Citation: 2013 TCC 27
Date: 20130128
Dockets: 2007-3627(GST)G,
2007-3628(GST)G, 2007-3629(GST)G,
2007-3630(GST)G, 2007-3631(GST)G
BETWEEN:
STANLEY J. TESSMER LAW CORPORATION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Paris J.
[1]
The parties in these
five related appeals have referred the following question to the Court for
determination pursuant to subsection 310(1) of the Excise Tax Act (“ETA”):
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 ss. 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 s. 52(1) of the Constitution Act.
[2]
Although the question
put to the Court refers to both sections 7 and 10(b) of the Canadian Charter of Rights and Freedoms (the
“Charter”), the
appellant’s counsel advised the Court at the hearing that he was now only
relying on section 10(b). The question is therefore amended accordingly.
[3]
The parties have agreed
that the determination in relation to section 1 of the Charter would proceed at a later date if this Court finds that
the appellant has shown that there has been a breach of Charter rights.
FACTS
[4]
The following is a summary of the relevant facts taken from the Agreed Statement
of Facts submitted by the parties.
[5]
The appellant’s
business is the provision of legal services, through Stanley J. Tessmer and two
other lawyers. The appellant specializes in criminal law.
[6]
During the period July
1, 1999 to December 31, 2006, the appellant did not collect GST in respect of
legal services for criminal defence work charged to some of its clients who had
been arrested or detained and who were either charged with a criminal offence
or who had been arrested with criminal charges pending.
[7]
The amount of GST that
was to be collected by the appellant, if GST was exigible on those criminal
defence services without breaching the Charter, was $228,440.97.
[8]
The appellant did not
conduct an independent review of the financial circumstances of its clients to
independently establish the ability of its individual clients to afford its
fees and any GST exigible on those fees.
[9]
No financial records of
any individual clients of the appellant were produced at the hearing of this
matter.
[10]
Pursuant to a series of
five notices of assessment covering, in all, the period from July 1, 1999 to
December 31, 2006, the appellant was assessed for GST in the amount of $228,440.97
as well as penalties and interest thereon.
Legislation
[11]
Section 10(b) of the Charter
provides that:
Everyone has the right on arrest or detention
. . .
to retain and instruct counsel without delay and to
be informed of that right;
. . .
[12]
Section
52(1) of the Charter reads:
The
Constitution of Canada is the supreme law of Canada, and any law that is
inconsistent with the provisions of the Constitution is, to the extent of the
inconsistency, of no force or effect.
[13]
For the
period in issue up to July 2006, section 165(1) of the ETA read:
Subject to this Part, every recipient of
a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 7% on the value of the
consideration for the supply.
[14]
For the period in issue
between July 1, 2006 to December 31, 2006, the rate of GST was 6%.
[15]
The phrase “taxable supply” and “supply” are defined in section 123(1) of
the ETA as follows:
“taxable supply” means a supply that is made
in the course of a commercial activity;
“supply” means, subject to sections
133 and 134, the provision of property or a service in any manner, including
sale, transfer, barter, exchange, licence, rental, lease, gift or disposition;
Background
[16]
The appellant
previously filed an appeal to this Court from an assessment of GST for a period
prior to the period covered by the subject appeals. In the earlier appeal, the
appellant also argued that the requirement to pay GST on criminal defence
counsel fees infringed its clients’ rights under section 10(b) of the Charter
to retain and instruct counsel. That appeal was dismissed: Stanley J.
Tessmer Law Corporation v. The Queen.
[17]
The appellant was
subsequently assessed for the period from July 1, 1999 to December 31, 2006, as
set out in paragraph 10 above. The five subject appeals were brought by the appellant
from those assessments.
[18]
The respondent, by
motion, challenged the appellant’s standing to raise alleged breaches of its
clients’ Charter rights in relation to the GST exigible on criminal
defence counsel fees. This Court held that the appellant does have standing to
raise the alleged Charter breaches.The
respondent has appealed that decision to the Federal Court of Appeal. The
appeal is being held in abeyance pending the determination of the question
submitted by the parties in this proceeding.
Previous Charter decisions
regarding taxes imposed on legal services
[19]
In John Carten
Personal Law Corporation v. British Columbia (Attorney General), the
British Columbia Court of Appeal upheld the constitutionality of a British Columbia tax on legal services. The appellant had challenged the validity of the
tax on several grounds, including that the tax infringed sections 7, 10(b),
11(d) and 15 of the Charter. The Court of Appeal dismissed the appeal
because the appellant had not provided evidence sufficient to show that the
effect of the tax was unconstitutional. Writing for the majority of the Court,
Lambert J.A. said:
All that being said, in my opinion Mr. Carten's
arguments on those issues cannot be sustained in this Court because of lack of
proof that rights of access to the courts, to justice, or to legal services,
have been denied because of this 7 per-cent tax on the amount paid or payable
for legal services.
