HomeARL NewsA Conversation on Comeau
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A Conversation on Comeau

This informal discussion between myself, Asher Honickman and Professor Malcolm Lavoie is owed, first of all, to a mea culpa. It’s a transcription of a discussion that was meant to be a podcast, but due to a recording issue wasn’t captured correctly. Since Asher, Malcolm and I agreed the discussion was useful and worth preserving, we’ve decided to present it in written format to ARL’s readers.

We cover both the broad, economic policy-related consequences of the Supreme Court’s decision in R. v. Comeau, 2018 SCC 15, as well as  its intriguing dicta on stare decisis and how the Bedford principle has been explicitly restricted to cases of “changing social circumstances”.  I hope we’ve captured something of the spirit of this lively discussion!

— Joanna Baron, National Director, Runnymede Society

 

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The SCC Decision

Joanna Baron [JB]: Let’s start with the basic reaction that the everyday layperson would have had to this decision: what went wrong? This case garnered universal support as well as serious legal arguments and political momentum, well-argued position in favour of lessening interprovincial trade barriers, and yet we have this decision which almost universally disappoints. Malcolm, given your experience both as a former SCC clerk and as counsel in this case, what do you think went wrong here?

 

Malcolm Lavoie [ML]: I think an important starting point for thinking about this case is to realize that it was, both from the SCC’s perspective and the perspective of many people interested in the case, about much more than just beer. The facts of the case were relatively straightforward—this absurd cross-border sting operation that sought to give tickets to people crossing the QC-NB border to purchase beer. But the trickier part of the case was that the provision in question, s. 121, is written in very general terms, it states simply that goods are to be “admitted free” between the provinces.

And the issue that I think the SCC got hung up on is the way in which this could diminish provincial regulatory authority—their power to enact regulations in what the provinces viewed as the public interest that could have effects on interprovincial trade. So in this case, the prohibition on possession of all but small quantities of beer was part of a broader provincial scheme that provided for comprehensive regulation of liquor in New Brunswick. And there are lots of laws that similarly limit trade but are part of broader regulatory frameworks and I think the court was afraid of unduly limiting the right of provinces to enact these regulations.

 

JB: Would you say that the court leaned too heavily on provincial jurisdiction under s. 92? Did the court effectively privilege one part of the constitution over another?

 

ML: Yeah. I think that’s a fair assessment. In fairness to the court, there was a genuine issue here of balancing government regulatory authority with this clearly stated provision in the constitution that goods are to be admitted freely from one province to the other. My criticism of the court’s approach is that it adopted an approach so permissive that it effectively doesn’t do very much. It doesn’t do much, so far as I can tell, beyond what sections 91 and 92 already do. So the court holds that under s. 121, a province can’t adopt measures whose primary purpose is to impede trade. Well, under ss. 91 and 92, provinces already can’t do that. If the primary purpose of a regulation to impede interprovincial trade, then it relates in pith and substance to interprovincial trade, and is within exclusive federal jurisdiction.

So the court had a legitimate concern about not unduly restricting provincial regulatory authority, but I believe it took that too far, to the point of practically nullifying s. 121. S. 121 doesn’t have much work to do going forward under the Court’s approach, and that’s unfortunate.

 

 

JB: So what do you think they could have done instead that would have better reconciled the legitimate competing demands that arise from the structure of our constitution?

 

ML: They could have adopted a test that would have demanded a little more in terms of justification from a provincial government where it enacts a measure that restricts trade. Under the court’s approach, all a province has to do is make sure that there’s some rational connection between a trade barrier and some broader scheme that’s otherwise within provincial jurisdiction. The court could have asked for a little more. That’s what I argued for in my academic article, and on behalf of Artisan Ales [an Alberta company that intervened in the case].

What I asked the court to adopt was a test to the effect that if a province discriminates against out-of-province goods— if it enacts some sort of measure whereby out of province goods are treated differently from in-province goods – the province should be subject to a strict requirement of justification, namely the province has to establish that this approach is necessary to achieve an important policy objective. So in the case of Comeau, rather than saying, “Yeah, we are banning all but small quantities of out-of-province liquor, and that’s ok because it’s rationally connected to a scheme of regulating the distribution and sale of liquor within the province”, the province would have had to actually establish that this prohibition was necessary for some really significant objective, like health or safety. It would have had to demonstrate that no reasonable non-discriminatory means of achieving the same policy objective would have been possible.

And that would have achieved real balance. It would have preserved provinces’ ability to enact regulations that are genuinely necessary to achieve important objectives. At the same time though, it would have given effect to this constitutional guarantee in s. 121 of free interprovincial trade.

