Tax Court of Canada Judgments

Date: 19990607

Docket: 98-276-GST-I

BETWEEN:

STANLEY J. TESSMER LAW CORPORATION,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Amended reasons for judgment

McArthur, J.T.C.C.

[1] The Appellant corporation operates a law practice. Legal services are provided by Stanley J. Tessmer (Tessmer), a criminal defence lawyer who has narrowed his services to defending persons charged with the criminal offence of impaired driving and with the criminal offence arising from growing marijuana. The issue is whether the Appellant corporation is required to pay goods and services tax (GST) on fees charged for its legal services. Tessmer testified in this appeal and he stated that imposing payment of GST on the Appellant's clients is unconstitutional.

[2] The Appellant is paid $5,000 plus GST for defending a client charged with impaired driving and $10,000 plus GST for marijuana charges. The Minister of National Revenue assessed the Appellant in the amount of $2,923.37 for GST together with interest and penalties for the period January 1, 1997 to March 31, 1997. The Appellant had collected GST for that period without remitting it to the Minister in order to commence this appeal. It has now been remitted.

Position of the Appellant

[3] Subsection 10(b) of the Charter of Rights and Freedom (the Charter) grants everyone the right, on arrest or detention to retain and instruct counsel. In the case of Regina v. Leclaire and Ross,[1] the Supreme Court of Canada interpreted the word 'counsel' as 'counsel of choice'. Tessmer stated that should a client wish the Appellant to represent him or her being prepared to advance $5,000 or $10,000 in fees, but not be in a position to pay the additional $350 or $700 in GST, then that client is denied the right of counsel of choice which violates subsection 10(b) of the Charter.

Position of the Respondent

[4] To enforce rights under the Charter, it must be your own right as stated by the Supreme Court of Canada in The Attorney General of Quebec v. Irwin Toy Limited.[2] The Appellant cannot challenge the law with respect to GST because it violates some other person's rights. It is the Appellant's clients that must pay the GST and not the Appellant. Secondly, subsection 10(b) gives everyone the right on arrest or detention to be informed of their right to retain and instruct counsel. In John Carten Personal Law Corp. v. British Columbia (Attorney General),[3] the Supreme Court of Canada held that to find the tax on legal services contained in the British Columbia Social Services Tax Amendment Act, 1992, unconstitutional, the Appellant would be required to prove that the right to counsel was denied, or its exercise was prevented by the existence of the 7% tax. The Appellant must prove "a right which would have been exercised but for this tax could not be exercised because of this tax".[4]

Legislation

[5] Subsection 10(b) of the Charter of Rights and Freedom reads as follows:

10 Everyone has the right on arrest or detention

...

(b) to retain and instruct counsel without delay and to be informed of that right; ...

Analysis

[6] There is no doubt that the Appellant's clients and indeed everyone upon arrest or detention, has to be informed of their right to have counsel. The main force of the Appellant's argument is that subsection 10(b) gives the detainee or accused the privilege to retain counsel of choice without regard to one's financial resources. This, I find, extends subsection 10(b) too far. A comprehensive legal aid system in British Columbia and in all provinces offers counsel to those who have been arrested or detained. Surely, the purpose of subsection 10(b) is to assure that persons arrested or detained are made aware of their right to counsel and the attempt of the legal aid plan to make affordable legal assistance available.

[7] In Panacui v. Legal Aid Society (Alta.),[5] Justice McDonald dealt with the issue of whether an accused person is permitted to use the state's funds to pay counsel of his choice rather than one selected by the state on his behalf. He concluded at pages 143-144 that the right to counsel guarantees that an accused has the right to professional advice and assistance during the pre-trial process, at trial and through the appellate process. He added that freedom of choice of counsel is not essential to satisfy the requirements of subsection 10(b). Justice McDonald concluded:

The rich man charged with an offence may be able to afford to pay a defence lawyer whose fees are high, but the rich man's ability to pay such fees will not guarantee that he will have the most effective counsel. His judgment as to which expensive lawyer to select may be exercised badly if the rich man relies upon unsound information and advice in making his selection. The system affords him no guarantee that he will choose the best. He may think that he has, but there is no way that he can be sure. The system guarantees him no more than that he will have the right to professional advice and assistance for the purposes listed above during the pre-trial process, at trial, and until the appellate process is completed. His right to counsel is an objective one; his subjective sense of satisfaction is of no concern to the judicial system. Nor is the question whether the counsel he has chosen will in fact be as effective as he hopes and thinks, even if it were possible to measure that fact objectively. (Emphasis added)

I agree with this reasoning and adopt it as my own. Subsection 10(b) does not support a constitutional guarantee of an accused person to have counsel of his choice.

