File: 05672010

B E T W E E N:





The Honourable Judge Ronald LeBlanc


Campbellton, NB


August 25, 26, 27 and 28, 2016


April 29, 2016


Mr. William Richards and Mrs. Kathryn Gregory, for the Attorney
General of New Brunswick
Mr. Arnold Schwisberg, Mr. Mikael Bernard and Mrs. Karen
Selick, for the defendant




Mr. Gérard Comeau of Tracadie, New Brunswick, is charged by way of Notice of

Prosecution with (translation): “did have or keep liquor not purchased from the Corporation” in
Campbellton, New Brunswick, on October 6, 2012, an offence under section 134(b) of the New
Brunswick Liquor Control Act.


The defence submits that section 134(b) of the Liquor Control Act is an unenforceable

provincial law under which no one can be convicted. They claim it is of no force and effect as it
contravenes section 121 of the Constitution Act, 1867.


The prosecution of course takes serious issue with this contention.


This Court is called upon to interpret section 121 of the Constitution Act, 1867 and

determine how it impacts on the defendant’s rights.



The parties agreed to the essential facts giving rise to the ticket issued to Mr. Comeau.

An Agreed Statement of Facts was marked as Exhibit C-1 at the trial. Additional facts relating to
the stop, the detention and the seizure of the alcohol in question were supplied by Constable Guy


Savoie, the police officer who intercepted Mr. Comeau’s vehicle in Campbellton on the date in


On Saturday, October 6, 2012, Mr. Gérard Comeau, a resident of Tracadie in the Acadian

Peninsula, drove to Pointe-à-la-Croix and the Listiguj First Nation Indian Reserve in the
province of Québec in his automobile. These communities are directly on the other side of the
Restigouche River after crossing the J.C. Van Horne Bridge from the city of Campbellton, New


Mr. Comeau was under surveillance by the RCMP once he arrived in the province of

Québec. The RCMP Campbellton Detachment had enlisted the aid of their counterparts in
Québec to assist in a project initiated by then Corporal René Labbé, the team leader of the
project. There was no complaint filed with the RCMP which initiated the investigation; it was
self-generated by the police force and was instigated as a crime-reduction initiative. The police
were targeting people who had in excess of five cases of beer in their possession once they
crossed the border. The operation involved surveillance by Québec RCMP of customers from
New Brunswick at outlets selling liquor in Pointe-à-la-Croix or in Listiguj, following them in
unmarked vehicles onto the bridge, radioing ahead to the local police force and providing them
the licence plate number and description of the vehicle involved. The vehicle would then be
stopped by members of the RCMP Campbellton Detachment and searched for the illegally
possessed alcohol. The operation lasted two days. It is unknown how many tickets were issued
for this type of infraction over the two-day span.



Mr. Comeau had gone to Pointe-à-la-Croix and Listiguj specifically to purchase alcoholic

beverages at a cheaper price than that which he would have paid had he purchased the alcohol in
New Brunswick. He was seen entering Wysote’s Convenience Store, the Société des alcools du
Québec and the Provigo Supermarket, all of which sold alcoholic beverages. He crossed the
J.C. Van Horne Bridge into the province of New Brunswick, intending to return to his home in

His vehicle was intercepted on Val d’Amour Street in Campbellton. The police seized


from the trunk of his vehicle the following:


2 cases of 24 bottles of Sleeman’s Light beer;

2 cases of 24 bottles of Miller Genuine Draft beer;

2 cases of 24 bottles of Molson M beer;

3 cases of 20 bottles of Budweiser Light beer;

3 cases of 20 bottles of Budweiser beer;

3 cases of 30 cans of Coors Light beer;

2 bottles of whiskey, 750 ml per bottle; and

1 bottle of Stinger Premixxx liqueur, 1.4 litre.

The total alcohol seized was therefore 354 bottles or cans of beer and three bottles of

liquor. Mr. Comeau was issued his ticket and was allowed to leave.


It was furthermore stipulated in the Agreed Statement of Facts that New Brunswickers

purchase liquor from the province of Québec and transport it themselves into New Brunswick


regularly. This particular aspect of the evidence was further highlighted by John Beckingham, a
private investigator of 27 years’ experience in the field who had been hired by the defendant to
investigate the frequency of alcohol purchases by New Brunswickers in the province of Québec.
He conducted his investigation over the course of six days during a two-week period in July and
August of 2015 by taking photos, talking to employees and owners of either convenience stores
or the Société des alcools du Québec, and generally observing the number of cars parked in the
parking lots and taking note of their province of origin. He concluded from his observations that
during the period in question approximately two thirds of the customers at these convenience
stores or the Société des alcools du Québec had licence plates originating from the province of
New Brunswick. Furthermore, at Wysote’s Convenience Store, he noted that approximately
ninety percent of the floor space was occupied by beer products.



The following are the applicable provisions of the Liquor Control Act of New Brunswick:
Except as provided by this Act or the regulations, no
person shall have liquor in his possession within the Province.
Except as provided by this Act or the regulations, no
person, within the Province, by himself, his clerk, employee,
servant or agent shall
(a) attempt to purchase, or directly or indirectly or upon any
pretence, or upon any device, purchase liquor, nor
(b) have or keep liquor,
not purchased from the Corporation.
A person who is not prohibited by law from having or
consuming liquor may have and consume in a residence or in a
roomette, duplex roomette, compartment, bedroom or drawing
room occupied by him in a train, but not in a public place
except when authorized under a permit,

(a) any liquor that has lawfully been acquired by him under
this Act from the Corporation,
(b) liquor not in excess of one bottle or beer not in excess of
twelve pints purchased outside Canada by him or by the
person from whom he received it as a bona fide gift, or
(c) liquor not in excess of one bottle or beer not in excess of
twelve pints purchased outside New Brunswick from a liquor
commission, board or similar body in any province or territory
of Canada by such person or by a person from whom he
received it as a bona fide gift.
148(2) A person who violates or fails to comply with a
provision of this Act that is listed in Column I of Schedule A
commits an offence.
148(3) For the purposes of Part II of the Provincial Offences
Procedure Act, each offence listed in Column I of Schedule A is
punishable as an offence of the category listed beside it in
Column II of Schedule A.


Under Schedule A, in Column I, section 134(b) of the Liquor Control Act is a category E


In New Brunswick, under the Provincial Offences Procedure Act, a category E

prescribed offence” carries, upon conviction, a minimum fine of $240.00. When one adds to
that fine the 20% surcharge under the Victim Services Act of New Brunswick and the $4.50
administrative fee prescribed by regulation for the processing of tickets, the result is a fine of
$292.50, which is the amount indicated on Mr. Comeau’s ticket.
Section 199 provides an interpretive aid to the Act:
199(1) The purpose and intent of this Act are to prohibit
transactions in liquor that take place wholly within the
Province, except under control as specifically provided by this
Act; and every section and provision of this Act shall be
construed accordingly.
199(2) The provisions of this Act dealing with the importation,
sale, and disposition of liquor within the Province through the
instrumentality of the Corporation, and otherwise, provide the
means by which such control shall be made effective; and


nothing in this Act forbids, affects, or regulates any transaction
that is not subject to the legislative authority of the Province.

Section 121 of the Constitution Act 1867, Stats. UK, 1867 (30 & 31 Victoria), c. 3, (the

Constitution Act, 1867) provides as follows:
s. 121 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.


Section 63(1) of the New Brunswick Provincial Offences Procedure Act actually includes

the possibility of a 30-day jail term for repeat offenders who commit a category E offence.


63(1) Where, in relation to a category E offence, a defendant
is convicted of an offence and has a previous conviction for the
same offence, the judge may, if satisfied that no other sentence
will deter the defendant from repeating that offence, sentence
the defendant to a term of imprisonment of not more than
thirty days.


Finally, sub-section 3(1) of the federal Importation of Intoxicating Liquors Act, R.S.C.

1985 c. I-13 will be referenced. It provides as follows:
3(1) Notwithstanding any other Act or law, no person shall
import, send, take or transport, or cause to be imported, sent,
taken or transported, into any province from or out of any
place within or outside Canada any intoxicating liquor, except
such as has been purchased by or on behalf of, and that is
consigned to Her Majesty or the executive government of, the
province into which it is being imported, sent, taken or
transported, or any board, commission, officer or other
governmental agency that, by the law of the province, is vested
with the right of selling intoxicating liquor.





The defence submits that section 134(b) of the Liquor Control Act is not an enforceable

provincial law as it constitutes a trade barrier that is contrary to section 121 of the Constitution
Act, 1867.

In pith and substance section 134(b) is a trade barrier, either tariff or non-tariff.

They maintain that a purposive or a progressive interpretation of section 121 of the Constitution
Act, 1867 must lead the Court to conclude that section 121 requires free trade among provinces
without trade barriers, tariff or non-tariff, regardless of whether the barrier is found in provincial
legislation or federal legislation. They submit that the wording, legislative history, legislative
context and the scheme of the Constitution Act, 1867 all compel the Court to conclude that
section 121 was intended to secure free trade among the provinces, whether existing or to be
added. They further submit that a plain reading of the section allows for only one conclusion:
free trade. They submit that the Supreme Court of Canada judgment in Gold Seal Limited v.
Dominion Express Company and The Attorney General of the Province of Alberta [1921] S.C.J.
No. 43 (hereinafter referred to as Gold Seal) and all other subsequent judicial decisions on
section 121 should be rejected outright as they are wrongly decided and of doubtful value based
on questionable practices by certain justices of the Supreme Court who participated in the Gold
Seal case. Other aspects of these arguments will be addressed as they arise.




The prosecution asks the Court to address the fundamental structure of the Canadian

Constitution and its relationship to the operation of the federation to determine whether section
134(b) of the Liquor Control Act violates section 121 of the Constitution Act, 1867. They
maintain that rules of statutory interpretation support the conclusion that section 121 was
intended to disarm only provincial laws requiring cross-border tariffs or duties. They argue that
the Canadian Constitution is composed of both written rules (the Constitution Act, 1867, the
amended and repatriated Constitution and various constitutional amendments) and unwritten
rules called constitutional conventions that make a living constitution. The Constitution must
continue to evolve in order to be responsive to the nature of the Canadian federation. They
maintain that legislative co-operation is required as between the federal government and the
provincial legislatures. They posit that federalism, one of the four foundational principles of the
Canadian constitution, gives Canada its unique political character by recognizing the diversity of
the component parts of the Constitution and the autonomy of provincial governments to develop
their societies within their respective spheres of jurisdiction. They invite the Court to recognize
the plurality of the modern nation state and acknowledge that this plurality is a rational part of
the political reality in the federal process. They suggest this Court should adopt the statutory
interpretation of section 121 as was decided by the Supreme Court of Canada in the Gold Seal
case and they invite the Court to dismiss the arguments presented by the defence. Finally, the
prosecution argues that it is the federal Importation of Intoxicating Liquors Act, not the
provincial Liquor Control Act, that establishes prohibitions against the importation of liquor into


one province from another and since the defence has not challenged the federal Act, their
argument should fail.



This last mentioned argument from the prosecution, the one proposing a rejection based

on lack of an attack on the federal Act was not, I believe, raised during oral argument. It flows
from the Crown’s Post-trial Brief. The defence, in their Reply Brief to the Crown’s Post-trial
Brief, states that they do not need to challenge the Importation of Intoxicating Liquors Act for the
purposes of their defence because section 134(b) of the Liquor Control Act is independent of the
Importation of Intoxicating Liquors Act. However, in the alternative, they argue that section 3 of
the Importation of Intoxicating Liquors Act also violates section 121 of the Constitution Act,


I will not address the issue of whether or not section 3 of the Importation of Intoxicating

Liquors Act violates section 121 of the Constitution Act, 1867. The Importation of Intoxicating
Liquors Act is federal legislation. The federal government was never invited to participate in
these proceedings. If the constitutionality of federal legislation is intended to be attacked, the
federal government must be given the opportunity to participate and to respond. Beyond the
basic common sense of this proposition, Rule 11 of the New Brunswick Rules of Provincial
Court Practice required Notice of Application to have been served on the Regional Office of the
Attorney General of Canada, which was not done. The Notice of Application filed was served
on the local office of the Attorney General of New Brunswick only. That was not surprising


since the constitutional issue raised was: “Is section 134(b) of the Liquor Control Act, RSNB
1973, c. L-10, contrary to and in violation of section 121 of the Constitution Act, 1867?” No
mention is made in that document to section 3 of the Importation of Intoxicating Liquors Act.
Furthermore, the presiding judge was never asked to add further issues to the trial. As a
consequence, for the purposes of my analysis, I limit my comments to section 134(b) of the
provincial Liquor Control Act, and will not deal with the constitutionality of section 3 of the
federal Importation of Intoxicating Liquors Act.



The issue is a simple one: whether section 134(b) of the Liquor Control Act of New

Brunswick violates section 121 of the Constitution Act, 1867, and is therefore of no force or
effect as against the defendant. This issue requires the Court to address the meaning to be
attributed to the words “admitted free” found in section 121 of the Constitution Act, 1867. The
simplicity of the issue is rivalled only by the complexity of the factors that the Court must
consider in arriving at its conclusion. The very nature of the Canadian federation is at stake.


In arriving at a conclusion on this issue, the Court will examine the applicable rules of

interpretation for constitutional documents and the legislative history of the Constitution Act,
1867, including the historic events giving rise to the “constitutional moment”. The Court will
also consider the context and scheme of the British North America Act,1867 as it was proclaimed
on July 1, 1867, as well as the relevant jurisprudence pertinent to section 121. The Court will
also address the issue of whether the jurisprudence has been tainted by the infamous “Duff


letter” which figures prominently in the defence attack on the jurisprudential interpretations
following the release of the Gold Seal decision.



During the course of this decision, I will refer to certain facts. The proof of these facts

derives from the testimony given by the various witnesses presented during the trial, the reports
of the two expert witnesses, Dr. Andrew Smith and Dr. Thomas Bateman, filed as exhibits
respectively D-6 and C-11, the other exhibits tendered at the trial, all of which were admitted
with the consent of the opposing party, and finally by reliance on proof of facts by judicial
notice. By judicial notice, I mean matters relating to the history of Canada that do not require to
be proven because of their notoriety and indisputability or that are capable of immediate and
accurate demonstration by resort to readily accessible sources of indisputable accuracy.
Regarding this last mentioned category of evidence, however, the Court was careful not to take
judicial notice of any fact vital to the resolution of the case or of any other important fact in



Section 134(b) of the Liquor Control Act is directed at the possession of liquor wholly

within the province. It specifically does not prohibit importation of liquor from outside the
province. The section provides that no person shall have in his possession liquor in the province
that was not purchased from the Corporation.



