The developer of the Olympic Village has failed in its bid to avoid paying a provincial property-transfer tax on buildings it constructed on city-owned land.

In an August 16 ruling, B.C. Supreme Court justice Deborah Kloegman dismissed an application by Millennium Southeast False Creek Properties Ltd. to only pay the transfer tax on the land itself. “To accede to this submission of Millennium is to ignore the preponderance of case authority in British Columbia that would say otherwise,” Kloegman wrote in her decision.

Bill Aujla, the city’s project manager of the Southeast False Creek and Olympic Village Project Office, told the Georgia Straight by phone that this decision applies to one commercial parcel. “That would set the precedent for the other commercial parcels,” he said.

The owners of Millennium, Peter Malek and his brother Shahram Malekyazdi, were unavailable by the Georgia Straight’s deadline to comment on the financial implications of the court decision. The company’s application was opposed by the B.C. government.

In 2006, Millennium agreed to lease land at Southeast False Creek from the City of Vancouver. As part of the deal, Millennium constructed buildings, which it owns, on the site. According to the ruling, Millennium is preparing to buy the land underneath these buildings from the city.

The B.C. government alleged that Millennium was trying to “short circuit the legislative regime in place” under the Property Transfer Tax Act by arguing that it should only have to pay the transfer levy for the cost of the land. Under the act, one percent must be paid on the first $200,000 of fair-market value, and two percent must be paid on the remainder.

Moreover, the B.C. government argued that it would be “inappropriate” for the court to make a decision until after the value of the land and buildings had been assessed. In addition, the B.C. government claimed that the Land Title Office should be given notice. That’s because, according to the decision, “Millennium’s arguments go to the heart of the land titles system because Millennium says that a transfer of land does not pass title to existing buildings.”

Kloegman acknowledged in her ruling that Millennium had relied on several Ontario court cases that delivered declarations under tax legislation. However, she also noted that Ontario has since amended its statutes to prevent people and companies from obtaining these declarations in the future by way of petitions to the courts.

“In essence, Millennium seeks a Declaration that would interfere with the Administrator’s assessment of PTT on this transaction, by dictating the manner in which fair market value is to be determined,” Kloegman stated. “I agree with the Crown that when an administrative scheme such as that set out under the PTTA exists, it should be followed.”

Follow Charlie Smith on Twitter at twitter.com/csmithstraight.