R. v. Comeau, 2018 SCC 15: Reflections from Europe

Laden down with red wine and chocolate, the fruits of a Friday-afternoon trip to the shops on rue Daguerre, I struggled to hoist my luggage onto the Eurostar, at the end of a recent visit to Paris. Such are the delights of life in the European Single Market. Better to stock up now, I reflected, as Brexit risks imperilling the free movement of goods between Great Britain and the Continent.

Elsewhere in the world, moving goods across borders, even goods for personal consumption, would attract tariffs and testing or simply prove impossible. Indeed, as the Supreme Court of Canada’s recent decision in R. v. Comeau, 2018 SCC 15 reminds us, goods may cross the borders of member states of the European Union more easily than they cross the borders of the provinces and territories of Canada.

At issue in Comeau was a provision of New Brunswick law forbidding people to “have or keep liquor not purchased” from the province’s liquor monopoly, the New Brunswick Liquor Corporation (Liquor Control Act, s. 134(b)). Mr Comeau had contravened the prohibition by travelling to the neighbouring province of Quebec, filling his car with cheap(er) liquor, and returning home. He was caught by vigilant police officers who were monitoring liquor purchases in border areas.

At trial, he successfully convinced the judge that the prohibition was unconstitutional, because it was inconsistent with s. 121 of the Constitution Act, 1867: “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”. Alas for Mr Comeau, the Supreme Court took a different view, holding that the constitutional provision only covers laws affecting “interprovincial movement of goods” which act “like a tariff” where “restriction of cross-border trade” is “the primary purpose of the law…”, an interpretation that excludes “laws enacted for other purposes, such as laws that form rational parts of broader legislative schemes with purposes unrelated to impeding interprovincial trade” (at para. 114).

The Comeau litigation throws into sharp relief the importance in contemporary liberal democracies of so-called “non-tariff” barriers to trade. These are barriers which have the effect of inhibiting trade, but whose purpose is (usually) to give effect to public policy. As the Supreme Court put it in Comeau, “provinces within a federal state should be allowed leeway to manage the passage of goods while legislating to address particular conditions and priorities within their borders” (at para. 86).

States the world over do precisely this, for instance, as with New Brunswick, acting to establish a liquor monopoly which (depending on one’s level of cynicism) can be designed to reduce alcohol consumption or maximise tax revenues. Indeed, non-tariff barriers are, on the whole, much more important in the modern world than tariff barriers. Tariffs have progressively been reduced over recent decades, to a point where they make up a small part of the price of traded goods, small enough that tariffs will often be less of a concern to exporters and importers than fluctations in currency exchange rates.

Non-tariff barriers are a different matter: exporters must dance to the tune of the importing state. For instance, given the statutory prohibition upheld by the Supreme Court, marketing your liquor in New Brunswick involves striking an agreement with the monopolist, the New Brunswick Liquor Corporation — otherwise, you will be shut out of that market entirely. Put another way, getting over a tariff barrier is a question of reaching into your wallet; but getting over a non-tariff barrier can require a complete overhaul of your production process, or might simply be impossible.

Many of these non-tariff barriers are designed to exclude imports. A great deal of international investment arbitration addresses allegations that non-tariff barrers have been erected in order to discriminate against foreign enterprises; and much of the body of European Union law is concerned with such matters. Even those barriers that are not discriminatory in their design are not always based on laudable motives. Although the Supreme Court in Comeau saw provincial liquor monopolies as promoting “public health” (at para. 86) or “public supervision of alcohol” (at para. 124), most Canadians understand that the primary purpose of these laws is to maximise provincial governments’ revenues.

The judges evidently understood, moreover, that striking down the New Brunswick prohibition would have raised serious doubts about other government-sponsored monopolies (see para. 3) and interpreted the Constitution accordingly. The result-oriented reasoning has been criticized. I am more sympathetic to the Supreme Court, though not for the reasons given in Comeau. In my view, here is much force in what Stratas JA said (albeit in dissent) in Felipa v. Canada (Citizenship and Immigration), 2011 FCA 272, at para. 159:

In our constitutional framework, the courts are responsible for making the final decisions on constitutional interpretation. They are duty-bound to strike down legislative and executive actions and practices that are wrong, even where they are longstanding and consistently followed. But we must recognize that these other branches of government do try, as they must, to keep their actions and practices within the limits of the powers given to them under the Constitution. This involves making judgments, implicitly or explicitly, regarding the limits in the Constitution. Other branches of government are interpreters of the Constitution.

As a result, “Before we say that Parliament has been wrong for most of Canada’s history – before we say that we alone are right and all others for most of Canada’s history have been wrong – we must be convinced that we are driven to that result by objective, sound constitutional analysis” (at para. 162). The same reasoning applies to what was at issue in Comeau, because for decades Canada’s provinces have erected non-tariff barriers on the understanding that they were entitled to do so. The consequences of holding otherwise would not only have been to throw provincial trading arrangements into disarray, but to disregard settled understandings developed over many decades of the best interpretation of s. 121 of the Constitution Act, 1867. Those who would interpret the Constitution solely by reference to the text or its original public meaning would no doubt recoil from this argument, but to my mind it is a perfectly legitimate “modality” of constitutional argument. Readers familiar with the Supreme Court of the United States’ decision in the Noel Canning case will understand that I align myself with Justice Breyer (at pp. 6-9 of the slip opinion), not with Justice Scalia (at pp. 3-6)).

Whatever its merits, the outcome in Comeau should come as no surprise to seasoned observers of the Supreme Court of Canada. As I wrote in 2015: “Those of us who engage in highly regulated activities can expect to face heavy penalties for non-compliance and regular inspections without being able to invoke the rights available to persons accused of crimes”. When it comes to economic regulation, the Supreme Court is decidedly conservative in its approach to constitutional law.

This content has been updated on May 10, 2018 at 13:00.