” Weatherill wrote.

“Failure on the part of the local government to follow the legislation, including failure to notify the owner … brings with it, and should bring with it in my view, significant consequences.”

Land was man’s only piece of real estate

When Morgan bought the 3.8-hectare property on Round Lake Road in 2010, his plan was to build a home for his family, a barn and a workshop for his carpentry finishing business, the judgment says.

His family moved into a trailer on the property in July 2012 and lived there for about nine months, until a bylaw officer told them they had to leave because there was no septic system and they didn’t have a permit.

Morgan, now 57, has been living in rental housing in Vernon since then, according to the judgment. In the meantime, his business has struggled and he fell behind on his property taxes.

A B.C. Supreme Court justice wrote that the Township of Spallumcheen failed in its responsibilities under the Local Government Act. (Peter Scobie/CBC)

After the land was sold without any notice to Morgan, provincial legislation gave him until Sept. 24, 2018 to make good. Morgan wasn’t aware of the sale until after that date, and his efforts to extend the redemption period failed.

“The property was the plaintiff’s only piece of real property,” Weatherill wrote. “He had no ability to purchase a replacement and has missed out on the significant increase in property values in the area since September 2018.”

The judge said Morgan was also entitled to his costs.

This is not the first time a local government has faced criticism over its conduct of a tax auction.

Last year, the provincial ombudsperson published a review showing that a vulnerable senior in Penticton lost her home and hundreds of thousands of dollars in equity after the city auctioned off the house for a third of its assessed value because of just $10,000 in unpaid property taxes.

The review said the woman had the money to pay off her taxes, but health concerns meant she needed help to submit the payments.

The city didn’t communicate clearly about what the homeowner stood to lose and didn’t make an effort to find out if she needed help, ombudsperson Jay Chalke found.

Chalke recommended the City of Penticton pay the homeowner just over $140,000 to make up for some of the equity she lost, but the city initially refused to do so. Council later voted to compensate her the recommended amount.

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