[8] In Regina v. Prosper,[6]the Supreme Court of Canada concluded that an arrested or detained person has the informational right to retain and instruct counsel without delay and also the right to be so informed. The Court was unanimous in finding at page 278 that:

Section 10(b) of the Charter does not impose a substantive constitutional obligation on governments to ensure that duty counsel is available, or likewise, provide detainees with a guaranteed right to free and immediate preliminary legal advice upon request. ...

The Court discussed the obvious utility and cost of providing such free duty counsel services. It is not a constitutional obligation. There is a constitutional guarantee to be informed of the right to legal advice through legal aid services if needed. There is no constitutional right to counsel of choice.

[9] In Regina v. Leclair and Ross,[7]referred to by counsel for both the Appellant and the Respondent, the Supreme Court of Canada held that an accused or detained person can call any lawyer of his choice. The Court does not say, however, that the state must pay for that counsel of choice. This is a choice to retain a legal aid counsel, a duty counsel, if available, or his or her own counsel. This is the extent of the choice. The Appellant's argument in the present appeal is a monetary one. The Appellant's counsel submits that the levy of a 7% GST may prevent clients from retaining Tessmer because, while they can afford his $5,000 or $10,000 fee, they cannot afford the additional 7% tax. It defies common sense to conclude that subsection 10(b) guarantees all accused, regardless of their finances, the right to retain the most expensive counsel. The decision in Regina v. Leclair and Ross does not support that proposition. While there is a privilege to retain counsel, that is quite different from saying that every person, whether he can or cannot pay the fees of a lawyer, has the right to retain counsel of his other choice.[8]

[10] As stated above, subsection 10(b) of the Charter gives the right to retain counsel. Counsel of choice without payment of GST, which in essence is placing an additional burden on the taxpayer, is not the same thing. The Charter does not absolve an accused who pays for legal services, from GST. The Appellant's fees, Tessmer admits, are high compared to those fees charged by others. The country has no constitutional duty to subsidize the funding of defence lawyers regardless of the accused's financial resources. Tessmer is not prepared to reduce the Appellant's fees to accommodate his clients, yet submits that the state be deprived of the GST. The Appellant's interpretation of subsection 10(b) defies common sense and leads to an absurd situation.

[11] Both counsel referred this Court to John Carten Personal Law Corp.[9]wherein the Appellant submitted that tax on legal services was inconsistent with the rights given in subsection 10(b) of the Charter. Speaking for the majority, Lambert J.A. stated at paragraph 13:

There are many reasons why the cost of legal services, or a lack of funds, may restrict, hamper, or even prevent a person from exercising rights of access to the courts or rights of access to other legal services. What would be required in order to find this Act wholly unconstitutional, or even unconstitutional in its application in a particular case, would be proof that people, or a class of people, in general, or some person in particular, who would have been able to exercise the legal rights in question if this tax were not in effect, were or was prevented by this tax from exercising those rights. It would not be sufficient to found an argument that the Act was unconstitutional in concept or in application merely to show that the tax operated as an impediment or a discouragement to the exercise of a protected right. What would be required would be proof that the right was denied, or its exercise was prevented, by the existence or operation of this tax. In other words, that a right which would have been exercised but for this tax could not be exercised because of this tax. ...

The present Appellant did not introduce any evidence to prove that anyone was prevented from exercising the right to counsel.

[12] Finally, the Respondent submitted that the Appellant corporation cannot challenge the law on the ground that it violates another person's Charter right. In this appeal, the Appellant is not claiming that its subsection 10(b) rights were infringed upon. The Appellant claims that it is its clients' rights that are infringed. While it is not necessary to deal with this submission, I agree with the Respondent's position that it must be your own Charter rights that are at issue if one challenges the validity of a statute.[10]

[13] The appeal is dismissed, without costs.

Signed at Ottawa, Canada, this 7th day of June, 1999.

"C.H. McArthur"

J.T.C.C.

---