SUPREME
COURT OF CANADA
Citation: R. v. Comeau, 2018 SCC 15
|
Appeal Heard:
December 6, 2017
Judgment
Rendered: April 19, 2018
Docket:
37398
|
Between:
Her
Majesty The Queen
Appellant
v.
Gerard
Comeau
Respondent
-
and -
Attorney
General of Canada, Attorney General of Ontario, Attorney General of Quebec,
Attorney General of Nova Scotia, Attorney General of British Columbia, Attorney
General of Prince Edward Island, Attorney General of Saskatchewan, Attorney
General of Alberta, Attorney General of Newfoundland and Labrador, Attorney
General of the Northwest Territories, Government of Nunavut as represented by
the Minister of Justice, Liquidity Wines Ltd., Painted Rock Estate Winery Ltd.,
50th Parallel Estate Limited Partnership, Okanagan Crush Pad Winery Ltd., Noble
Ridge Vineyard and Winery Limited Partnership, Artisan Ales Consulting Inc.,
Montreal Economic Institute, Federal Express Canada Corporation, Canadian
Chamber of Commerce, Canadian Federation of Independent Business, Cannabis
Culture, Association of Canadian Distillers, operating as Spirits Canada,
Canada’s National Brewers, Dairy Farmers of Canada, Egg Farmers of Canada,
Chicken Farmers of Canada, Turkey Farmers of Canada, Canadian Hatching Egg
Producers, Consumers Council of Canada, Canadian Vintners Association and
Alberta Small Brewers Association
Interveners
Coram: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner,
Gascon, Côté, Brown and Rowe JJ.
Reasons for
Judgment:
(paras. 1 to 128)
|
The Court
|
Note: This document is subject to editorial revision before its
reproduction in final form in the Canada Supreme Court Reports.
r. v. comeau
Her Majesty The Queen Appellant
v.
Gerard Comeau Respondent
and
Attorney General of Canada,
Attorney General of Ontario,
Attorney General of Quebec,
Attorney General of Nova Scotia,
Attorney General of British Columbia,
Attorney General of Prince Edward
Island,
Attorney General of Saskatchewan,
Attorney General of Alberta,
Attorney General of Newfoundland and
Labrador,
Attorney General of the Northwest
Territories,
Government of Nunavut as represented by
the Minister of Justice,
Liquidity Wines Ltd.,
Painted Rock Estate Winery Ltd.,
50th Parallel Estate Limited
Partnership,
Okanagan Crush Pad Winery Ltd.,
Noble Ridge Vineyard and Winery Limited
Partnership,
Artisan Ales Consulting Inc.,
Montreal Economic Institute,
Federal Express Canada Corporation,
Canadian Chamber of Commerce,
Canadian Federation of Independent
Business,
Cannabis Culture,
Association of Canadian Distillers,
operating as Spirits Canada,
Canada’s National Brewers,
Dairy Farmers of Canada,
Egg Farmers of Canada,
Chicken Farmers of Canada,
Turkey Farmers of Canada,
Canadian Hatching Egg Producers,
Consumers Council of Canada,
Canadian Vintners Association and
Alberta Small Brewers
Association Interveners
Indexed as: R. v.
Comeau
2018 SCC 15
File No.: 37398.
2017: December 6; 2018: April 19.
Present: McLachlin C.J.
and Abella, Moldaver, Karakatsanis, Wagner, Gascon, Côté, Brown and
Rowe JJ.
on appeal from the court of appeal for new brunswick
Constitutional
law — Interprovincial trade — Provincial offences — Restricted access to liquor
from other provinces — New Brunswick resident charged under s. 134(b) of
Liquor Control Act for having quantities of alcohol in excess of applicable
limit — Whether s. 134(b) of Liquor Control Act infringes s. 121 of
Constitution Act, 1867 — Whether s. 121 is free trade provision that bars
any impediment to interprovincial commerce — Meaning of “admitted free” in s. 121
—Whether trial judge erred in departing from binding precedent on basis of
historical evidence and expert’s opinion of evidence — Constitution Act, 1867, s. 121
— Liquor Control Act, R.S.N.B. 1973, c. L‑10, s. 134(b).
Together
with other provisions of the New Brunswick Liquor Control Act, s. 134(b)
makes it an offence to “have or keep liquor” in an amount that exceeds a
prescribed threshold purchased from any Canadian source other than the New
Brunswick Liquor Corporation. C is a resident of New Brunswick who entered
Quebec, visited three different stores, and purchased quantities of alcohol in
excess of the applicable limit. Returning from Quebec to New Brunswick, C was
stopped by the RCMP; he was charged under s. 134(b) and was issued
a fine. C challenged the charge on the basis that s. 121 of the Constitution
Act, 1867 — which provides that all articles of manufacture from any
province shall be “admitted free” into each of the other provinces — renders s. 134(b)
unconstitutional. The trial judge found s. 134(b) to be of no
force and effect against C and dismissed the charge. The Court of Appeal
dismissed the Crown’s application for leave to appeal.
Held:
The appeal should be allowed. Section 134(b) of the Liquor
Control Act does not infringe s. 121 of the Constitution Act, 1867 .
Common
law courts are bound by authoritative precedent. Subject to extraordinary
exceptions, a lower court must apply the decisions of higher courts to the
facts before it. A legal precedent may be revisited 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. Not only is the exception narrow, it is not a general
invitation to reconsider binding authority on the basis of any type of
evidence. For a binding precedent from a higher court to be cast aside, the new
evidence must fundamentally shift how jurists understand the legal question at
issue.
This
high threshold was not met in this case. The trial judge relied on evidence
presented by an historian whom he accepted as an expert. The trial judge
accepted the expert’s description of the drafters’ motivations for including s. 121
in the Constitution Act, 1867 , and the expert’s opinion that those
motivations drive how s. 121 is to be interpreted. Neither class of
evidence constitutes evolving legislative and social facts or a comparable
fundamental shift; the evidence is simply a description of historical
information and one expert’s assessment of that information. The trial judge’s
reliance on the expert’s opinion of the correct interpretation of s. 121
was erroneous. To depart from precedent on the basis of such opinion evidence
is to cede the judge’s primary task to an expert. And to rely on such evidence
to rebut stare decisis is to substitute one expert’s opinion on domestic
law for that expressed by appellate courts in binding judgments. This would
introduce the very instability in the law that the principle of stare
decisis aims to avoid.
The
modern approach to statutory interpretation provides a guide for determining
how “admitted free” in s. 121 should be interpreted. The text of the
provision must be read harmoniously with the context and purpose of the
statute. Constitutional texts must be interpreted in a broad and purposive
manner and in a manner that is sensitive to evolving
circumstances. Applying this framework to s. 121 , the text, historical
context, legislative context, and underlying constitutional principles do not
support the contention that s. 121 should be interpreted as prohibiting
any and all burdens on the passage of goods over provincial boundaries,
essentially imposing an absolute free trade regime within Canada. Rather, these
considerations support a flexible, purposive view of s. 121 — one that
respects an appropriate balance between federal and provincial powers.
With
respect to the text of s. 121 , the phrase “admitted free” is ambiguous,
and falls to be interpreted on the basis of the
historical, legislative and constitutional contexts. To achieve economic union,
the framers of the Constitution agreed that individual provinces needed to
relinquish their tariff powers. The historical context supports the view that,
at a minimum, s. 121 prohibits the imposition of charges on goods crossing
provincial boundaries — tariffs and tariff‑like measures. But the
historical evidence nowhere suggests that provinces would lose their power to
legislate under s. 92 of the Constitution Act, 1867 for the benefit
of their constituents even if that might have impacts on interprovincial trade.
As
well, the legislative context of s. 121 indicates that it was part of a
scheme that enabled the shifting of customs, excise, and similar levies from
the former colonies to the Dominion; that it should be interpreted as applying
to measures that increase the price of goods when they cross a provincial
border; and that it should not be read so expansively that it would impinge on
legislative powers under ss. 91 and 92 of the Constitution Act, 1867 .
In
addition, foundational principles underlying the Constitution may aid in its
interpretation. In this case, the federalism principle is vital. It recognizes
the autonomy of provincial governments to develop their societies within their
respective spheres of jurisdiction and requires a court interpreting
constitutional texts to consider how different interpretations impact the
balance between federal and provincial interests. Reading s. 121 to
require full economic integration would significantly undermine the shape of
Canadian federalism, which is built upon regional diversity within a single
nation. The need to maintain balance embodied in the federalism principle
supports an interpretation of s. 121 that prohibits laws directed at
curtailing the passage of goods over interprovincial borders, but allows
legislatures to pass laws to achieve other goals within their powers, even
though the laws may have the incidental effect of impeding the passage of goods
over interprovincial borders.
The
lines of jurisprudential authority about the ambit of s. 121 can be
distilled into two related propositions. First, the purpose of s. 121 is
to prohibit laws that in essence and purpose restrict or limit the free flow of
goods across the country. Second, 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.
Therefore, s. 121 does not catch burdens on goods crossing provincial
borders that are merely incidental effects of a law or scheme aimed at some
other purpose. To prohibit incidental impacts on cross‑border trade would
allow s. 121 to trump valid exercises of legislative power, and create
legislative hiatuses where neither level of government could act.
It
follows that a claimant alleging that a law violates s. 121 must establish
that the law in essence and purpose restricts trade across a provincial border.
The law must impact the interprovincial movement of goods like a tariff, which,
in the extreme, could be an outright prohibition. The claimant must establish
that the law imposes an additional burden on goods by virtue of them coming in
from outside the province. And, restriction of cross‑border trade must be
the primary purpose of the law, thereby excluding laws enacted for other
purposes, such as laws that form rational parts of broader legislative schemes
with purposes unrelated to impeding interprovincial trade.
In
this case, s. 134(b) impedes liquor purchases originating anywhere
other than the New Brunswick Liquor Corporation. In essence, it functions like
a tariff, even though it may have other purely internal effects. However, the
text and effects are aligned and suggest the primary purpose of s. 134(b)
is not to impede trade, but rather to restrict access to any non‑Corporation
liquor, not just liquor brought in from another province. The objective of the
New Brunswick regulatory scheme is not to restrict trade across a provincial boundary,
but to enable public supervision of the production, movement, sale, and use of
alcohol within New Brunswick. Finally, s. 134(b) is not divorced
from the objective of the larger scheme. It plainly serves New Brunswick’s
choice to control the supply and use of liquor within the province. The primary
purpose of s. 134(b) is to prohibit holding excessive quantities of
liquor from supplies not managed by the province. While one effect of s. 134(b)
is to impede interprovincial trade, this effect is only incidental in light of
the objective of the provincial scheme in general. Therefore, while s. 134(b)
in essence impedes cross‑border trade, this is not its primary purpose.
Section 134(b) does not infringe s. 121 of the Constitution
Act, 1867 .
Cases Cited
Applied:
Gold Seal Ltd. v. Attorney‑General for the Province of Alberta (1921),
62 S.C.R. 424; Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013]
3 S.C.R. 1101; Atlantic Smoke Shops Ltd. v. Conlon, [1943] 4 D.L.R. 81; Murphy
v. Canadian Pacific Railway Co., [1958] S.C.R. 626; Carter v. Canada
(Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331; referred to: MacDonald
v. City of Montreal, [1986] 1 S.C.R. 460; Roberge v. Bolduc, [1991]
1 S.C.R. 374; Reference re Agricultural Products Marketing Act, [1978] 2
S.C.R. 1198; Black v. Law Society of Alberta, [1989] 1 S.C.R. 591; Canadian
Pacific Air Lines Ltd. v. British Columbia, [1989] 1 S.C.R. 1133; Canadian
Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157; Rodriguez v.
British Columbia (Attorney General), [1993] 3 S.C.R. 519; Edwards v.
