Dockets:
A-104-09
A-50-13
A-51-13
A-52-13
A-53-13
A-54-13
Citation: 2013 FCA 290
CORAM:
DAWSON J.A.
TRUDEL J.A.
NEAR J.A.
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Docket:
A-104-09
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BETWEEN:
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HER MAJESTY THE QUEEN
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Appellant
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and
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STANLEY J. TESSMER LAW CORPORATION
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Respondent
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REASONS
FOR JUDGMENT
TRUDEL J.A.
[1]
Her Majesty the Queen is appealing the Amended Order of
Miller J., dated March 4, 2009, in which she found that Stanley J. Tessmer Law
Corporation (Tessmer) had standing “to raise and rely on the alleged breaches
of the Charter rights of its clients in challenging the validity of the Excise
Tax Act, [R.S.C. 1985, c. E-15] [ETA] as it applies to impose Goods
and Services Tax (“GST”) on legal fees charged for criminal defence services
supplied by [Tessmer]” (Miller J.’s reasons are indexed as 2009 TCC 104). The
Crown argues that Justice Miller erred in finding that Tessmer has standing in
accordance with the exception set out in Canadian Egg Marketing Agency v.
Richardson, [1998] 3 S.C.R. 157 [CEMA].
[2]
By order of this Court dated March 18, 2013, this
appeal is being heard at the same time as five consolidated appeals commenced
by Tessmer concerning an Order of Paris J. from January 28, 2013, in which he
held that the GST imposed by s. 165 of the ETA did not infringe and was
not inconsistent with the rights of the Appellant’s clients guaranteed by s.10(b)
of the Canadian Charter of Rights and Freedoms, [Part 1 of the Constitution
Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.
11] [the Charter] (Paris J.’s reasons for order are indexed as 2013 TCC
27). Paris J. drew his final conclusion after having noted the absence of
evidence that any of Tessmer’s clients were unable to retain counsel as a
result of the GST payable on legal services and Tessmer’s concession that this
type of evidence was available (Paris J.’s reasons at paragraphs 57 and 67).
[3]
Tessmer maintains that Justice Paris erred in requiring
that it adduce evidence to demonstrate that this provision violates its
clients’ constitutional rights. Tessmer argues that the unconstitutionality of
the impugned provision is apparent on its face. As a result, it only has to
show that the tax is inconsistent with the right being exercised under s. 10(b)
of the Charter. On appeal to this Court, Tessmer also brought a notice
of constitutional question, which is expressed as follows:
Whether, based on the facts set out in the Agreed Statement of Facts filed
herewith, the goods and services tax (GST) imposed by s. 165 of the Excise
Tax Act infringes or is inconsistent with the rights of the Appellant’s
clients guaranteed by s. 7 and ss. 10(b) of the Charter of Rights and
Freedoms such that s. 165 of the Excise Tax Act is, to the extent of
any such inconsistency and, subject to s.1 of the Charter, of no force
and effect by reason of ss. 52(1) of the Constitution Act (A-50-13
Tessmer Memorandum of Fact and Law at paragraph 1).
[4]
This same question was originally in front of the Tax
Court of Canada. At the hearing of the consolidated appeals, Tessmer was
reminded that Paris J. had amended this question after counsel for Tessmer had
advised that he was now only relying on s. 10(b). It was agreed that
Tessmer would only refer to s. 7 of the Charter as it informed the
interpretation of s. 10(b).
Analysis
The Issue of Standing
[5]
With regard to the issue of standing, I agree with
Justice Miller that the exception set out in CEMA applies to accord
Tessmer standing. In CEMA, the Supreme Court of Canada held that while
typically a party does not have standing to challenge the constitutionality of
a statute where its own Charter rights are not infringed, a corporation
may have standing “to attack what it regards as an unconstitutional law when it
is involuntarily brought before the courts pursuant to a regulatory regime set
up under an impugned law” (CEMA at paragraph 44).
[6]
Under ss. 221 and 225 of the ETA, Tessmer is an
agent of the Crown. It is required, as a "person who makes a taxable
supply," to collect from its clients the GST payable on legal fees and to
remit to Her Majesty in right of Canada the appropriate GST net tax amount.
