Saturday, May 26, 2007

Supreme Court of Canada Holds British Columbia's Tax on Legal Services Constitutional

Yesterday, in British Columbia (Attorney General) v. Christie, 2007 SCC 21, the Supreme Court of Canada held that British Columbia's tax on legal services is constitutional. The Court reversed the British Columbia Court of Appeal's holding that the tax was unconstitutional "as offending the principle of assess to justice" to the extent that the legislation purports to "tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals."

The tax is a seven percent tax on legal fees. The Province of British Columbia does not levy a sales tax on any other professional services.

This challenge was brought by a lawyer who represented the poor. I think it useful to quote a couple of paragraphs from the Supreme Court's reasons for judgment. These two paragraphs make it clear that this tax had a real impact on the ability of a lawyer to represent people with little money.

2 This case is the latest in a series of challenges to the tax and its predecessor, the Social Service Tax Amendment Act, 1992, S.B.C. 1992, c. 22. It was brought by Mr. Dugald Christie, a litigation lawyer who worked with poor and low income people in Vancouver. Mr. Christie was consumed by a passion to provide legal services to those at the margins of society. It was a passion that ultimately took his life; last year, on a cross-Canada bicycle trip to raise funds for the cause, he was struck and killed on a stretch of highway near Sault Ste. Marie, Ontario.

3 Mr. Christie’s action to have the legal services tax declared unconstitutional was rooted in his experience of the effects of the tax on his practice. Mr. Christie charged low fees. His net income in the years 1991 to 1999 did not exceed $30,000 per year. Often his clients were not able to pay the bills he rendered for legal services, either on time or at all. Yet the Act required him to submit the tax to government even though the fees on which it had been levied had not been paid. Mr. Christie’s small income made this difficult. On March 10, 1997, the government sent Mr. Christie a demand notice. A few days later, without ascertaining the reason for non-payment or attempting to work out a payment schedule, the province seized $972.11 from Mr. Christie’s bank account. It seized a further $5,349.64 in December 1997. Mr. Christie stopped practising law and did not resume the practice until July 2000.

This was not a claim brought by a wealthy lawyer on behalf of wealthy clients.

The Supreme Court held that there is no general right to be represented by a lawyer before a court or tribunal where legal rights and obligations are at stake. There are rights to a lawyer in specific circumstances, such as the right to retain and instruct a lawyer on arrest or detention. But the Supreme Court held that the rule of law does not require a right to be represented by a lawyer.

I have some difficulty with the Supreme Court of Canada characterization of the issue, and with the Court's analysis in this case. In particular, I disagree with paragraph 13 of the reasons.

13 This general right to be represented by a lawyer in a court or tribunal proceedings where legal rights or obligations are at stake is a broad right. It would
cover almost all — if not all — cases that come before courts or tribunals where individuals are involved. Arguably, corporate rights and obligations would be included since corporations function as vehicles for individual interests. Moreover, it would cover not only actual court proceedings, but also related legal advice, services and disbursements. Although the respondent attempted to argue otherwise, the logical result would be a constitutionally mandated legal aid scheme for virtually all legal proceedings, except where the state could show this is not necessary for ffective access to justice.
It seems to me that there is a difference in kind between striking down a governmental impediment to access to justice, and mandating a "legal aid scheme for virtually all legal proceedings." Surely the Court could show greater deference to provincial legislatures on issues involving expenditures of funds than on taxes limiting access to lawyers.

If instead of a seven percent tax, British Columbia had imposed a two hundred percent tax on legal fees, would the result have been the same? I doubt it. But I am not sure that the Supreme Court of Canada's reasons for judgment in this case would preclude a two hundred percent tax.

Supposing instead of imposing a tax on legal fees, a provincial or the federal government passed a law preventing lawyers from representing client's in court for certain kinds of civil claims against the government. Could such a restriction be constitutional if the litigation does not affect a right to life, liberty or security of the person?

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