Attorney‑General for Canada, [1930] 1 D.L.R. 98; R. v. Big M Drug
Mart Ltd., [1985] 1 S.C.R. 295; R. v. Blais, 2003 SCC 44, [2003] 2
S.C.R. 236; Hunter v. Southam Inc., [1984] 2 S.C.R. 145; Reference re
Same‑Sex Marriage, 2004 SCC 79, [2004] 3 S.C.R. 698; Reference re
Employment Insurance Act (Can.), ss. 22 and 23, 2005 SCC 56, [2005] 2
S.C.R. 669; Reference re Supreme Court Act, ss. 5 and 6, 2014 SCC
21, [2014] 1 S.C.R. 433; R. v. Mohan, [1994] 2 S.C.R. 9; Reference re
Secession of Quebec, [1998] 2 S.C.R. 217; Reference re Senate Reform,
2014 SCC 32, [2014] 1 S.C.R. 704; Reference re Manitoba Language Rights,
[1985] 1 S.C.R. 721; R. v. Tessling, 2004 SCC 67, [2004] 3 S.C.R. 432; Daniels
v. Canada (Indian Affairs and Northern Development), 2016 SCC 12, [2016] 1
S.C.R. 99; Caron v. Alberta, 2015 SCC 56, [2015] 3 S.C.R. 511; Reference
re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; General Motors of
Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641; Canadian
Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Operation
Dismantle Inc. v. The Queen, [1985] 1 S.C.R. 441; Reference re Anti‑Inflation
Act, [1976] 2 S.C.R. 373; Fédération des producteurs de volailles du
Québec v. Pelland, 2005 SCC 20, [2005] 1 S.C.R. 292; NIL/TU,O Child and
Family Services Society v. B.C. Government and Service Employees’ Union,
2010 SCC 45, [2010] 2 S.C.R. 696; Attorney‑General for Manitoba v.
Manitoba Egg and Poultry Assn., [1971] S.C.R. 689; RJR‑MacDonald
Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199; Air Canada v.
Ontario (Liquor Control Board), [1997] 2 S.C.R. 581; R. v. Gautreau
(1978), 21 N.B.R. (2d) 701.
Statutes and Regulations Cited
Canadian Wheat Board Act, R.S.C. 1952,
c. 44.
Constitution Act, 1867, ss. 91 , 92 ,
119 , 121 , 122 , 123 .
Importation of Intoxicating Liquors Act,
R.S.C. 1985, c. I‑3, s. 3 .
Liquor Control Act, R.S.N.B. 1973, c. L‑10, ss. 43(c), 134(b), 148(2).
New Brunswick Liquor Corporation Act,
S.N.B. 1974, c. N‑6.1 [now R.S.N.B. 2016, c. 105].
Provincial Offences Procedure Act,
S.N.B. 1987, c. P‑22.1, s. 116(3).
Supreme Court Act, R.S.C. 1985, c. S‑26,
s. 40 .
Treaties and Other International Instruments
General Agreement on Tariffs and Trade,
Can. T.S. 1948 No. 31, Part I, Article I.
Reciprocity Treaty With Great Britain,
June 5, 1854, 10 Stat. 1089.
Authors Cited
Black’s Law Dictionary, 9th ed. by
Bryan A. Gardner. St. Paul, Minn.: Thompson Reuters, 2009, “tariff”.
Hill, Derek, ed. National Trade and Tariff Service. Toronto: LexisNexis,
1999 (loose‑leaf updated February 2018).
Hogg, Peter W., and Wade K. Wright. “Canadian Federalism,
the Privy Council and the Supreme Court: Reflections on the Debate about
Canadian Federalism” (2005), 38 U.B.C. L. Rev. 329.
Kong, Hoi L. “Republicanism and the division of powers in
Canada” (2014), 64 U.T.L.J. 359.
Leclair, Jean. “The Supreme Court of Canada’s Understanding of
Federalism: Efficiency at the Expense of Diversity” (2003), 28 Queen’s L.J.
411.
McLean, James A. Essays in the Financial History of Canada.
New York: Columbia College, 1894.
Monahan, Patrick J. “At doctrine’s twilight: The structure of
Canadian federalism” (1984), 34 U.T.L.J. 47.
Oxford English Dictionary, 2nd ed. Oxford:
Clarendon Press, 1989, “essence”.
Perry, J. Harvey. Taxes, tariffs, & subsidies: A history
of Canadian fiscal development. Toronto: University of Toronto
Press, 1955.
Schneiderman, David. “Economic Citizenship and Deliberative
Democracy: An Inquiry into Constitutional Limitations on Economic Regulation”
(1995), 21 Queen’s L.J. 125.
Scott, F. R. “Centralization and Decentralization in Canadian
Federalism” (1951), 29 Can. Bar R. 1095.
Sullivan, Ruth. Sullivan on the Construction of Statutes, 6th
ed. Markham, Ont.: LexisNexis, 2014.
Swinton, Katherine. “Courting Our Way to Economic Integration:
Judicial Review and the Canadian Economic Union” (1995), 25 Can. Bus. L.J.
280.
Wexler, Stephen. “The Urge to Idealize: Viscount Haldane and the
Constitution of Canada” (1984), 29 McGill L.J. 608.
APPEAL
from a judgment of the New Brunswick Court of Appeal (Larlee J.A.), 2016
CanLII 73665, [2016] N.B.J. No. 232 (QL), 2016 CarswellNB 445 (WL Can.), dismissing
an application for leave to appeal a decision of LeBlanc Prov. Ct. J., 2016
NBPC 3, 448 N.B.R. (2d) 1, 1179 A.P.R. 1, 398 D.L.R. (4th) 123, [2016] N.B.J. No. 87
(QL), 2016 CarswellNB 167 (WL Can.), declaring s. 134(b) of the Liquor
Control Act, R.S.N.B. 1973, c. L‑10, of no force or effect with
respect to Mr. Comeau. Appeal allowed.
William B. Richards and Kathryn A. Gregory, Q.C., for the
appellant.
Ian A. Blue, Q.C., Arnold
Schwisberg, Mikael Bernard and Daria Peregoudova,
for the respondent.
François Joyal and Ian Demers, for the
intervener the Attorney General of Canada.
Michael S. Dunn and Padraic Ryan, for the intervener the Attorney
General of Ontario.
Jean‑Vincent Lacroix and Laurie Anctil, for the intervener the
Attorney General of Quebec.
No one appeared for the intervener the Attorney
General of Nova Scotia.
J. Gareth Morley and Tyna Mason, for the intervener the
Attorney General of British Columbia.
Jonathan M. Coady and Thomas Laughlin, for the intervener the
Attorney General of Prince Edward Island.
Theodore J. C. Litowski, for the intervener the
Attorney General of Saskatchewan.
Robert J. Normey, for the intervener the
Attorney General of Alberta.
Philip Osborne and Barbara Barrowman, for the intervener the Attorney
General of Newfoundland and Labrador.
Bradley Patzer, for the intervener the Attorney
General of the Northwest Territories.
John L. MacLean and Adrienne Silk, for the intervener the Government
of Nunavut as represented by the Minister of Justice.
Shea Coulson and Allan L. Doolittle,
for the interveners Liquidity Wines Ltd., Painted Rock Estate Winery Ltd., 50th
Parallel Estate Limited Partnership, Okanagan Crush Pad Winery Ltd. and Noble
Ridge Vineyard and Winery Limited Partnership.
Malcolm Lavoie, for the intervener Artisan
Ales Consulting Inc.
Mark Gelowitz and Robert Carson, for the intervener the Montreal
Economic Institute.
J. Scott Maidment and Samantha Gordon, for the intervener Federal
Express Canada Corporation.
Christopher D. Bredt and Ewa Krajewska, for the interveners the Canadian
Chamber of Commerce and the Canadian Federation of Independent Business.
Kirk Tousaw and Jack Lloyd, for the intervener Cannabis
Culture.
Jennifer Klinck and Marion Sandilands, for the intervener the Association
of Canadian Distillers, operating as Spirits Canada.
Steven I. Sofer and Paul Seaman, for the intervener Canada’s
National Brewers.
David K. Wilson, Owen M. Rees and Julie Mouris, for the interveners the Dairy
Farmers of Canada, the Egg Farmers of Canada, the Chicken Farmers of Canada, the
Turkey Farmers of Canada and the Canadian Hatching Egg Producers.
Paul J. Bates, Ronald Podolny, Tyler J. Planeta and Michael Sobkin, for the intervener the Consumers
Council of Canada.
Robert W. Staley, Ranjan K. Agarwal and Jessica M. Starck, for the intervener the Canadian
Vintners Association.
Robert Martz and Paul Chiswell, for the intervener the Alberta
Small Brewers Association.
The following is the judgment delivered by
The Court —
I.
Introduction
[1]
In 1867, The British North America Act, 1867
(U.K.), 30 & 31 Vict., c. 3 , united individual British colonies
into one new country, the Dominion of Canada. Prior to this, each colony had
its own power to impose tariffs at its borders. Part VIII of that Act (now
the Constitution Act, 1867 ) contains provisions for the transfer of this
power to levy tariffs to the Dominion government. At the heart of Part VIII is
s. 121 , the provision at issue in this appeal:
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.
[2]
The respondent, Mr. Gerard Comeau, contends that
s. 121 is essentially a free trade provision — in his view, no barriers can be
erected to impede the passage of goods across provincial boundaries. On the
other side of the debate, the appellant, Her Majesty the Queen in Right of New
Brunswick (“the Crown”), argues that s. 121 was only intended to dismantle the
power to impose tariffs or tariff-like charges at provincial boundaries. The
trial judge agreed with Mr. Comeau. The question before us is whether he erred
in doing so. What does it mean for articles to be “admitted free” as stated in
s. 121 ? How does that requirement constrain state action? Fundamentally, does
s. 121 constitutionalize some particular form of economic union? These
questions lie at the core of this appeal.
[3]
The answers to these questions have broad
implications. If to be “admitted free” is understood as a constitutional
guarantee of free trade, the potential reach of s. 121 is vast. Agricultural
supply management schemes, public health-driven prohibitions, environmental
controls, and innumerable comparable regulatory measures that incidentally
impede the passage of goods crossing provincial borders may be invalid.
[4]
The dispute arises out of Mr. Comeau’s assertion
that s. 121 of the Constitution Act, 1867 prevents the Province of New
Brunswick from legislating that New Brunswick residents cannot stock alcohol
from another province. The appeal asks whether s. 134(b) of the Liquor
Control Act, R.S.N.B. 1973, c. L-10, infringes s. 121 . Section 134(b) of the Liquor Control Act provides:
134 Except as provided by this Act or the regulations, no person, within
the Province, by himself, his clerk, employee, servant or agent shall
. . .
(b)
have or keep liquor,
not purchased from the
Corporation.
[5]
Together with ss. 43(c) and 148(2) of the
Liquor Control Act, s. 134(b) makes it an offence to “have
or keep liquor” in an amount that exceeds a prescribed threshold purchased from
any Canadian source other than the New Brunswick Liquor Corporation.
[6]
In holding that s. 134(b) of the Liquor
Control Act is invalid because it offends s. 121 of the Constitution
Act, 1867 , the trial judge departed from
binding precedent from this Court on the basis of historical and opinion
evidence tendered by an expert witness.
[7]
The appeal therefore raises two issues. First,
did the trial judge err in departing from precedent, and second, what is the
proper interpretation of s. 121 ? Both issues go to the primary question in this
appeal: Does s. 134(b) of the Liquor Control Act infringe s. 121
of the Constitution Act, 1867 ?