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.
In my opinion the evidence in this case
is insufficient to provide a basis for a conclusion that the Act is
unconstitutional. Mr. Carten's affidavit is the only evidence. It indicates
that the tax gives rise to inconvenience and expense to him in his law
practice. But, of course, that is not the point.
…
That evidence is, in my opinion,
insufficient to provide a basis of constitutional facts adequate to support the
constitutional arguments made in Mr. Carten's first seven points. And we are
not entitled to speculate, in the absence of any sufficient proof, that surely
the very existence of the tax would prevent someone, somewhere, from going to
court. If we were tempted to engage in any such speculation we would
immediately have to confront the fact that legal aid is widely available to
those who are financially challenged and that the tax does not apply to legal
aid services.
The Supreme Court of Canada has
established that there have to be proven constitutional facts to support a
constitutional argument. A constitutional question cannot be approached in a
factual vacuum. See Danson v. Ontario (Attorney General), [1990] 2 S.C.R. 1086 at 1099. In my opinion, no sufficient basis of
constitutional facts has been proven in this case.
[20]
In a dissenting opinion
in that case, McEachern C.J.B.C. stated that the tax, “by increasing the cost
of litigation, impairs or hinders effective access to counsel and therefore to Charter
rights and remedies”
and that “the state cannot burden effective access to counsel with a tax.” He
concluded that “a tax on the legal bill for services in connection with the
enforcement or protection of civil or criminal law constitutional rights is
inconsistent with the Charter”
and therefore that the legislation which imposed the tax was ultra vires
the province to that extent.
[21]
Leave to appeal the
decision of the B.C. Court of Appeal was denied by the Supreme Court.
[22]
In British Columbia
(Attorney General) v. Christie,
the Supreme Court dealt with another constitutional challenge to the British Columbia tax on legal services. In that case, the respondent, Mr. Christie,
asserted the existence of a general constitutional right to legal services in
determining and interpreting legal rights before courts and tribunals. The B.C.
Court of Appeal accepted that such a constitutional right existed and held that
the legal services tax breached that right and declared the tax to be
unconstitutional. On appeal from that decision, the Supreme Court set aside the
order of the B.C. Court of Appeal on the basis that there was no general
constitutional right to counsel in proceedings before courts and tribunals
dealing with rights and obligations. The Court also noted the lack of a
sufficient evidentiary record to show that the effect of the tax was unconstitutional:
This conclusion makes it unnecessary to
inquire into the sufficiency of the evidentiary basis on which the plaintiff
bases his claim. However, a comment on the adequacy of the record may not
be amiss, in view of the magnitude of what is being sought — the striking out
of an otherwise constitutional provincial tax. Counsel for Mr. Christie
argued before us that the state cannot constitutionally add a cost to the
expense of acquiring counsel to obtain access to justice when that cost serves
no purpose in furthering justice. This assumes that there is a direct and
inevitable causal link between any increase in the cost of legal services and
retaining a lawyer and obtaining access to justice. However, as the Attorney
General of British Columbia points out, 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 tax will in fact adversely affect access to
justice. Without getting into the adequacy of the record in this case, we note
that this Court has cautioned against deciding constitutional cases without an
adequate evidentiary record: R. v. Edwards Books and Art Ltd., 1986 CanLII 12 (SCC), [1986] 2 S.C.R. 713,
at pp. 762 and 767-68, per Dickson C.J.; MacKay v. Manitoba,
1989 CanLII 26 (SCC), [1989] 2 S.C.R. 357,
at p. 361; Danson v. Ontario (Attorney General), 1990 CanLII 93 (SCC), [1990] 2 S.C.R. 1086,
at p. 1099.
[23]
In R. v. Yung, the
accused challenged the constitutionality of both the B.C. provincial tax and
the GST on legal services. Mr. Yung and his co-accused were defendants in
criminal proceedings before the British Columbia Supreme Court and were
represented by Stanley Tessmer. It was argued that the tax on legal services
was inconsistent with their right to retain and instruct counsel under section
10(b) of the Charter, with their right to a fair trial under section
11(d) and with their right to life, liberty and security of the person under
section 7. In dismissing the application for a declaration that the relevant
sections of the federal and provincial legislation were of no force and effect,
Brooke J. held that the defendants had failed to adduce evidence to show that
the taxes prevented them from retaining counsel. The judge relied on the
decision of the British Columbia Court of Appeal in John Carten Personal Law
Corporation, and stated that:
There
is a paucity of evidence before me that a right which would have been exercised
but for these taxes could not be exercised because of these taxes.
