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Page 2 June 26, 2017 • Law Times www.lawtimesnews.com comes to mortgages. While Chegancas had not received the certificate that showed the borrower had received independent legal advice until after the transaction was complete, lawyers say this did not af- fect his reliance on it. Piersanti argued that the acknowledgement of independent legal advice by itself does not create a situation of proximity be- tween the lawyer and the third party. However, in the sum- mary judgment proceed- ings, Reuben Rosenblatt, of Minden Gross LLP, provided expert opinion that while the primary purpose of independent legal advice is to ensure that the borrower under- stands the risks of entering a transaction, lenders can also require a borrower to obtain it to minimize risk on their end. Gavin MacKenzie, of MacKenzie Barristers, says that cases brought by parties against a lawyer retained by the other side are always problematic, as generally a lawyer has a duty to his client. In this case, however, the expert evidence point- ed to the fact that it was reasonable to expect that the lender would rely on the fact that the borrower receives independent legal advice, he says. "It already brings home to lawyers the risk if you provide independent legal advice to a borrower, that you may well be liable to the lender who relies on your certificate of in- dependent legal advice," says MacKenzie, who was not involved in the case. "But I do think it's con- fined to that situation. I don't think it opens up lia- bility on the part of lawyers generally to non-clients." In his decision, Leder- man relied on a 2002 ruling in Gerling Global Insurance Co. v. Siskind, Cromarty, in which Jus- tice Ian Nordheimer found that a duty of care arose between a third party and a lawyer who commis- sioned a document, as the lawyer could reasonably foresee that the non-client would rely on it. Nadia Campion, a part- ner with Polley Faith LLP, who was not involved in the case, says the decision does not expand liabil- ity for lawyers, but it is a reminder to lawyers that provide independent legal advice that they may have a duty to non-clients in real estate transactions. She says lawyers who provide independent legal advice have to be cognizant of whether those representa- tions are going to be relied on by a third party. "I think they need to think beyond just who are they providing the in- dependent legal advice to," she says. "[T]hey have to be really careful about ensur- ing that they are executing their duties to their fullest extent." Gavin Tighe, the lawyer representing Piersanti, de- clined to comment on the decision as the issues are still before the court. "We look forward to having the matter dealt with on its merits," says Tighe, a senior partner with Gardiner Roberts LLP. Heather Gray, the law- yer representing other de- fendants in the lawsuit, did not provide comment. LT NEWS The change will impact most lawyers next year, as it will take effect in the tax year that starts after the budget. But concerns have con- tinued to mount, with the Canadian Bar Association recently sending a submis- sion to the federal govern- ment asking for further legislative guidance about the change, a de minimis test and longer transition period. Tax lawyer Brandon Siegal says going forward lawyers are going to need to make sure to have their accounting systems set up to value work in progress to ensure it is reported. He says this change will mean lawyers will end up having to pay 13 months' worth of income tax in one shot. Lawyers are going to need to plan for it and create a work-in-progress fund. "There was this hope- ful benefit of always kick- ing the can down the road by one year. That's gone." Siegal says that as law- yers and professional cor- porations are required to have a calendar year end under the Income Tax Act, the first year will be the one that starts on Jan. 1, 2018. Those that incorpor- ated after the budget was released on March 22, 2017, however, will be caught this year. David Stevens, a part- ner with Gowling WLG, says the change will be particularly problematic for practice areas such as personal injury but also technically difficult for a significant portion of the profession as well. "It's significant and somewhat troubling," he says. Siegal says it is not clear how work in progress will be assessed for contin- gency work, as it may or may not be billable in the end. The Canada Revenue Agency, however, issued guidance at the end of April, saying no amount is receivable by the lawyer until the right to collect the amount is established. Lawyers say the ration- ale for the elimination of billed-basis accounting is likely that work in prog- ress should not be de- ducted while associated expenses are deducted, and that professionals should be given a defer- ral that is not available to other taxpayers. The federal govern- ment has said there will be a transitional period to phase in the elimination of billed-basis accounting. For the first taxation year that starts after the budget was released, 50 per cent of "the lesser of the cost and the fair mar- ket value of work in prog- ress will be taken into account for the purposes of determining the value of inventory held by the business," and for each year after, the full amount will be taken into account, according to a document on the budget's tax meas- ures. In its submission, the CBA said the pro- posed transition period is not adequate for long- established practices that have work-in-progress balances, which have built up over years. The CBA has asked that the government con- sider a transition of five to seven years. A spokesman for the Ministry of Finance de- clined to comment on the issue. LT Continued from page 1 CBA wants longer transition Continued from page 1 © 2017 Thomson Reuters Canada Limited 00245IQ-A87334-NK Available risk-free for 30 days Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 CORPORATE / COMMERCIAL New Edition Consolidated Canada Business Corporations Act and Regulations 2017, 37th Edition Contributing Editor: Andrew Treash, B.Sc., LL.B. Consolidated Canada Business Corporations Act and Regulations 2017, 37 th Edition contains the full text of the Canada Business Corporations Act, R.S.C. 1985, c. C. 44, Can. Reg. 2001-512 (Canada Business Corporation Regulations, 2001), Can. Reg. 427 (Minister Designation Order), Forms under the Canada Business Corporations Act, the Winding-Up and Restructuring Act, R.S.C. 1985, c. 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