[8]
We conclude that the trial judge erred in
departing from previous decisions of this Court. Going on to interpret s. 121 ,
we conclude that it prohibits laws that in essence and purpose impede the
passage of goods across provincial borders and, therefore, does not prohibit
laws that yield only incidental effects on interprovincial trade. The
impediment to trade posed by s. 134(b) of the Liquor Control Act
is an incidental effect of a regulatory scheme that does not, as its primary
purpose, thwart interprovincial trade. Thus, section 134(b) does not
infringe s. 121 . We would therefore allow the appeal.
II.
Factual History
[9]
The respondent Mr. Comeau is a resident of the
Tracadie-Sheila region on the Acadian Peninsula in northeastern New Brunswick.
On October 6, 2012, Mr. Comeau drove to Campbellton in the northwest of the
province, crossed the Restigouche River, and entered Quebec. Mr. Comeau did
what many Canadians who live tantalizingly close to cheaper alcohol prices
across provincial boundaries probably do. He visited three different stores and
stocked up.
[10]
Mr. Comeau was being watched. The Campbellton
RCMP had become concerned with the frequency by which enterprising New
Brunswick residents were sourcing large quantities of alcohol in Quebec in
contravention of the law. In response, the RCMP started monitoring New
Brunswick visitors to commonly frequented liquor stores on the Quebec side.
Officers in Quebec would record visitors’ information and pass it on to their
New Brunswick colleagues, who were waiting across the border. During his
October 6, 2012 trip, Mr. Comeau was so tracked.
[11]
Returning from Quebec to New Brunswick, Mr.
Comeau was stopped by the RCMP. The police found a large quantity of beer and
some bottles of spirits in his vehicle. It is not in dispute that Mr. Comeau
purchased quantities of alcohol in excess of the applicable limit prescribed by
s. 43(c) of the Liquor Control Act. Mr. Comeau was charged under
s. 134(b) and consequently issued a fine in the amount of $240 plus
administrative fees and the victim surcharge levy.
[12]
Mr. Comeau challenged the charge on the basis
that s. 121 of the Constitution Act, 1867 renders s. 134(b) of
the Liquor Control Act unconstitutional and therefore of no force and
effect. It is not controversial that the beer and liquor at issue in this case
are the “Articles of the Growth, Produce, or Manufacture” of a Canadian
province — that is, they were produced in Quebec or elsewhere in Canada. The
question of whether s. 121 concerns non-Canadian goods imported into one
province and then shipped across the country either intact or as inputs in new
manufactured goods is not before the Court and therefore we do not address it.
III.
Judicial History
[13]
The New Brunswick Provincial Court, per LeBlanc
J., agreed with Mr. Comeau that s. 134(b) infringed s. 121 of the Constitution
Act, 1867 . The trial judge found s. 134(b) to be of no force and
effect against Mr. Comeau and therefore dismissed the charge: 2016 NBPC 3, 448
N.B.R. (2d) 1.
[14]
The trial judge accepted that this Court’s 1921
decision in Gold Seal Ltd. v. Attorney-General for the Province of Alberta
(1921), 62 S.C.R. 424, was binding authority. He noted that this Court in Gold
Seal held that s. 121 prohibits direct tariff barriers (i.e. customs
duties) on goods moving between provinces. He found that s. 134(b) of
the Liquor Control Act imposed no tariff and therefore would not violate
s. 121 under Gold Seal.
[15]
The trial judge went on to hold, however, that Gold
Seal was wrongly decided and should not be applied, given the evidence on
the origins of s. 121 called by Mr. Comeau. This evidence, presented by an
historian whom the trial judge accepted as an expert, comprised historical
information about the intentions of the drafters of s. 121 , and the expert’s
opinion as to the import of that historical evidence for the interpretation of
s. 121 . The trial judge accepted the expert’s opinion “without hesitation”:
para. 52.
[16]
On the basis of this evidence, the trial judge
concluded that the drafters were highly motivated to open up trade between the
provinces. This was a direct response to trade barriers that had been erected
by the United States of America in response to anti-British sentiment in that
country during the American Civil War. The trial judge accepted that the
drafters would have been preoccupied with the continued economic prosperity of
British North America after the American Civil War and that this depended on
the availability of new barrier-free markets. The trial judge concluded that
this motivation could be extracted from the expert’s description of the
political climate at the time, but also more specifically from the speeches of
some of the Fathers of Confederation. On this basis, the trial judge agreed
with the expert that the phrase “admitted free” in s. 121 alluded to free
trade, and that, in the minds of the drafters, this meant barrier-free borders.
[17]
The trial judge first concluded that the failure
of the Court to consider this historical evidence and “embark on a large,
liberal or progressive interpretation” of s. 121 in Gold Seal rendered
that decision suspect: para. 116. He then concluded that the new evidence
adduced at trial allowed him to depart from Gold Seal under the
evidence-based exception to vertical stare decisis approved in Canada
(Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101. The trial
judge held, at para. 125:
What has
occurred is that there has been a significant change in evidence, one that I
believe has fundamentally shifted the parameters of the debate. To my
knowledge, in none of the cases dealing with section 121 has there been any
evidence presented to the trier of fact, or to the appellate court, addressing
the issues presented before me respecting the following topics: the drafting of
the British North America Act, 1867 , the legislative history of
the Act, the scheme of the Act and its legislative context. It
has been the presentation of evidence on these issues that changed in a
substantial way the parameters of the debate on the correct interpretation of
the expression “admitted free” in section 121 of the Constitution Act, 1867 .
In my opinion, this allows this Court to proceed with its analysis and indeed
mandates that it do so.
[18]
After concluding that he was entitled to depart
from binding precedent on the basis of the expert’s evidence, the trial judge
then held that this evidence of the “original purpose of the provision at
issue” is “elemental and fundamental” in the analysis and should not be
“displaced” by other considerations stemming from a “long-standing
misinterpretation of the intent of the Fathers of Confederation”: para. 165.
[19]
The trial judge held that, given his conclusions
regarding the drafters’ intent, s. 121 , correctly construed, prohibits all
barriers to interprovincial trade. As s. 134(b) of the Liquor Control
Act discourages cross-border purchases and therefore limits access to
extra-provincial liquor, the trial judge determined that it infringed s. 121 .
[20]
The Crown sought leave to appeal directly to the
New Brunswick Court of Appeal, as it was authorized to do in this case by
virtue of s. 116(3) of the Provincial Offences Procedure Act, S.N.B.
1987, c. P-22.1. The Court of Appeal dismissed the application for leave: 2016
CanLII 73665.
[21]
The Crown now appeals to this Court. Although
the Court of Appeal’s decision was limited to the question of leave, the
substantive constitutional question is properly before this Court: MacDonald
v. City of Montreal, [1986] 1 S.C.R. 460; Roberge v. Bolduc, [1991]
1 S.C.R. 374; s. 40 of the Supreme Court Act, R.S.C. 1985, c. S-26 .
IV.
Issues
[22]
The main issue is whether s. 134(b) of
the Liquor Control Act infringes s. 121 of the Constitution Act, 1867 .
This raises the following subsidiary issues:
a)
Did the trial judge err in departing from
binding precedent and providing his own interpretation of s. 121 ? and
b)
What is the proper interpretation of s. 121 ?
V.
Analysis
A.
Did the Trial Judge Err in Departing From
Binding Precedent and Providing His Own Interpretation of Section 121 of the
Constitution Act, 1867 ?
[23]
The trial judge accepted that this Court’s
decision in Gold Seal was binding authority and that, applying Gold
Seal, s. 134(b) of the Liquor Control Act does not
violate s. 121 of the Constitution Act, 1867 . He went on to hold,
however, that Gold Seal had been wrongly decided and that therefore he
should not follow it.
[24]
The decision of this Court in Gold Seal was
expressly affirmed by the Judicial Committee of the Privy Council in Atlantic
Smoke Shops Ltd. v. Conlon, [1943] 4 D.L.R. 81, at pp. 91-92, and by
a majority of this Court in Murphy v. Canadian Pacific Railway Co., [1958]
S.C.R. 626, at p. 634. It has never been overruled, although some Justices of
this Court have interpreted it to apply not only to tariffs, but to tariff-like
burdens on goods crossing provincial boundaries: Murphy, at p. 642, per
Rand J.; Reference re Agricultural Products Marketing Act, [1978] 2
S.C.R. 1198, at p. 1268, per Laskin C.J.; Black v. Law Society of Alberta,
[1989] 1 S.C.R. 591, at p. 609, per La Forest J.; Canadian Pacific Air Lines
Ltd. v. British Columbia, [1989] 1 S.C.R. 1133, at p. 1153, per La Forest
J.; Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R.
157, at paras. 123 and 171, per McLachlin J. (as she then was).
[25]
For the stare decisis issue, we need not
decide between these interpretations (although we address them later in these
reasons). The trial judge’s reading of s. 121 — that it precludes any laws that
impede goods crossing provincial boundaries — is incompatible with both
interpretations.
[26]
Common law courts are bound by authoritative
precedent. This principle — stare decisis — is fundamental for
guaranteeing certainty in the law. Subject to extraordinary exceptions, a lower
court must apply the decisions of higher courts to the facts before it. This is
called vertical stare decisis. Without this foundation, the law would be
ever in flux — subject to shifting judicial whims or the introduction of new
esoteric evidence by litigants dissatisfied by the status quo.
[27]
The question before us is whether the trial
judge erred in rejecting this Court’s precedent, which he acknowledged was
binding, and re-interpreting s. 121 . In doing so, he relied on one historian’s
evidence of the drafters’ motivations for including s. 121 in the Constitution
Act, 1867 and that expert’s opinion of what those motivations tell us about
how s. 121 should be interpreted today.
[28]
The trial judge relied on one of the narrow
exceptions to vertical stare decisis identified by this Court in Bedford.
The respondent argues that the trial judge was entitled to do so on the basis
of the expert’s evidence. The appellant demurs. We agree with the appellant.
[29]
In Bedford, this Court held that a legal
precedent “may be revisited 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”: para. 42. The trial judge, relying on the evidence-based exception
identified in that excerpt from Bedford, held that the historical and
opinion evidence he accepted “fundamentally shifts the parameters of the
debate” over the correct interpretation of s. 121 , referring to this Court’s
treatment of the question in Gold Seal.
[30]
The new evidence exception to vertical stare
decisis is narrow: Bedford, at para. 44; Carter v. Canada
(Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331, at para. 44. We noted
in Bedford, at para. 44, that
a lower court is not entitled to ignore
binding precedent, and the threshold for revisiting a matter is not an easy one
to reach. . . . This balances the need for finality and stability with the
recognition that when an appropriate case arises for revisiting precedent, a
lower court must be able to perform its full role.
[31]
Not only is the exception narrow — the evidence
must “fundamentally shif[t] the parameters of the debate” — it is not a general
invitation to reconsider binding authority on the basis of any type of
evidence. As alluded to in Bedford and Carter, evidence of a
significant evolution in the foundational legislative and social facts — “facts
about society at large” — is one type of evidence that can fundamentally shift
the parameters of the relevant legal debate: Bedford, at paras. 48-49; Carter,
at para. 47. That is, the exception has been found to be engaged where the
underlying social context that framed the original legal debate is profoundly
altered.
[32]
In Carter, for example, new evidence
about the harms associated with prohibiting assisted death, public attitudes
toward assisted death, and measures that can be put in place to limit risk was
relevant. This evidence was unknowable or not pertinent, given the existing
legal framework, when Rodriguez v. British Columbia (Attorney General),
[1993] 3 S.C.R. 519, was decided. These new legislative and social facts did
not simply provide an alternate answer to the question posed in Rodriguez.
Instead, the new evidence fundamentally shifted how the Court could assess the
nature of the competing interests at issue.