The Liquor Control Act then allows for exceptions, one being in relation to liquor

imported into the province from another province. That is found in section 43(c) of the Liquor
Control Act, which allows for a person to have in his possession in this province one bottle of
liquor or 12 pints of beer purchased from a liquor commission outside of this province.
Although not raised by counsel at trial, a strict interpretation of this section allows for one or the
other of the two types of liquor, not both. It actually provides for liquor or beer. This same
section allows a person in this province to possess liquor in the province: section 43(a). The
word “liquor” is defined in section 1 of the Liquor Control Act as follows:
“liquor” includes (boisson alcoolique)
(a) any alcoholic, spirituous, vinous, fermented, malt or other
intoxicating liquid or combination of liquids,
(b) any mixed liquid, a part of which is alcoholic, spirituous,
vinous, fermented, malt or otherwise intoxicating,
(c) all drinks or drinkable liquids and all preparations or
mixtures that are capable of human consumption and
intoxicating, and
(d) beer and wine,
but does not include any beverage obtained by the alcoholic
fermentation of an infusion or decoction of barley malt and
hops or of any similar products in drinkable water and
containing 0.5 per cent or less of proof spirits.


Since the definition of “liquor” includes “beer”, then one could argue the rather

improbable result that a person could have in his possession, in compliance with section 43(c) of
the Liquor Control Act, one bottle of beer or 12 pints of beer purchased from a liquor
commission outside of this province.


Since the provincial legislation prohibits only the possession of liquor or beer purchased

from outside the province in quantities exceeding the prescribed limit, it is not an offence under
the New Brunswick legislation to transport the alcohol across provincial boundaries. It is the

Importation of Intoxicating Liquors Act, the federal Act, which prohibits importation of
intoxicating liquors. However, it is impossible for section 134(b) of the Liquor Control Act to
come into play unless and until the liquor or beer is transported across the provincial boundary.
No one can be charged under section 134(b) unless someone transports liquor or beer across the
provincial lines. Once the liquor or beer is in New Brunswick, in provenance from another
province, that person can be charged with the unlawful possession of it if the amount exceeds
that permitted by the provincial legislation.


The Importation of Intoxicating Liquors Act creates liquor monopolies across the country.

It provides in part that no person shall import or transport into any province from any other
province any intoxicating liquor unless that liquor has been purchased by the government of the
province into which it is being transported or imported. Admittedly, this is a gross paraphrasing
of the section, but it conveys the true import of it.


Section 134(b) of the Liquor Control Act and section 3 of the Importation of Intoxicating

Liquors Act were the subject of debate in the New Brunswick Court of Appeal in the case of
R. v. Gautreau [1978] N.B.J. No. 107. The facts in that case were not dissimilar to those in the
present case. Mr. Gautreau had purchased 22 cases of beer in Québec and was on his way to his
home in New Brunswick when he was stopped by the RCMP. The fact this occurred in 1977,
almost 40 years ago, has not been lost on this Court. The applicable provincial and federal
legislation in the Gautreau case were identical to the ones being argued in this case. The trial
Judge in Gautreau expressed the tentative opinion that section 134 of the Liquor Control Act was
possibly ultra vires the Provincial Legislature as legislation impinging upon federal jurisdiction


over trade and commerce. Section 121 was not argued. The Court of Appeal dealt with the case
on the basis of harmony between conflicting enactments. It decided, at paragraphs 9 and 11:
“There is, therefore, no conflict between the federal act
prohibiting the importation of liquor into a province and the
prohibition of the Liquor Control Act of having or keeping
liquor in the province not purchased from the Corporation.
The two prohibitions are separate and distinct. Clearly a
person may violate the prohibition against having or keeping
liquor not purchased from the Corporation and which has
been imported into the province in violation of the Importation
of Intoxicating Liquors Act without violating the provisions of
that Act. It is also apparent that a violation of the Federal Act
against importing liquor may, in certain circumstances, involve
a violation of the prohibition against having or keeping liquor
not purchased from the Corporation. This, in my opinion, does
not involve the doctrine of paramountcy because, to use the
words of Mr. Justice Judson in O'Grady v. Sparling, [1960]
S.C.R. 804, at 811, "both provisions can live together and
operate concurrently".
In the instant case s. 3 of the Importation of Intoxicating
Liquors Act is unquestionably valid legislation and s. 134(b) of
the Liquor Control Act is prima facie intra vires. Since there is
no conflict between them, in the sense that they can stand
together, the latter provision is not affected by the doctrine of


Importantly, the Court applied an earlier ruling from the Judicial Committee of the

Judicial Council that held that a provincial legislature has no power or authority to prohibit the
importation of intoxicating liquor into a province. It also applied the Gold Seal case. I refer to
paragraph 6:
“It is well established by a series of judicial decisions that
while Parliament and the Legislature together have complete
legislative authority to regulate and control traffic in
intoxicating liquor, certain aspects of the control fall solely in
the authority of Parliament. Thus in A.G. Ont. v. A.G. Canada,
[1896] A.C. 348 the Judicial Committee held that a provincial
legislature has no power or authority to prohibit the
importation of intoxicating liquor into the province. The

question was again dealt with in Gold Seal Ltd. v. Dominion
Express Co. (1921), 62 D.L.R. 62 when the Supreme Court of
Canada held that Parliament had power to prohibit the
importation of intoxicating liquor into Alberta under its
general power under s. 91 of the British North America Act "to
make laws for the peace, order and good government of
Canada" as well as under its jurisdiction to regulate trade and
commerce under s. 91(2)”.


Additional evidence was presented to this Court regarding what I would call collateral

issues. These include the Maritime Beer Accord, the Agreement on Internal Trade – an attempt
to create a policy changing the amount of alcohol a person could bring into New Brunswick –
and discussions between Ministers regarding amending the Importation of Intoxicating Liquors
Act. I will deal with these briefly, since none of them deal directly with the issue of the
interpretation of the impugned legislation.


The Maritime Beer Accord is nothing more than the result of a handshake deal made in

1993 between Frank McKenna, then Premier of New Brunswick, and John Savage, then Premier
of Nova Scotia, to bypass the controls imposed by the provinces as a result of the Importation of
Intoxicating Liquors Act. If a brewer wanted to sell beer in a province, they had to have a
brewery in the province. Both Moosehead and Labatt’s had breweries in New Brunswick and
Nova Scotia. The Premiers agreed that Moosehead would close their plant in Nova Scotia and
Labatt’s would close their plant in New Brunswick yet both would retain the privileges
associated with still having a plant in both provinces. With this agreement, beer produced in
Nova Scotia was treated exactly the same as beer produced in New Brunswick. The same
applied for Nova Scotia produced beer. The resulting reciprocal treatment applied to the listing,
pricing, distribution and marketing of beer and access to points of sale. Currently, the situation


in New Brunswick is that beer produced in Nova Scotia or Prince Edward Island is treated
exactly like beer produced in New Brunswick whereas beer produced in Ontario and Québec are
not. Beer produced by brewers in the last two mentioned provinces, and all other provinces, is
handled through the Alcool NB Liquor (the ANBL) warehouse, which attracts a warehouse
handling fee, which would be considered, no doubt, to be a tariff trade barrier.


Efforts to remove trade barriers also arose out of discussions leading up to the Agreement

on Internal Trade, admitted into evidence as Exhibit C-7. The Agreement on Internal Trade
Implementation Act, S.C. c. 17, is the legislated result of those discussions.


The preamble of the Agreement on Internal Trade states in part the following:
REDUCE AND ELIMINATE, to the extent possible, barriers
to the free movement of persons, goods, services and
investments within Canada;”
Articles 100, 402 and 404 state the following:
Article 100: Objective
“It is the objective of the Parties to reduce and eliminate, to the
extent possible, barriers to the free movement of persons,
goods, services and investments within Canada and to establish
an open, efficient and stable domestic market. All Parties
recognize and agree that enhancing trade and mobility within
Canada would contribute to the attainment of this goal.”
Article 402: Right of Entry and Exit
“Subject to Article 404, no Party shall adopt or maintain any
measure that restricts or prevents the movement of persons,
goods, services or investments across provincial boundaries.”
Article 404: Legitimate Objectives


Where it is established that a measure is inconsistent with
Article…402…that measure is still permissible under this
Agreement where it can be demonstrated that:
a) the purpose of the measure is to achieve a legitimate
b) the measure does not operate to impair unduly the access of
persons, goods, services or investments of a Party that meet
that legitimate objective;
c) the measure is not more trade restrictive than necessary to
achieve that legitimate objective; and
d) the measure does not create a disguised restriction on


Article 402, the right of entry and exit, is specifically excluded from operation in the case

of alcoholic beverages: article 1000(1).


The preamble to the federal Agreement on Internal Trade Implementation Act specifies

the following:
“…AND WHEREAS the reduction or elimination of barriers
to the free movement of persons, goods, services and
investments is essential for the promotion of an open, efficient
and stable domestic market to enhance the competitiveness of
Canadian business and sustainable development;”


Mr. Richard Smith, the prosecution witness who testified about the Agreement on

Internal Trade and its implementation, was not an expert in the field and only had a rudimentary
knowledge of its contents.

Being the Senior Vice President, Chief Operating Officer and

Secretary of the Board of Directors of the ANBL however, he did have knowledge about current
liquor practices, particularly involving New Brunswick.

To cursorily and perhaps unduly

summarize his testimony on the Maritime Beer Accord and the implementation of the Agreement
on Internal Trade in this province, New Brunswick continues to respect the handshake deal with
Nova Scotia and Prince Edward Island on beer distribution notwithstanding Nova Scotia’s

reticence to reciprocate, and because New Brunswick is of the opinion that there are
discriminatory practices in Québec and Ontario in relation to alcohol products, this province
retains its discriminatory practices against products made in their jurisdictions (transcript, vol. 1,
page 56).


Mr. Smith also testified about Exhibit C-4, a submission to the Board of Directors of

ANBL in October of 2011 dealing with a resolution to approve a change to the existing New
Brunswick legislation on interprovincial travel importation of liquor. In June of 2011, the
Canadian Association of Liquor Jurisdictions had approved a resolution supporting the ability of
individuals to transport on their person, and for their personal use, reasonable quantities of liquor
across provincial and territorial boundaries within Canada, subject to the proviso that each
jurisdiction would determine what quantity of liquor was reasonable. Subsequent conference
calls were held amongst the jurisdictions resulting in most implementing or adopting policies to
support the resolution. The policy change was adopted by the Board of ANBL at its October 14,
2011, meeting. The policy adopted was identical to that adopted in Nova Scotia, and matched
quantities adopted in Ontario and Nova Scotia. The policy adopted stated:
“New Brunswick residents returning home from travel within
Canada may have reasonable quantities of beverage alcohol,
obtained elsewhere in Canada for personal use, accompany
them on their person without penalty.
For the purposes of this policy, “reasonable quantities” are
defined as:
1. Spirits: 3 litres;
2. Wine: 9 litres;
3. Beer: 24 litres.
Amounts in excess of these limits shall not be permitted and
are to be obtained via the ANBL special order process”.



It would appear that, flawed language notwithstanding, such a policy represented national

standards. The Department of Public Safety, responsible for the Liquor Control Act in New
Brunswick, did not actively pursue the request for modification to its legislation. The proposed
24 litres of beer represents the equivalent of 70 bottles, apparently.


Finally, a great deal of interest was generated by the initiative of the province of British

Columbia to amend the Importation of Intoxicating Liquors Act by proclamation of Bill C-311.
Exhibit C-6 represents the opinions expressed in the attached letters by certain of the politicians
in the Maritime Provinces to the proposed enactment. The provinces of Nova Scotia, Prince
Edward Island and New Brunswick, at least as regards the dates of the forwarding of these
letters, all opposed the proposed amendment. That amendment would have facilitated direct
delivery of wine products to consumers in all provinces. The provinces felt that supporting the
proposal would endanger a reliable source of revenue. Bill C-311 allowed for importation of
wine into another province provided that the individual complied with the laws of the receiving
province, and that it be for personal consumption only.



As was so aptly stated by Justices Cromwell and Karakatsanis in Québec (Attorney

General) v. Canada (Attorney General) [2015] 1 S.C.R. 693 in paragraph 3, “…the courts are
not to question the wisdom of legislation but only to rule on its legality”.


The Constitution of Canada requires a “flexible interpretation” so that it can be adapted

over time to changing conditions. This is the source of what has been called the “progressive

interpretation” as explained by Lord Sankey’s use of a colourful metaphor in Edwards v. A.-G.
Canada [1930] A.C. 124. He described the Constitution of Canada as “a living tree capable of
growth and expansion within its natural limits”. He stated that the Constitution of Canada must
not be “cut down” by “a narrow and technical construction” but rather should be the subject of “a
large and liberal interpretation”. This “living tree” metaphor has been applied by the Supreme
Court of Canada in many cases, including A.G. Québec v. Blaikie [1979] 2 S.C.R. 1016, a case
involving language rights, A.-G. B.C. v. Canada Trust Co. [1980] 2 S.C.R. 466, a case involving
the taxation power and Re Residential Tenancies Act [1981] 1 S.C.R. 714, a case involving the
interpretation of section 96 of the Constitution Act, 1867.


In the Same-Sex Marriage Reference [2004] 3 S.C.R. 698, the question before the

Supreme Court of Canada was whether Parliament’s power over “marriage” extended to
legalizing same-sex marriages. The issue of the need to interpret the Constitution by reference to
the applicable norms at the time of Confederation came into play. In 1867, the prevailing view
was that marriage was by its very nature a union between a man and a woman. There were no
exceptions to this. Homosexual acts were illegal, even as between consenting adults. The Court
said at paragraph 22, in response to the argument that the Constitution Act, 1867 effectively
entrenched the common law definition of "marriage" as it stood in 1867, that:
“…The "frozen concepts" reasoning runs contrary to
one of the most fundamental principles of Canadian
constitutional interpretation: that our Constitution is a living
tree which, by way of progressive interpretation,
accommodates and addresses the realities of modern life…”

At paragraph 23, the Court continued:


“A large and liberal, or progressive, interpretation
ensures the continued relevance and, indeed, legitimacy of
Canada's constituting document. By way of progressive
interpretation our Constitution succeeds in its ambitious
enterprise, that of structuring the exercise of power by the
organs of the state in times vastly different from those in which
it was crafted…”


The reason for this adaptive interpretation is explained by Professor Peter Hogg in the

Constitutional Law of Canada, 5th Edition at page 36-26 as follows:
“It is never seriously doubted that progressive interpretation is
necessary and desirable in order to adapt the Constitution to
facts that did not exist and could not have been foreseen at the
time when it was written”.


Judicial interpretations must change as society’s values change and evolve. This is

inevitable. Consequently courts must not adopt inflexible interpretations rooted in the past. On
the other hand, progressive interpretations must not “liberate the courts from the normal
constraints of interpretation”, per Hogg, J, supra at 15-50. He states:
“…Constitutional language, like the language of other texts,
must be “placed in its proper linguistic, philosophical and
historical contexts” (citing R v Big M Drug Mart [1985] 1 S.C.R.
295 at 344, per Dickson, J). Nor is the original understanding
(if it can be ascertained), irrelevant. On the contrary, the
interpretation of a constitutional provision “must be anchored
in the historical context of the provision” (citing R v Blais
[2003] 2 S.C.R. 236). All that progressive interpretation insists
is that the original understanding is not binding
forever…contemporary courts are not constrained to limit
their interpretations to meanings that would have been
contemplated in 1867 (or whenever the text was created)”.


