Provincial beer rules are unconstitutional, lawyers argue

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The Fathers of Confederation were aiming to protect interprovincial trade from all barriers, even non-tariff ones, when they drafted the Constitution. That's the argument being put forward in a factum filed with the Supreme Court of Canada on Friday on behalf of a New Brunswick man who got in trouble for buying 14 cases of beer and three bottles of spirits in a Quebec border town and bringing them home.

Gérard Comeau was fined nearly $300 in 2012 for the infraction of the New Brunswick Liquor Control Act, which prohibits residents from possessing more than one bottle of spirits or 12 pints of beer not purchased from a liquor store in the province. But, in a 2016 ruling, New Brunswick Provincial Court Justice Ronald LeBlanc threw out the charges against Mr. Comeau and called the province's liquor laws unconstitutional.

The Crown appealed the ruling but the New Brunswick Court of Appeal declined to hear the case, catapulting it all the way up to the Supreme Court, where it is scheduled for a hearing on Dec. 6 and 7. If the top court upholds Justice LeBlanc's ruling, it could end provincial monopolies on liquor sales and dismantle interprovincial trade barriers that cost Canada billions in lost GDP every year.

Mr. Comeau's lawyers are asking the top court to dismiss the Crown's appeal, arguing that doing so would help Canada fulfill its "enormous economic potential" for generations to come.

The extensive list of intervenors from a variety of industries indicates how broad the implications of the decision may be. The Association of Canadian Distillers, the Consumers Council of Canada and a consortium of Canadian farming associations that includes the Dairy Farmers of Canada and the Egg Farmers of Canada are among the dozen groups that have joined the litigation.

"This is really a pan-Canadian story in every sense," says Howard Anglin, executive director of the Canadian Constitution Foundation, which is assisting Mr. Comeau with the case. "A ruling like that would certainly shake the foundations of all sorts of other laws and goods which make it much harder for Canadians to move goods freely within Canada across provincial borders," Mr. Anglin says.

A 2016 Senate report says internal trade barriers cost the country's economy as much as $130-billion by stifling competition, driving up prices and hampering business growth.

The Supreme Court now must try to determine how broadly to interpret Section 121 of the Constitution, which states that: "All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces."

The Office of the Attorney-General for New Brunswick declined to comment since the matter is still before the courts. But in its factum filed with the Supreme Court in August, the Crown argues that the Constitution must be read within the proper historical context and with a reasonable amount of flexibility. In spite of the phrasing "admitted free," Section 121 has never been treated as a stand-alone free trade provision, the Crown argues.

"The historical context of the Canadian federation, the foundational principles of Canadian constitutionalism, and a proper textual understanding of the written Constitution, all lead to the inexorable conclusion that the decision of the trial judge is incorrect," the Crown's factum reads. Indeed, if the Supreme Court sides with Justice LeBlanc, it threatens to dismantle Canadian federalism, the Crown asserts.

A previous case, referred to as the Gold Seal decision, interpreted Section 121 as being aimed at prohibiting interprovincial customs duties but not other types of non-tariff barriers.

However, lawyers for Mr. Comeau say the provision was intentionally drafted to prohibit all forms of barriers on interprovincial trade, including limitations on how much could be imported. In their factum, they cite testimony from historian Andrew Smith, who told the trial that an early draft of Section 121 said goods should be "admitted free of duty." But the section was later rewritten to say "admitted free" to broaden its meaning to include all barriers, even non-tariff ones, according to the factum.

Interprovincial trade barriers don't exist in the United States and in other federations, says Mr. Anglin, who argues that Canadian politicians preach free trade abroad but don't abide by the same principles on domestic soil.

"It's an unnecessary regulatory drag on our economy and we hope that this ruling will go a long way to getting rid of it," he said.