[33]
This focus on shifting legislative and social
facts is conceptually linked to Lord Sankey’s famous “living tree” metaphor,
which acknowledges that interpretations of the Constitution Act, 1867 evolve
over time, given shifts in the relevant legislative and social context: Edwards
v. Attorney-General for Canada, [1930] 1 D.L.R. 98 (P.C.), at pp. 106-7. In
Edwards, both legal and social changes that had opened the door to
women’s increased integration into public life after Confederation confirmed
that it was no longer appropriate to read the term “person” in the impugned
constitutional provision as anything other than its plain gender-neutral
meaning: pp. 110-12.
[34]
To reiterate: departing from vertical stare
decisis on the basis of new evidence is not a question of disagreement or
interpretation. For a binding precedent from a higher court to be cast aside on
the basis of new evidence, the new evidence must “fundamentally shif[t]” how
jurists understand the legal question at issue. It is not enough to find that
an alternate perspective on existing evidence might change how jurists would
answer the same legal question.
[35]
This high threshold was not met in this case.
[36]
The trial judge accepted the expert’s evidence
in question on two points — one of history, the other of law. He accepted (1)
the expert’s description of the drafters’ motivations for including s. 121 in
the Constitution Act, 1867 , and (2) the expert’s opinion that those
motivations drive how s. 121 is to be interpreted. Neither class of evidence
constitutes evidence, for example, of evolving legislative and social facts;
the evidence is simply a description of historical information and one expert’s
assessment of that information. This does not evince a profound change in
social circumstances from the time Gold Seal was decided. It is evidence
of one perspective of events that occurred decades before the Gold Seal company
brought its case to the courts and a century before this Court’s discussion of
s. 121 in Murphy. Historical evidence can be helpful for
interpreting constitutional texts: R. v. Big M Drug Mart Ltd., [1985] 1
S.C.R. 295, at p. 344; R. v. Blais, 2003 SCC 44, [2003] 2 S.C.R. 236.
However, a re-discovery or re-assessment of historical events is not evidence
of social change.
[37]
Because the historical evidence accepted by the
trial judge is not evidence of changing legislative and social facts or some
other fundamental change, it cannot justify departing from vertical stare
decisis. Differing interpretations of history do not fundamentally shift
the parameters of the legal debate in this case. While one’s particular
collection of historical facts or one’s view of that historical evidence may
push in favour of a statutory interpretation different from that in a prior
decision, the mere existence of that evidence does not permit the judge to
depart from binding precedent.
[38]
The trial judge held otherwise. He concluded
that this Court in Gold Seal did not conduct a broad and purposive
interpretation of the provision — the approach established by Edwards about
a decade after Gold Seal was decided. He went on to conclude that this
gap meant that the expert’s “new” evidence of historical context could open the
door to a re-interpretation: paras. 42 and 116.
[39]
Although it is true that Gold Seal was
decided prior to Edwards and was arguably interpreted under a different
rubric than constitutional provisions under the shadow of the living tree, it
does not follow that the historical evidence permitted the trial judge to
bypass an existing binding interpretation on the basis of a new understanding
of the legislative context and history. First, Atlantic Smoke Shops and Murphy,
which applied Gold Seal, were decided after Edwards. Second,
the trial judge’s interpretation was limited entirely to the words and context
of the provision in light of the historical evidence. This methodology does not
conform to the purposive approach to constitutional interpretation that has
grown out of Edwards and decades of subsequent jurisprudence: Hunter
v. Southam Inc., [1984] 2 S.C.R. 145, at pp. 155-56; Big M Drug Mart,
at p. 344; Reference re Same-Sex Marriage, 2004 SCC 79, [2004] 3 S.C.R.
698, at paras. 29-30; Reference re Employment Insurance Act (Can.), ss.
22 and 23, 2005 SCC 56, [2005] 2 S.C.R. 669, at para. 9; Reference re
Supreme Court Act, ss. 5 and 6, 2014 SCC 21, [2014] 1 S.C.R. 433, at
para. 19.
[40]
In addition to the historical evidence of the
founders’ intentions, the trial judge also relied on the expert’s opinion of
the correct interpretation of s. 121 . This reliance was erroneous. As a
preliminary observation, it is difficult if not impossible to contemplate a
situation where evidence on domestic law (e.g. interpreting a Canadian statute)
would ever be admissible as expert opinion evidence under R. v. Mohan,
[1994] 2 S.C.R. 9. The application of contextual factors, including drafters’
intent, to the interpretation of a statutory provision is not something that is
“outside the experience and knowledge of a judge”: Mohan, at p. 23. To
depart from precedent on the basis of such opinion evidence is to cede the
judge’s primary task to an expert.
[41]
More to the point in the present matter: to rely
on such evidence to rebut vertical stare decisis is to substitute one
expert’s opinion on domestic law for that expressed by appellate courts in
binding judgments. This would introduce the very instability in the law that
the principle of stare decisis aims to avoid. This is precisely why the
exceptions provided in Bedford and Carter are narrow. If a
constitutional provision could be reinterpreted by a lower court whenever a
litigant finds an expert with an alternate interpretation, the common law
system would be left in disarray. This is not what Bedford and Carter teach. The approach to stare
decisis is strict. Bedford and Carter do not alter that
principle.
[42]
Moreover, a difference in opinion about the
interpretation of a statutory provision does not evince a fundamental shift in
the parameters of the debate. The debate and its parameters remain unchanged.
The only change is the answer provided.
[43]
The trial judge erred in departing from binding
precedent on the basis of the historical evidence and the expert’s opinion of
how that evidence should inform the interpretation of s. 121 . Neither is new
evidence that meets the threshold of fundamentally shifting the parameters of
the debate about how to interpret s. 121 . The historical evidence is one
non-dispositive ingredient in the multi-faceted statutory interpretation
exercise. The opinion evidence is simply one unique articulation of an
alternate resolution flowing out of a particular appreciation of those
ingredients — the recipe remains the same.
B.
What Is the Proper Interpretation of Section
121 ?
[44]
The trial judge refused to apply binding
precedent and instead adopted a different conclusion on the basis of an expert
witness’ evidence about the intention of the founding fathers at the time of
Confederation and the impact of that intention on how we are to understand s.
121 . As just discussed, he erred in doing this. The appeal could be allowed on
this ground alone.
[45]
However, this Court has been invited to offer
guidance on the scope of s. 121 . We take up this invitation in this section.
First, we lay out the competing interpretations of s. 121 . Then, we consider
these competing interpretations of s. 121 in light of its text, its historical
context, its legislative context, and the principles that guide the
interpretation of constitutional provisions in the federal-provincial context.
Finally, we consider the existing jurisprudence and how it accords with our
purposive interpretation of s. 121 in the aim of defining the ambit of the
prohibition provided in s. 121 .
(1)
“Admitted Free”: the Competing Interpretations
[46]
Section 121 of the Constitution Act, 1867 ,
provides:
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.
[47]
Section 121 is found in Part VIII of the Constitution
Act, 1867 , which deals with how revenues, debts, property, and
fiscal authority were to be transferred between existing legislatures and the
new federal government upon Confederation. The scheme specifically provides for
the power to levy border tariffs to be transferred from the former colonies to
the new Dominion, as described in ss. 122 and 123 .
[48]
The appellant Crown submits that “admitted free”
in s. 121 should be read as prohibiting laws that, like tariffs, place burdens on
the price of goods crossing interprovincial boundaries. There are two
versions of this position, one slightly broader than the other, which we will
discuss in due course. At this point it suffices to note that on either
version, Mr. Comeau would not succeed. Even on the second broader version of
this position — that s. 121 prohibits laws that in essence and purpose impede
the passage of goods across provincial borders (see Murphy, per Rand J.)
— s. 134(b) would stand, because it is part of a comprehensive scheme to
control liquor in the province of New Brunswick and is not directed to impeding
interprovincial trade in both essence and purpose.
[49]
Mr. Comeau does not quibble about the fine
points of precisely what kind of charge or burden is caught by s. 121 on the
basis of the jurisprudence. He advances a new and much more radical proposition
— that “admitted free” in s. 121 means that provincial laws cannot do anything
that impedes, or makes more difficult, the flow of goods across provincial
borders, directly or indirectly. In his view, s. 134(b) of the Liquor
Control Act impedes the flow of goods across the New Brunswick border by
prohibiting New Brunswickers from stocking liquor from other provinces at home.
Therefore, it violates s. 121 of the Constitution Act, 1867 .
[50]
Mr. Comeau essentially contends that s. 121 is a
“free trade” provision that bars any impediment to interprovincial commerce.
The purpose of s. 121 , he says, was to foster the full unimpeded economic
integration of the new federation.
[51]
The implications of these competing
interpretations of s. 121 of the Constitution Act, 1867 are significant.
If Mr. Comeau’s broad interpretation of s. 121 is correct, federal and
provincial legislative schemes of many types — environmental, health,
commercial, social — may be invalid. If a narrower interpretation is correct,
the legal force of s. 121 is circumscribed to tariffs, or their functional
equivalents.
[52]
The modern approach to statutory interpretation
provides our guide for determining how “admitted free” should be interpreted.
The text of the provision must be read harmoniously with the context and
purpose of the statute: R. Sullivan, Sullivan on the Construction of
Statutes, (6th ed. 2014), at §. 2.6. Constitutional provisions must be
“placed in [their] proper linguistic, philosophic and historical contexts”: Big
M Drug Mart, at p. 344. Constitutional texts must be interpreted in a broad
and purposive manner: Hunter, at pp. 155-56; Big M Drug Mart, at
p. 344; Reference re Supreme Court Act, at para. 19. Constitutional
texts must also be interpreted in a manner that is sensitive to evolving
circumstances because they “must continually adapt to cover new realities”: Reference
re Same-Sex Marriage, at para. 30; see also Reference re Employment
Insurance Act, at para. 9. This is the living tree doctrine: Edwards,
at pp. 106-7. Finally, the underlying organizational principles of the
constitutional texts, like federalism, may be relevant to their
interpretation: Reference re Secession of Quebec, [1998] 2 S.C.R. 217, at para. 32; Reference re Senate Reform,
2014 SCC 32, [2014] 1 S.C.R. 704, at para. 25; Reference re Manitoba
Language Rights, [1985] 1 S.C.R. 721.
[53]
Applying this framework to s. 121 of the Constitution
Act, 1867 , we conclude — as detailed below — that the interpretation of
“admitted free” proposed by Mr. Comeau should be rejected. Section 121 does not
impose absolute free trade across Canada. We further conclude that s. 121
prohibits governments from levying tariffs or tariff-like measures (measures
that in essence and purpose burden the passage of goods across a provincial
border); but, s. 121 does not prohibit governments from adopting laws and
regulatory schemes directed to other goals that have incidental effects on the
passage of goods across provincial borders.
(2)
Text
[54]
The introductory words of s. 121 of the Constitution
Act, 1867 are broad; the phrase “All Articles of Growth, Produce, or
Manufacture of any one of the Provinces” comprehensively covers all articles of
trade of Canadian origin. (We need not decide in this case whether s. 121
applies to articles coming into Canada and then moved around the country.) This
text on its own does not answer the question of how “admitted free” should be
interpreted. That phrase remains ambiguous, and falls to be interpreted on the
basis of the historical, legislative and constitutional contexts.
(3)
Historical Context
[55]
Historical circumstances surrounding the
adoption of s. 121 form part of the contextual interpretation of the provision.
Historical evidence serves to put a provision in its “proper
linguistic, philosophic and historical contex[t]”: Big M Drug Mart, at
p. 344. Evidence of the intent of the drafters for the
purpose of interpreting constitutional texts is not conclusive: R. v.
Tessling, 2004 SCC 67, [2004] 3 S.C.R. 432, at paras. 61-62; Daniels v.
Canada (Indian Affairs and Northern Development), 2016 SCC 12, [2016] 1
S.C.R. 99, at para. 44.