The prosecution has insisted on this point in their presentation. As Professor Hogg has

stated at page 60-9 of his text:


The principle of progressive interpretation means that the
views of the framers about the meaning of particular
provisions of the constitutional text become less and less
relevant with the passage of time. As Beetz, J. has pointed out,
legislative history is a “starting point”, but it cannot be
conclusive in interpreting “essential dynamic” provisions
(citing Martin Service Station v MNR [1977] 2 S.C.R. 996 at


The last mentioned principle no doubt arises from the following, found in Mister Justice

Beetz’ judgment in the Martin Service Station case, supra:
“…Legislative history provides a starting point which may
prove helpful in ascertaining the nature of a given legislative
competence; but, as is shown by the history of legislation
relating to bankruptcy and insolvency and by the
interpretation of the jurisdiction of Parliament in this matter,
it is seldom conclusive as to the scope of that competence for
legislative competence is essentially dynamic”.


Post-Charter cases involving interpretation of the Constitution stress a “purposive

interpretation” – see for example R. v. Kapp [2008] S.C.C. 41 at paragraph 82.

This requires

the Court to examine the actual wording of the section involved, its legislative history, the
scheme of the Act and the legislative context. The interpretation should be a generous rather
than a legalistic one which, while not overshooting the actual purpose of the legislation in
question, must be placed in its proper linguistic, philosophic and historical context: R. v. Big M.
Drug Mart [1985] 1 S.C.R. 295 at paragraph 117.




What must be determined is the meaning to be attributed to the words “admitted free” in

section 121: “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 defence posits that a liberal interpretation of these words leads one to conclude that

all articles grown, produced or manufactured in one province of Canada must be admitted free
into another province of Canada because, based on either a progressive or a purposive
interpretation of the Constitution, the section mandates free trade among provinces without any
barriers, whether the barrier be tariff or non-tariff and whether the barrier is found in federal or
provincial legislation.


The Supreme Court of Canada in Gold Seal has said otherwise. They have said that

section 121 does nothing more than protect the movement of Canadian goods against
interprovincial “custom duties” or “charges”. This interpretation has been applied in Canada by
all provinces and territories for over 95 years.


Yet this is decidedly not what was intended by the Fathers of Confederation. The

historical context of the section in question was very ably and thoroughly described at trial by
one of the world’s most renowned experts on the constitutional moment, Dr. Andrew D. Smith,
whose credentials were unimpeachable and whose testimony was beyond reproach. I accept his


testimony without hesitation and will refer to it in more detail later in this judgment when I
address the issue of the historical context of the challenged section.


Addressing myself to the wording used in the section, the question then becomes, was the

Gold Seal qualifier “admitted free from custom duties or charges” justified? There is certainly
nothing in the plain reading of section 121 to suggest that the words “admitted free” meant
admitted free from custom duties or charges. Those words do not form any part of the section.


Dr. Smith provided some important background information concerning the drafting of

section 121 which I accept as having shed some light on its proper interpretation. The British
North America Act, 1867 (UK), renamed the Constitution Act, 1867 by the Constitution Act,
1982 was an enactment of the Parliament of the United Kingdom. It created the federal nation of
Canada in 1867 by uniting the provinces of Canada (now Ontario and Québec), Nova Scotia and
New Brunswick into a single « Dominion » it named Canada. The British North America Act,
1867 was the culminating legislation emanating from agreements and discussions arising from
conferences held in Charlottetown in 1864, Québec City in 1864 and in London, England in
December 1866.


The “constitutional moment” is the expression used to describe the statements and the

actions of the framers of the British North America Act, 1867 during the period from June 1864
to March 1867, the period of time when the entirety of the details of that Act were being worked
out between the various participants.



A rough draft constitution, called the Québec Plan of Union, was produced by the Fathers

of Confederation at the Québec conference in the fall of 1864. That draft was modified at the
constitutional conference held in London, resulting in the London Resolutions of 1866. It was
further subsequently refined as the Fathers of Confederation continued to develop the plan,
resulting in the bill that was presented to the British Parliament in February and March 1867.


Section 121 of the British North America Act, 1867, as well as other parts of that bill, was

drafted by a British government lawyer named Francis Savage Reilly. Dr. Smith testified that
Frank Reilly was born in Dublin in 1825, was called to the English bar in 1851 and specialized in
insurance cases and commercial arbitration. He lived in London. Two versions of section 121
were drafted by Frank Reilly. The initial draft, numbered 125, read like this:
All Articles the Growth or Produce or Manufacture of
Ontario, Québec, Nova Scotia, or New Brunswick, shall be
admitted free into all Ports in Canada.

The final draft, section 121, which was enacted, reads as follows:
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.


As can be seen, and as confirmed through the testimony of Dr. Smith, there are two

striking differences between the two drafts.


Firstly, the section 125 draft mentions specifically that the articles of growth, produce or

manufacture of Ontario, Québec, Nova Scotia or New Brunswick was to be admitted free. The
specific provinces were named. The reference to these specific provinces was deleted in the


redrafted section 121, which refers to all articles of growth, produce or manufacture of “any one
of the provinces”. The striking out of the names of the four provinces was, in his opinion, not
accidental. The Fathers of Confederation clearly had expansion in mind. They were thinking
forward to further provincial annexations and consequently did not want to bind only the four
provinces mentioned in section 125.

The articles “of any one of the provinces” were

consequently to be admitted free into each of the other provinces, regardless of the date they
formed part of the Dominion of Canada.


Secondly, the words “into all ports in Canada” were deleted.

This change also

demonstrates that the framers of the Constitution were forward looking individuals. This change
indicates that the Fathers of Confederation were thinking about land-based trade, not just waterbased trade.

Dr. Smith testified that by getting rid of that restriction, the Fathers of

Confederation were looking in the direction of a “more comprehensive economic union”
(transcript, vol. 3, page 34). The drafting took into consideration that in the 19th century,
technology was advancing rapidly and had the effect of “shrinking” the world. Roads were
being built. Huge bridges spanning great distances over rivers were being constructed, including
one over the St. Lawrence River. Railroads were going to be connecting the provinces one to the
other. Electric telegraph was making it easier for businessmen to interact with each other over
great distances. All of which prompted the Fathers to seek a more comprehensive economic
union, “an attempt to create unfettered exchange” and to “tie the hands of future generations of
Canadian politicians, federal and provincial”, according to Dr. Smith (transcript, vol. 3, page 36).



There is another important facet of this study into the wording used in the British North

America Act, 1867. In order to determine the intention of the drafters of section 121, Dr. Smith
referred us to legislation in the British colonies that were in existence prior to Confederation.
Each of the colonies of Nova Scotia, New Brunswick and the Province of Canada had drafted
legislation in an attempt to eliminate trade barriers between them. They had, according to
Dr. Smith, passed laws “intended to set the legislative basis for a free trade agreement”
(transcript, vol. 3, page 37). The Nova Scotia and the New Brunswick Acts in question were
called An Act in relation to the Trade between the British North America Possessions (SNS 1848
(10 & 11 Vict.) c. 1 and SNB 1850 (13 Vict.) c. 2). The Province of Canada had a title even
more telling: An Act to facilitate Reciprocate Free Trade between this Province and other
British North American Provinces (S. Prov. C. 1850 (13 & 14 Vict.) c. 3)

The New Brunswick legislation was passed March 30, 1848. It read as follows:
“Whereas it is desirable that the Trade between the British
North American Possessions of Canada, Nova Scotia, Prince
Edward Island, Newfoundland, and New Brunswick, should be
conducted in the most free and unrestricted manner;
Be it enacted by the Lieutenant Governor, Legislative
Council and Assembly, That whenever from time to time the
importation into any other of the British North American
Provinces hereinbefore mentioned, of all articles, the growth,
production or manufacture of this Province (excepting
Spirituous Liquors) shall by Law be permitted free from Duty,
His Excellency the Lieutenant Governor, by and with the
advice of Her Majesty’s Executive Council, shall forthwith
cause a proclamation to be inserted in the Royal Gazette, fixing
a short day thereafter, on which the Duty on all articles
(excepting Spirituous Liquors) being the growth, production,
or manufacture of any such Province as aforesaid, (excepting
Spirituous Liquors) into which the importation of all articles,
the growth, production or manufacture of this Province, shall
be so permitted free from Duty, shall cease and determine; and
from and after the day so limited and appointed, all such
articles, the growth, produce or manufacture of any such

Province, in such Proclamation to be named, (excepting
Spirituous Liquors), shall be admitted into this Province Duty
free, upon such proof of origin and character as may from time
to time be required in and by any Order of the Lieutenant
Governor in Council”.


Each of the Acts had similar wording. Dr. Smith referred to this as “reciprocal free trade”

(transcript, vol. 3, page 38), through a complex mesh of lateral and multilateral agreements as
between the North American provinces. He made the point that there were many people in
British North America who were familiar with the principle of “admitted free from duty”.
Certainly the politicians of the day, including the Fathers of Confederation, would have been
aware of the difference between “admitted free” and “admitted free of duty”.


The words “All articles of the Growth, Produce or Manufacture” found in section 121 of

the British North America Act, 1867 certainly mirrors that found in the three proclamations in
pre-Confederation Canadian provinces. I find that significant. In drafting our Constitution, Mr.
Reilly used wording similar to the legislative language used in New Brunswick, Nova Scotia and
Canada to propagate interprovincial trade between the provinces. Most importantly, he did not
include the words free “from duty”. Dr. Smith stated that for contemporaries, the term “admitted
free” had a different meaning than “admitted free of duty”. To him, “admitted free” had a
broader, more comprehensive, more robust meaning, referring to the expressions it “Has to be
allowed in, has to be waived in” (transcript, vol. 3, page 39 and 40). This was no accident in his
opinion. The use of the words “admitted free” strengthened the phrasing of the sentence to more
accurately reflect the values, ideas and principles of the drafters of the British North America
Act, 1867.


I will now examine the placement of section 121 in the structure of the British North

America Act, 1867 to determine if there are any significant conclusions that could be reached
about its meaning based on its placement in the Act.


Section 121 of the Constitution Act, 1867 is in Part VIII of the Act, under the heading

Revenues, Debts, Assets, Taxation”. These sections (102 to 126) dealt with sundry items such
as the creation of a Consolidated Revenue Fund, the interest on provincial public debts, the
salary of the Governor General, assets, debts, ownership of public property, grants to the
provinces, the continuance of Customs and Excise laws, etc.


Dr. Smith was of the opinion that the placement of section 121 in Part VIII of the Act was

significant because it was disconnected deliberately from sections 91, 92 and 93 of the Act.
These are the sections that deal with the distribution of powers as between the federal and
provincial governments. These address jurisdictional questions. Section 121 on the other hand
is placed with what he referred to as “the physical side of Confederation” being division of
assets, national debt and so forth (transcript, vol. 3, page 57 and 58). Dr. Smith was of the
opinion that when the Fathers of Confederation were addressing the drafting of section 121 of
the British North America Act, 1867, they were thinking about the revenue sources of
governments, focusing on what would be a legitimate revenue source for a government and what
wouldn’t. Part VIII also deals with the transition from one form of government to another and
involves a transition period.



The prosecution takes the position that the 24 sections in Part VIII are in generic terms

referencing matters of revenue or money. It advances the theory that since section 121 is placed
in the same Part as sections 122 to 124, which deal with the continuation of certain customs and
excise taxes and duties until they are altered by the new Government of Canada, the position
advanced by Dr. Smith is not sustainable.


I find neither the heading, nor the placement of section 121 in Part VIII of the Act to be of

any particular benefit in arriving at a conclusion as to its meaning. The section deals with the
subject of trade as between the provinces. It had to be placed somewhere in the Act and its
placement in Part VIII was perhaps nothing more than not having another Part in which to more
appropriately place it. The various headings were as follows: Part I: Preliminary; Part II:
Union; Part III: Executive Power; Part IV: Legislative Power; Part V: Provincial Constitutions;
Part VI: Distribution of Legislative Powers; Part VII: Judicature; Part IX: Miscellaneous
Provisions; Part X: Intercolonial Railway and Part XI: Admission of Other Colonies. Indeed, it
would have been preferable to give the section its own Part since it deals with a topic not neatly
or clearly belonging to any of the others.


Having closely examined the wording of the section, I conclude that there is nothing in

the wording used in section 121 of the Constitution Act, 1867 that would lead one to infer that
the Fathers of Confederation intended to restrict the words “admitted free” to “admitted free of
customs duties or charges”. Indeed, the opposite is the conclusion I would reach. The fact that
the language used is similar to that found in provincial enactments in the provinces of Canada at
the time and the fact that the section does not use the words “free of duty” as is used in those


provincial enactments and in other sections in the same Part of the British North America Act,
1867 have convinced me that the wording used in section 121 suggests free trade, not “admitted
free of customs duties or charges”.



I will now examine in some detail the historical context of section 121 of the Constitution

Act, 1867.


The preamble to the British North America Act, 1867 includes the following two

“Whereas the Provinces of Canada, Nova Scotia and New
Brunswick have expressed their Desire to be federally united
into One Dominion under the Crown of the United Kingdom of
Great Britain and Ireland, with a Constitution similar in
Principle to that of the United Kingdom:
And whereas such a Union would conduce to the Welfare of
the Provinces and promote the Interests of the British


This vision of the Dominion of Canada having a Constitution similar in principle to that

of Great Britain plays a key role in the interpretation of historical events giving rise to the
proclamation of the British North America Act, 1867. The Fathers of Confederation specifically
espoused what was familiar to them and rejected any notion of an American-style of

The influence of the governmental policies of Great Britain relating to

administration, management and trade were key to what the Fathers wanted to accomplish here
in Canada. The British North America Act, 1867 did not make any major break with colonial

past. Independence from the United Kingdom was neither sought nor contemplated. The newlycreated Dominion of Canada remained a colony of the United Kingdom. Indeed, the resolve to
remain attached to the United Kingdom was so strong that the Fathers of Confederation did not
include an amending formula for the Act. Clearly they wanted continuity.


According to Dr. Smith, they also wanted to create inter-colonial free trade. That, in fact,

was an important motivation for Confederation. The historical background to be addressed in
this part of my decision derives primarily from the testimony of Dr. Smith and from his report.
The historical context was not disputed by the prosecution.


The positive benefits of free trade and the negative effects of trade impediments, also

called “non-tariff trade barriers” were well known to the Fathers of Confederation and to the
politicians in Great Britain during the events leading up to Confederation. Both shared the
philosophy that the creation of a true common market embracing all of the North American
colonies would be beneficial.


For the purposes of the trial in this matter, a “tariff barrier” was defined as a tax or a

payment of money assessed on the basis of the weight or volume of the product or as a
percentage of the value of the product entering the jurisdiction in question. It adds to the cost of
imported goods and is one of several trade policies that a country can enact. A “non-tariff
barrier” was not specifically defined but examples were given. They can come in a variety of
forms, all of which refer to restrictions that result from prohibitions, conditions, or specific
market requirements that make importation or exportation of products more difficult or more


costly. Government action in the form of laws, regulations, policies or restrictions can effectively
increase costs and form non-tariff barriers to trade.


There was a wide range of motives for the creation of a unified Canada, many of which

related to economic development.

