Read our Q2 Torys Quarterly article on this and other issues provoking tensions between federal and provincial powers.
The Constitution Act, 1867 has suddenly become a hot topic in a range of industries across Canada. In R. v. Comeau, a unanimous decision of the Supreme Court of Canada affirmed the validity of provisions of New Brunswick's Liquor Control Act that prohibit residents from "hav[ing] or keep[ing]" quantities of alcohol purchased outside of the province in excess of applicable limits. In coming to this decision, the Supreme Court confirmed that s. 121 of the Constitution Act, 1867 prohibits laws whose purpose is to "restrict or limit the free flow of goods across the country," but that "laws that pose only incidental effects on trade as part of broader regulatory schemes not aimed at impeding trade do not have the purpose of restricting interprovincial trade and hence do not violate s. 121."1
What You Need To Know
- The Supreme Court established a two-part test to determine whether a law is intended to restrict trade, and therefore inconsistent with s. 121. A party challenging a provincial law must first establish that "the law in essence and purpose restricts trade across a provincial border" by imposing an "additional cost on goods by virtue of them coming in from outside the province," like a tariff.2
- This test is flexible. In some cases, evidence may be required to determine if a law imposes an additional cost. For example, a licensing scheme which requires a license to import a good "may impede cross-border trade" if "the cost of the licence is substantial or if it is very difficult to acquire."
- If the first part of the test is met, the claimant must then establish that the law's "primary purpose" is to "restrict trade." This must be established objectively by evidence, and the inquiry is based on "the wording of the law, the legislative context in which it was enacted […], and all of the law's discernable effects […]."3
Comeau, a resident of Campbellton, New Brunswick took a trip into neighboring Québec. While there, he "stocked up"4 by purchasing quantities of alcohol that exceed the limits under New Brunswick's Liquor Control Act. Section 43(c) of the Act limits the amount of liquor purchased extra-provincially that a person may "have and consume" to "liquor not in excess of one bottle or beer not in excess of twelve pints." Comeau's shopping trip was monitored and recorded by the RCMP, and he was stopped by the RCMP while reentering New Brunswick. The RCMP found quantities of alcohol in his vehicle in excess of applicable limits, and issued him a fine of $240 plus administrative fees and the victim surcharge levy.
Comeau Challenges the Fine
Comeau contested the fine in New Brunswick Provincial Court on the basis of s. 121 of the Constitution Act, 1867. It says that "All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces." Comeau argued that this section was intended to prohibit all barriers to interprovincial trade.
The trial judge agreed with Comeau, relying heavily on the evidence a historian gave regarding the "the intentions of the drafters of s. 121" and his "opinion as to the import of that historical evidence for the interpretation of s. 121."5 On the basis of this evidence, the trial judge concluded that the Supreme Court's 1921 decision in Gold Seal Ltd. v. Attorney-General for the Province of Alberta, where the Supreme Court concluded that s. 121 was limited to prohibiting customs duties on goods moving between provinces, was wrongly decided.
Appeal to the Supreme Court
The New Brunswick Court of Appeal denied the Crown's application for leave to appeal the Provincial Court's decision. The Crown sought and was granted leave to appeal to the Supreme Court. The Supreme Court affirmed binding precedent regarding s. 121, and overturned the Provincial Court's decision on two bases.
First, the Supreme Court found that the trial judge erred by not following its almost 100-year-old Gold Seal decision. It held that lower courts should only depart from binding precedent "if new legal issues are raised as a consequence of significant developments in the law, or if there is a change in the circumstances or evidence that fundamentally shifts the parameters of the debate."6 While the trial judge found that this exception was satisfied by the historical evidence, the Supreme Court disagreed. It explained that this exception "is not a general invitation to reconsider binding authority on the basis of any type of evidence."7 The "high threshold" required to depart from binding precedent was not met in this case because it was "not evidence of changing legislative and social facts or some other fundamental change."8
Second, the Supreme Court held that the trial judge's interpretation of s. 121 was wrong. It rejected the conclusion that the section prohibits any and all burdens on the passage of goods over provincial boundaries.9 Instead, it concluded that s. 121 is limited to "preventing provinces from passing laws aimed at impeding trade by setting up barriers at boundaries, while allowing them to legislate to achieve goals within their jurisdiction even where such laws may incidentally limit the passage of goods over provincial borders."10 It held that the Liquor Control Act "functions like a tariff" because it restricts "access to liquor from other provinces." However, it recognized that the law's primary purpose is to "to prohibit holding excessive quantities of liquor from supplies not managed by the province," and not to impede trade.11 It therefore does not meet the test for infringing s. 121.
Co-author of this bulletin Andrew Bernstein wrote an opinion piece for the Globe and Mail on issues of national interest and their broader implications on federalism.12
1 paras. 97
2 paras. 107
3 para. 111
4 para. 9
5 para. 15
6 para. 29
7 para. 31
8 para. 37
9 para. 89
10 para. 91
11 paras. 121, 125
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