[56]
For our purposes, the relevant historical
context can be summarized as follows. Economic issues were among the most
important drivers of Confederation — the union in the Dominion of Canada of
certain colonies of the Maritimes and Upper and Lower Canada. The economies of
the colonies were driven by resource exports.
[57]
For a long period, England was a predictable and
lucrative market for these colonial exports. However, by 1850, British
preferences for Canadian exports had declined: J. H. Perry, Taxes, tariffs,
& subsidies: A history of Canadian fiscal development (1955), at p. 24.
[58]
Loss of British markets provoked two
developments. First, Lord Elgin, Governor General of the Province of Canada
(now Ontario and Quebec) was pushed to negotiate a trade agreement between
British North America and the United States of America. The result was the 1854
Reciprocity Treaty, 10 Stat. 1089, which opened new markets for Canadian
exports that mimicked the provinces’ earlier access to British demand: Perry,
at p. 25. Under the Treaty, prescribed products flowed across the international
border free from customs duties.
[59]
Second, the colonies began negotiating
reciprocal trade agreements with each other. Many of these arrangements meant
“substantial freedom from duty” for interprovincial “natural” imports: Perry,
at p. 25.
[60]
For a while, the economies of the colonies
developed with the aid of reciprocity with the United States and the other
intercolonial agreements. However, in 1866 the United States abrogated the Reciprocity
Treaty. Once again the colonies found themselves cut off from an accessible
and profitable market for their exports. Forced to look for a new solution,
they plotted their continued economic growth by looking to increased economic
integration.
[61]
However, that integration faced a roadblock: the
colonies’ general power to impose tariffs like customs duties and other burdens
on goods crossing borders for the purpose of generating revenues. The
pre-Confederation colonies could not rely solely on exports. By the early
1850s, the colonies had considerable autonomy over tariffs, particularly for
manufactured goods. They controlled their own tariff-based income-generating
activities, which were important revenue-generating measures: Perry, at pp.
26-28; J. A. McLean, Essays in the Financial History of Canada (1894),
at pp. 33-34.
[62]
These regional tariff powers were incompatible
with economic integration. To achieve economic union, the framers agreed that
individual provinces needed to relinquish their tariff powers. As this Court
stated in Black, at pp. 608-9, per La Forest J.:
The attainment of economic
integration occupied a place of central importance in the scheme. “It was an
enterprise which was consciously adopted and deliberately put into
execution.”: [D. Creighton, British North America Act at Confederation: A
Study Prepared for the Royal Commission on Dominion-Provincial Relations
(1939)]; see also Lawson v. Interior Tree Fruit and Vegetable Committee of
Direction, [1931] S.C.R. 357, at p. 373. The creation of a central
government, the trade and commerce power, s. 121 and the building of a
transcontinental railway were expected to help forge this economic union. The
concept of Canada as a single country comprising what one would now call a
common market was basic to the Confederation arrangements and the drafters of
the British North America Act attempted to pull down the existing
internal barriers that restricted movement within the country.
Section
121 of the Constitution Act, 1867 , was one of the pillars of the
Confederation scheme for achieving the economic union sought by the Fathers of
Confederation.
[63]
Excerpts from speeches given by political
leaders at the time of Confederation provide a sense of their vision of
economic union as the new nation was forged. In some passages, leaders refer to
abolishing customs houses that existed on provincial boundaries
pre-Confederation: trial reasons, at paras. 97-98. Other passages,
however, indicate concern for impediments on interprovincial trade beyond
formal tariffs: trial reasons, at para. 93. Still other passages refer more
generally to unencumbered trade across boundaries: trial reasons, at paras. 92,
96 and 100.
[64]
The framers of the Constitution were familiar
with tariffs and charges on goods crossing borders. But, in drafting s. 121 ,
they chose the broad phrase “admitted free” rather than a narrower phrase like
“free from tariffs”. We do not know why they chose this broader, and arguably
ambiguous, phrase. We do know there were debates on the issue, and those that
wanted a more expansive term than “tariffs” or “customs duties” won the day.
[65]
What light does this history shed on the
question that divides Mr. Comeau and the Crown? Was s. 121 conceived to
eradicate all impediments on trade at provincial borders, direct and
indirect, as Mr. Comeau contends? Or was it conceived as a provision to
eradicate tariffs and charges at provincial borders, and to otherwise allow the
adoption of valid laws that may have the incidental effect of impeding trade
across interprovincial boundaries, as the Crown argues?
[66]
Mr. Comeau’s expert witness acknowledged that
what he interprets as the drafters’ broad view of “free trade” was not
specifically grounded in how fiscal measures were operating on the ground at
the time of Confederation. He characterizes what he sees as the drafters’
intent to eliminate all barriers to trade as anticipatory and prescient
in light of how certain observers understand the benefits of free trade in
our time (A.R., vol. V, at pp. 129 and 151). He also notes that “[t]he
Fathers of Confederation saw no contradiction between supporting [free trade]
with a pragmatic willingness to adopt forms of state intervention” that
implicated the economy (A.R., vol. V, at p. 135).
[67]
We conclude that the historical context supports
the view that, at a minimum, s. 121 prohibits the imposition of charges on
goods crossing provincial boundaries — tariffs and tariff-like measures. At the
same time, the historical evidence nowhere suggests that provinces, for
example, would lose their power to legislate under s. 92 of the Constitution
Act, 1867 for the benefit of their constituents even if that might have
impacts on interprovincial trade. The historical evidence, at best, provides only
limited support for the view that “admitted free” in s. 121 was meant as an
absolute guarantee of trade free of all barriers.
(4)
Legislative Context
[68]
Section 121 is found in Part VIII of the Constitution
Act, 1867 , which is entitled “REVENUES; DEBTS; ASSETS; TAXATION”. Its
provisions describe the establishment of Canada’s Consolidated Revenue Fund;
the timing for the cessation of certain provincial revenue-generating
activities, like tariffs, inconsistent with consolidation; the terms by which
the federal government would assume provinces’ debts; and stipulations about
provincial fiscal matters that would continue after Confederation. The
placement of s. 121 within Part VIII of the Constitution Act, 1867 is
significant for three reasons.
[69]
First, s. 121 is part of a trio of provisions
that concern interprovincial trade. Section 122 states that the excise and
customs laws of the provinces are to be maintained until otherwise determined
by Canada. Section 123 provides that where more than one province has comparable
excise and customs laws, proof of payment in one province constitutes payment
in the other. Read together, it is apparent that ss. 121 , 122 , and 123 address
the shifting of customs and excise levies from the provincial level to the
federal level. Sections 122 and 123 are concerned with how the shift is
accomplished; s. 121 reflects the new arrangement once the shift is
accomplished.
[70]
Sections 121 , 122 , and 123 may be read together
as covering the field with respect to re-arranging customs and excise duties
upon union. Interprovincial tariffs would be abandoned and international
tariffs would become the responsibility of Canada. The reference to excise laws
suggests that the provisions were drafted in recognition that other fiscal
tools like excise taxes could operate to impede trade in a manner equivalent to
customs duties.
[71]
Second, Part VIII is concerned with
revenue-generating instruments and their consolidation: excise taxes, customs
duties, levies. All of these are measures that attach to commodities and
function by increasing the price of goods. Nothing in Part VIII suggests that
s. 121 should be read to capture merely incidental impacts on demand for goods
from other provinces; the focus of Part VIII is direct burdens on the price of
commodities.
[72]
Third, s. 121’s position in Part VIII, as well
as its text, make it clear that it does not confer power, but limits the
exercise of the powers conferred on legislatures by ss. 91 and 92 of the Constitution
Act, 1867 . The federal and provincial heads of power delineated in ss. 91
and 92 are exhaustive: Reference re Same-Sex Marriage, at para. 34.
Limits on these powers by provisions like s. 121 must be interpreted in a way
that does not deprive Parliament and provincial legislatures of the powers
granted to them to deal effectively with problems that arise. Otherwise, there
would be constitutional hiatuses — circumstances in which no legislature could
act. This is something constitutional interpretation does not countenance: see,
e.g., Murphy, at p. 642, per Rand J. Prohibition of impediments
to interprovincial trade engages several of these heads of power, including
trade and commerce (s. 91(2) ), taxation (ss. 91(3) and 92(2) ), property and
civil rights (s. 92(13) ), provincial sanctions (s. 92(15) ), and local matters
(s. 92(16) ). It follows that s. 121 should be interpreted in a way that allows
governments to enact proactive policies for the good of their citizens and in a
way that maintains an appropriate balance between federal and provincial powers
— even if the exercise of those powers may have an incidental effect on other
matters, like bringing goods across provincial boundaries.
[73]
We conclude that the legislative context of s.
121 indicates that it was part of a scheme that enabled the shifting of
customs, excise, and similar levies from the former colonies to the Dominion;
that it should be interpreted as applying to measures that increase the price
of goods when they cross a provincial border; and that it should not be read so
expansively that it would impinge on legislative powers under ss. 91 and 92 of
the Constitution Act, 1867 . Before leaving the legislative context, we
deal with an additional argument.
[74]
It is suggested by some that the legislative
context shows that s. 121 was a purely transitional provision and was “spent”
once the transfer of powers from the former colonies to the new Canada was
accomplished. Some of s. 121’s neighbouring provisions — ss. 119 and 122 for
example — are clearly transitional and time-limited.
[75]
Declaring a constitutional provision to be
“spent” amounts to judicial excision of the provision from the constitutional
text in question. Absent clear
language, a court should not hold that a constitutional provision is of no
continued application. To do so would overstep the court’s interpretive role,
and would instead confer on it a legislative one.
[76]
Comparison of the text of s. 121 to the text of
ss. 119 and 122 undermines the argument that s. 121 is spent. The required
clear language is absent. Section 121 is not only transitional. Both ss. 119
and 122 impose explicit temporal limits on their continued operation. Section
119 establishes a 10-year scheme for debt reconciliation between Canada and New
Brunswick from the time of Confederation — the provision is clearly spent.
Section 122 includes a condition by which the provision becomes spent: “The
Customs and Excise Laws of each Province shall [. . .] continue in force until
altered by the Parliament of Canada”.
(5)
Foundational Principles
[77]
In Reference re Secession of Quebec, at
para. 32, this Court held that foundational principles underlying the
Constitution may aid in its interpretation. Three of these — the federalism
principle, the democratic principle and the protection of minorities principle
— were raised in this case. The latter two do not shed much light on how s. 121
should be interpreted, in our view. However, the federalism principle is vital.
[78]
Federalism refers to how states come together to
achieve shared outcomes, while simultaneously pursuing their unique interests.
The principle of federalism recognizes the “autonomy of provincial governments
to develop their societies within their respective spheres of jurisdiction”: Reference
re Secession of Quebec, at para. 58; see also Caron v. Alberta, 2015
SCC 56, [2015] 3 S.C.R. 511, at para. 5. The tension between the centre and the
regions is regulated by the concept of jurisdictional balance: Reference re
Secession of Quebec, at paras. 56-59. The federalism principle requires a
court interpreting constitutional texts to consider how different
interpretations impact the balance between federal and provincial interests.
The same concern has led to, for example, the development of doctrines like the
necessarily incidental doctrine and the ancillary powers doctrine.
[79]
An expansive interpretation of federal powers is
typically met with calls for recognition of broader provincial powers, and vice
versa; the two are in a symbiotic relationship. Many of the doctrinal tools
used by courts in division of powers cases reflect the tension between federal
and provincial capacity: see, e.g., H. L. Kong, “Republicanism and the division
of powers in Canada” (2014), 64 U.T.L.J. 359, at pp. 393-97. As this
Court noted in Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R.
837, at para. 7:
It
is a fundamental principle of federalism that both federal and provincial
powers must be respected, and one power may not be used in a manner that
effectively eviscerates another. Rather, federalism demands that a balance be
struck, a balance that allows both the federal Parliament and the provincial
legislatures to act effectively in their respective spheres.
