SCC rules provincial laws can have incidental effects on interprovincial trade.
19, April 19, 2018 - Filed in: Court Cases
"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."
The Court held that the appeal is allowed. Section 134(b) of the Liquor Control Act does not infringe s. 121 of the Constitution Act, 1867.
The Court wrote as follows (at paras. 1-2, 4, 8, 22, 26-28, 34-35, 52, 54, 67, 73, 77, 88, 106, 114, 125- 126):
"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.
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.
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.
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.
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 ?
- A. Did the Trial Judge Err in Departing From Binding Precedent and Providing His Own Interpretation of Section 121 of the Constitution Act, 1867?
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.
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.
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.
B. What Is the Proper Interpretation of Section 121 ?
...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.
This high threshold was not met in this case.
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,  2 S.C.R. 217, at para. 32; Reference re Senate Reform, 2014 SCC 32,  1 S.C.R. 704, at para. 25; Reference re Manitoba Language Rights,  1 S.C.R. 721.
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
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
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.
(5) Foundational Principles
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.
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
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.
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.
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.
Section 134(b) does not violate s. 121 of the Constitution Act, 1867."
Note: The summary and body are drawn from Eugene Meehan’s SupremeAdvocacy Weekly Updates for the Law Community.