Canada: The Comeau Case: Are We Headed For Liberalized Interprovincial Trade In Canada? The Supreme Court Will Soon Decide

The Provincial Court of New Brunswick's decision in R. v. Comeau was rendered on April 29, 2016 by Judge Ronald LeBlanc in Campbellton, N.B. While it has not garnered a lot of media attention in Quebec, this decision, which is currently before the Supreme Court of Canada, could have a major impact on interprovincial trade, specifically in terms of liberalizing the market for alcoholic beverages, and generally on the powers of the provinces to legislate on imports from other Canadian provinces. 

1. The facts and key issue in the Comeau decision 

Gérard Comeau was charged under the New Brunswick Liquor Control Act for having crossed the border into New Brunswick from Quebec with more than five cases of beer in his possession. In his defence against the charge, Mr. Comeau argued that the Liquor Control Act is of no force or effect, as it contravenes section 121 of the Constitution Act, 1867 ("Section 121") by imposing a non-tariff trade barrier to the transport of alcohol between provinces. Section 121 provides 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." 

"Tous articles du crû, de la provenance ou manufacture d'aucune des provinces seront, à dater de l'union, admis en franchise dans chacune des autres provinces." 

 [emphasis added] 

The Attorney General of New Brunswick (the "Attorney General") argued that the Liquor Control Act does not contravene Section 121, as that section is only intended to prohibit tariff trade barriers between the provinces, such as customs duties. Section 121 therefore allows the provinces to impose restrictions of all kinds, other than "customs duties", on interprovincial trade. 

In light of the parties' respective positions, the Court had to decide on the interpretation of the terms "admitted free / admis en franchise" as used in Section 121, in order to determine whether they prohibit non-tariff as well as tariff barriers to interprovincial trade. 

2. The judgment's conclusions

To the surprise of many, and despite decades of consistent case law to the contrary, Judge LeBlanc agreed with most of the defence's arguments and acquitted Mr. Comeau. In the judge's view, the intention of the Fathers of Confederation prior to the enactment of the Constitution Act, 1867 was that Section 121 would prohibit both tariff and non-tariff barriers to interprovincial trade, in order to foster free trade throughout the new nation. 

By thus interpreting Section 121, Judge LeBlanc knowingly placed himself at odds with the interpretation adopted in 1921 by the Supreme Court of Canada in Gold Seal Ltd. v. Alberta (Attorney General). In that landmark judgment, followed many times since, the country's highest court decided that Section 121 was aimed solely at prohibiting interprovincial customs duties and did not prevent the provinces from imposing other restrictions on interprovincial trade. 

3. The New Brunswick Court of Appeal refuses to intervene 

Following Judge LeBlanc's decision, the Attorney General appealed the judgment to the Court of Appeal of New Brunswick, but the appeal was dismissed. The Attorney General therefore applied for leave to appeal to the Supreme Court of Canada, and on May 4, 2017 it agreed to hear the appeal. 

4. The potential consequences of the Supreme Court's decision

The Supreme Court's decision in R. v. Comeau could not only result in the liberalization of the market for alcoholic beverages, but have a significant impact on interprovincial trade in general.  If the Court endorses this broad and very liberal interpretation of Section 121, its decision would foster a liberalization of interprovincial commerce well beyond the trade in alcoholic beverages, and significantly limit the interventionist role of the provinces in the economic realm. For if the highest court in the land takes the view that the terms "admitted free / admis en franchise" prohibit both tariff and non-tariff trade barriers, we could see a wave of challenges to many of the measures put in place by the provinces over time to regulate intra-provincial commerce, support and protect the local economy, or develop new economic niches. 

Such an interpretation of Section 121 could be relied on, for example, to challenge the restrictions imposed by agricultural marketing boards on commodities such as wheat, eggs, poultry and dairy products. Of course, some industries would benefit from a complete opening up of the markets. Products that are hard to find in one province or another would become readily available there. Other businesses however would have to modernize rapidly, or radically modify their price structures. 

Thus, the pending decision of the Supreme Court could have very significant consequences for the Canadian economic ecosystem and on the interventionist powers of the provinces in the economic sphere. 

With special thanks to law students Karine Virgile  and Raphaëlle Alimi-Lacroix.

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.

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