[24]
Brooke J. also
held that the decision of the Supreme Court in Christie was “entirely
dispositive of the issue.”
[25]
In Stanley J. Tessmer Law Corporation v. The Queen, referred to in paragraph 15 above, the appellant argued that the GST on the legal fees
it charged to its clients infringed those clients’ section 10(b) Charter
rights. McArthur J. of this Court dismissed the appeal, finding that “subsection 10(b) does not support a
constitutional guarantee of an accused person to have counsel of his choice”
and that the appellant “did not introduce any evidence to prove that anyone was
prevented from exercising the right to counsel.”
Appellant’s Position
[26]
The appellant submits
that a tax on criminal defence legal services provided to a person who has been
arrested or detained is inconsistent with that person’s right under
section 10(b) of the Charter to retain or instruct counsel of
choice. The appellant says that the tax is an infringement and impediment to
the exercise of that right and is therefore unconstitutional with respect to
both purpose and effect.
[27]
The appellant maintains
that it is not required to provide evidence that any of its clients were denied
counsel of their choice as a result of the tax imposed on the services of
counsel. It says that it is only required to show that the general effect of
the tax is unconstitutional under reasonably hypothetical circumstances: R.
v. Mills,
R. v. Goltz,
R. v. Seaboyer; R. v. Gayme, R. v. Big M Drug Mart Ltd.. The
appellant says therefore that it is irrelevant whether the section 10(b) Charter
rights of any of its clients were infringed.
[28]
The appellant also
maintains that these Supreme Court decisions (except Mills which was
decided subsequently) were not brought to the attention of the B.C. Court of
Appeal in John Carten Personal Law Corporation, and therefore that that
case and those which followed it (i.e. Yung and Tessmer) are not
determinative of the issue of the need for an evidentiary record in cases of
this kind.
[29]
The
appellant maintains that, by its nature, a tax on criminal defence legal fees
will, at some level, be prohibitive or at the very least act as an impediment
to or will interfere with the right to counsel since the additional cost of the
tax to an accused will interfere with the financial resources available to
mount a defence to the charges brought against him or her: Stein I (United
States v. Stein) .
Analysis
[30]
The appellant asserts that the GST imposed on criminal
defence services provided to a person who has been arrested or detained is
unconstitutional both in purpose and effect. As stated by Dickson J. in R.
v. Big M Drug Mart Ltd.:
Both
purpose and effect are relevant in determining constitutionality; either an
unconstitutional purpose or an unconstitutional effect can invalidate
legislation
[31]
The appellant contends
that the general purpose of the GST legislation imposing the tax is to raise
revenue but that it also has a specific purpose to tax an accused with respect
to the provision of legal services in defence of a State‑sponsored
prosecution. Its only submission regarding the unconstitutionality of the purpose
of the tax was that it is patently inconsistent to prosecute a person and at
the same time tax the legal services that the person requires in order to
defend against the prosecution.
[32]
I am unable to ascribe
the specific purpose suggested by the appellant to subsection 165(1) of the ETA,
which I reproduce again here for ease of reference:
Subject to this Part, every
recipient of a taxable supply made in Canada shall pay to Her Majesty in right
of Canada tax in respect of the supply calculated at the rate of 7% on the
value of the consideration for the supply.
[33]
Subsection 165(1) is a provision of general application and
covers an infinite variety of transactions. I do not believe that it can be
said that a specific purpose of subsection 165(1) is to tax legal services in
defence of a State-sponsored prosecution since Parliament has not singled out
those particular services for different treatment under that provision.
Therefore I find that the appellant has not shown that subsection 165(1) of the
ETA has an invalid purpose.
[34]
The appellant also
maintains that the effect of section 165 breaches section 10(b) Charter
rights.
[35]
In light of the
decisions in John Carten Personal Law Corporation, Christie and Yung,
the first question to be addressed is whether the appellant must provide evidence
of the effect of the GST on any of its clients after their arrest or detention.
The failure to provide an evidentiary foundation was fatal to the challenge
brought in John Carten Personal Law Corp. and Yung, and was the
subject of obiter comment in Christie.
[36]
As noted in Christie,
the requirement for an evidentiary record in Charter cases has been
highlighted many times by the Supreme Court. For example, in MacKay v.
Manitoba,
Cory J. wrote:
Charter cases will frequently be concerned
with concepts and principles that are of fundamental importance to Canadian
society. For example, issues pertaining to freedom of religion, freedom of
expression and the right to life, liberty and the security of the individual
will have to be considered by the courts. Decisions on these issues must be
carefully considered as they will profoundly affect the lives of Canadians and
all residents of Canada. In light of the importance and the impact that these
decisions may have in the future, the courts have every right to expect and
indeed to insist upon the careful preparation and presentation of a factual
basis in most Charter cases. The relevant facts put forward may cover a
wide spectrum dealing with scientific, social, economic and political aspects. Often
expert opinion as to the future impact of the impugned legislation and the
result of the possible decisions pertaining to it may be of great assistance to
the courts.
Charter decisions should not and must not be
made in a factual vacuum. To attempt to do so would trivialize the Charter
and inevitably result in ill-considered opinions. The presentation of facts is
not, as stated by the respondent, a mere technicality; rather, it is essential
to a proper consideration of Charter issues. A respondent cannot, by
simply consenting to dispense with the factual background, require or expect a
court to deal with an issue such as this in a factual void. Charter
decisions cannot be based upon the unsupported hypotheses of enthusiastic
counsel.
[37]
And in Danson v. Ontario (Attorney General),
Sopinka J. wrote:
This Court 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. For example, in R. v. Edwards Books and Art Ltd., 1986 CanLII 12 (SCC), [1986] 2 S.C.R.
713, at pp. 767-68, this Court declined to hold that the Retail Business Holidays Act, R.S.O. 1980,
c. 453, infringed the s. 2(a) Charter rights of
Hindus or Moslems in the absence of evidence about the details of their
respective religious observance. Similarly, in Rio
Hotel Ltd. v. New Brunswick (Liquor Licensing Board), 1987 CanLII 72 (SCC), [1987] 2 S.C.R. 59,
at p. 83, this Court declined to consider a s. 2(b) Charter challenge to
certain provisions of the Liquor Control Act, R.S.N.B. 1973, c. L-10, in the absence of evidence on the nature
of the conduct that was claimed to constitute "expression" within the
meaning of s. 2(b).
[38]
It does appear,
however, that in certain cases the requirement for evidence concerning the
effects of impugned legislation may be dispensed with. In Danson, Sopinka
J. went on to say:
This
is not to say that such facts must be established in all Charter challenges. Each case must be considered
on its own facts (or lack thereof).
[39]
In two Charter
cases cited by the appellant, R. v. Mills
and R v. Goltz,
the Supreme Court explicitly relied on reasonable hypotheticals or imaginable
circumstances in place of facts relating to the accused.
[40]
In Mills, the
Supreme Court had to determine whether it was possible to challenge the
constitutionality of impugned legislation in the absence of evidence that the rights
of the accused had in fact been violated. In that case, the accused
challenged the validity of amendments to the Criminal Code dealing with
the production of records in sexual offence proceedings, on the basis that the
amendments violated his rights guaranteed under sections 7 and 11(d) of
the Charter. The trial judge concluded that they did and that they were
not saved by section 1 of the Charter.
[41]
Before the Supreme
Court, the Attorney General for Alberta submitted that the finding of
constitutional invalidity “was premature and lacked an adequate factual
foundation” because no records had yet been denied to the accused. In answer to
this submission, McLachlin and Iacobucci JJ. wrote:
The mere fact that it is not clear whether the
respondent will in fact be denied access to records potentially necessary for
full answer and defence does not make the claim premature. The respondent need
not prove that the impugned legislation would probably violate his right to
make full answer and defence. Establishing that the legislation is
unconstitutional in its general effects would suffice, as s. 52 of the
Constitution Act, 1982, declares a law to be of no force or effect to the
extent that it is inconsistent with the Constitution.
However, accepting that the respondent may challenge
the general constitutionality of the impugned legislation does not answer the
question of whether the respondent must first apply for, and be denied, the
production of third party records before bringing a constitutional challenge.
The question to answer is whether the appeal record provides sufficient facts
to permit the Court to adjudicate properly the issues raised. As Sopinka J.
stated for the Court in R. v. DeSousa, [1992] 2 S.C.R. 944,
at p. 955, when discussing the general rule that constitutional challenges
should be disposed of at the end of a case: "An apparently meritorious
Charter challenge of the law under which the accused is charged which is not
dependent on facts to be elicited during the trial may come within this
exception to the general rule" (emphasis added).
This Court has often stressed the importance of a
factual basis in Charter cases. See, for example, MacKay v. Manitoba, [1989] 2 S.C.R. 357,
at p. 361; R. v. Edwards Books and Art Ltd., [1986] 2 S.C.R. 713,
at pp. 762 and 767‑68, per Dickson C.J.; Rio Hotel Ltd. v. New Brunswick
(Liquor Licensing Board), [1987] 2 S.C.R. 59,
at p. 83; Danson v. Ontario (Attorney General), [1990] 2 S.C.R. 1086,
at p. 1099; Baron v. Canada, [1993] 1 S.C.R. 416,
at p. 452; DeSousa, supra, at p. 954; Canadian Broadcasting Corp. v. New Brunswick (Attorney General), [1996] 3 S.C.R. 480,
at para. 15. These facts have been broken into two categories: legislative and
adjudicative. In Danson, supra, at p. 1099, Sopinka J., for the Court, outlined
these categories as follows:
These terms derive from Davis, Administrative Law Treatise (1958), vol. 2, para. 15.03, p. 353. (See also Morgan,
"Proof of Facts in Charter Litigation", in Sharpe, ed., Charter
Litigation (1987).) Adjudicative facts are those that concern the immediate
parties: in Davis' words, "who did what, where, when, how, and with what
motive or intent ...." Such facts are specific, and must be proved by
admissible evidence. Legislative facts are those that establish the purpose and
background of legislation, including its social, economic and cultural context.
Such facts are of a more general nature, and are subject to less stringent
admissibility requirements: see e.g., Re Anti-Inflation Act, [1976] 2 S.C.R. 373,
per Laskin C.J., at p. 391; Re Residential Tenancies Act, 1979, [1981] 1 S.C.R. 714,
per Dickson J. (as he then was), at p. 723; and Reference re Upper Churchill
Water Rights Reversion Act, [1984] 1 S.C.R. 297,
per McIntyre J., at p. 318.
The argument that the present appeal is premature
rests on the contention that there are few adjudicative facts before the Court.
Two points may be made in response.
First, it is not clear what further adjudicative
facts would arise if the respondent had gone through the impugned procedure and
been refused production. Although, pursuant to s. 278.8(1) of the Criminal
Code, the trial judge must provide reasons for refusing to order production of
any record, or part of any record, presumably these reasons could not divulge
much about the content of the records in question for that would defeat the
very purpose of the new provisions.
Second, the record contains sufficient facts to
resolve the issues posed by the present appeal. Indeed, no argument was made
that the adjudicative facts, sparse as they may be, are insufficient. Moreover,
a determination that the legislation at issue in this appeal is
unconstitutional in its general effect involves an assessment of the effects of
the legislation under reasonable hypothetical circumstances. In R. v. Goltz, [1991] 3 S.C.R. 485,
Gonthier J. stated, for the majority, at pp. 515-16:
It is true that this Court has been
vigilant, wherever possible, to ensure that a proper factual foundation exists
before measuring legislation against the Charter (Danson v. Ontario (Attorney
General), [1990] 2 S.C.R. 1086,
at p. 1099, and MacKay v. Manitoba, [1989] 2 S.C.R. 357,
at pp. 361-62). Yet it has been noted above that s. 12 jurisprudence does not
contemplate a standard of review in which that kind of factual foundation is
available in every instance. The applicable standard must focus on imaginable
circumstances which could commonly arise in day-to-day life. [Emphasis added.]
Likewise, given the nature of the statutory
framework, where the accused and the Court remain unaware of the contents of
the records sought, many of the arguments by necessity focus upon such
"imaginable circumstances".
[42]
In Mills, it
appears to me that the willingness of the Supreme Court to consider imaginable
circumstances as part of the factual foundation for a Charter challenge hinged
on the fact that it was not possible to bring actual facts to support the
allegation that a Charter right had been infringed. In Mills, the
Court considered that the ability to show an actual breach of an accused’s
rights would have been limited by a lack of knowledge of the contents of the
records for which production was refused even if he had made a request. It was on this basis that the Supreme Court, in Mills was prepared to
consider imaginable circumstance in evaluating the constitutionality of the
impugned legislation.
[43]
In Goltz, the
issue was whether a mandatory minimum sentence of seven days in jail for
driving while prohibited violated the accused’s right under section 12 of
the Charter to not be subjected to any cruel and unusual treatment or
punishment. The current test for determining whether a law prescribes a cruel
and unusual punishment is whether a sentence is grossly or excessively
disproportionate to the wrongdoing.
