Update on Christie v. British Columbia

Since my last post on Christie v. British Columbia, there have been a couple of developments.

Those familiar with this case will recall that the British Columbia Court of Appeal held that to the sales tax on legal services is 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 decision is here.

The Supreme Court of Canada has granted the Province of British Columbia leave to appeal. According to the Law Society of B.C.'s website, the appeal is scheduled to be heard in March, 2007.

The Ministry of Small Business and Revenue has issued guidelines for the collection and remittence of the tax. The Ministry's position is that lawyers must collect and remit the sales tax in respect of all "solicitors'" sevices. Lawyers must collect the tax in respect of "barristers'" services, but may hold the tax in trust pending the outcome of the appeal to the Supreme Court of Canada. There is an exception for barrister services to low income persons, in which case, lawyers are not required to collect the tax.

The government defines "barristers'" services as,

all services directly related to the conduct of proceedings before a court or an independent administrative tribunal. These services are provided to a client in relation to an adversarial dispute between the client and another party. In order to qualify as “barristers’ services”, the services must relate to an existing dispute what, barring a negotiated settlement, will require resolution by a court or independent administrative tribunal. Barristers’ services include:

appearing as an advocate in a court or independent administrative tribunal;
drawing up a document that is intended to be filed with a court or independent administrative tribunal;
advising a client on a matter that is the subject of a proceeding before a court or independent tribunal, or the matter is very likely to be, barring a settlement, the subject of a proceeding before a court or independent administrative tribunal;
negotiating between a client and another party that, barring a settlement, will require a resolution by a court or independent administrative tribunal;
arbitration or mediation with respect to matters that would otherwise require resolution by a court or independent tribunal.

“Barristers’ services” does not include advice designed to avoid future disputes.

Solicitors' services are, apparently,

all legal services that are not barristers’ services, such as:

acting for a client before a body that is not a court or independent administrative tribunal;
providing advice to protect a client from a future dispute;
acting for a client in respect of a transaction;
acting for a client during negotiations designed to reach an agreement unrelated to a proceeding before a court or independent administrative tribunal.

So, if I ever represent a billionaire who is fighting another billionaire in court, I must collect the sales tax from my billionaire client, but do not have to remit the tax. If the Supreme Court of Canada upholds the Court of Appeal's decision, I can return the tax to my billionaire client.

But, if I draw a will for a single, low income mom to appoint a guardian for her child, I must collect and remit the tax to the Provincial Government.

What if the Supreme Court of Canda declares the tax unconstitutional in respect of all legal services? Will my single mom client get her tax back?

[Since I wrote this post, the Supreme Court of Canada has released its decision holding that the sales tax on legal fees is constitutional. You can read about it here.]