Since 1854, ten years before the movement towards

Confederation began in earnest, the people in British North America – in those provinces now
known as Ontario, Québec, Nova Scotia and New Brunswick – had prospered economically by
exporting their natural products to the United States under the terms of the Reciprocity Treaty. It
was a period of tremendous prosperity for the people of British North America. Lord Elgin on
behalf of Great Britain and its North American colonies and the United States Secretary of State,
William Marcy signed this Reciprocity Treaty on June 5, 1854. Its effect was to eliminate
customs tariffs thereby giving the North American colonists relatively unfettered access to the
US market. The basic bargain was this: American fishermen were allowed to fish in British
colonial waters and, in return, British North Americans got the benefits of free trade with the
United States of America. They could send their timber, fish, minerals and agricultural products
across the border into the lucrative US market.


The economy of the British colonies surged ahead because of this relatively unfettered

access to the US market. It gave rise to a period of tremendous optimism in British North
America and generated extensive economic development including, for example, the building of
railways and the opening of banks. Notwithstanding some opposition in the United States, most
Americans favoured the continuation of the Reciprocity Treaty. That changed, however, with
the outbreak of the civil war in the United States, which lasted between April 12, 1861 and May


9, 1865.

Many Americans perceived British North Americans as sympathizing with the

Southern Confederacy. Rightly or wrongly, they attributed blame to them for helping the south
in the US Civil War. This resulted in the United States imposing a battery of non-tariff barriers
for goods imported from the British colonies.


US Customs officials began what has been described as the “search and detain”

protocols. These had the effect of delaying the transporting of goods across the US border.
Increased paperwork, assertive inspections, passport requirements and other means were used to
delay the crossing of goods, all of which resulted in increased costs to the exportation of goods to
the US market, thereby constituting non-tariff barriers to trade. Between 1864 and 1865, there
was increasing pressure emanating from the United States to abrogate the Reciprocity Treaty.
British North American politicians complained bitterly about the search and detain protocols.
However, being a colony and not a sovereign country at the time, they had no ambassador in the
United States to speak on their behalf. They turned to the British government for help. Lord
Lyons, the Senior British diplomat in Washington at the time, spent a great deal of time
attempting to resolve the issue. Indeed, he later recalled that during this period he spent more
time dealing with British North American issues than he did with British issues.


Dr. Smith emphasized the importance of this topic. This issue of non-tariff trade barriers

and tariff trade barriers was uppermost in the minds of Canadian politicians during the
constitutional moment. The Fathers of Confederation clearly understood the distinction between
the two because of current events giving rise to the repeal of the Reciprocity Treaty.



Repeal required a 12-month notice period. In March 1865, notice was given. The

Reciprocity Treaty ceased to be operative on March 17, 1866. As of that date, there was no
longer free trade between the United States of America and the colonies of British North


The vast majority of people in the British North American colonies wanted a return to


Indeed, in the 1860s and early 1870s the government of John A. MacDonald

repeatedly attempted to negotiate a new Reciprocity Treaty with the United States. His goal of
restoring reciprocity enjoyed overwhelming support in Canada. The British government also
wanted its North American subjects to be able to trade freely with the United States but were
unable to achieve that end. This gave rise to a search for an alternate mode of economic

The search was in earnest for alternative markets.

The strategy adopted,

according to Dr. Smith, was internal free trade within the boundaries of British North America.


During this time, British North Americans were also discussing their constitutional

future. Discussions between the three Maritime Provinces, New Brunswick, Nova Scotia and
Prince Edward Island, had been scheduled to take place concerning a political and economic
union between them. The Fathers of Upper Canada (now Québec and Ontario) got wind of their
discussions and attended the Charlottetown Conference for discussions between September 1 and
September 7, 1864. This first conference brought together 23 delegates from Upper Canada,
New Brunswick, Nova Scotia, and Prince Edward Island. The Fathers from Upper Canada were
able to convince the other provinces that if a union of their three provinces was a good idea, then
the union between all provinces would be a better one. They discussed a comprehensive union


that would include not only the provinces represented, but also the possibility of other provinces
to be annexed over time. The Maritime Fathers ultimately agreed to the proposal.


The discussions resumed at the Québec conference in Québec City between October 10

and 27, 1864. This second meeting was attended by 33 delegates representing the original
participating provinces plus two delegates from Newfoundland. The representatives expanded on
the Charlottetown discussions, which resulted in a series of 72 resolutions known as The Québec
Resolutions. It was there that the Fathers of the Confederation drafted the first Constitution of


These resolutions dealt in part with the distribution of powers between a new federal

government and the provinces, the division of Upper Canada into two provinces to be named
Ontario and Québec, and the financial structure of the new Dominion. It also required the new
federation to build an intercolonial railway. While the Newfoundland and Prince Edward Island
representatives withdrew from the project, those from Nova Scotia, New Brunswick and Upper
Canada agreed to submit the resolutions to their assemblies for approval.


The third and final conference was held in London, England, from December 1866 to

March 1867. It led to the adoption of the final version of The Québec Resolutions. The task of
converting the rough plan of a proposed Constitution into a working enactment began. The
attending Fathers of Confederation were assisted by British politicians including Henry Herbert,
the 4th Earl of Carnarvon who in 1866 had been appointed Secretary of State for the Colonies,
and, of course, Francis Reilly.



The British, who were asked to present an enactment establishing a new country with a

new constitution, were expected to express the resolutions in clear, eloquent legislative form.
There followed various drafts of the sections to be proclaimed. The wording became more
refined; sections were moved around and renumbered. The British wanted the legislation to
reflect the wishes of the Fathers of Confederation, mature and knowledgeable men who had a
vision, who had the right to determine their own constitutional destiny and who sought a selfgoverning autonomous country that would continue to be part of the British Empire.


The Canadian colonies were in good hands. The British had much experience and the

required expertise to assist in the drafting of the proposed Constitution.

At the time of

Confederation, the British were considered to be experts in diplomacy and trade negotiation.
They knew how to write a document such as that sought by the British North Americans.


The British North America Act, 1867 introduced into the British Parliament by Lord

Carnarvon on February 12 and approved by Queen Victoria on March 29, 1867, creating the
united provinces under the Dominion of Canada, was to take effect on July 1 of that year.


The Fathers of Confederation wanted a strong, comprehensive economic union in

addition to the political union it envisaged. The 1860s were the high-water mark in the belief in
free enterprise, in the idea that government should allow the private sector to operate with
minimal regulation from government. This belief arose as a result of certain events in the 1840s.
At about that time, the protectionist movement in Great Britain was being replaced by a grass
roots movement towards a free market approach to the economy. There was continuous debate


about the benefits of free trade in the British Empire during the period of time in question. By
the 1850s, the debate had been conclusively settled. The consensus favoured free trade. The
British concluded that by eliminating trade barriers both internally and externally, and by letting
the market operate freely, maximized rates of economic growth would result. By the 1850s, both
political parties in Great Britain shared this view. It was not a partisan issue as it had been
previously. After 1850, most goods entering the United Kingdom did so without paying any
customs duties. The British government replaced the revenue that had previously been collected
from regressive customs duties with an income tax paid by the top two percent of British
families. The concept of free trade became deeply entrenched in British political culture. In the
1860s, the quintessential British policy favoring free trade was recognized internationally.
People associated Britain with free trade. Since the Fathers of Confederation were committed to
remaining part of the British Empire, the British views on free trade would have been influential
to them.


That was the historical context during which section 121 of the British North America

Act, 1867 came into being. Having examined this historical context, I come to the conclusion
that section 121 was incorporated into the British North America Act, 1867 as a result of
apprehension by the Fathers of Confederation at the prospect of financial losses anticipated to
arise from the repeal of the Reciprocity Treaty with the United States and from the concomitant
anxiety generated by a significant loss of an established market for goods produced in British
North America. The firmly established British movement towards free trade at the time of the
constitutional discussions, together with the punitive losses brought about by the repeal of the
Reciprocity Treaty would have had to have influenced the Fathers of Confederation to move in


the direction of free trade. I have been convinced that their intent was to replace the loss of the
free trade American market with a free trade Canadian market. The strong and harmonious
economic union envisaged by our Fathers of Confederation had to have been based on free trade,
not on punishing internal non-tariff trade barriers, such as had been put in place by the
Americans. The benefits to be realized by opening up the markets of each province to the
products of the others would have been curtailed by allowing non-tariff barriers to be imposed by
each of them.



What was said by the Fathers of Confederation and British parliamentarians during the

events leading up to March 1867 has also assisted this Court in determining what was intended to
be accomplished by them.


In the Confederation Debates on September 12, 1864, George Brown, a Father of

Confederation, stated that he heartily endorsed Confederation because it would break down trade
barriers and open up a new market. I quote:
“…Union of all Provinces would break down all trade barriers
between us, and throw open at once…a combined market of
four millions of people. You in the east would send us your
fish and your coals and your West India produce, while we
would send you in return the flour and the grain and the meats
you now buy in Boston and New York. Our merchants and
manufacturers would have a new field before them – the
barrister in the smallest provinces would have the judicial
honors of all of them before him to stimulate his ambition – a
patentee could secure his right over all British America – and
in short all the advantages of free intercourse which has done
so much for the United States, would at once be open to us all”.


In Ottawa, on November 1, 1864, Alexander Galt, another Father of Confederation, said

the following:
“Now we desire to bring about that same free trade in our own
colonies. It is almost a disgrace to us, if I may use the term,
that under the British flag, in the dominions of our Sovereign
in British North America, there should be no less than five or
six tariffs and systems of taxation; and we cannot have trade
between one Province and another without being subjected to
all the inconveniences which occur in a foreign country. Surely
it is our business to remove these difficulties, and we ought as
subjects of the Crown, whose interests are identical, to be


On November 23, 1864, in Sherbrooke, Québec, Galt explained the rationale for

Confederation by stating that one of “…the chief benefits expected to flow from the
Confederation was the free interchange of the products of the labor of each province”. He said
Confederation would eliminate “restrictions on the free interchange of commodities as to prevent
the manufactures of the rest from finding a market in any one province, and thus from sharing in
the advantages of the extended Union”.


John A. MacDonald, to be elected the first Prime Minister of Canada, in a speech on

February 6, 1865, said:
“…if we wish... to establish a commercial union, with
unrestricted free trade, between people of the five provinces,
belonging, as they do, to the same nation, obeying the Same
Sovereign…this can only be obtained by a union of some kind
between the scattered and weak boundaries composing the
British North American Provinces”.


Again, on February 7, 1865, in a speech in the Parliament of the Province of Canada on

the desirability of Confederation, Galt referred to the prosperity North American colonies


enjoyed under the 1854 Reciprocity Treaty to demonstrate “the benefits of free commercial
intercourse”. He stated that trade had increased between British North America and the United
States, stating it “swelled from less than $2,000,000.00 to upwards of 20,000,000.00 per annum”.
He observed that “we are threatened with an interruption of that trade” because United States’
politicians would soon prove “hostile to the continuance of free commercial relations with this
country”. Since the United States were soon to re-impose trade barriers he said “…it is the duty
of the House to provide, if possible, other outlets for our productions… If we have reason to fear
that one door is about to be closed to our trade, it is the duty of the House to endeavour to open
another”. He stated this could be accomplished by providing for “free trade with our own
fellow-colonists for a continued and uninterrupted commerce which will not be liable to be
disturbed at the capricious will of any foreign country”. He stated:
“I believe the Union of these Provinces must cause a most
important change in their trade. Union is free trade among
ourselves. Perhaps insurmountable difficulties may prevent us
carrying out any such thing whilst separated, but when united
our intercourse must be as free as between Lancashire and
Yorkshire. The free intercourse between the States of the
American Union – free trade in the interchange of products,
has had more to do with their marvellous progress than
anything that was put in their constitution. Give us Union and
the East shall have free trade with the West”.


George-Étienne Cartier, another Father of Confederation, argued in favour of

Confederation on the grounds that it would ensure free trade between the North American
colonies. On February 7, 1865, he stated:
“It was of no use whatsoever that New Brunswick, Nova Scotia
and Newfoundland should have their several custom houses
against our trade, or that we should have custom houses
against the trade of those provinces”.



On February 19, 1867, Lord Carnarvon said the following in the House of Lords:
“Now these districts, which it may almost be said that nature
designed as one, men have divided into many by artificial lines
of separation. The Maritime Provinces need the agricultural
products and the manufacturing skill of Canada, and Canada
needs harbours on the coast and a connection with the sea.
That connection, indeed, she has, during the summer, by one of
the noblest highways that a nation could desire, the broad
stream of the St. Lawrence; but in winter henceforth she will
have it by the intercolonial railway. At present there is but a
scanty interchange of the manufacturing, mining, and
agricultural resources of these several Provinces. They stand to
each other almost in the relation of foreign States. Hostile
Custom Houses guard the frontiers, and adverse tariffs choke
up the channels of intercolonial trade. There is no uniformity
of banking, no common system of weights and measures, no
identity of postal arrangements. The very currencies differ. …
Such then being the case, I can hardly understand that any one
should seriously dispute the advantage of consolidating these
different resources, and interests, and incidents of government
under one common and manageable system”.


Lord Carnarvon therefore referenced both tariff and non-tariff barriers to trade in the

British colony in his speech to the House of Lords.


On February 28, 1867, during second reading debate in the House of Commons in Great

Britain, the Under-Secretary of State for the colonies, Mr. Charles Adderley, spoke the following
in regards to the proposed British North America Act, 1867:
“The commercial advantages are, perhaps, the most
prominent, and the least open to question or dispute. The idea
is absurd of retaining a system of different commercial tariffs
amongst these contiguous Provinces which are ruining and
keeping down their trade. Why, the effect of the reciprocity
treaty between the United States and Canada was to develop
the commerce between these countries in one year from
2,000,000 to 20,000,000 dollars. That treaty has now ceased;
but surely that is a reason why, at least amongst themselves,
there should be the most perfect reciprocity. Well, then, as to

their mutual interests, who can doubt that these three
Provinces – the wheat-growing West, the manufactures Centre,
and the fisheries and outlet on the coasts, are necessary to each
other to make one great country jointly developing diverse
interests. Was there ever, let me ask, a country so composed by
nature to form a great and united community? By their mutual
resources – by the assistance of their different interests, they
would make together a powerful and prosperous nation. As
long as they remain separate they are a prey to the commercial
policy of other nations, and mutual jealousies among


There were of course many debates and speeches leading up to Confederation. Only a

small portion of them have been referred to by me. I believe however that the excerpts quoted
demonstrate one of the principal motivations giving rise to the Canadian Confederation. The
colonies of British North America had lost, or were about to lose, access to the free trade they
had enjoyed for years with the United States. The existing systems in the Provinces were
hampering free trade as between them and something needed to be done to open up the
movement of goods as between the provinces to replace the loss of that American market. They
had in place “customs houses” impeding trade. In my opinion, the Fathers of Confederation
wanted free trade as between their respective jurisdictions. They also wanted to eliminate
customs duties as between the provinces in order to open up the market for the movement of
their goods. I conclude that to the Fathers of Confederation, the Union meant free trade, the
breaking down of all trade barriers as between the provinces forming part of the proposed
Dominion of Canada. The free movement of goods across provincial borders was, in fact, one of
the major advantages the Fathers saw in Confederation.




Of singular importance to the determination of these matters is the precedent set by the

Supreme Court of Canada in the Gold Seal case. The facts leading up to the release of that
judgment are important, as the defence alleges impropriety by certain of its participants. They
also allege it was wrongly decided.


