Canada: Court Holds Canada A Free Trade Nation Within Its Own Borders: Provincial Tariff Ruled Unconstitutional

Last Updated: December 21 2016
Article by Stephen Thiele and Constantine Valettas

Politicians have debated trade and tariffs for centuries. Proponents of capitalism often argue that there should be free trade between countries so as to permit the freer movement of goods and to stimulate job creation, particularly in those nations that are able to manufacture or produce goods in high volume and cheaply.

At the international level, Canada is a supporter of free trade, as evidenced by its participation in the North American Free Trade Agreement. However domestically, Canada has struggled with the concept of the free movement of goods between the provinces and there is often bickering among provincial politicians concerning provincial trade tariffs.

But a recent decision1 demonstrates that Canada was founded on the concept of free trade between the provinces and that trade barriers between them are therefore unconstitutional.

Background to R. v. Comeau

In R. v. Comeau, a resident of New Brunswick challenged a charge laid under s. 134(b) of the New Brunswick Liquor Control Act for illegally possessing a large quantity of alcohol which he had bought in Quebec and transported into New Brunswick. Under s. 134(b), a person is prohibited from attempting to purchase, directly or indirectly, or from keeping alcohol not purchased from New Brunswick liquor authorities.

Legal Arguments2

The resident contended that the pith and substance of s. 134(b) was a trade barrier, either tariff or non-tariff. This was contrary to s. 121 of the Constitution Act, 1867 which the resident argued required free trade among provinces, without trade barriers, tariff or non- tariff, regardless of whether the barrier was found in provincial or federal legislation.

In addition, it was contended that a previous decision interpreting s. 121 differently, rendered by the Supreme Court of Canada in 1921 in Gold Seal Ltd. v . Dominion Express Co.3, was wrongly decided and of doubtful value based on questionable practices by certain justices of the Court who participated in that case.

In contrast, the Crown argued that the rules of statutory interpretation supported the conclusion that s. 121 of the Constitution Act, 1867 was intended to disarm only provincial law requiring cross-border tariffs and duties and that the decision made by the Supreme Court of Canada in Gold Seal was correct.

Judgment of the Court

The court agreed with the resident and declared s. 134(b) of the New Brunswick Liquor Control Act unconstitutional. In rendering his decision, Justice LeBlanc considered the wording of s. 121 of the Constitution Act, 1867, its legislative history and its historical context. He then examined the relevant case law pertinent to s. 121 and the place of s. 121 within the scheme of Canadian federalism.

Section 121 provides as follows: 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.

The key phrase in the section is "admitted free".

Applying a "flexible", liberal or progressive interpretation to s. 121, Justice LeBlanc explained that the phrase "admitted free" was intended to have a broader, and a more comprehensive and robust meaning than the phrase "admitted free of duty" such that a province was mandated to allow a good to enter across its borders.4

Furthermore, there was nothing in the historical context of s. 121 to suggest that the Fathers of Confederation intended to restrict the meaning of the words "admitted free" in any way.   Indeed, the Fathers of Confederation wanted to create inter-colonial free trade. This was reflected in contemporary debates at the time.

For example, George-Étienne Cartier argued in favour of Confederation on the grounds that it would ensure free trade between the North American colonies, stating as follows:

It was no use whatsoever that New Brunswick, Nova Scotia and Newfoundland should have their several custom houses against our trade, or that we should have custom houses against the trade of those provinces.6

With respect to the Gold Seal case and its progeny, Justice LeBlanc agreed with all of the critical arguments of the resident in connection with the decision. More specifically, the judge noted that there was little interpretation at all of s. 121 in Gold Seal and that the Supreme Court of Canada had failed to embark on a large, liberal or progressive interpretation of the   Constitution Act, 1867.

Nevertheless, Justice LeBlanc felt that he was bound by legal principle to follow the decision in Gold Seal unless it could be demonstrated that a new issue was being raised or that there was a significant change in circumstances justifying departure from Gold Seal's binding effect.

Justice LeBlanc found that there had been a significant change in evidence, which permitted him to reassess the Gold Seal case. This reassessment included the examination of a letter written by Justice Duff, one of the Supreme Court of Canada justices who sat on the Gold Seal case, in which he described that a meeting had taken place between two of the judges and the Minister of Justice at a critical time in the case, and that the three discussed the possible outcome of the case and how the two judges would be ruling. In addition, the letter implied that the two judges, explicitly or implicitly, told the Minister how to change the outcome of the case.8

Although the judge rejected the notion that there had been judicial interference in the Gold Seal case based on the letter and that the letter had no relevance to the issue to be decided, he found that the Supreme Court of Canada had reached the wrong decision based on the evidence presented in connection with, among other things, the intent of the drafters of s. 121. Justice LeBlanc stated that the narrow and strict interpretation placed upon s. 121 in the Gold Seal case was unwarranted and unfounded.9

The judge then concluded that s. 121 of the Constitution Act, 1867 permitted the free movement of goods among the provinces without barriers, tariff or non-tariff, and the charges against the resident were dismissed.

The Crown has appealed

Impact of the Decision

The impact of this decision could be wide- ranging for all provinces since their existing trade structures and schemes were established by the rulings of the Courts, including the ruling in the Gold Seal case. In essence, the provinces may be required to revisit these structures and schemes or face potential legal challenge. 

But as noted by Justice LeBlanc, statutes   of constitutional force must be interpreted in accordance with the meaning of their words, considered in context and with a view to the purpose they were intended to serve.

Accordingly, if provincial structures and schemes need to be revisited so as to comply with the Constitution, then so be it.

Legal Representation

Ian Blue of Gardiner Roberts LLP played a significant role in the development and preparation of the successful legal argument. He was assisted in the legal representation of the New Brunswick resident by Arnold   Schwisberg, Mikael Benard and Karen Selick.


1.R. v. Comeau, Court File No. 05672010 (Campbellton), N.B. Prov. Ct., LeBlanc J., April 29, 2016

2.Paras 18-20

3. [1921] S.C.J. No. 43

4.Paras. 42, 49 and 63

5.Para. 69

6.Para. 97

7.Paras. 115-116

8.Paras. 126-149

9.For a comprehensive review of Justice LeBlanc's findings, see paras. 175-192

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Stephen Thiele
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions