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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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