Court rules GST on criminal law services constitutional

A Kelowna, B.C. criminal law practice faces a tax bill of $200,00 after failing in its latest attempt to have GST on criminal defence legal services declared unconstitutional.

Stanley J. Tessmer Law Corp. argued the imposition of the GST infringes s. 10 (b) of the Charter, by impeding an arrested or detained person’s right to counsel.

“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,” wrote Tax Court of Canada Justice Brent Paris, summing up the firm’s case.

However, Paris was not convinced, going on to find in his Jan. 28 judgment that on the facts of the case, a breach was not made.

Between 1999 and 2006, the firm’s principal, Stanley Tessmer, and two other lawyers, did not collect GST on bills for some of its arrested clients, who were either charged with a criminal offence or who had criminal charges pending.

After being slapped with an assessment for $228,000 in GST, plus interest and penalties, the firm appealed to the Tax Court of Canada. The law firm won an early minor victory when the court found it did have standing to raise the alleged Charter breaches, before Paris’ decision dismantled the case. It isn’t the first time the firm has challenged a GST assessment — a previous appeal to the Tax Court by the firm claiming a Charter breach was dismissed in 1999.

This time around, Tessmer claimed the purpose of the GST legislation was unconstitutional because of the inconsistency between the government’s dual roles as prosecutor and tax collector on the services required to defend that prosecution.

But Paris concluded the legislation was too broad, encompassing as it does an “infinite variety of transactions,” to find its purpose invalid.

In addition to the purpose of the legislation, Tessmer argued its effect was also unconstitutional. The firm had not conducted any assessments on the ability of its clients to pay its fees and the GST on them, but argued it should be allowed to rely on hypothetical situations to show the general effect of the tax was unconstitutional. But Paris again sided against the firm.

“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. . . . 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,” Paris wrote.

Without evidence that any of Tessmer’s clients “were unable to retain counsel as a result of the GST payable on legal services,” Paris said the facts of the case did not support the infringement claim.

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