COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Christie v. British Columbia (Attorney General),

 

2006 BCCA 241

Date: 20060511


Docket: CA032731

Between:

Dugald Christie

Respondent/

Appellant by Cross Appeal

(Petitioner)

And

The Attorney General of British Columbia

Appellant/

Respondent by Cross Appeal

(Respondent)

And

The Attorney General of Canada and

Her Majesty the Queen in Right of Canada

Respondents

(Respondents)

And

The Law Society of British Columbia

Intervenor


 

 

 

Before:

The Honourable Chief Justice Finch

The Honourable Madam Justice Rowles

The Honourable Mr. Justice Hall

Oral Reasons for Judgment

 

R.D. Gibbens

 

Counsel for the Respondent/Appellant on the Cross Appeal, D.E. Christie

 

J. Penner

S. Martorana

 

Counsel for the Appellant/Respondent on the Cross Appeal, Attorney General of British Columbia

D. Gruber

Counsel for the Intervenor, The Law Society of British Columbia

Place and Date of Hearing:

Vancouver, British Columbia

8 May 2006

Place and Date of Judgment:

Vancouver, British Columbia

11 May 2006

 

 

[1]                FINCH, C.J.B.C.:  The petitioner, who was the successful respondent and cross appellant in these proceedings, applies under s. 9(6) of the Court of Appeal Act to vary the order of a judge in chambers on 10 March 2006 granting the appellant Attorney General a partial stay of the order pronounced by this Court on 20 December 2005, pending a decision on the appellant’s application for leave to appeal to the Supreme Court of Canada, or a decision by that court on appeal if one is granted.  The chambers order has not been entered, but has been settled in the following terms:

IT IS ORDERED THAT until the Supreme Court of Canada dismisses the application of the Attorney General of British Columbia for leave to appeal the order of this Court made on 20 December 2005 or, if leave be granted, until the Supreme Court of Canada pronounces judgment on the appeal or until further order the effects of the declaration of unconstitutionality contained in the said order are stayed to the extent that the declaration of unconstitutionality invalidates the statutory obligation of the lawyers of British Columbia to collect tax on legal services related to the determination of rights and obligations by courts of law and independent administrative tribunals and to hold said taxes in trust.

[2]                The learned chambers judge applied the three part test for a stay laid down by the Supreme Court of Canada in RJR-MacDonald Inc. v. A.G. (Canada), [1994] 1 S.C.R. 311.  He was satisfied that there was sufficient merit in the proposed appeal, and that the Attorney General had established the likelihood of irreparable harm, so that the first two steps of the test were met.  Those conclusions are not in issue on this application.

[3]                The chamber judge’s decision turned on the third step, the balance of inconvenience to the appellant Attorney General, should a stay be refused, or to the petitioner respondent, should a stay be granted.

[4]                The judge concluded that a partial stay would best strike a balance in the circumstances.  The effect of the partial stay, as expressed in the order quoted above, is to require B.C. lawyers to continue to collect social service tax on legal services related to litigation, regardless of their clients’ financial circumstances, but to hold the collected tax in trust, rather than remit the tax to government as required by statute.

[5]                The critical reasoning in support of a partial stay is found in this part of the chamber judge’s reasons:

[17]      This application therefore turns on the balance of inconvenience.

[18]      I have already noted that, if the stay is not granted and if the AGBC should succeed in the appeal, the Province will have lost substantial sums in valid taxes that could not effectively be recovered. Such a result is contrary to the public interest. On the other hand, this Court found the legislation unconstitutional on the basis that it infringes or denies the rights of citizens access to justice, one of the elements of the rule of law. As counsel for the LSBC points out, a price cannot be put on the infringement of these rights and, if the declaration of invalidity is sustained in the Supreme Court of Canada, the constitutional rights of a large number of citizens will be adversely affected so long as a stay is in place. That is not in the public interest, either.

[19]      I have concluded that the balance can best be adjusted in this case by a partial stay.

. . .

[23]      If the stay required by the AGBC is granted and he subsequently fails in his appeal, individual taxpayers will face serious and perhaps insurmountable difficulties should they attempt to recover taxes paid in the meantime. For example, whether there is a right to recover taxes paid under a mistake of law has not been definitively settled: see Air Canada v. British Columbia, [1989] 1 S.C.R. 1161 at 1203-08 (per LaForest J.); Air Canada v. Ontario (Liquor Control Board), [1997] 2 S.C.R. 561 at ¶¶ 35, 77; Kingstreet Investment Ltd. v. New Brunswick (Department of Finance) (2005), 254 D.L.R. (4th) 715, 2005 NBCA 56 at ¶ 27.  However, a partial stay on the basis that the taxes would be collected by lawyers but not remitted to the government would leave the taxes collected in the hands of the lawyers in trust and would ensure that individual taxpayers will be able to recover taxes they have paid if the appeal should fail. In addition, a partial stay on this basis would protect the government to the extent that, if it should succeed on the appeal, taxes paid in the meantime will be readily recoverable.

. . .