[80]
This Court has consistently interpreted the
scope of economic powers under the Constitution Act, 1867 through the
lens of jurisdictional balance. An example is the development of the
“necessarily incidental” indicator for tolerated provincial/federal overlap
under the trade and commerce power: General Motors of Canada Ltd. v. City
National Leasing, [1989] 1 S.C.R. 641; Canadian Western Bank v. Alberta,
2007 SCC 22, [2007] 2 S.C.R. 3; Reference re Securities Act.
[81]
Much has been written on the principle of
federalism as an interpretive aid. Some say it leads to divergent outcomes and
is inherently policy driven: see, e.g., P. J. Monahan, “At doctrine’s twilight:
The structure of Canadian federalism” (1984), 34 U.T.L.J. 47, at p. 48.
Others argue that it boils
down to a principle of efficiency that favours centralization and privileges
federal heads of power: see, e.g., J. Leclair, “The Supreme Court of Canada’s Understanding
of Federalism: Efficiency at the Expense of Diversity” (2003), 28 Queen’s
L.J. 411, at p. 423. Still others counter by pointing to the vast scope of
regional autonomy promised by the powers conferred on the provinces by ss.
92(13) and 92(16): see, e.g., S. Wexler, “The Urge to Idealize: Viscount
Haldane and the Constitution of Canada” (1984), 29 McGill L.J. 608, at
pp. 641-42.
[82]
For our purposes, it suffices to state that the
federalism principle reminds us of the careful and complex balance of interests
captured in constitutional texts. An interpretation that disregards regional
autonomy is as problematic as an interpretation that underestimates the scope
of the federal government’s jurisdiction. We agree with Professor Scott that
“[t]he Canadian constitution cannot be understood if it is approached with some
preconceived theory of what federalism is or should be”: F. R. Scott,
“Centralization and Decentralization in Canadian Federalism” (1951), 29 Can
Bar R. 1095, at p. 1095; see also P. W. Hogg and W. K. Wright, “Canadian Federalism, the Privy Council and
the Supreme Court: Reflections on the Debate about Canadian Federalism” (2005),
38 U.B.C.L. Rev. 329, at p. 350.
[83]
Thus, the federalism principle does not impose a
particular vision of the economy that courts must apply. It does not allow a
court to say “This would be good for the country, therefore we should interpret
the Constitution to support it.” Instead, it posits a framework premised on
jurisdictional balance that helps courts identify the range of economic
mechanisms that are constitutionally acceptable. The question for a court is
squarely constitutional compliance, not policy desirability: see, e.g., Reference
re Securities Act, at para. 90; Operation Dismantle Inc. v. The Queen,
[1985] 1 S.C.R. 441, at pp. 471-72, per Wilson J.; Reference re
Anti-Inflation Act, [1976] 2 S.C.R. 373, at pp. 424-25, per Laskin C.J.
Similarly, the living tree doctrine is not an open invitation for litigants to
ask a court to constitutionalize a specific policy outcome. It simply asks that
courts be alert to evolutions in, for example, how we understand jurisdictional
balance and the considerations that animate it.
[84]
With these cautions in mind, we turn to the
parties’ submissions on the principle of federalism. Both Mr. Comeau and the
Crown refer to the federalism principle to support their own particular views
of desirable policy outcomes — in Mr. Comeau’s case, the policy of no
impediments, direct or incidental, on trade across provincial borders; in the
Crown’s submission, a view of cooperative federalism that poses few, if any,
limits on provinces’ authority to impose such impediments. Asserting what they
see as the contemporary goals of federalism by pointing to the living tree
doctrine (Edwards, at
pp. 106-7), the parties urge the Court to interpret s.
121 in accordance with their preferred visions of how federalism functions. We
will consider each of these arguments in turn.
[85]
We begin with Mr. Comeau’s submission that the
principle of federalism supports full economic integration. We cannot accept
this submission. The federalism principle emphasizes balance and the ability of
each level of government to achieve its goals in the exercise of its powers
under ss. 91 and 92 of the Constitution Act, 1867 . Full economic
integration would “curtail the freedom of action — indeed, the sovereignty — of
governments, especially at the provincial level”: K. Swinton, “Courting Our Way
to Economic Integration: Judicial Review and the Canadian Economic Union”
(1995), 25 Can. Bus. L.J. 280, at p. 291; see also D. Schneiderman,
“Economic Citizenship and Deliberative Democracy: An Inquiry into
Constitutional Limitations on Economic Regulation” (1995), 21 Queen’s L.J.
125, at p. 152. Reading s. 121 to require full economic integration would
significantly undermine the shape of Canadian federalism, which is built upon
regional diversity within a single nation: Reference re Secession of Quebec,
at paras. 57-58; Canadian Western Bank, at para. 22. A key facet of this
regional diversity is that the Canadian federation provides space to each
province to regulate the economy in a manner that reflects local concerns.
[86]
The federalism principle supports the view that
provinces within a federal state should be allowed leeway to manage the passage
of goods while legislating to address particular conditions and priorities
within their borders. For example, the Northwest Territories and Nunavut have
adopted laws governing the consumption of liquor, which include controls on
liquor coming across the border into their territories. The primary objective
of the laws is public health, but they have the incidental effect of curtailing
cross-border trade in liquor. The Northwest Territories and Nunavut argue that
these sorts of laws do not fall under the spectre of s. 121. We agree that to
interpret s. 121 in a way that renders such laws invalid despite their
non-trade-related objectives is to misunderstand the import of the federalism
principle.
[87]
The Crown and other intervening Attorneys
General, for their part, advocate interpreting s. 121 narrowly to give
governments expansive scope to impose barriers on goods crossing their borders.
This interpretation, they argue, is a natural consequence of their position
that “cooperative federalism” is a distinct foundational principle for
constitutional interpretation, as such principles are understood in Reference
re Secession of Quebec. Cooperative federalism describes situations where
different levels of government work together on the ground to leverage their
unique constitutional powers in tandem to establish a regulatory regime that
may be ultra vires the jurisdiction of one legislature on its own. In
division of powers cases where interlocking regulatory schemes have been
impugned, the concept of cooperative federalism has often informed this Court’s
assessment of vires: see, e.g., Fédération des
producteurs de volailles du Québec v. Pelland, 2005
SCC 20, [2005] 1 S.C.R. 292; NIL/TU,O Child and
Family Services Society v. B.C. Government and Service Employees’ Union,
2010 SCC 45, [2010] 2 S.C.R. 696. However, that is a distinct inquiry from the
interpretative question raised here. The foundational principle that forms part
of the architecture of constitutional texts as we described in Reference re
Secession of Quebec is federalism — and that principle does not
mandate any specific prescription for how governments within a federation
should exercise their constitutional authority.
[88]
We cannot therefore accept either the arguments
of Mr. Comeau or the Crown on the principle of federalism. This does not mean,
however, that the principle is unhelpful to the interpretation of s. 121. The
need to maintain balance embodied in the federalism principle supports an
interpretation of s. 121 that prohibits laws directed at curtailing the passage
of goods over interprovincial borders, but allows legislatures to pass laws to
achieve other goals within their powers, even though the laws may have the
incidental effect of impeding the passage of goods over interprovincial
borders.
(6)
Defining the Ambit of Section 121: The
Jurisprudence
[89]
We have established in the preceding sections
that the text, historical context, legislative context, and underlying constitutional
principles do not support Mr. Comeau’s contention that s. 121 should be
interpreted as prohibiting any and all burdens on the passage of goods over
provincial boundaries, essentially imposing an absolute free trade regime
within Canada. Rather, these considerations support a flexible, purposive view
of s. 121 — one that respects an appropriate balance between federal and
provincial powers and allows legislatures room to achieve policy objectives
that may have the incidental effect of burdening the passage of goods across
provincial boundaries.
[90]
This established, the next question to be
answered is: What does s. 121 of the Constitution Act, 1867 actually
prohibit? Before us, the debate was framed as a conflict between two lines of
authority — the Gold Seal line of authority, which is said to confine s.
121 to the prohibition of tariffs, and the line of authority based on the
judgment of Rand J. in Murphy, which sets out the view that s.
121 prohibits not only tariffs, but extends to laws that in essence and purpose
are directed to impeding the passage of goods across provincial boundaries.
[91]
For the reasons that follow, we do not see these
lines of authority to be in conflict. Properly understood, they represent a
single, progressive understanding of the purpose and function of s. 121 in the
broader constitutional scheme. This understanding is entirely consistent with
our earlier conclusion that s. 121 — understood through the lens of its text,
its historical and legislative contexts and the principle of federalism — is
best conceived as 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.
[92]
Gold Seal, decided
in 1921, was the first case to interpret s. 121 of the Constitution
Act, 1867 . It concerned a federal statute that prohibited the importation
of liquor into any dry province. The federal law was complementary to
provincial prohibition laws, passed because the provinces were not competent
under the division of powers to regulate interprovincial trade — an early
example of cooperative federalism. The Gold Seal liquor company argued that the
trade barrier installed by the federal law violated s. 121 . The Court’s
discussion of s. 121 in Gold Seal was cursory. Duff and Mignault JJ., in
the majority, each held that the law at issue was not caught by s. 121 because
it was not a tariff on goods crossing provincial borders. Mignault J. added
that this was consistent with a similar provision in the United States
Constitution addressing the same concerns: Gold Seal, at p. 470. Anglin
J. agreed, but offered no analysis: Gold Seal, at p. 466.
[93]
Gold Seal was
endorsed by the Judicial Committee of the Privy Council in Atlantic Smoke
Shops, at p. 92. At issue was a New Brunswick law that made tobacco
importers liable to a tax on tobacco brought into the province. The tobacco
retailer argued that the tax constituted a trade barrier contrary to s. 121 .
Viscount Simon L.C. accepted this Court’s analysis in Gold Seal and
concluded that s. 121 , read in the context of Part VIII, was the death knell
for provincial tariffs. However, the tax was held not to infringe s. 121 on the
ground it was a general consumption tax, and thus did not impose a burden on
the basis of a provincial border: Atlantic Smoke Shops, at pp.
91-92.
[94]
In 1958, the majority of this Court in Murphy
adopted Gold Seal and Atlantic Smoke Shops: at p. 634. A grain
producer had attempted to arrange an interprovincial shipment of wheat contrary
to the Canadian Wheat Board Act, R.S.C. 1952, c. 44. The question was
whether the Act’s prohibition on cross-border shipments violated s. 121 . The
majority, en passant, held it did not because it did not impose a
tariff. Murphy was decided primarily on the basis of the division of
powers. Nevertheless, this Court briefly addressed s. 121 .
[95]
Rand J. in his concurring reasons in Murphy
undertook a more substantive, purposive analysis of s. 121. He did not
criticize Gold Seal, which he accepted as the foundational case,
but sought to draw out the rationale underlying Gold Seal, s. 121, and
its constitutional implications. His reasons read like a series of reflections
on the nature and purpose of s. 121. He began by noting that apart from matters
of purely local and private concern, the country was one economic unit: Murphy,
p. 638. He went on, however, to explain why provincial marketing schemes that
may enable different charges in different regions do not violate s. 121. Such
schemes “embody an accumulation” of various charges because they are concerned
with realizing objects for all producers across the relevant sector — from
transportation to wages to insurance. Charges that are merely “one item in a
scheme that regulates their distribution” do not have cross-border trade as
their object or purpose and therefore do not violate s. 121. They are “items in
selling costs and can be challenged only if the scheme itself is
challengeable”: Murphy, at pp. 638-39. Section 121 “does not
create a level of trade activity divested of all regulation I have no doubt;
what is preserved is a free flow of trade regulated in subsidiary features
which are or have come to be looked upon as incidents of trade. What is
forbidden is a trade regulation that in its essence and purpose is related to a
provincial boundary”: Murphy, at p. 642, per Rand J.