The Gold Seal Company, a liquor merchant in Calgary, Alberta, carried on an

interprovincial business throughout Canada as an importer, an exporter and a distributor of all
kinds of wines, spirits and malt liquors. On February 1, 1921, Gold Seal tendered to the
Dominion Express Company packages of intoxicating liquors to be shipped to a person’s private
dwelling outside of Alberta. Dominion Express refused. They stated that they would not carry
their intoxicating liquors from Alberta to any person or corporation in Saskatchewan or
Manitoba. They did this because the Government of Canada had enacted the Canada
Temperance Amending Act, which came into force in Alberta just a few days previously.


Without going into detail about the steps that legislation had to go through in order to

take effect, the end result was that the federal cabinet had to issue a proclamation bringing the
Act into force in Alberta, then it required that the proclamation “…name the day on which…[the]
prohibition will go into force”. The proclamation of the governor in council did not name the
day on which the prohibition was to come into force. Gold Seal thereupon argued that the
Canada Temperance Amending Act was not properly proclaimed.



The issue before the Supreme Court of Canada was whether or not the federal cabinet’s

proclamation of the Act had complied with the requirements of section 152(g) of the Canada
Temperance Amending Act. Factums filed by both Gold Seal and the Attorney General addressed
that issue. Their factums did not address section 121 of the British North America Act, 1867.
Oral argument in the Supreme Court took place on May 10 and 11, 1921. During oral argument,
Gold Seal must have raised the section 121 issue. The Court reserved its decision. On June 4,
1921, prior to the Supreme Court issuing judgment in the case, the federal government enacted
the Proclamation Validation Act, S.C. 1921 (11 & 12 Geo. V) c. 20. Sections 1 and 2 of that Act
declared as follows:
No proclamation heretofore or hereafter issued under
Part IV of the Canada Temperance Act, as enacted by chapter
eight of the Statutes of 1919, second session, shall be deemed to
be void, irregular, defective or insufficient for the purpose
intended merely because it does not set out the day on which,
in the event of the vote being in favour of the prohibition, such
prohibition shall go into force, provided it does state that such
prohibition shall go into force on such day and date as shall by
order in council under section 109 of the Canada Temperance
Act be declared.
No order of the Governor in Council declaring
prohibitions in force in any province, whether heretofore
passed or hereafter to be passed, shall be or shall be deemed to
have been ineffective, inoperative, or insufficient to bring
prohibition into force at the time thereby declared by reason of
any error, defect, or omission in the proclamation or other
proceedings preliminary to the vote of the electors, or in the
taking, polling, counting or in the return of the vote or in any
step or proceeding precedent to the said order, unless it appear
to the court or judge before whom the prohibition is in
question that the result of the vote was thereby materially



The Supreme Court then allowed the parties to the proceedings to file supplementary
The written judgment was released on October 18, 1921.

It was held that the

Proclamation Validation Act, making no exception from its application to proceedings in any
suit pending at the time of its passage, was valid legislation and cured what would have been
held to be a fatal defect in the proclamation. The proclamation having been “cured”, the validity
of the proceedings was upheld. An otherwise invalid proclamation was thereby saved by the
Proclamation Validation Act.


As to section 121 of the British North America Act, 1867, the comments by Duff,

Mignault, and Anglin JJ., have been subsequently interpreted to ring the death knell to what the
defence alleges is a constitutionally protected right to interprovincial free trade.

Duff J. said at page 456:
“The capacity of the Parliament of Canada to enact the
amendment of 1919 is denied. With this I do not agree. And,
first, I am unable to accept the contention founded upon
section 121 of the B.N.A. Act; the phraseology adopted, when
the context is considered in which this section is found, shews, I
think, that the real object of the clause is to prohibit the
establishment of customs duties affecting inter-provincial trade
in the products of any province of the Union.”

Anglin J. said, at page 466:
“Neither is the legislation under consideration in my opinion
obnoxious to s. 121 of the B.N.A. Act. The purpose of that
section is to ensure that articles of the growth, produce or
manufacture of any province shall not be subjected to any
customs duty when carried into any other province.
Prohibition of import in aid of temperance legislation is not
within the purview of the section.”


Migneault J. stated at pages 469-470:
“Nor do I think that any argument can be based on sec. 121 of
the British North America Act which states that all articles of
the growth, produce or manufacture of any of the provinces
shall, from and after the Union, be admitted free in each of the
other provinces.
This section, which so far as I know has never been judicially
construed, is in Part VIII of the Act, bearing the heading
"Revenues, Debts, Assets, Taxation," and is followed by two
sections which deal with customs and excise laws and custom
In the United States constitution, to which reference may be
made for purposes of comparison, there is a somewhat similar
provision (art. 1, Sec. 9 par. 5 and 6) the language of which,
however, is much clearer than that of sec. 121. It says:
No tax or duty shall be laid on articles exported from any state.
No preference shall be given, by any regulation of commerce or
revenue, to the ports of one state over those of another; nor
shall vessels bound to or from one state be obliged to enter,
clear or pay duties to another.
I think that, like the enactment I have just quoted, the object of
section 121 was not to decree that all articles of the growth,
produce or manufacture of any of the provinces should be
admitted into the others, but merely to secure that they should
be admitted "free," that is to say without any tax or duty
imposed as a condition of their admission. The essential word
here is "free" and what is prohibited is the levying of custom
duties or other charges of a like nature in matters of
interprovincial trade”.


The next case to deal with section 121 of the British North America Act, 1867 was issued

from the Judicial Committee of the Privy Council on appeal from the Supreme Court of Canada
in Atlantic Smoke Shops Limited v. Conlon [1943] 4 D.L.R. 81 (referred to as Atlantic Smoke
Shops), a case emanating from New Brunswick.

The question in that case was the

constitutionality of “An act to provide for imposing a tax on the consumption of tobacco” (the


Tobacco Tax Act), proclaimed by the legislature of the Province of New Brunswick in 1940. The
retail operator of a store in Saint John, New Brunswick, who sold tobacco products argued that
the provisions of the Tobacco Tax Act were ultra vires of the legislature of the Province of New
Brunswick. Section 5 of that Act required of the resident the payment of the tax on tobacco
brought in for their personal consumption from other provinces. The Court said the following
relative to section 121 in paragraph 9:
“…Sect. 121 was the subject of full and careful exposition by
the Supreme Court of Canada in Gold Seal, Ld. v. Attorney
General for Alberta, (1921), 62 S.C.R. (Can.) 424, 439, where
the question arose whether the parliament of Canada could
validly prohibit the importation of intoxicating liquor into
those provinces where its sale for beverage purposes was
forbidden by provincial law. The meaning of s. 121 cannot
vary according as it is applied to dominion or to provincial
legislation, and their Lordships agree with the interpretation
put on the section in the Gold Seal case, (1921), 62 S.C.R.
(Can.) 424, 439. Duff J. held that "the phraseology adopted,
when the contest (sic) is, considered in which the section is
found, shows, I think, that the real object of the clause is to
prohibit the establishment of customs duties affecting interprovincial trade in the products of any province of the union",
Ibid. 456. (A.C.), Anglin J. said: "The purpose of that section is
to insure that articles of the growth, produce or manufacture
of any province shall not be subjected to any customs duty
when carried into any other province", (1921), 62 S.C.R.
(Can.) 466. Mignault J. described the purpose of the section as
being to secure that admission of the articles described should
be "without any tax or duty imposed as a condition of their
admission", Ibid. 470, (A.C.). These considerations make it
clear that if s. 5 of the Tobacco Tax Act is not obnoxious to s.
122 of the British North America Act, it is also free from
objection on the score of s. 121. That the tax is taxation within
the province is, their Lordships think, clear for the reasons
given by Taschereau J”.


The reasoning behind the conclusion is found in paragraph 8 of the decision:
“Objection is taken to the validity of s. 5 on the alleged
ground that it offends against ss. 121 and 122 of the British

North America Act. When the scheme of Canadian federation
is considered as a whole, the purpose and effect of these two
sections seem plain enough. Previous to the date of federation,
each province was a separate unit raising part of its revenue by
customs duties on certain commodities imported from outside it might even be from another province. One essential purpose
of federating such units is that they should cease to maintain
customs barriers against the produce of one another, and
hence s. 121, supplemented by s. 123, established internal free
trade from July 1, 1867, which was the date proclaimed for the
Union. It was not, however, practicable to abolish provincial
customs entirely on that date. Ordinary customs and excise
are, as Mill's treatise shows, the classical examples of indirect
taxation, and thus fell thenceforward within the exclusive
legislative competence of the dominion parliament. But until
the Dominion had imposed and collected sufficient taxes on its
own account, it was desirable to continue to gather in the
revenue arising from the customs and excise laws of the
provinces (with the exception of inter-provincial import
duties), though it would appear from s. 102 of the British
North America Act that after federation the proceeds passed
into the consolidated revenue fund of the Dominion. A
dominion tariff has long since been enacted and the customs
and excise laws of the different provinces have been brought to
an end by dominion legislation. The question, therefore, on this
part of the case, which has to be determined is whether s. 5 of
the New Brunswick Act is invalid as amounting to an attempt
by the province to tax in disregard of the restrictions contained
in ss. 121 and 122 of the constitution. If s. 5 purports to impose
a duty of customs, it is wholly invalid, and, if it denies free
admission of tobacco into New Brunswick, it is invalid so far as
this refers to tobacco manufactured in another province of
Canada. Their Lordships have reached the conclusion that s. 5
does not impose a customs duty…”


The next case to deal with section 121 is Murphy v. CPR [1958] S.C.R. 626 (referred to

as Murphy). That case involved one Stephen Francis Murphy who was the president of a
company he incorporated in British Columbia called Mission Turkey Farms Ltd. His company
raised turkeys in British Columbia. On September 29, 1954, Mr. Murphy tendered to the
Canadian Pacific Railway Company in Winnipeg, Manitoba, one sack of wheat, one of oats and


one of barley, requesting that it transport them to his farm in Princeton, British Columbia. The
grain had been grown in Manitoba. It was obviously a test case, intended to question the validity
of certain legislation. CPR refused to accept the grain for transport. It alleged that it was
prohibited from doing so by reason of the provisions of the federally enacted Canadian Wheat
Board Act, and more specifically, section 32 of that Act. That section provided that no person
other than the Canadian Wheat Board could transport or cause to be transported from one
province to another, or export from Canada any grain owned by a person other than the Board.
The Board was required to purchase all wheat, oats and barley produced in the three Prairie

Mr. Murphy alleged that the Canadian Wheat Board Act was ultra vires the

Parliament of Canada and that a prohibition against farmers shipping wheat out of a province
was unconstitutional because it violated section 121 of the British North America Act, 1867. He
lost on both counts. The Court held that the Canadian Wheat Board Act was valid federal
legislation as it was in relation to a section 91 power involving regulation of trade and
commerce. Locke J., speaking on behalf of the majority, summarily dismissed the section 121
argument citing Justices Duff and Anglin in the Gold Seal case, as well as the Atlantic Smoke
Shops case. Interestingly in that case, Justice Rand, concluding as he did “…I find in s. 121 no
obstacle to the operation of the scheme in any of the features challenged” (at page 643), did
appear to widen the scope of permissible interprovincial trade where he stated, at page 642:
“I take s. 121, apart from customs duties, to be aimed against
trade regulation which is designed to place fetters upon or
raise impediments to or otherwise restrict or limit the free flow
of commerce across the Dominion as if provincial boundaries
did not exist. That it 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”.


Justice Rand cautioned that it was not necessary for the courts to explore section 121 in

detail in both the Gold Seal and the Atlantic Smoke Shop cases. The Atlantic Smoke Shop case
dealt with infringement by way of a tax, whereas Gold Seal dealt with infringement by way of a
prohibition in support of valid provincial law (see page 639). He concluded on the topic, at
pages 642-43, as follows:
“Section 121 does not extend to each producer in a province an
individual right to ship freely regardless of his place in that
order. Its object, as the opening language indicates, is to
prohibit restraints on the movement of products. With no
restriction on that movement, a scheme concerned with
internal relations of producers, which, while benefiting them,
maintains a price level burdened with no other than
production and marketing charges, does not clash with the
section. If it were so, what, in these days has become a social
and economic necessity, would be beyond the total legislative
power of the country, creating a constitutional hiatus. As the
provinces are incompetent to deal with such a matter, the two
jurisdictions could not complement each other by co-operative
action: nothing of that nature by a province directed toward its
own inhabitants could impose trade restrictions on their
purchases from or sales of goods to other provinces. It has
become a truism that the totality of effective legislative power
is conferred by the Act of 1867, subject always to the express
or necessarily implied limitations of the Act itself; and I find in
s. 121 no obstacle to the operation of the scheme in any of the
features challenged”.


The final case to deal with section 121 is Re Agricultural Products Marketing Act, [1978]

2 S.C.R. 1198 (referred to as the APMA case). In that case, the facts relating to the reference
showed that an agreement had been entered into between the federal Minister of Agriculture and
federal marketing agency and their provincial counterparts in all the provinces.

By this

agreement, the parties contracted to establish a comprehensive egg marketing scheme under the
Farm Products Marketing Agencies Act, 1970-71-72 (Can.), c. 65. The program involved federal
and provincial marketing plans establishing quotas for export, interprovincial and intraprovincial

trade. The Canadian Egg Marketing Agency was established and set overall quotas for each
Province. The Agency was given authority to impose levies or charges on the marketing of eggs
by egg producers and these were to be collected on behalf of the Agency by the local egg board.
In Ontario, the Ontario Farm Products Marketing Board set individual production quotas based
on the Province's quota.


Thirteen questions relating variously to the validity of certain provisions of three Acts,

two federal and one provincial, establishing an interlocking scheme of control of egg marketing,
both as to price and supply, established under federal and provincial authority had been referred
to the Ontario Court of Appeal. Interestingly, in none of the thirteen questions was reference
specifically made to section 121 of the Constitution Act, 1982, although the question was raised
as to whether enabling legislation was ultra vires the individual jurisdictions.


The following excerpts from Chief Justice Laskin’s decision from that case deal with

section 121. I should add that the arguments made by the appellants was that the enabling
statute, by authorizing the Canadian Egg Marketing Agency to limit and control which egg
producers may market interprovincially, the number of eggs they may market and the price at
which they may sell effectively prevented the establishment of a single economic unit in Canada
with absolute freedom of trade between its constituent parts, which they claimed was one of the
main purposes of Confederation and which was guaranteed by section 121 of the Constitution
(see page 48).
At page 21:
“The distortion allegedly involved in the overall regulatory
scheme is said by the appellants to impede the free flow of

commodities but, apart from the effect of s. 121 of the British
North America Act, that could be the effect of any federal
regulatory scheme which had no interaction with provincial
agencies and there is no constitutional infirmity in such a

At page 45:
“I should note here that a second ground of attack upon the
foregoing provisions was that they violated s. 121 of the British
North America Act, the so-called "free trade" provision, 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”.

