By Michael Marschal, JD Candidate (University of Saskatchewan)
This comment explores R. v. Comeau. Although the Supreme Court of Canada’s articulation of the law regarding s. 121 of the Constitution Act, 1867 was persuasive, well-reasoned, and consistent with modern federalism jurisprudence, its application was shallow and overly deferential.
One man’s quest to buy cheap liquor across the provincial border in Quebec, without risking a fine, led to the Supreme Court of Canada decision R. v. Comeau.1 This decision considered whether s. 134(b) of the New Brunswick Liquor Control Act2 infringed s. 121 of the Constitution Act, 1867.3 It clarified two significant issues in the law: (1) when lower court judges can depart from binding precedent based on the exceptions outlined in R. v. Bedford;4 and (2) the nature and scope of s. 121 of the Constitution. The first issue was quickly dealt with by the Court, concluding that the trial judge erred by departing from binding precedent on s. 121.5 The Supreme Court’s handling of the second issue, the nature and scope of s. 121, is the focus of this comment.
The Court’s seventy-three paragraph analysis of s. 121 is persuasive, well-reasoned, and consistent with modern federalism jurisprudence. By contrast, the brief ten-paragraph application that follows appears shallow and overly deferential. It fails to give any real meaning to s. 121, particularly given the courts’ role as “guardians of the constitution.”6 The Court ultimately reached the correct result, but for the wrong reasons.
Section 121 states “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.”7The Court concluded in Comeau that s. 121 does not create an absolute free trade zone in Canada.8 Provincial laws with merely incidental effects impacting interprovincial trade do not violate s. 121.9 Instead, to violate s. 121, a provincial law must restrict interprovincial trade in both essence and purpose.10 This approach is consistent with modern federalism jurisprudence, which has moved away from the historic concept of federal and provincial powers as “watertight compartments” to a conception of cooperative federalism involving “overlapping jurisdiction.”11 In Reference re Secession of Quebec,12 the Supreme Court recognized the principle of federalism means that provincial governments must be allowed the autonomy to regulate and “develop their societies”13 even if that regulation has incidental effects on federal jurisdiction.14
The interpretation of s. 121 from Comeau is merely one more iteration of the idea of cooperative federalism. Section 121 is simply an enumerated power to impose interprovincial tariffs that was taken out of the powers conferred in ss. 91 and 92 of the Constitution.15However, it must be viewed similarly to other powers: in a flexible and purposive manner.16
Comeau becomes problematic when the Court applies s. 121 to s. 134(b) of the LCA. Subsection 134(b) prohibits the possession of liquor not purchased from the New Brunswick Liquor Corporation (known as Alcohol New Brunswick Liquor, “ANBL”) except for the allowed amount prescribed in s. 43.17 Section 43 allows for possession of twelve pints of beer or one bottle of liquor not purchased from the ANBL.18 The Court concluded s. 134(b) has two effects: (1) it restricts access to liquor purchased from outside the province; and (2) it restricts access to liquor purchased intraprovincially that is not purchased from the ANBL.19 The fine imposed for violation of this provision, in substance, acts as an interprovincial tariff and thus, in essence, violates s. 121.20 However, to be inconsistent with s. 121, the primary purpose of the legislation must also be to restrict trade. It is at this point where my analysis diverges from that of the Court.
The Court concludes that the provision’s primary purpose is to “enable public supervision of the production, movement, sale, and use of alcohol within New Brunswick.”21 With the utmost respect for the Court, this conclusion fails to critically examine the regulatory framework and the substance of the provision.
To be clear, an impermissible purpose, when considering the core22 of s. 121, is imposing a charge merely because alcohol is crossing a provincial boundary.23 Creating a provincial monopoly on alcohol sales within the province is a permissible purpose.24 Artificially increasing the price of all alcohol within the province is a permissible purpose.25 Setting provincial standards on the permissible quality and alcohol content is a permissible purpose.26 So long as the provisions treat all alcohol in the province equally, there is no infringement of s. 121.
The real purpose of s. 134(b) of the LCA is to protect the provincial monopoly on alcohol sales by prohibiting the possession of liquor not purchased from the ANBL. Taking a broad, permissive view of the purpose as “supervision” of alcohol in New Brunswick fails to take an honest assessment of the nature of alcohol sales in the province. The product sold by the ANBL is the exact same product that is sold in other provinces.27 The ANBL controls the supply of alcohol in the province but does not limit it in any meaningful way. The ANBL does not set any limits on the volume of ANBL alcohol that can be purchased or possessed by residents in the province, nor does it monitor who purchases liquor from the ANBL or how it is being used or transported.28 New Brunswick does not do anything to monitor or supervise alcohol lawfully purchased from the ANBL after the transaction is concluded.
It could be argued that government regulation to artificially increase the price of all alcohol in the province with the goal of discouraging excessive alcohol consumption is a permissible purpose.29 However, government regulation must treat the price of all alcohol in the province equally to avoid being classified as a tariff.30 Subsection 134(b) does not treat all alcohol equally as it prohibits virtually all out-of-province liquor and enforces the prohibition through a fine, which is an arbitrary amount not connected to the price of alcohol set by the ANBL.
The allowable amounts in s. 43 of the LCA are simply too low to indicate a primary purpose of targeting bootleggers seeking to violate the ANBL’s monopoly. Twelve pints of beer or one bottle of liquor is a relatively small amount of alcohol considering that the top twenty per cent of alcohol consumers in the United States drink, on average, more than fifteen drinks per week.31 The exact placement as to where the line of allowable amounts is drawn should be left to the legislature; however, the limits must be reasonable if the purpose is truly to target bootlegging. Subsection 134(b), in conjunction with s. 43, clearly targets the personal consumption of out-of-province liquor, not merely potential bootleggers.
The primary purposes of s. 134(b) is to protect the province’s monopoly on alcohol and the revenue it generates for the province. Although s. 121 is directed at revenue generating provincial tariffs,32 the fact that s. 134(b) generates revenue does not automatically mean that the purpose is to impose a charge on liquor crossing a provincial border. One must look at the journey of two bottles of beer, one brewed in Moncton, New Brunswick,33 the other brewed in London, Ontario,34 to understand the true nature of the LCA scheme. Both beers are purchased by the ANBL at fair market value and then sold to the people of New Brunswick at a markup. Both beers are treated the same. The liquor is still admitted “free” in the sense that the scheme does not impose a charge for liquor merely crossing a border, but acts as a general tax on all liquor in the province regardless of where it is manufactured. The taxation of liquor in the province to recover costs on the healthcare or criminal justice systems caused by alcohol is a permissible provincial purpose.35 The Court shies away from this result and instead chooses to close its eyes to the true nature of the scheme.36 However, by doing so, it creates the potential for the ANBL to implicitly violate s. 121 by refusing to purchase alcohol from certain provinces. All alcohol in New Brunswick flows through the ANBL; therefore, the true risk in the LCA scheme is the ANBL’s discretion to choose which goods enter the province by exercising its purchasing powers provided for in the LCA.37 This risk is amplified by the administrative nature of this power, as it may not be clear to an outside observer why the ANBL is, or is not, purchasing specific liquor from a particular region.
The lack of critical analysis of the substance of s. 134(b) demonstrates an unwillingness on the part of the Court to enforce s. 121 of the Constitution in a meaningful way. Despite the Court’s insistence on looking at substance over form, it refrains from doing so in its application of the law to s. 134(b).38
Although the Court ultimately comes to the correct result in Comeau, its application was unduly shallow and sends the implicit message that the courts will not look behind the veil when it comes to s. 121. This leaves provincial governments free to violate s. 121, provided they cloak their impermissible purpose using broad, open provisions to blend it with a permissible one. Time will tell whether courts in the future will engage in more probing analyses of provisions alleged to violate s. 121.
1 2018 SCC 15 [Comeau].
2 RSNB 1973, c L-10 [LCA].
3 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, Appendix II, No 5 [Constitution].
4 2013 SCC 72,  3 SCR 1101.
5 Comeau, supra note 1 at paras 23–43.
6 The Right Honourable Chief Justice of Canada Beverley McLachlin, “Canada’s Legal System at 150: Democracy and the Judiciary Remarks of the Right Honourable Beverley McLachlin, P.C. Chief Justice of Canada” (delivered at the Empire Club of Canada, Toronto, Ontario, 3 June 2016), online: Supreme Court of Canada <https://www.scc-csc.ca/judges-juges/spe-dis/bm-2016-06-03-eng.aspx>, archived: < https://perma.cc/ZWT8-TMXN>.
7 Constitution, supra note 3.
8 Comeau, supra note 1 at para 89.
10 Ibid at para 107.
11 Reference re Securities Act, 2011 SCC 66 at paras 54-60,  3 SCR 837.
12 Reference re Secession of Quebec,  2 SCR 217, 1998 CanLII 793.
13 Ibid at para 58.
15 Comeau, supra note 1 at para 72.
16 Ibid at para 89.
17 LCA, supra note 2.
19 Comeau, supra note 1 at para 121.
21 Ibid at para 124.
22 To borrow terminology from the doctrine of interjurisdictional immunity (Quebec v Canadian Owners and Pilots Association, 2010 SCC 39 at para 37,  2 SCR 536).
23 Comeau, supra note 1 at paras 67, 98, 100.
24 Ibid at para 124.
25 Ibid at para 93.
26 Constitution, supra note 3, s 92(13).
27 New Brunswick Liquor Corporation Catalog, online: ANBL <https://www.anbl.com/catalog>, archived: <https://perma.cc/3GXW-7XQX>.
28 Except, of course, to ensure the purchaser is of legal age and persons are not driving while intoxicated.
29 Comeau, supra note 1 at para 93.
30 Ibid at para 108.
31 Christopher Ingraham, “Think You Drink a Lot? This Chart Will Tell You”, The Washington Post(25 September 2014), online: <https://www.washingtonpost.com/news/wonk/wp/2014/09/25/think-you-drink-a-lot-this-chart-will-tell-you/?noredirect=on&utm_term=.260fdd3ac0e3>, archived: <https://perma.cc/JH76-2PNP>.
32 Comeau, supra note 1 at paras 61, 68, 71.
33 Molson Canadian is brewed in Moncton, New Brunswick and sold by the ANBL (“Molson Coors Canada” (2018), online: Molson Coors <https://www.molsoncoors.com/en/our-story/our-markets/molson-coors-canada>, archived: <https://perma.cc/92CE-5VH4>).
34 Budweiser is brewed by Labatt in London, Ontario and sold by the ANBL (“Our Company” (2018), online: Labatt <http://www.labatt.com/company/#province>, archived: <https://perma.cc/7LRM-C2A6>).
35 Constitution, supra note 3, s 92(2).
36 Comeau, supra note 1 at para 124.
37 Supra note 2, s 35(2).
38 Comeau, supra note 1 at para 109.