In Goltz, the Supreme Court explained that there are two aspects to an
analysis of gross disproportionality. First, an assessment of the penalty from
the perspective of the actual offender is carried out. If no finding of gross
disproportionality is made on the facts of the particular case, a consideration
based on reasonable hypothetical circumstances will be conducted.
[44]
The standard of review described
by the Court in Goltz is particular to section 12 Charter
challenges. That case does not appear to mandate the use of hypotheticals in
general in measuring legislation against other sections of the Charter. In
explaining its use of hypotheticals, the Court in Goltz said:
It is true that this Court has been vigilant,
wherever possible, to ensure that a proper factual foundation exists before
measuring legislation against the Charter (Danson v. Ontario (Attorney
General), [1990] 2 S.C.R. 1086,
at p. 1099, and MacKay v. Manitoba, [1989] 2 S.C.R. 357,
at pp. 361-62). Yet it has been noted above that s. 12 jurisprudence does
not contemplate a standard of review in which that kind of factual foundation
is available in every instance. The applicable standard must focus on
imaginable circumstances which could commonly arise in day-to-day life.
[Emphasis added.]
[45]
Apart from the
circumstances found in the Mills and Goltz cases, the Supreme
Court has also indicated that an evidentiary foundation establishing a Charter
breach may not be required at all if the question of constitutionality is a
pure question of law. This appears from the reasons of Beetz J. in Manitoba (Attorney General) v. Metropolitan Stores Ltd.:
There may be rare cases where the question of constitutionality will
present itself as a simple question of law alone which can be finally settled
by a motion judge. A theoretical example which comes to mind is one where Parliament
or a legislature would purport to pass a law imposing the beliefs of a state
religion. Such a law would violate s. 2(a) of the Canadian Charter of Rights and
Freedoms, could not possibly be saved under s. 1
of the Charter, and might
perhaps be struck down right away; see Attorney General
of Quebec v. Quebec Association of Protestant School Boards, 1984 CanLII 32 (SCC), [1984] 2
S.C.R. 66, at p. 88. It is trite to say that these cases are
exceptional.
[Emphasis added.]
[46]
The
example given by Beetz J. in this passage was referred to by Sopinka J. in Danson
as follows:
The unconstitutional purpose of Beetz J.'s hypothetical law is found on
the face of the legislation, and requires no extraneous evidence to flesh it
out.
[47]
In addition to Mills,
Goltz and Metropolitan Stores Ltd., the appellant also relied on
the Supreme Court decisions in Seaboyer/Gayme, Big
M Drug Mart, and R. v. Ferguson
in support of its proposition that reasonable hypotheticals may be used as the
factual foundation in a Charter challenge.
[48]
The issue in Seaboyer/Gayme
was whether sections 276 and 277 of the Criminal Code (the “rape-shield”
provisions) infringed the accused’s rights under sections 7 and 11(d) of the Charter.
Those provisions restricted the
right of the defence on a trial for a sexual offence to cross-examine and lead
evidence of a complainant's sexual conduct on previous occasions. In Seaboyer/Gayme,
the accused had been prevented at the preliminary enquiry from cross-examining
the complainant on her sexual conduct on other occasions. The majority of the Supreme
Court determined that section 276 was inconsistent with sections 7 and 11(d)
and was not saved by section 1 of the Charter because it had the
potential to exclude evidence relevant to the defence and whose probative value
was not substantially outweighed by its potential prejudicial effect. The Court
does not address the question of using reasonable hypotheticals, but obviously
took into account the potential of the legislation to cause a particular
result, i.e. the exclusion of relevant evidence. However, in my view, this is a
further example of considering imaginable circumstances in a situation where
there was no evidence available and could be no evidence available of the
actual effect on the accused of the denial of the right to cross-examine
because he had been prevented from cross-examining the complainant. There was
no way of knowing what the complainant’s evidence would have been and what the
effect of that evidence would have been on the defence.
[49]
In Ferguson, the
issue was whether the four year minimum sentence set out in the Criminal
Code for the offence of manslaughter with a firearm constituted cruel or
unusual punishment and therefore offended section 12 of the Charter. In
that case, the Supreme Court concluded that it had not been shown either on the
facts as they pertained to the accused or on the basis of the reasonable
hypotheticals submitted by him that the sentence amounted to cruel or unusual
punishment. It is clear though that the Supreme Court considered the reasonable
hypotheticals within the context of the section 12 analysis, which has a
particular standard of review. McLachlin C.J. writing for the Court said:
I conclude that there is no basis for
concluding that the four-year minimum sentence prescribed by Parliament amounts
to cruel and unusual punishment on the facts of this case.