[96]
Finally, Rand J. explained that schemes that
restrict goods crossing borders only incidentally cannot be held to violate s.
121 because this would create a constitutional hiatus, which constitutional
construction abhors. A prohibition barring even incidental impacts on the
passage of goods over a provincial border would render provinces incapable of
dealing with important matters within their jurisdictions. At the same time,
the federal government could not fill the void because the matter would not fall
within its power given the division of powers — “the two jurisdictions could
not complement each other by co-operative action”: Murphy, at pp.
642-43, per Rand J.
[97]
These excerpts reflect many of the themes that
emerge in our earlier discussion of historical context, legislative context,
and federalism. However, they can be distilled into two related propositions.
First, the purpose of s. 121 is to prohibit laws that in essence and purpose
restrict or limit the free flow of goods across the country. Second, 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.
[98]
These propositions are consistent with the decisions
in Gold Seal and Atlantic Smoke Shops. First, while the
Court in these cases spoke of s. 121 forbidding tariffs, and while Rand J. in Murphy
spoke of s. 121 forbidding laws that purposely act like tariffs (i.e. laws
that in essence burden the passage of goods over provincial borders), this is a
distinction without a difference. Constitutional limits must operate on
the level of principle and function, not on what label is applied to a
particular kind of law. Constitutional compliance is not a matter of semantics.
Clearly, traditional tariffs would offend the purpose of s. 121, as Rand J.
describes it. But so might other measures that function in the same way. It
follows that s. 121 applies not only to tariffs, but also to the functional
equivalents of tariffs.
[99]
Second, Gold Seal and Murphy support
the proposition that s. 121 was not intended to catch burdens on goods crossing
provincial borders that were merely incidental effects of a law or scheme aimed
at some other purpose, holding that because the restrictions on the shipment of
goods over provincial borders were part of a larger valid federal scheme, they
did not offend s. 121. As Rand J. pointed out in Murphy, to prohibit
incidental impacts on cross-border trade would allow s. 121 to trump valid exercises
of legislative power, and create legislative hiatuses where neither level of
government could act: Murphy, at pp. 638 and 642-43. The federalism
principle militates against such an interpretation — the aim is balance and
capacity, not imbalance and constitutional gaps. The federal government and
provincial governments should be able to legislate in ways that impose
incidental burdens on the passage of goods between provinces, in light of the
scheme of the Constitution Act, 1867 as a whole, and in particular the
division of powers: Murphy, at pp. 638 and 641, per Rand J. This is
illustrated by Gold Seal. If the federal government had not been able to
enact its law prohibiting liquor from crossing the borders of the dry
provinces, there would have been a legislative hiatus, and the cooperative
scheme aimed at allowing these provinces to keep liquor out would not have been
possible.
[100]
Put another way, s. 121 allows schemes that
incidentally burden the passage of goods across provincial boundaries, but does
not allow them to impose such impediments only because they cross a
provincial boundary. In Rand J.’s view, the gravamen of s. 121 was to prohibit
laws directed to erecting barriers to trade at provincial boundaries — whether
customs duties or other measures that are intended to fill the role of such
tariffs: Murphy, at p. 642.
[101]
One may argue about whether Rand J.’s view
states the logical underpinning of Gold Seal, or extends it. But
if one accepts the underlying principle that animates s. 121 — that s. 121
prohibits laws that in essence and purpose seek to set up trade barriers
between the provinces — the debate is sterile. Gold Seal, Atlantic
Smoke Shops and Murphy are all consistent with this basic
proposition, even if they did not explicate it. None of them endorsed a law
that was directed in essence and purpose to impeding goods crossing provincial
borders.
[102]
Rand J.’s description of the ambit of s. 121 has
found favour with subsequent jurists. Laskin J. (as he then was) in his
concurring reasons in Attorney- General for Manitoba v. Manitoba Egg and
Poultry Assn., [1971] S.C.R. 689, at p. 717, noted that s. 121 is meant to
address measures that lead to the “figurative sealing of [. . .]
borders”. As Chief Justice in his concurring reasons in Reference re Agricultural
Products Marketing Act, at p. 1268, he adopted Rand J.’s interpretation of
s. 121 and noted that s. 121 is about identifying whether the “essence and
purpose” of the impugned law is to erect a trade barrier at a provincial
boundary. The majority in the first case did not comment on s. 121. In Reference
re Agricultural Products Marketing Act, the majority concluded that the
impugned law did not offend s. 121, and while it offered no analysis of its
own, it indicated no disagreement with Chief Justice Laskin’s discussion of s.
121.
[103]
In obiter comments in two subsequent
decisions, La Forest J., writing for the Court, similarly noted that the
functional approach articulated by Rand J. stemmed from the view established in
Gold Seal: Black, at p. 609; Canadian Pacific Air Lines,
at p. 1153.
[104]
Most recently in Richardson, Iacobucci
and Bastarache JJ. for the majority and McLachlin J. (as she then was) in
dissent, agreed (though, again, in obiter) that Rand J.’s interpretation
of s. 121 was the operative authority for that provision: paras. 63-65, per
Iacobucci and Bastarache JJ., paras. 123 and 171, per McLachlin J. In dissent
but not on this point, McLachlin J. noted, at paras. 123 and 171:
In broad outline, s. 121 of
the Constitution Act, 1867 permits legislation which incidentally
impinges on the flow of goods and services across provincial boundaries, but
prohibits legislation that in “essence and purpose is related to a provincial
boundary”: Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626, at
p. 642, per Rand J.; Reference re Agricultural Products Marketing Act,
[1978] 2 S.C.R. 1198, at p. 1268, per Laskin C.J. interpreting s. 121 . .
. .
. . .
. . . Provinces and the federal
government are permitted to impose disadvantages on the basis of provincial
boundaries so long as this effect is incidental to another purpose within their
proper legislative sphere. They are not permitted, however, to create
interprovincial barriers which are not incidental to such a higher purpose. The
primary/incidental distinction in s. 6(3)(a) mirrors the jurisprudence
under s. 121 of the Constitution Act, 1867 , which bars trade laws aimed
primarily at impeding the flow of goods on the basis of provincial boundaries: Murphy
v. Canadian Pacific Railway, supra; Reference re Agricultural
Products Marketing Act, supra.
[105]
The comments of Justices of this Court on s. 121
in the post-Gold Seal jurisprudence have never acquired the status of
binding law, being made without majoritarian status or in obiter. But
they do not conflict with Gold Seal and Atlantic Smoke Shops;
rather, they offer a principled and robust articulation of the holdings from
those earlier decisions.
[106]
We conclude that a purposive approach to s. 121
leads to the following conclusion: s. 121 prohibits laws that in essence and
purpose restrict trade across provincial boundaries. Laws that only have the
incidental effect of restricting trade across provincial boundaries because
they are part of broader schemes not aimed at impeding trade do not offend s.
121 because the purpose of such laws is to support the relevant scheme, not to
restrict interprovincial trade. While Gold Seal did not undertake a
purposive analysis of s. 121 and hence did not describe the ambit of s. 121
precisely in these terms, it is entirely consistent with it. The earlier
jurisprudence of this Court on s. 121 and the broader articulation adopted by
Rand J. stand as different moments on a progressive jurisprudential continuum,
all consistent with the text of s. 121 , its historical and legislative
contexts, and the principle of federalism.
[107]
It follows that a party alleging that a law
violates s. 121 must establish that the law in essence and purpose restricts
trade across a provincial border. “Essence” refers to the nature of the measure
— “‘what a thing is’; . . . [its] character”: The Oxford English
Dictionary (2nd ed. 1989), at p. 400. “Purpose” focuses on the
object, or primary purpose, of the measure.
[108]
The first question is whether the essence or
character of the law is to restrict or prohibit trade across a provincial
border, like a tariff. Tariffs, broadly defined, are “customs duties and
charges of any kind imposed on or in connection with importation or
exportation”: General Agreement on Tariffs and Trade (World Trade
Organization), Can. T.S. 1948 No. 31, Part I, Article I. The claimant must
therefore establish that the law imposes an additional cost on goods by virtue
of them coming in from outside the province. Put another way, a claimant must
establish that the law distinguishes goods in a manner “related to a provincial
boundary” that subjects goods from outside the province to additional costs: Murphy,
at p. 642, per Rand J. A prohibition on goods crossing the border is an extreme
example of such a distinction.
[109]
The additional cost need not be a charge
physically levied at the border, nor must it take the form of an actual
surcharge; all that is required is that the law impose a cost burden on goods
crossing a provincial border. A law that provides that “rum produced in the
Maritime provinces will be subject to a 50% surcharge upon entering
Newfoundland” has the same effect, in principle, as a law that states that “any
person who brings rum produced in the Maritime provinces into Newfoundland is
guilty of an offence and liable to a fine”. Both laws impose a burden on the
cost of goods that cross a provincial boundary.
[110]
In some cases, evidence may be required to
determine if an impugned law imposes a charge on the basis of a provincial
border. Consider a fictional law that requires Alberta distillers to get a
special licence to import rye. It is not plain on the face of the law whether
the law (1) imposes any sort of charge on the movement of rye or (2) whether
any such charge is linked to a distinction between goods related to a
provincial boundary. If the cost of the licence is substantial or if it is very
difficult to acquire, the measure may impede cross-border trade in rye.
Similarly, if the only rye available to Alberta distillers is from
Saskatchewan, the licence requirement may function like a tariff against a
Saskatchewan good. On the other hand, if the licence is not burdensome to
acquire or if the licensing requirement applies equally where Alberta
enterprises have access to rye from within Alberta, the law may not impose a
burden or charge based on a provincial border and s. 121 is not violated.
[111]
If the law does not in essence restrict the
trade of goods across a provincial border, the inquiry is over and s. 121 is
not engaged. If it does, the claimant must also establish that the primary
purpose of the law is to restrict trade. A law may have more than one purpose.
But impeding trade must be its primary purpose to engage s. 121 . The inquiry is
objective, based on the wording of the law, the legislative context in which it
was enacted (i.e. if it is one element of a broader regulatory scheme), and all
of the law’s discernable effects (which can include much more than its
trade-impeding effect). If the purpose of the law aligns with purposes
traditionally served by tariffs, such as exploiting the
passage of goods across a border solely as a way to collect funds, protecting local industry or punishing another province, this may,
depending on other factors, support the contention that the primary purpose of
the law is to restrict trade: see, e.g., Murphy, at pp. 638-39, per Rand
J.; Reference re Agricultural Products Marketing Act, at p. 1268, per
Laskin C.J.; National Trade and Tariff Service (loose-leaf), at §. 1.3; Black’s
Law Dictionary (9th ed. 2009), at pp. 1593-94.
[112]
Stand-alone laws that have the effect of
restricting trade across provincial boundaries will not violate s. 121 if their
primary purpose is not to impede trade, but some other purpose. Thus a law that
prohibits liquor crossing a provincial boundary for the primary purpose of
protecting the health and welfare of the people in the province would not
violate s. 121 . More commonly, however, the primary purpose requirement of s.
121 fails because the law’s restriction on trade is merely an incidental effect
of its role in a scheme with a different purpose. The primary purpose of such a
law is not to restrict trade across a provincial boundary, but to achieve the
goals of the regulatory scheme.
[113]
However, a law that in essence and purpose
impedes cross-border trade cannot be rendered constitutional under s. 121
solely by inserting it into a broader regulatory scheme. If the primary purpose
of the broader scheme is to impede trade, or if the impugned law is not
connected in a rational way to the scheme’s objective, the law will violate s.