At pages 48 and 49:
“I should add that the objection to the anti-dumping provision
is that because it precludes the marketing in one Province of
eggs produced in another at a price less than the aggregate of
the price in the Province of production and reasonable
transportation charges, it imposes a tariff through inclusion of
the cost of transportation in the price to be charged in the
importing Province. The shipper is not allowed to absorb the
cost of transportation even if he wishes, and the result, it is
said, is that producers in one Province are protected as against
producers in another.
The authorities on s. 121 were brought into the submissions to
support the contentions that s. 121 applies to federal legislation
no less than to provincial legislation and that the marketing
plan here exhibits a protectionist policy as among Provinces,
impeding the flow of trade in eggs between and among
Provinces. Reference was made to the observation of Viscount
Simon in Atlantic Smoke Shops v. Colon [ [1943] A.C. 550.], at
p. 569 that "the meaning of s. 121 cannot vary according as it
is applied to dominion or to provincial legislation". It seems to
me, however, 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. It must be
remembered too that the federal trade and commerce power
also operates as a brake on provincial legislation which may

seek to protect its producers or manufacturers gains entry of
goods from other Provinces.
A federal regulatory statute which does not directly impose a
customs charge but through a price fixing scheme, designed to
stabilize the marketing of products in interprovincial trade,
seeks through quotas, paying due regard to provincial
production experience, to establish orderly marketing in such
trade cannot, in my opinion, be in violation of s. 121. In Gold
Seal Ltd. v. Dominion Express Co. [ (1921), 62 S.C.R. 424.],
both Anglin and Mignault JJ. viewed s. 121 as prohibiting the
levying of customs duties or like charges when goods are
carried from one Province into another. Rand J. took a
broader view of s. 121 in Murphy v. C.P.R. [ [1958] S.C.R.
626.], where he said this, at p. 642:
I take s. 121 apart from customs duties to be aimed against
trade regulation which is designed to place fetters upon, or
raise impediments to, or otherwise restrict or limit, the free
flow of commerce across the Dominion as if provincial
boundaries did not exist. That it 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 indicants
of trade. What is forbidden is a trade regulation, that in its
essence and purpose is related to a provincial boundary.
Accepting this view of s. 121, I find nothing in the marketing
scheme here that, as a trade regulation, is in its essence and
purpose related to a provincial boundary. To hold otherwise
would mean that a federal marketing statute, referable to
interprovincial trade, could not validly take into account
patterns of production in the various Provinces in attempting
to establish an equitable basis for the flow of trade. I find here
no design of punitive regulation directed against or in favour
of any Province”.




The defence is asking this Court to reconsider the Gold Seal case. They allege that the

Supreme Court of Canada’s interpretation that section 121 of the British North America Act,
1867 prohibited only the establishment of customs duties affecting interprovincial trade was
wrongly decided. They base this opinion on five arguments:

1. The Supreme Court of Canada did not interpret the British North America Act, 1867
properly. They did not interpret it in a large, liberal and comprehensive spirit, as was
required, considering the magnitude of the subjects with which it purports to deal in so
few words.

2. The justices cited no authority, basing their conclusion on the “objects of the clause”,
notwithstanding there is nothing in the Confederation documents to suggest that the
object of section 121 should be so limited.

3. No constitutional law textbook prior to the Gold Seal case suggested their restrictive
interpretation of section 121.

4. The Gold Seal interpretation ignores the fact that section 121 does not mention the words
“duties”, “charges” or “taxes”, whereas sections 102, 103, 123 and 126 do. Since the
Fathers of Confederation knew the impact of duties, charges and taxes on goods, and had
them included in other provisions of Part VIII, but not in section 121 in that Part, that

would suggest that they did not intend section 121 to be confined to prohibiting tariff
barriers, but rather to be applicable to both tariff and non-tariff trade barriers.

5. Had the federal government not enacted the Proclamation Validation Act prior to the
decision being released, Gold Seal would have won their case. The Supreme Court of
Canada dismissed the section 121 argument summarily, which, by itself, is sufficient
reason to reject its interpretation.


I cannot disagree with any of these remarks. The Supreme Court of Canada did not

embark on a large, liberal or progressive interpretation of the Constitution Act, 1867 in Gold
Seal. There was in fact little interpretation at all of section 121. They cited no authority, they
based their conclusion on the “objects of the clause” without examining the objects of the clause
in detail, they relied on no constitutional law textbook, the case does not refer to other sections in
Part VIII of the British North America Act, 1867 and the one paragraph included on section 121
by Justice Duff could be classified as a summary dismissal of an argument. That however does
not mean that the case was wrongly decided. It does mean that the case should be re-examined if



The defence is asking this Court to not follow binding precedent.



The Supreme Court of Canada has authority to depart from its previous decisions and it

has done so in the past. However, departing from previous decisions should only be done with
caution and for compelling reasons: see Binus v. The Queen [1967] S.C.R. 594, per Cartwright J.
The lower courts, however, are bound by the principle of stare decisis, otherwise known as the
doctrine of binding precedent, under which decisions of a court are binding on courts lower in
the hierarchy.


There are exceptions to the stare decisis principle. These were recently explained in

Carter v. Canada (Attorney General) [2015] 1 S.C.R. 331 at paragraph 44 as follows:
44 “The doctrine that lower courts must follow the decisions
of higher courts is fundamental to our legal system. It provides
certainty while permitting the orderly development of the law
in incremental steps. However, stare decisis is not a straitjacket
that condemns the law to stasis. Trial courts may reconsider
settled rulings of higher courts in two situations: (1) where a
new legal issue is raised; and (2) where there is a change in the
circumstances or evidence that "fundamentally shifts the
parameters of the debate" (Canada (Attorney General) v.
Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101 at para. 42)”.


Chief Justice McLachlin of the Supreme Court of Canada wrote the following in

relation to the principle of stare decisis in the case cited, Canada (Attorney General) v.
Bedford [2013] S.C.C. 72 (the Bedford case) in paragraphs 38 to 44:
38 “Certainty in the law requires that courts follow and
apply authoritative precedents. Indeed, this is the foundational
principle upon which the common law relies.
The issue of when, if ever, such precedents may be
departed from takes two forms. The first "vertical" question is
when, if ever, a lower court may depart from a precedent
established by a higher court. The second "horizontal"
question is when a court such as the Supreme Court of Canada
may depart from its own precedents.

40 In this case, the precedent in question is the Supreme
Court of Canada's 1990 advisory opinion in the Prostitution
Reference, which upheld the constitutionality of the
prohibitions on bawdy-houses and communicating -- two of the
three provisions challenged in this case. The questions in that
case were whether the laws infringed s. 7 or s. 2(b) of the
Charter, and, if so, whether the limit was justified under s. 1.
The Court concluded that neither of the impugned laws were
inconsistent with s. 7, and that although the communicating
law infringed s. 2(b), it was a justifiable limit under s. 1 of the
Charter. While reference opinions may not be legally binding,
in practice they have been followed (G. Rubin, "The Nature,
Use and Effect of Reference Cases in Canadian Constitutional
Law" (1960), 6 McGill L.J. 168, at p. 175).
41 The application judge in this case held that she could
revisit those conclusions because: the legal issues under s. 7
were different, in light of the evolution of the law in that area;
the evidentiary record was richer and provided research not
available in 1990; the social, political and economic
assumptions underlying the Prostitution Reference no longer
applied; and the type of expression at issue in that case
(commercial expression) differed from the expression at issue
in this case (expression promoting safety). The Court of Appeal
disagreed with respect to the s. 2(b) issue, holding that a trial
judge asked to depart from a precedent on the basis of new
evidence, or new social, political or economic assumptions, may
make findings of fact for consideration by the higher courts,
but cannot apply them to arrive at a different conclusion from
the previous precedent (at para. 76).
In my view, a trial judge can consider and decide
arguments based on Charter provisions that were not raised in
the earlier case; this constitutes a new legal issue. Similarly, the
matter 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.
The intervener, the David Asper Centre for
Constitutional Rights, argues that the common law principle of
stare decisis is subordinate to the Constitution and cannot
require a court to uphold a law which is unconstitutional. It
submits that lower courts should not be limited to acting as


"mere scribe[s]", creating a record and findings without
conducting a legal analysis (I.F., at para. 25).
44 I agree. As the David Asper Centre also noted, however, a
lower court is not entitled to ignore binding precedent, and the
threshold for revisiting a matter is not an easy one to reach. In
my view, as discussed above, this threshold is met when a new
legal issue is raised, or if there is a significant change in the
circumstances or evidence. 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.


Professor Hogg in Constitutional Law of Canada, 5th Edition at page 8-24 posits the

theory that, in constitutional cases, it is arguable that “the Court should be more willing to
overrule prior decisions than in other kinds of cases”, citing the dictum of Black J. of the
Supreme Court of the United States in Green v. U.S. [1958] 356 U.S. 165, 195 who wrote the
“…the Court has a special responsibility where questions of
constitutional law are involved to review its decisions from
time to time and where compelling reasons present themselves
to refuse to follow erroneous precedents; otherwise its mistakes
in interpreting the Constitution are extremely difficult to
alleviate and needlessly so”.


In this case, I am no doubt bound by the vertical stare decisis principle which obliges me

to follow the binding precedent set by the Supreme Court of Canada. I cannot ignore binding
precedent unless one of the exceptions applies. The threshold is high. That threshold is met
when “a new legal issue is raised, or if there is a significant change in the circumstances or
evidence” (Bedford case, supra).



In this case, I do not believe that a new legal issue has been raised. The issue was

addressed as far back as 1921 in the Gold Seal case. The Court there addressed the issue of what
meaning was to be attributed to the word “free” found in section 121 of the Constitution Act,
1867. The members of the Court very summarily examined the phraseology adopted, the
purpose of the section, its object and the context in which the section was to be found and arrived
at its conclusion. It must be remembered also that three other Supreme Court pronouncements
have been made relative to section 121: the Atlantic Smoke Shops case in 1943, the Murphy case
in 1958 and the APMA case in 1978. All of these addressed in varying degrees of detail the legal
issue that has been raised in this case.


Nor do I believe that there has been a significant change in circumstances justifying a

departure from binding precedent. Whatever is meant by that expression, I would think that it
would operate against the request made here by the defence. Canada, the provinces and its
territories have carried on their economic policies in reliance on the binding precedent set by
Gold Seal for over 95 years now. There has been no significant change in circumstances
requiring reassessment.


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.



The defence calls into play the validity of the Gold Seal decision based on the improper

manipulation of one of the foundational aspects of judicial independence. They allege that there
was the exercise of extraneous influence in the judicial function at the highest court, which
affected the outcome of the case. In support of this shocking allegation, they submit what is
called the Duff letter.


The Duff letter was admitted by consent as Exhibit D-1, a certified true copy of a

document filed in the Library and Archives, Canada, described by Nicole Fleury on behalf of the
Librarian and Archivist of Canada as follows: “It is an unsigned letter from Lyman Poore Duff
to Lord Haldane in 1925”. The letter is dated 4th of June, 1924, and addressed to the Rt. Hon.
Viscount Haldane, O.M., K.T., House of Lords, London.


The paragraph from this letter, which purports to support the defence theory, is here

“An instance of what I am referring to occurred a couple of
years ago, in Meighen’s time when Doherty was Minister of
Justice. A question was before this Court as to the validity of a
proclamation to bring the Canada Temperance Act into force
in Alberta. The temperance people were making a row about
it, and the Minister of Justice, being anxious to ascertain the
probable result of the appeal then pending, sent for two

members of the Court, Anglin and Mignault, and obtained
from them information as to their own opinions and the
opinions of their colleagues and the probable result of the
appeal, and as a consequence legislation curing the defect was
introduced before our judgment was delivered. Doherty felt
safe in that case, because he and the two judges mentioned
were educated at the same Jesuit college in Montreal, with, as
you may imagine, very close reciprocal affiliations”.


The reference to “Meighen” is likely a reference to then Prime Minister Arthur Meighen.

The reference to “Doherty” was likely a reference to The Right Honourable Charles J. Doherty,
the then Minister of Justice. “Anglin” and “Mignault” refer to two of Justice Duff’s colleagues
on the bench. Francis Alexander Anglin, a New Brunswicker, was appointed to the Supreme
Court of Canada on February 23, 1909, and retired as Chief Justice of that Court on February 28,
1933. He served on the Supreme Court for 24 years. Pierre-Basile Mignault was an educator
and the author of the monumental treatise Le Droit civil canadien, (9 volumes, 1885-1916). On
October 25, 1918, he was appointed to the Supreme Court of Canada. He served on the Court for
ten years, retiring on September 30, 1929.


It is therefore alleged that the two afore-mentioned justices from the Supreme Court of

Canada met with the then Minister of Justice between May 11, 1921, (the final day of oral
arguments in the Supreme Court of Canada) and June 4, 1921, (the proclamation date of the
Proclamation Validation Act in Parliament). It is further alleged that the three not only discussed
the possible outcome of the Gold Seal case, but further that Justices Anglin and Mignault
disclosed to the Justice Minister how they were to decide the case. It is implied that they also
told him, explicitly or implicitly, how to change the outcome of the case.



The question is what import should this letter have on my decision in this case?


Defence counsel referred to Canada v. Tobiass [1997] 3 S.C.R. 391 to explain the

seriousness of such allegations and the possible ramifications. In that case, Mr. Thompson, the
Assistant Deputy Attorney General in charge of civil litigation at the federal Department of
Justice, met in private with the Chief Justice of the Federal Court. The two men discussed the
scheduling of the Minister of Citizenship and Immigration’s cases in the Federal Court. They
later exchanged letters, neither of which was copied to any of the counsel for the other parties. In
his letter to the Chief Justice, Mr. Thompson referred to the fact that the Attorney General was
being asked to consider taking a reference to the Supreme Court of Canada to determine some
preliminary points of law because the Trial Division was unable or unwilling to proceed with the
cases expeditiously. In his reply, the Chief Justice stated that he had discussed Mr. Thompson’s
concerns with the Associate Chief Justice, and that both were prepared to take all reasonable
steps to avoid such a reference. He added that the Associate Chief Justice said he had not fully
appreciated "the urgency of dealing with these matters as expeditiously as the Government
would like" until he had read his letter. However, now that he was aware of the Government's
concerns he would devote one week to deal with the cases not only with respect to the
preliminary points but also with respect to the merits. A judicial stay of proceedings was sought
by the applicants. The Supreme Court of Canada dealt with the impropriety in this way. I quote
paragraph 85 of the decision:
“In short, the evidence supports the conclusion that the
appearance of judicial independence suffered a serious affront
as a result of the…meeting between Mr. Thompson and Isaac
C.J. This affront very seriously compromised the appearance
of judicial independence. A reasonable observer apprised of
the workings of the Federal Court and of all the circumstances

would perceive that the Chief Justice and the Associate Chief
Justice were improperly and unduly influenced by a senior
officer of the Department of Justice. However, there is no
persuasive evidence of bad faith on the part of any of the actors
in this drama, nor is there any solid evidence that the
independence of the judges in question was actually

Notwithstanding the finding of impropriety, the Supreme Court refused to stay proceedings.