Although Tessmer technically initiated the appeals to the Tax Court of Canada,
it did so because, as Miller J. found, "the onus is placed on the taxpayer
to show an error in the Minister’s assessment" (Miller J.’s reasons at
paragraph 20). This, Justice Miller wrote, is a "nuance of our
self-assessing system" (ibidem). As a result of its decision not to
collect or remit, Tessmer was assessed GST, interest and penalties totalling
approximately $360,000. Faced with the five above-mentioned assessments, it
could either pay the amounts notwithstanding its belief that collecting GST
from its clients violates their constitutional rights, or appeal the
assessments to the Tax Court of Canada.
[7]
On this basis, I see no error in Justice Miller’s
finding that Tessmer was brought to the Court involuntarily or with the result
that Tessmer was granted standing based on the exception set out in CEMA.
Having found that Tessmer has standing, I turn now to the appeal on the merits.
The Constitutional Challenge
[8]
First, I note that Tessmer accepts Paris J.’s finding
that s. 165(1) of the ETA does not have an invalid purpose.
Consequently, Tessmer is left with a challenge of the legislation on the basis
of its effect on the rights of its clients pursuant to s. 10(b) of the Charter.
[9]
I agree with Justice Paris that Tessmer failed to
establish that s.165 of the ETA violates s.10(b) of the Charter.
On the facts of this case, Tessmer was required to produce evidence to
demonstrate the effect of GST on the rights of its clients but did not. The Supreme
Court of Canada has made clear that “Charter decisions should not and
must not be made in a factual vacuum” (MacKay v. Manitoba, [1989] 2
S.C.R. 357 at page 361). As well, in Danson v. Ontario (Attorney General)
[1990] 2 S.C.R. 1086, at p. 1099 [Danson], the Supreme Court of Canada
affirms that it has been vigilant "to ensure that a proper factual
foundation exists before measuring legislation against the provisions of the Charter,
particularly where the effects of impugned legislation are the subject of
the attack" (my emphasis).
[10]
As discussed in John Carten Personal Law Corp. v.
British Columbia (Attorney General) (1997) 40 B.C.L.R. (3d) 181 (BCCA),
leave to appeal denied, [1998] S.C.C.A. No. 205, there are many reasons why the
cost of legal services, or a lack of financial means may restrict, hamper or
even prevent someone from exercising rights of access to courts or to other
legal services (at paragraph 33). This accords with the Supreme Court of
Canada’s decision in British Columbia (Attorney General) v. Christie
2007 SCC 21, [2007] 1 S.C.R. 873 [Christie] in which the Court cited
with approval the position of the Attorney General of British Columbia who was
arguing that "the economics of legal services may be affected by a complex
array of factors, suggesting the need for expert economic evidence to establish
that the [provincial] tax [on the purchase price of legal services] will in
fact adversely affect access to justice" (ibidem at paragraph 28).
Once again in Christie, the Supreme Court cautioned against deciding
constitutional cases without an adequate evidentiary record (at paragraph 28).
[11]
Here, there is a total lack of evidence and counsel for
Tessmer was unable to point to any authority justifying our Court to depart
from the teachings of the Supreme Court of Canada in Danson or Christie.
On the facts of this case, this complete lack of evidence is fatal to the
constitutional challenge launched by Tessmer.
[12]
As a result, I need not address Tessmer’s argument
regarding the scope of s. 10(b) of the Charter. My silence,
however, should not be interpreted as an endorsement of Paris J.’s reasons on
this issue (see in particular paragraphs 61 and ff. of Paris J.’s reasons).
[13]
Consequently, I propose to dismiss the appeal in file
A-104-09 with costs. I also propose to dismiss the appeals in files A-50-13,
A-51-13, A-52-13, A-53-13 and A-54-13 with one set of costs.
[14]
Finally, I would respond to the constitutional
question, as amended by Paris J., as follows:
Based on the facts set out in the Agreed Statement of Facts filed by the
parties, the goods and services tax (GST) imposed by s. 165 of the Excise
Tax Act does not infringe and is not inconsistent with the rights of the
Appellant’s clients guaranteed by s. 10(b) of the Charter of Rights
and Freedoms.
[15]
A copy of these reasons shall be filed in appeal
A-104-09 and in each of the five consolidated appeals.
"Johanne Trudel"
“I agree
Eleanor R. Dawson J.A.”
“I agree
D.G.Near J.A.”
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