121 . A rational connection between the impugned measure and the broader
objective of the regulatory scheme exists where, as a matter of reason or
logic, the former can be said to serve the latter: see, e.g., RJR-MacDonald
Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199, at para. 153, per
McLachlin J. (as she then was), and at para. 184, per Iacobucci J. The scheme
may be purely provincial, or a mixed federal-provincial scheme: Gold Seal;
see also Reference re Agricultural Products Marketing Act.
[114]
In summary, two things are required for s. 121
to be violated. The law must impact the interprovincial movement of goods like
a tariff, which, in the extreme, could be an outright prohibition. And,
restriction of cross-border trade must be the primary purpose of the law,
thereby excluding laws enacted for other purposes, such as laws that form
rational parts of broader legislative schemes with purposes unrelated to impeding
interprovincial trade.
[115]
The decided cases, while not numerous,
illustrate how the essence and purpose test works. In Gold Seal, a
federal law aimed at assisting dry provinces in keeping liquor out of their
territories was held not to infringe s. 121 . The law did not impede the flow of
goods across provincial boundaries as its primary purpose; rather, it was part
of a larger federal-provincial scheme to facilitate provinces’ decisions, as
informed by local referendums, to impose temperance to avoid harms associated
with alcohol consumption. Therefore, it did not violate s. 121 . Similarly, in Murphy,
a federal law prohibiting farmers from shipping grain across provincial
boundaries was held not to violate s. 121 because it was part of a larger
marketing scheme to enable the distribution of grain. The impugned tax in Atlantic
Smoke Shops failed because it did not distinguish between local and
extra-provincial tobacco. In other words, it was not in essence tariff-like.
[116]
There is debate about whether s. 121 applies
equally to provincial and federal laws. While this Court has in previous
decisions proceeded on the basis that federal laws may engage s. 121 (see,
e.g., Gold Seal and Murphy), no federal law is properly at issue
in the present appeal and so the question need not be resolved here. We agree
with Laskin C.J.’s statement in Reference re Agricultural Products Marketing
Act, at p. 1267, that “the application of s. 121 may be different according
to whether it is provincial or federal legislation that is involved because
what may amount to a tariff or customs duty under a provincial regulatory
statute may not have that character at all under a federal regulatory statute”.
VI.
Application
[117]
Does s. 134(b) of the Liquor Control
Act contravene s. 121 ? We conclude that it does not. To reiterate, s. 134(b)
provides:
134 Except as provided by this Act or the regulations, no person, within
the Province, by himself, his clerk, employee, servant or agent shall
. . .
(b) have or keep
liquor,
not purchased from the Corporation.
[118]
Our task is to determine if the essence and
purpose of s. 134(b) is to restrict trade in liquor across New
Brunswick’s border.
[119]
The first question is whether s. 134(b),
in its essence or character, functions like a tariff by
impeding cross-border trade. Section 134(b), in conjunction with other
provisions, makes it an offence to stock excessive amounts of liquor obtained
from anywhere other than the New Brunswick Liquor Corporation. Liquor from the
Corporation can be stocked for free, while liquor from elsewhere cannot,
without running the risk of incurring a fine and having the alcohol
confiscated. These penalties act to burden the cost of such liquor both
directly and indirectly. First, the penalties imposed for stocking liquor
purchased from outside the Corporation function to directly increase the cost
of acquiring such liquor. Second, the risk of fine and confiscation indirectly
acts as a general disincentive for New Brunswickers who would otherwise seek
lower-priced liquor than that available through the Corporation, where it
exists.
[120]
By making people who stock liquor acquired from
outside the provincial Corporation pay fines and thus more generally depriving
them of cheaper goods, the law burdens the cost of the targeted liquor. If the
authorities seize any liquor identified when a charge is laid under s. 134(b)
— as occurred in Mr. Comeau’s case — the law, in practical terms, prohibits,
and therefore completely bars access to, non-Corporation liquor. This
prohibition functions like a tariff at the extreme end of the spectrum. With
respect to out-of-province liquor, the liquor is not just prevented from being
“admitted free”; it cannot be admitted at all.
[121]
This restriction is related to a provincial
boundary. Section 134(b) impedes liquor purchases originating outside of
the provincial Corporation above a certain threshold. The law thus has two
effects. The first effect is to restrict access to
liquor from other provinces. The other effect is to restrict access to liquor
within the province that is not controlled by the Corporation. But although the
fine functions to restrict purchases of liquor from the black market within New
Brunswick, this does not negate the fact that it also imposes a burden on
bringing liquor across a provincial boundary. The presence of the first effect
— restricting access to liquor from other provinces — is sufficient to
establish that s. 134(b), in essence, functions like a tariff, even
though it may have other purely internal effects.
[122]
The next question is whether this restriction on trade is the primary purpose of s. 134(b).
As discussed, the text, the effects and the legislative context assist in
identifying the primary purpose of s. 134(b). Here, the text and effects
are aligned and suggest the primary purpose of s. 134(b) is not to
impede trade. Section 134(b) prohibits “hav[ing] or keep[ing]” liquor
above a certain threshold “not purchased from the Corporation”. In effect, it
restricts holding liquor obtained from non-Corporation sources within New
Brunswick and restricts holding liquor from non-Corporation sources
coming into New Brunswick. The text and effects of s. 134(b) indicate
that its primary purpose is to restrict access to any non-Corporation
liquor, not just liquor brought in from another province like Quebec. This is
reinforced when one reads s. 134(b) in conjunction with s. 43(c),
the provision that sets the maximum amount of allowable non-Corporation liquor
that can be kept by someone within New Brunswick. The existence of a statutory
threshold, as opposed to an absolute prohibition, suggests that the purpose of
s. 134(b) is not to specifically target out-of-province liquor, but to
more generally prevent defined quantities of non-Corporation liquor from
entering the liquor supply within New Brunswick’s borders.
[123]
This conclusion is confirmed when one considers
the broader scheme of which s. 134(b) forms part — a scheme that governs
New Brunswick’s capacity to regulate how liquor is managed within the province.
The Liquor Control Act sets out diverse and extensive rules and
prohibitions aimed at controlling access to liquor in New Brunswick. A
companion statute, the New Brunswick Liquor Corporation Act, S.N.B.
1974, c. N-6.1 (now R.S.N.B. 2016, c. 105), establishes the province’s public
liquor supply management monopoly. Together, these statutes set out a
comprehensive and technical scheme to ensure that the liquor trade within the
province is monitored. Section 3 of the federal Importation of Intoxicating
Liquors Act, R.S.C. 1985, c. I-3 , endorses provinces’ capacity to enact
such schemes.
[124]
The objective of the
New Brunswick scheme is not to restrict trade across a provincial boundary, but
to enable public supervision of the production, movement, sale, and use of
alcohol within New Brunswick. It is common ground that
provinces are able to enact schemes to manage the supply of and demand for
liquor within their borders: Air Canada v. Ontario (Liquor Control Board),
[1997] 2 S.C.R. 581, at para. 55, citing R. v. Gautreau (1978), 21
N.B.R. (2d) 701 (S.C. (App. Div.)). Governments manage liquor prices, storage
and distribution with a view to diverse internal policy objectives. Although
the Crown conceded that New Brunswick generates revenue from its legislative
scheme, this is not the primary purpose of the scheme, but an offshoot of it.
Finally, s. 134(b) is not divorced from the
objective of the larger scheme. It plainly serves New Brunswick’s choice to
control the supply and use of liquor within the province.
[125]
We conclude that the primary purpose of s. 134(b)
is to prohibit holding excessive quantities of liquor from supplies not managed
by the province. New Brunswick’s ability to exercise oversight over liquor
supplies in the province would be undermined if non-Corporation liquor could
flow freely across borders and out of the garages of bootleggers and home
brewers. The prohibition imposed in s. 134(b) addresses both. While one
effect of s. 134(b) is to impede interprovincial trade, this effect is
only incidental in light of the objective of the provincial scheme in general.
Therefore, while s. 134(b) in essence impedes cross-border trade, this
is not its primary purpose.
[126]
Section 134(b) does not violate s. 121 of
the Constitution Act, 1867 .
VII.
Conclusion
[127]
For the foregoing reasons, the Crown’s appeal is
allowed. The Court answers the appellant’s constitutional question as follows:
Question: Does s. 121 of the Constitution
Act, 1867 (U.K.), 30 & 31 Vict., c. 3 , render unconstitutional s. 134(b)
of the Liquor Control Act, R.S.N.B. 1973, c. L-10, which along with s. 3
of the Importation of Intoxicating Liquors Act, R.S.C. 1985, c. I-3 ,
establishes a federal-provincial regulatory scheme in respect of intoxicating
liquor?
Answer: No.
[128]
This Court has already ordered that the appellant
will bear the costs of this appeal: leave to appeal judgment, [2017] S.C. Bull.
778.
Appeal
allowed with costs to the respondent.
Solicitor for the
appellant: Attorney General of New Brunswick, Fredericton.
Solicitors for the
respondent: Gardiner, Roberts, Toronto; Matchim Bernard Law Group,
Campbellton, N.B.; Arnold Schwisberg, Markham, Ontario.
Solicitor for the
intervener the Attorney General of Canada: Attorney General of Canada,
Montréal.
Solicitor for the
intervener the Attorney General of Ontario: Attorney General of Ontario,
Toronto.
Solicitor for the
intervener the Attorney General of Quebec: Attorney General of Quebec,
Québec.
Solicitor for the
intervener the Attorney General of British Columbia: Attorney General of
British Columbia, Victoria.
Solicitors for the
intervener the Attorney General of Prince Edward Island: Stewart McKelvey,
Charlottetown.
Solicitor for the
intervener the Attorney General of Saskatchewan: Attorney General of
Saskatchewan, Regina.
Solicitor for the
intervener the Attorney General of Alberta: Attorney General of Alberta,
Edmonton.
Solicitor for the
intervener the Attorney General of Newfoundland and Labrador: Attorney
General of Newfoundland and Labrador, St. John’s.
Solicitor for the
intervener the Attorney General of the Northwest Territories: Attorney
General of the Northwest Territories, Yellowknife.
Solicitor for the
intervener the Government of Nunavut as represented by the Minister of Justice: Attorney
General of Nunavut, Iqaluit.
Solicitors for the
interveners Liquidity Wines Ltd., Painted Rock Estate Winery Ltd., 50th
Parallel Estate Limited Partnership, Okanagan Crush Pad Winery Ltd. and Noble
Ridge Vineyard and Winery Limited Partnership: Coulson Litigation,
Vancouver; Gudmundseth Mickelson, Vancouver.
Solicitor for the
intervener Artisan Ales Consulting Inc.: University of Alberta, Edmonton.
Solicitors for the
intervener the Montreal Economic Institute: Osler, Hoskin & Harcourt,
Toronto.
Solicitors for the
intervener Federal Express Canada Corporation: McMillan, Toronto.
Solicitors for the
interveners the Canadian Chamber of Commerce and the Canadian Federation of
Independent Business: Borden Ladner Gervais, Toronto.
Solicitors for the
intervener Cannabis Culture: Tousaw Law Corporation, Abbotsford, B.C.
Solicitors for the
intervener the Association of Canadian Distillers, operating as Spirits Canada: Power
Law, Vancouver.
Solicitors for the
intervener Canada’s National Brewers: Gowling WLG (Canada), Toronto.
Solicitors for the
interveners the Dairy Farmers of Canada, the Egg Farmers of Canada, the Chicken
Farmers of Canada, the Turkey Farmers of Canada and the Canadian Hatching Egg
Producers: Conway Baxter Wilson, Ottawa.
Solicitors for the
intervener the Consumers Council of Canada: Siskinds, London and Toronto;
Michael Sobkin, Ottawa.
Solicitors for the
intervener the Canadian Vintners Association: Bennett Jones, Toronto.
Solicitors for the
intervener the Alberta Small Brewers Association: Burnet, Duckworth &
Palmer, Calgary.