Certainly no one would doubt that a clandestine meeting to discuss the possible outcome

of pending litigation between a party to that case and two justices who have heard and have
reserved their decision on it would be highly improper. Such a situation would compromise the
appearance of judicial independence. It would be unheard of today and must have been unheard
of in 1921. It would constitute unethical and unprincipled behaviour for any judge to tell a
litigant in a case actually before the courts what the possible outcome of that case will or could


The difficulty I have is actually deciding that this discussion occurred. There was very

little evidence presented before me on this topic, important though it may be to the defence’s
position here. The only evidence about the holding of this discussion with the Minister of Justice
is that which is contained within the actual letter D-1. There was no other documentary or other
evidence proffered in support of the allegations contained within it. In other words, the
allegations must stand or fall entirely on the contents of D-1 since no other evidence was
presented to otherwise shore up proof of the alleged misconduct. Articles may have been
published exposing it and biographers and historians may have written about it, but, for the
purposes of this trial, no other supporting evidence exists in relation to it.


To be precise, at this trial, I have heard no evidence from any source that would shed any

light on the discussions held during that meeting. I have nothing emanating from Lord Haldane
proving that he received the letter or responded to it. I have nothing emanating from Justices
Anglin or Mignault confirming the meeting took place or what may have been discussed. I have
nothing emanating from then Minister of Justice the Right Honourable Charles Doherty, or from
his office. In summary, no confirmatory evidence about the holding of the meeting or the
discussions that may have occurred there was presented to me.


As to the letter itself, I feel I must be cautious about the weight I should attach to it. I

state this for a number of reasons which I will now expose.


I have no evidence that the letter was actually mailed to Lord Haldane. I am certain that

Justice Duff wrote it, but nothing proves it was received. It would be as much impermissible
speculation to conclude that it was mailed as to conclude that it wasn’t.


The letter is unsigned. Furthermore, it does not follow the usual form of either a personal

or a business letter. The first page contains the usual heading containing the date and place of
issuance, being Ottawa.

It then states:

“Dear Lord Haldane:” Following the salutation,

Justice Duff explains that the Court will not get through their list in time for a sailing on the 13 th,
as he originally expected, but that he will go on the Montclair on the 20th, arriving in London on
the 27th. He then places his closing: “With kind regards, Yours sincerely”, without a signature.
At the bottom of page 1 is the addressee: “Rt. Hon. Viscount Haldane, O.M., K.T., House of
Lords, LONDON”.

This appears to be a self-contained one-page letter, yet there follows six


additional pages on a variety of topics, none referenced on the first page. It almost appears like
an attachment to the letter, or at least what one might today consider to be as such. The final
paragraph of the letter appears to end abruptly, as if the writer hadn’t finished the letter. There is
no closing salutation or signature on the last page.


The very appearance of this letter is therefore unusual. It does not follow the usual form

one would expect.


Next, and perhaps most importantly, the source of the information obtained by

Mister Justice Duff is not identified. Justice Duff was obviously not at that meeting therefore the
facts outlined in the paragraph constitute hearsay evidence. Justice Duff must have obtained that
information from another source, but there has been no evidence presented at this trial to
establish that the information he relates in the letter originated from a reliable or trustworthy
source. Again, one might surmise that the information had to have come from either Justices
Anglin or Mignault or the Minister himself, but there being no confirmation of this, it is
impermissible speculation in my opinion. Justice Duff did not, for example, state in the letter:
“Justice Anglin told me about a meeting he had with the Minister…” The fact is, there may have
been others present at the meeting, or there may have been someone who overheard the
conversation but who did not participate in the meeting. All of this is of course speculative,
which must raise a cautionary flag in the mind of the trier of fact.



In addition, I must also question Mister Justice Duff’s motivation for conveying the

particular message. This was not the only allegation of impropriety surrounding judges. He
made three other allegations in the letter implying improper conduct.


In the third paragraph of the letter he wrote:
“…Anglin, for example, shortly after his appointment to this
Court, went to Detroit and made a bitter speech to a congress
of Irish-American educationists, attacking the decision of the
Privy Council in connection with the Manitoba school
controversy in 1905, ascribing the decision to political


Mister Justice Duff therefore is alleging that the same Justice Anglin who he stated had

an improper meeting with the Minister of Justice in the Gold Seal case, also discussed his belief
that political influence was brought to bear in a decision of the Judicial Committee of the Privy


In the fifth paragraph of the letter, Justice Duff wrote the following:
“The Prime Minister himself is very jealous, I think, of the
authority of the courts to deal with ultra vires legislation, and I
do not doubt that he would prefer to see the final authority in
the Canadian courts, with the idea that a court in Ottawa
would be amenable to influence. You can have very little idea
of the liberties some Canadian Ministers will allow themselves
in influencing judges where they think it is safe to bring
pressure to bear…”


Mister Justice Duff therefore also appears to be alleging improper conduct by the

politicians towards the judges, allowing themselves to bring pressure on them when they think it
would be safe to do so. He also appears to have expressed the belief that if the court of last


resort was the Supreme Court of Canada, this would please the Prime Minister of Canada as the
Court would be amenable to influence by him or by his Ministers.


Finally, in the seventh paragraph, Mister Justice Duff wrote the following:
“…The Prime Minister, who was then Deputy Minister of
Labour here, and his cousin, who up to that time had been a
close personal friend of mine, made a direct attempt to
influence the decision of the members of the Court by
communicating facts which afterwards came out in another
litigation and which undoubtedly did shew that Lesueur was
rather unfairly taking advantage of material placed at his
disposal by Mackenzie’s descendants to raise questions as to
Mackenzie’s personal character which might much better have
been left alone. The majority of this Court decided in favour
of Lesueur and the offence was passed over without comment,
unfortunately, as I thought at the time…”


So it would appear that Mister Justice Duff considered that the then Minister of Labour,

who later became Prime Minister, committed an “offence” by making a direct attempt to
influence the members of the Supreme Court of Canada by communicating facts to them, which
facts subsequently came out in another litigation.


I mention these three other allegations of misconduct in order to highlight the dangers of

proceeding on unsubstantiated and possibly unreliable hearsay. One might question the bona
fides of Justice Duff in view of the other comments he makes in the same letter.


It is true, as was pointed out by the defence, that the Minister of Justice knew there was

another option open to him to avoid an unfavourable judgment in the Gold Seal case and this
opens up the possibility that information came from Justices Anglin or Mignault. However I am


not prepared to conclude, based on the Duff letter alone, that Justices Anglin and Mignault, if
they were present at a meeting with him, told him how they were going to decide the case and
presented to him this option in order to avoid the adverse ruling. The Right Honourable Charles
J. Doherty had been, after all, the Minister of Justice for a number of years, he taught
International Law at McGill University and was a former Justice of the Superior Court of
Québec. There is no doubt he would consequently have been quite capable of having come up
with his own ideas about how to avoid any negative consequences arising from the pending
judgment in Gold Seal.



Dr. Thomas Bateman, Associate Professor and Chair of the Department of Political

Science at St. Thomas University in Fredericton, New Brunswick, a political scientist, was
qualified by the Court to give opinion evidence in Canadian constitutionalism (being the history
and politics of the Canadian constitution), conventions of the Canadian Constitution (being
unwritten judicially unenforceable rules that fill out the Canadian Constitution as part of our
British inheritance), Canadian constitutional development from Confederation to the present and
Canadian federalism as it has been influenced by both judicial interpretation and by
intergovernmental relations. His written report was admitted into evidence by consent as Exhibit
C-11. Admittedly, he had never published any articles on section 121 of the Constitution Act,
1867, nor of its historical or political context. He also admitted that he had never published any
article regarding the “constitutional moment” between 1864 and 1867.

He has, however,


commented on Supreme Court of Canada decisions which either directly or indirectly touch upon
the issues raised by section 121.


Dr. Bateman wrote in his report that Section 92 of the Constitution Act, 1867 sets out

most of the provinces’ policy responsibilities. In regard to alcohol specifically, the provinces
have jurisdiction in respect to direct taxation, saloon and tavern licences for revenue purposes,
the incorporation of companies with provincial objects, property and civil rights in the province,
and generally all matters of a local or private nature in the province. This, he says, leads one to
conclude that provinces have appreciable constitutional room to legislate in respect to the
production, sale, regulation and consumption of alcohol. The federal government, on the other
hand, has jurisdiction in, among other things, the regulation of trade and commerce, all forms of
taxation and criminal law. It too can legislate in relation to certain aspects of alcoholic liquors.
He wrote in his report that “Section 121, in principle, operates as a limit on federal and
provincial legislative activity in areas within their competence. Neither courts nor politicians
have been particularly assiduous in using s. 121 to limit governments’ legislative activities”. He
was of the opinion that since provincial laws usually have either the purpose or effect of limiting
free trade, any robust interpretation of section 121 would sharply clip the provinces’ policy


Dr. Bateman listed examples of barriers which either intentionally or in effect obstructed

internal free trade. These include:

Differential tax rates and other tax policies, some of them fashioned to attract businesses
from other jurisdictions;


Differential professional accreditation and licencing standards;

Differential product standards, labelling requirements, and grading schemes;

Agricultural commodity supply management schemes that define quantities produced and
prices paid for products;

Various policies to encourage the development of provincial economic sectors, including
natural resources;

Provincial liquor policies encouraging the consumption of products produced from within
the province; and

Government procurement policies favouring domestic suppliers of goods and services
though out-of-province bids may be superior on quality or price.


These barriers are the result of the operation of Canadian federalism, he states. In his

opinion, the existing tension between the division of powers in sections 91 and 92 and the free
trade provision in section 121 has been resolved by a weakening of section 121. He affirmed
that Canadian governments, rather than the courts, have taken on the lion’s share of
responsibility for the management of the federation. Indeed, courts encourage political rather
than judicial management of the federation.

This is accomplished in part by the courts’

recognition of constitutional conventions and by a judicious deferral to governments to maintain
the balance of powers.


As I understand it, the Crown’s position is that notwithstanding what may have been the

intent of the framers of the Constitution, the Canadian Constitution is more than merely the
written text of the Constitution, a basic principle which has been recognized by the courts, and


that federalism must evolve in order to “address and be responsive to the nature of the Canadian
federation” (Post-trial Brief on Law, page 10).

According to the prosecution, “federalism

recognizes the diversity of the component parts of Confederation, and the autonomy of
provincial governments to develop their societies within their respective spheres of jurisdiction”
(Post-trial Brief on Law, page 11).


Given the nature of the Canadian Constitution, the prosecution states that it may, and

often does take both provincial and federal powers to competently and adequately legislate in
particular spheres of activity, citing Tsilqhot’n v. British Columbia [2014] S.C.C. 44 at paragraph
148. As a result, conflicts in relation to the division of constitutional powers in Canada today are
more often resolved than litigated, a fact which also underscores the depth of influence exerted
by the unwritten Constitution in the evolution of the Canadian polity (Post-trial Brief on Law,
page 9).


The prosecution asks this Court to not deconstruct the political and constitutional

accommodation of federalism as it has taken shape in Canada since 1867.

To quote the

testimony of Dr. Bateman:
“…a very robust interpretation of section 121 would drain the
section 92 power…of most of their significance because the …
very existence of jurisdiction that provinces can exercise means
that different provinces can exercise their jurisdiction in
different ways and I would say that almost inevitably at least
some, maybe many, maybe most exercises of different
provinces’ jurisdictional responsibilities would operate as some
kind of barrier to free trade. So a very robust interpretation of
section 121 would operate against the division of powers such
as 91 and 92. My guess is that you can’t have one provision of
the Constitution interpreted in a way to obliterate another
provision of the Constitution and to put the point slightly
differently, the interpretation which seems to prevail at the

moment, mainly that section 121 is really to do with the
prohibition on customs and duties at a provincial border, is…a
fairly workable way to reconcile internal free trade with the
existence of powers by provinces under section 92” (transcript,
vol. 4, page 96, lines 4 to page 97, line 2)


In my opinion, this is a very compelling argument. A robust interpretation of section 121

would create conflict with the exercise of provincial powers under section 92 of the Constitution
Act, 1867. Dr. Bateman gave the example of a province which, for purposes related to their
internal needs, imposes restrictions on imports of any particular product from other provinces.
This would be an impediment to free trade in that commodity. A robust interpretation of
“admitted free” in section 121 would tear down those restrictions as being impediments to free
trade, which weakens the ability of that province to protect its own interests.


The interpretation of section 121 sought by the defence amounts to a request to this Court

to dismantle a regime that has been in place since the inception of the Constitution in 1867.


The prosecution requests of the Court simply to recognize and uphold the current state of

affairs, one which has been steadfastly adhered to and which, for all intents and purposes,
appears to have adequately regulated the affairs between all levels of government. The Crown
argues that constitutional doctrine must facilitate, not undermine co-operative federalism Thisqhot’n case, supra, at para 149.


There can be no question but that in the intervening years since Gold Seal has been

decided, governments have put in place a multitude of restrictive measures across this country.
These include marketing boards such as for wheat, eggs, milk and poultry, provincial liquor

monopolies in all provinces, and a host of existing schemes that interfere with interprovincial
trade. There are also innumerable policies put in place by the provinces that could be understood
to limit free trade between the provinces, including those listed by Dr. Bateman. The Gold Seal
interpretation has also “enabled the creation of federal schemes that have imposed interprovincial
trade barriers in the form of mandatory sale requirements, prohibitions of interprovincial
shipments, and imposition of provincial quotas”, per Ian Blue, Q.C. Free Trade within Canada:
Say Goodbye to Gold Seal, page 20.


The effect on section 92 of the Constitution Act, 1867 of defining “admitted free” as

requiring free trade among provinces without any trade barriers, tariff or non-tariff, whether
found in federal or provincial legislation, such as advanced by the defence, would eliminate any
scheme that would interfere with the free movement of goods inter-provincially, whether for
agricultural products, produce, manufactured goods, liquor or any other product regardless of
whether or not such regulated scheme was enacted for the benefit or the protection of the
residents of that province. It would likely only allow for the regulation by the provinces of
matters that would not interfere with inter-provincial movement of these goods. Justice Rand in
the Murphy case called these “subsidiary features”. How exactly this would play out would no
doubt be the subject of much political maneuvering and court interpretations.


To put this matter in its proper context, this is obviously not a “division of powers” case,

nor, I believe, one that requires an examination of the principles of “exhaustiveness”,
“interjurisdictional immunity” or “paramountcy” as suggested by the prosecution. This is not a
case dealing with a conflict as between laws passed by two separate jurisdictions or of
entrenchment by one jurisdiction over another’s powers. But it does require the Court to consider

the issues by reference to contemporary views of Canadian federalism, as explained by the
Supreme Court of Canada in Canadian Western Bank v. Alberta [2007] 2 S.C.R. 3 at para. 42:
“…Canadian federalism is not simply a matter of
legalisms. The Constitution, though a legal document, serves as
a framework for life and for political action within a federal
state, in which the courts have rightly observed the importance
of co-operation among government actors to ensure that
federalism operates flexibly”.


