Court of Appeal orders partial stay of judgment in Christie v. British Columbia  

March 10, 2006

On March 10 the BC Court of Appeal ordered a partial stay of the Court's earlier decision in Christie v. British Columbia respecting PST on legal services, pending appeal to the Supreme Court of Canada: see 2006 BCCA 120. The provincial government had applied for a stay of the decision. The Law Society intervened to oppose the stay and outline issues impacting on lawyers and their clients. For the earlier decisions of the Court of Appeal in this case, see 2005 BCCA 631 (December 20, 2005 judgment) and 2006 BCCA 59 (February 10, 2006 supplementary judgment).

The Hon. Mr. Justice Smith ordered that the Court's December 20, 2005 declaration of invalidity concerning PST in Christie "is stayed to the limited extent of maintaining the statutory obligation of the lawyers of this province to collect the taxes on legal services and to hold them in trust pending the appeal."

As a result of this order, BC lawyers must bill and collect the provincial sales tax on all legal fees in accordance with the Social Service Tax Act.

As far as remittance of the tax is concerned, lawyers are not required to remit the tax on legal services that are "related to the determination of rights and obligations by courts of law or independent administrative tribunals," as set out in the December 20, 2005 judgment. Instead, lawyers should hold these funds in trust pending the outcome of the appeal to the Supreme Court of Canada.

The Law Society has received legal advice that the partial stay does not affect those portions of the Social Services Tax Act that have not been declared invalid by the Court of Appeal. As a result, lawyers have a continuing obligation to remit tax on services outside the scope of the December 20, 2005 decision. If a lawyer is uncertain about whether a legal service falls within the scope of the judgment, the prudent course is to hold the tax in trust. In other words, if in doubt about remittance, you should bill and collect the tax, but hold it in trust rather than remit it.

The provincial government has advised the Law Society that it is continuing work on guidelines to assist the profession and that "lawyers are advised that they will not be charged penalties or interest for the failure to remit amounts that they are holding in trust pending publication of the guidelines": see the Consumer Taxation Branch website.

The Law Society's practice advice team is reviewing the practical implications for lawyers, to provide assistance. Lawyers who require further information or would like to flag new issues should contact practice advisors Dave Bilinsky (604 605-5331 or or Barbara Buchanan (604 697-5816 or