Ordinarily, a s. 12 analysis for a mandatory
minimum sentence requires both an analysis of the facts of the accused’s case
and an analysis of reasonable hypothetical cases: Goltz, at pp. 505-6.
At his sentencing hearing and in the Court of Appeal, however, Constable
Ferguson did not rely on reasonable hypotheticals to contest the
constitutionality of s. 236(a). He contended simply that s. 236(a)
was unconstitutional as applied to the facts of his case. The reasonable
hypotheticals not having been argued, there was no basis for the sentencing
judge or the Court of Appeal to reach a conclusion on whether s. 236(a)
was unconstitutional on a reasonable hypotheticals analysis. Constable Ferguson
offers an alternative argument based on reasonable hypotheticals for the first
time in this Court. In my view, Constable Ferguson has not pointed to a
hypothetical case where the offender’s minimum level of moral culpability for
unlawful act manslaughter using a firearm would be less than that in the
reasonable hypotheticals considered in Morrisey.
[50]
Finally, in Big M
Drug Mart, the Supreme Court held that legislation requiring businesses to
close on Sunday infringed the guarantee of religious freedom found in section 2(a)
of the Charter. One of the arguments raised by the respondent Attorney
General of Alberta was that the appellant corporation had no standing to raise
the question of infringement of religious freedom because a corporation could
have no religion. The Supreme Court held that the respondent had standing,
saying:
Whether a corporation can enjoy or exercise freedom of religion is
therefore irrelevant. The respondent is arguing that the legislation is
constitutionally invalid because it impairs freedom of religion‑‑if
the law impairs freedom of religion it does not matter whether the company can
possess religious belief. An accused atheist would be equally entitled to
resist a charge under the Act. The only way this question might be relevant
would be if s. 2(a) were interpreted as limited to protecting only those
persons who could prove a genuinely held religious belief. I can see no basis
to so limit the breadth of s. 2(a) in this case.
The argument that the respondent, by reason of being a corporation, is
incapable of holding religious belief and therefore incapable of claiming
rights under s. 2(a) of the Charter, confuses the nature of this
appeal. A law which itself infringes religious freedom is, by that reason
alone, inconsistent with s. 2(a) of the Charter and it matters
not whether the accused is a Christian, Jew, Muslim, Hindu, Buddhist, atheist,
agnostic or whether an individual or a corporation. It is the nature of the
law, not the status of the accused, that is in issue.
(Emphasis added.)
[51]
The appellant relies on
this last statement of the Supreme Court (that “[i]t is the nature of the law,
not the status of the accused, that is in issue”) to support its argument that
it does not have to show evidence of actual effects of charging GST on its
services in order to make out a breach of section 10(b).
[52]
The appellant in my
view is taking that statement out of context. The Court was dealing at that
point with the issue of the respondent’s standing to bring the Charter
challenge, not to the question of whether it had shown that either the purpose
or effect of the legislation was unconstitutional. The Court dealt with those
issues later on in its decision. This Court has already found that the appellant
has standing to argue the constitutionality of the GST on the legal services in
issue. It is a separate question whether the appellant has proved that the
legislation, either in purpose or effect breaches section 10(b).
[53]
Ultimately, in Big M
Drug Mart, the Court found that since the purpose of the legislation
was to compel religious observance, it offended section 2(a) and it was not
necessary to consider the effects of the legislation. The purpose of the
legislation was dealt with as a question of law and therefore one that did not
require evidence in support. Dickson J. said:
A finding that the Lord’s Day Act has a secular purpose is, on
the authorities, simply not possible. Its religious purpose, in compelling
sabbatical observance, has been long‑established and consistently
maintained by the courts of this country.
[54]
From my review of the
Supreme Court decisions on point, it appears that a party may only rely on
hypotheticals to establish a factual foundation for a Charter challenge
where actual facts are not available to that party. In such cases, the Court
has been willing to consider imaginable circumstances which could easily arise
in day-to-day life. The use of hypotheticals in those cases amounts to the
Court taking judicial notice of facts or circumstances, which then form the
evidentiary foundation for the Charter challenge. These hypotheticals
are accepted as true because they could commonly arise in day-to-day life or
are indisputable on their face.
[55]
A party will also be
relieved from presenting any factual foundation at all in cases where
the unconstitutionality of the impugned legislation is apparent on the face of
the legislation.