The intention of the framers of the Constitution in drafting legislation is obviously a very

important factor to be taken into account, albeit not a decisive factor. This is borne out by the
situation which developed in the case of R. v. Blais [2003] 2 S.C.R. 236 where counsel evidently
invited the Supreme Court of Canada to interpret a constitutional document in a manner that was
not consistent with the intention of its drafters. Mr. Blais was a Manitoba Métis. He was
convicted of hunting deer out of season. He had been hunting for food on unoccupied Crown
land. His defence was based solely on the allegation that, as a Métis, he was immune from
conviction under the Wildlife Act regulations in so far as they infringed on his right to hunt for
food under paragraph 13 of the Manitoba Natural Resources Transfer Agreement (the NRTA).
The NRTA stipulated that the provincial laws respecting game applied to the Indians subject to
the continuing right of the Indians to hunt, trap and fish for food on unoccupied Crown lands.
The Manitoba NRTA is a constitutional document, incorporated as Schedule (1) to the
Constitution Act, 1930. The issue was whether the word “Indians” in paragraph 13 of the NRTA
included the Métis. The Court proceeded with the interpretation of the constitutional document
in this way:
16 Against this background, we turn to the issue before us:
whether "Indians" in para. 13 of the NRTA include the Métis.
The starting point in this endeavour is that a statute -- and this
includes statutes of constitutional force -- must be interpreted

in accordance with the meaning of its words, considered in
context and with a view to the purpose they were intended to
serve: see E. A. Driedger, Construction of Statutes (2nd ed.
1983), at p. 87. As P.-A. Côté stated in the third edition of his
treatise, "Any interpretation that divorces legal expression
from the context of its enactment may produce absurd results"
(The Interpretation of Legislation in Canada (3rd ed. 2000), at p.


The Court then addressed counsel’s request to interpret the constitutional document

favourably to Mr. Blais notwithstanding what might have been the original intent of the
document, at paragraphs 39 and 40 as follows:
“We decline the appellant's invitation to expand the
historical purpose of paragraph 13 on the basis of the "living
tree" doctrine enunciated by Lord Sankey L.C. with reference
to the 1867 British North America Act: Edwards v. AttorneyGeneral for Canada, [1930] A.C. 124 (P.C.), at p. 136. The
appellant, emphasizing the constitutional nature of paragraph
13, argues that this provision must be read broadly as
providing solutions to future problems. He argues that,
regardless of paragraph 13's original meaning, contemporary
values, including the recognition of the Crown's fiduciary duty
towards Aboriginal peoples and general principles of
restitutive justice, require us to interpret the word "Indians"
as including the Métis.
This Court has consistently endorsed the living tree
principle as a fundamental tenet of constitutional
interpretation. Constitutional provisions are intended to
provide "a continuing framework for the legitimate exercise of
governmental power": Hunter v. Southam Inc., [1984] 2 S.C.R.
145, per Dickson J. (as he then was), at p. 155. But at the same
time, this Court is not free to invent new obligations foreign to
the original purpose of the provision at issue. The analysis
must be anchored in the historical context of the provision. As
emphasized above, we must heed Dickson J.'s admonition "not
to overshoot the actual purpose of the right or freedom in
question, but to recall that the Charter was not enacted in a
vacuum, and must therefore ... be placed in its proper
linguistic, philosophic and historical contexts": Big M Drug
Mart, supra, at p. 344; see Côté, supra, at p. 265. Dickson J. was
speaking of the Charter, but his words apply equally to the task

of interpreting the NRTA. Similarly, Binnie J. emphasized the
need for attentiveness to context when he noted in R. v.
Marshall, [1999] 3 S.C.R. 456, at para. 14, that "'[g]enerous'
rules of interpretation should not be confused with a vague
sense of after-the-fact largesse." Again the statement, made
with respect to the interpretation of a treaty, applies here”.


“The original purpose of the provision at issue” therefore, is an important consideration

in approaching judicial interpretation of the Constitution.

Courts should not allow such

elemental and fundamental considerations to be displaced merely by notions of what, today, may
amount to a request for accommodation based on a long-standing misinterpretation of the intent
of the Fathers of Confederation.



The defence has attempted to convince the Court that the imposition of a fine imposed by

a provincial government for the commission of a regulatory offence, such as the one committed
under section 134(b) of the Liquor Control Act, is a financial consequence of crossing a border
and consequently is in the nature of a tariff trade barrier.


Whereas I agree that both are financial consequences of the act of crossing goods over a

provincial border, I am not convinced that a fine is a tariff trade barrier. It would appear to me
that a province has jurisdiction to impose fines for offences committed within their borders. The
fines are imposed for the purpose of inflicting punishment for the offence committed. It may
also be considered as a means to dissuade or discourage the commission of the offence in the
particular jurisdiction.



However, the nature of a tariff trade barrier and that of a fine are very different. They are

of a different character. Whatever definition one might give to the expression “tariff trade
barrier”, it would not seem appropriate to me to include fines levied as punishment for the
commission of an offence within its definition. In order for the fine to be imposed, an offence
has to have been committed and the person would have to have been convicted of it. In my
opinion, in this particular case, it is not the fine imposed that would constitute the trade barrier,
but the prohibition from import imposed under section 134(b) of the Liquor Control Act.



Dr. Bateman suggested in his testimony and in his report that section 121 of the

Constitution Act, 1867 has fallen into desuetude and its disuse may now be a constitutional
convention. He maintains that only a portion of Canada’s whole constitutional corpus is in the
written Constitution and that a significant degree of our Constitution is unwritten. These he
referred to as constitutional conventions, also called “rules of critical morality”.


conventions bind political actors and can be as binding as any entrenched law. They give shape
and substance to the skeletal written constitution. Not being in the constitutional documents,
however, they are not enforced by the courts in the same way as the formal provisions are. Some
conventions are so fundamental to the very nature of the Canadian constitutional order that they
are considered binding upon actors to a high degree.


Dr. Bateman suggests that judicial interpretation of section 121 has fallen short of the

expectations of those who seek a Canadian free trade area. Decisions such as the Gold Seal case
confined the section to the invalidation of tariff-like interprovincial barriers at a time when these

were the main impediments to free trade. Since then, as government intervention into the
economy increased, and as non-tariff barriers proliferated, section 121 has fallen into a type of
desuetude. He explains that governments do not use section 121 to challenge the protectionist
policies of other governments. As such perhaps a convention has formed whereby section 121 is
effectively rendered inoperative.


Dr. Bateman was of the opinion that section 121 refers only to customs duties at the

provincial borders and since the interprovincial customs and duties were removed soon after
Confederation, they are out of play. There being no tariffs at the border between provinces,
section 121 is dormant and has become a convention such that no province would now
contemplate imposing a custom duty at the border. He compared it to the section 56 power
permitting the British government to disallow legislation passed by the Parliament of Canada,
and the section 90 power allowing the Governor General of Canada on the advice of the
Government of Canada to disallow a law passed by a provincial legislature. Both these sections
have fallen into desuetude.


Having heard the evidence given by Dr. Bateman on the issue of whether section 121 has

fallen into desuetude, I find that if by desuetude he means it is unused or rendered inoperative,
then I would agree. I would not agree however that it has become inoperative for the reasons he
stated. Once the Supreme Court of Canada strictly interpreted section 121 to custom duties,
there was in reality nowhere else for the section to go. It strictly prohibited custom duties and
nothing else. Its disuse became merely a matter of practice or custom. It was not possible for


the section to be interpreted in any way to come to the aid of any other governmental policy or


Dr. Bateman interpreted section 121 differently than did Dr. Smith. His interpretation

focused on the addition of the words immediately preceding and following the word “free”, that
is, “admitted free into”. In his opinion, “admitted…into” suggests a border crossing matter.
Since customs are levied at a border, section 121 is confined to customs.


I am not convinced that the words “admitted…into” limit the expression “admitted free

into” to custom duties only. Indeed, my interpretation of the words of section 121 has concluded
otherwise, based on a number of factors. Certainly there is no reason to adopt the very strict
interpretation put upon the wording as advanced by Dr. Bateman.

Nothing in the words

“admitted free into” could possibly lead to that interpretation.



I found it interesting that the RCMP in Campbellton were targeting people crossing the

border with five cases of beer or more. The limit was twelve bottles and the RCMP knew this.
This suggests a certain laissez-faire attitude by the police in relation to this particular offence
provided their arbitrarily imposed limit to the amount traversing the border was not crossed. It
hardly makes sense that a person carrying five cases of beer would be charged but an individual
with four cases would not, when in both scenarios the identical offence was committed. This, I


suppose, is a reflection of the tolerance shown by public safety officials to this type of regularlyoccurring offence which is not likely a high priority in terms of crime prevention.


The Maritime Beer Accord, the Agreement on Internal Trade and efforts by provincial

jurisdictions to increase allotted import quotas for alcohol all represent to some extent, efforts to
circumvent existing trade barriers. None of these schemes has been particularly successful,
especially with respect to alcohol. The provinces, for the most part, assiduously protect their
monopolistic hold on this important source of revenue.


With respect to the nomenclature of section 121 of the Constitution Act, 1867, I find that

there is nothing in the language used in that section that could lead one to conclude it was
intended to prohibit customs duties or charges.


I find that the changes made in the wording of section 121 of the Constitution Act, 1867,

more specifically the changes between the first and second draft, was a reflection by the Fathers
of Confederation of their forward-looking views of the proposed new country. They anticipated
expansion and they anticipated greater trade as between the provinces, as demonstrated by the
deletion of the reference to ports. The amended wording reflects their attempt to gain unfettered
economic exchange and a more comprehensive economic union.


I find that drafter Francis Reilly used wording found in existing legislation in the British

colonies in drafting section 121 of the British North America Act, 1867. The similarity in the
wording could not have been happenstance or coincidence. The colonies of Nova Scotia, New


Brunswick and the Province of Canada all had drafted legislation in their respective jurisdictions
that eliminated trade barriers between them. The Province of Canada’s Act was called An Act to
facilitate Reciprocate Free Trade between this Province and other British North American
Provinces. These laws were clearly intended to encourage trade as between the three then
existing provinces. The words “the growth, production or manufacture of any such Province” in
the New Brunswick Act mirrors the wording that was adopted for use in section 121 of the
British North America Act, 1867, which compels me to conclude that the Fathers of
Confederation wished to use wording in section 121 that was similar to the words used in
existing legislation encouraging free trade in their respective provinces.


I find that the placement of section 121 in Part VIII of the British North America Act,

1867, does not assist the Court in arriving at any conclusion as to its meaning or its limitations.
Attempting to find meaning in its placement is an exercise in futility. It was most likely placed
in that part of the Act that was the most fitting considering all other parts of the Act.


I find that the British, at the time of the drafting of the British North America Act, 1867

were very experienced in legislative drafting, including on commercial and economic matters.
Being experts in diplomacy and trade negotiation, they would have known to include “from
customs duties or charges” in section 121 if such were the wishes of the Fathers of
Confederation. During this time period, most goods entering the United Kingdom did so without
paying customs duties.



I am convinced that the Fathers of Confederation were keenly aware of the distinction to

be drawn between the expressions “admitted free” and “admitted free from duty”. I am also
convinced that they deliberately avoided the “free of duty” terminology because that was not
their wish. The best source for arriving at a conclusion about the intent of the Fathers of
Confederation is provided by its historical context. In other words, the intention of the Fathers of
Confederation is most pertinently demonstrated by the historical context during the constitutional
moment leading up to the enactment of section 121.


That historical context leads to only one conclusion:

the Fathers of Confederation

wanted to implement free trade as between the provinces of the newly formed Canada. They
specifically rejected an American-style of government and adopted continuity with the British
system of government at a time when free trade was actively implemented in Britain. Economic
development was not only pursued, it was one of the foundational reasons for the pursuit of a
union. The repeal of the Reciprocity Treaty with the United States, which was based on free
trade, necessitated the search for alternatives. The proposed discussions between Nova Scotia,
Prince Edward Island and New Brunswick in September 1864 about possible political and
economic union opened up the possibility to replace the American free market with a made in
Canada free market for all provinces. The Fathers of Confederation wanted to replace the lost
free trade with the United States with free trade as between the proposed provinces of Canada.


This constitutes a summary of the historical context leading up to the enactment of

section 121. The free trade sought by the framers of our Constitution would not have been


accomplished merely by the abolition of customs duties at provincial borders, even though that
was one of the steps they took following the creation of the federation.


I find that the penalizing non-tariff barriers to trade imposed by the Americans in the

years leading up to the repeal of the Reciprocity Treaty shows that the Fathers of Confederation
were not simply concerned with eliminating customs duties as between the provinces. Rather,
they wanted to avoid all such barriers, tariff or non-tariff. The barriers to trade as between the
two countries were based on non-tariff schemes, not taxes or customs duties.


I find that the speeches and orations from the Fathers of Confederation prior to the

enactment of the British North America Act, 1867 conclusively point to their desire to implement
free trade as opposed to the elimination of customs duties as between the provinces. Examples
abound: “Union of all Provinces would break down all trade barriers between us”; “Now we
desire to bring about that same free trade in our own colonies”; “…the free interchange of the
products of the labor of each province”; “…if we wish to…establish a commercial union, with
unrestricted free trade, between people of the five provinces…”; “Union is free trade among


The current state of the law in Canada on the meaning and effect of section 121 of the

Constitution Act, 1867 is clear and unambiguous: section 121 prohibits the establishment of
customs duties affecting inter-provincial trade in the products of any province in Canada. The
principle of vertical stare decisis mandates that I follow that law and not deviate from it unless an
exception is warranted. I believe in this case that an exception has been established by the


presentation, for the first time, of expert evidence on the historical context of section 121 of the
British North America Act, 1867.


I believe that if the evidence that was presented before me at this trial had been brought

to the attention of the justices of the Supreme Court of Canada in their deliberations on the
meaning of section 121, particularly when the Gold Seal case was decided in 1921, the result
would have been different.


It is therefore with a great deal of trepidation that I find that the Gold Seal case was

wrongly decided, for the reasons outlined. I believe that the narrow and strict interpretation
placed upon section 121 in the Gold Seal case was unwarranted and unfounded. Furthermore,
the Gold Seal decision shaped all subsequent cases dealing with section 121.

Should the

Supreme Court of Canada agree that Gold Seal was wrongly decided, then undoubtedly they
would re-examine all other cases dealing with section 121.


I find that in the case presented to me, the Duff letter has no relevance to the issued to be

decided. There are too many unknown variables permitting me to arrive at any conclusion based
on its contents alone. For reasons relating primarily to its reliability as evidence, I find that the
Duff letter does not assist in arriving at any conclusion in this matter.


I am certain that interpreting section 121 of the Constitution Act, 1867 as permitting the


movement of goods among the provinces without barriers, tariff or non-tariff will have a
resounding impact. Indeed, the consequences of this finding could be significant. The path of


least resistance would mandate that the Court simply follow the Gold Seal ruling and allow for
the continuance of existing structures and schemes which have been in place for nearly a century.
But statutes of constitutional force must be interpreted in accordance with the meaning of its
words, considered in context and with a view to the purpose they were intended to serve; their
analysis must be anchored in the historical context of the provision: R. v. Blais, supra.


I find that section 121 of the Constitution Act, 1867 has not fallen into desuetude. Its

disuse or neglect has arisen as a result of an unfounded judicial interpretation which effects have
continued for nearly a century.



Section 134(b) of the Liquor Control Act of New Brunswick constitutes a trade barrier

which violates section 121 of the Constitution Act, 1867 and is therefore of no force or effect as
against Gérard Comeau.


The charge against him is dismissed.

Dated at Campbellton, New Brunswick, this 29th day of April, 2016.

Ronald LeBlanc
Provincial Court Judge