[31]      Counsel for Mr. Christie submitted that, if a stay should be granted, there should be an order that exempts him and his clients from its effects. He represents primarily poor clients and it was through his efforts that the judgment under appeal was obtained. At one level it may seem only just that he and his clients be permitted to enjoy the fruits of his victory pending appeal. However, I can think of no principled basis, and none was suggested, upon which he and his clients should be treated differently than all other lawyers and clients in the Province. Accordingly, I decline to exempt Mr. Christie and his clients from the stay.

[6]                On this application to vary, counsel for the petitioner contends, inter alia, that the chambers judge failed to consider the impact of a partial stay, and erred in refusing an exemption to the petitioner from the requirement to continue collecting tax from poor clients.

[7]                A brief history of the proceedings is necessary to understand the petitioner’s position.

[8]                The petitioner applied in Supreme Court challenging the constitutionality of the Social Service Tax Amendment Act (No. 2), 1993 S.B.C. c. 24, alleging that the tax impaired or denied his clients ability to have access to justice, contrary to the rule of law and the Charter of Rights and Freedoms.  The Supreme Court judge held, on 8 February 2005, that the Act infringed the constitutional right of access to justice of low income persons, and was ultra vires to that extent.

[9]                The Attorney General appealed from the order of 8 February 2005, and the petitioner cross appealed contending that the tax was unconstitutional in its entirety, and that all persons requiring legal services, rich or poor, should have the benefit of the conclusion that the tax impaired access to justice.

[10]            A majority of this court was persuaded to that view in reasons pronounced 20 December 2005.  The order entered consequent on those reasons provides:

THIS COURT ORDERS that the appeal is dismissed and the cross appeal allowed to the extent set out in this Order;

AND THIS COURT FURTHER ORDERS that the Order of Madam Justice Koenigsberg given February 8, 2005 is set aside;

AND THIS COURT DECLARES that the Social Service Tax Amendment Act (No. 2), S.B.C. c. 24 is unconstitutional to the extent that it purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals.

[11]            It is that order against which the chambers judge granted the partial stay, as set out in paragraph 1 of these reasons.

[12]            The main thrust of the petitioner’s submission on this application to vary the stay can be summarized as follows.  The Supreme Court declared the Act unconstitutional in respect of low income earners.  The Attorney General appealed that decision and lost.  The petitioner succeeded on the cross appeal.  This Court said the tax was unconstitutional in respect of all litigants, rich or poor.  The effect of the partial stay is to require low income litigants to pay the tax, and to require the petitioner to collect the tax, in spite of two successful rulings in his favour.  The petitioner says such a result is perverse.  He and his clients are now in a worse position than before his success in the Court of Appeal.  Low income litigants must now pay the unconstitutional tax, which they did not have to pay following the Supreme Court judgment.  Counsel for the petitioner says the chambers judge failed to consider the impact that a partial stay would have on poor people.

[13]            The petitioner also advanced other submissions.  Counsel says the partial stay has the same effect as a full stay and undermines and damages Charter values by denying the poor access to justice.  He says the chambers judge failed to consider s. 1 of the Charter and the absence of any justification for breach of a Charter right to legal services and access to justice.  He says individuals who are denied legal representation are a substantial cost to the legal system, and the chambers judge ignored this fact.  He also sought to adduce fresh evidence on this application to show the complications and expense related to the obligation on lawyers to collect tax and to hold it in trust.

[14]            The petitioner seeks to set aside the partial stay altogether.  In the alternative, he contends that he should be exempted from the application of the stay.

[15]            Counsel for the Attorney General says the chambers judge applied the correct legal test, and that no error has been shown that would justify variation by a division of the court.  He says that before the chamber’s judge, counsel for the petitioner (who is not counsel on this application) supported a partial stay in the terms granted.  He says s. 1 of the Charter is not relevant in weighing the balance of inconvenience, and that no principled basis has been shown for granting the petitioner an exemption from the stay.

[16]            Mr. D. Gruber appeared for the intervenor, the Law Society of British Columbia, and advised that his client took no position on the application to vary.

[17]            In my respectful view, the partial stay is unnecessarily broad and unfair, not only to the petitioner and his clients, but to all low income litigants.  On a reading of the chamber judge’s reasons, it does not appear to me that he considered the effect the partial stay would have on low income litigants.  It requires them to pay a tax declared by both courts to be unconstitutional in respect of them.  It puts them in a worse position, after the petitioner’s success on appeal, than they were in after a successful result in the Supreme Court.  There is no balance in the order from their point of view.  The evidence, accepted by the Supreme Court judge, was that requiring low income litigants to pay tax denied them access to justice.  The partial stay has the same effect.

[18]            I am satisfied that the partial stay does not strike a proper balance between government on the one hand, and those who, because of their means, are denied access by requiring them to pay the tax.  In my view, there is a compelling public interest in varying the partial stay to the extent that it applies to low income persons.

[19]            I would vary the partial stay and grant an exemption from its effect to the petitioner, and his clients, as well as other low income persons, and lawyers who act on their behalf.  The petitioner should have the costs of this application.

[20]            ROWLES, J.A.: I agree.

[21]            HALL, J.A.: I agree.

[22]            FINCH, C.J.B.C.:  So ordered.

“The Honourable Chief Justice Finch”