[56]
Apart from these
limited exceptions, a party challenging legislation will be required to bring
evidence of the effects of the legislation. Therefore, I reject the appellant’s
contention that in any Charter challenge the Court may rely on
imaginable circumstances to establish the effects of impugned legislation.
[57]
Furthermore, since the
appellant does not take the position that evidence of the effect of the GST on
the ability of its clients who were detained or arrested to afford its services
is unavailable, I find that this case does not fall within the exception set
out in Mills and implicitly recognized in Seaboyer/Gayme.
[58]
It is also obvious that
the section 12 Charter standard of review which was applied in Goltz
and Ferguson is not relevant to this case.
[59]
Even if I had been
satisfied that the appellant was excepted from presenting actual facts relating
to the application of the GST to legal fees for criminal defence services
provided to the appellant’s clients who had been detained or arrested, I would
still have found that the appellant had not provided the Court with any
reasonably imaginable circumstances or hypotheticals that would demonstrate a
breach of section 10(b) rights.
[60]
In its written argument,
the appellant stated that:
. .
. the degree of infringement will depend upon the set of variables such as the
applicable tax rate, the financial status of the accused and the fees, both
actual and potential, which in turn will relate to the length of the trial, the
mode of trial elected, whether one or more voir dires are held, whether experts
are called, the amount of preparation, the extent of legal research, the
calling of witnesses, the entering of a pleas and the filing of an appeal. A
fee of $30,000 at the current HST rate of 12% will impose upon the accused a
tax liability of $3,600. That additional cost will, depending on the financial
capabilities of the accused, interfere with the financial resources available
to mount a defence to the charges including the cost of legal fees plus taxes.
[61]
The hypothetical case
described in this example, though, involves fees incurred for legal
representation well beyond the point of arrest or detention which triggers
section 10(b) Charter rights. The right to counsel under section 10(b)
is not an ongoing right throughout the preparation and hearing stages. It is
limited by the words of the provision to the time surrounding arrest or
detention. In Christie, the Supreme Court said that the right as
expressed in section 10(b) arises in “one specific situation”, and in R. v.
Willier,the Supreme Court said:
… s. 10(b) provides detainees with an opportunity to
contact counsel in circumstances where they are deprived of liberty and in the
control of the state, and thus vulnerable to the exercise of its power and in a
position of legal jeopardy. The purpose of s. 10(b) is to provide
detainees an opportunity to mitigate this legal disadvantage.
[62]
While a right to
counsel at trial may arise in certain circumstances under sections 7 or
11(d) of the Charter, which guarantee a person a fair trial in
accordance with the principles of fundamental justice, at the
outset of this hearing the appellant abandoned its reliance on section 7 of the
Charter and focused its arguments solely on section 10(b). Therefore the
example provided by the appellant is not illustrative of a hypothetical breach
of section 10(b) rights.
[63]
Similarly, the Stein case to
which the appellant referred is an American case involving interference by
government with the resources available to the defendants to mount a defence to
the charges brought against them. This went to the fairness of the trial and to
the issue of fundamental justice. In the Canadian constitutional context, those
are aspects of rights guaranteed by sections 7 and 11(d) of the Charter and
not by section 10(b).
[64]
In response to the
appellant’s submission that prejudice to a person’s section 10(b) rights must
be presumed in this case, I can only say that I am unable to easily
imagine that a person who has been arrested or detained would be prevented or even
deterred from retaining and instructing counsel in that situation by the
additional GST payable on counsel fees.
[65]
Finally, I do not
accept the appellant’s contention that the constitutionality of the GST on
criminal legal defence services is a question of law alone and therefore that
it is not required to produce any evidence because it is apparent on its face
that the tax will impede access to counsel.
[66]
I have already held
that the appellant has not shown that the purpose of the tax is specifically
directed at those services, and since it is a tax of general application, this
case is not analogous to the example used by Beetz J. in Metropolitan Stores
Ltd. and cited by Sopinka J. in Danson of a law imposing a state
religion. It is also not analogous to the example provided by counsel at the
hearing, of a tax on entry to a church. As in the example of a law imposing a
state religion, a tax on church entry would have a patently unconstitutional purpose.
Conclusion
[67]
For these reasons and in
the absence of evidence that any of the appellant’s clients were unable to
retain counsel as a result of the GST payable on legal services, I find that
the question put to the Court for determination, amended to delete the
reference to section 7 of the Charter, must be answered 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 ss. 10(b) of the Charter of Rights and Freedoms.
[68]
The Respondent is awarded costs of
the motion on a party and party basis.
Signed at Ottawa, Canada, this 28th day of January 2013.
“B.Paris”
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