 

Comeau and Federalism

JB: Asher, I’m curious to hear what you think. In general, in your writings for ARL, you have been a fan of a more robust federalism jurisprudence. So on its face, the court’s carving out of a more robust provincial jurisdiction might appeal to you. What do you think about what Comeau had to say on this point?

 

Asher Honickman [AH]: Well, I don’t think this was the sort of federalism I would promote. The federalism I have promoted is more of the classical approach where each order of government has defined jurisdiction. Really, what we’re seeing in the Comeau case is a judicial statement that the property and civil rights power is extremely broad. And it’s interesting because there wasn’t really a division of powers argument put before the Court, but it’s almost implicit in what the Court is saying that this law would also survive a division of powers analysis, notwithstanding it has a pretty significant interprovincial trade component. And so this is contrary to the federalism I’ve always promoted. This is really saying that Parliament and the provinces can enact whatever barriers to interprovincial trade they want, it’s all one big happy family, so long as these laws don’t conflict with each other and we have to go to a paramountcy analysis.

That is not what the Constitution says. In my commentary on Comeau, what I’ve said is that while s.121 is not this utterly transformative provision, I do think it’s there to emphasize something very important, which is that the provinces do not have the right to regulate interprovincial trade. The property and civil rights power is very broad, but it does have limits.

You see this throughout the entire drafting history of the BNA Act—the Framers were very worried about the property and civil rights power, because they knew it was broad. They put in textual guarantees against reading it too broadly, like the notwithstanding clause in s. 91. I would argue that s. 121 can be seen in the same light – it’s the framers limiting the scope of property and civil rights to exclude interprovincial trade.

 

JB: Malcolm already alluded to this, but if you look at s. 111 of the SCC’s decision, where they talk about whether the test for s. 121 is engaged, it really does carve it out to almost a dead letter.

 

AH: It does, and this is essentially an absurdity. To believe this you have to believe that the framers went ahead and drafted this provision—I believe it was even amended between two drafts—intending it to have no content whatsoever. Malcolm’s correct that it’s essentially nullified because it’s superfluous in light of s. 91(2). I would argue it provides even less protection than s.91(2) provides.

Under a s. 91(2) analysis, you don’t have to establish that a provincial law’s primary purpose is interprovincial trade, you do a much more holistic pith and substance analysis, which looks at purpose but also effects. As far as I recall, we don’t have language in that test going to primary purpose, because laws can have multiple purposes. For example, if Ontario enacted a law tomorrow that said all businesses within the province have to close at 5pm, that law would have to be read down because it would apply to federal undertakings such as banks, and the provinces can’t regulate banks. Even if the provinces said the primary purpose of the legislation was not to regulate banks, it wouldn’t matter because the law would impact banks and so it’s in relation to banking, therefore ultra vires and would need to be read down so as not to apply to banks. And so that’s how an analysis like that would work.

But here the Court is saying as long as the primary purpose isn’t directed at trade, it’s constitutional. And beyond that, as Malcolm was saying, there’s the rational connection test where on a division of powers analysis—you do sometimes have a rational connection test, but more frequently you have a necessarily incidental test. So not only is s. 121 rendered superfluous, it provides even less protection, so we’re left to wonder why would the framers even have included s. 121? What purpose does it serve?

 

ML: Yeah, I just want to re-iterate that I think that’s exactly right, that this not only reduces s. 121 to a 91/92 federalism analysis, it reduces it to the most permissive form of federalism analysis, which leaves out the necessarily incidental approach and essentially allows anything in that has a rational connection to a broader scheme, which I suppose is consistent with a co-operative federalism approach, but is certainly highly permissive.

 

AH: I agree with that. The example I gave about banking, as I’m thinking about it—under a modern cooperative federalism approach, the court might actually have allowed that as constitutional, because that’s how the jurisprudence has gone to an extent. But I think we’d both agree that under a classical federalism approach, a law like that would have been read down and that’s how the interjurisdictional immunity doctrine got started. You had provinces enacting laws that broadly fit into property and civil rights, but because they addressed federally regulated companies or entities, they had to be read down.

And so you could have the same analysis, really, with the type of law in Comeau, where you could say that nobody is implying that provinces can’t establish monopolies on alcohol, but that doesn’t mean that you’re allowed to control where the alcohol comes from out of province. So you could say that within NB you can only buy liquor from the New Brunswick Liquor Control Board, and that would be a classical division of powers approach to this. But under this banner of cooperative federalism, the courts have effectively said, let’s just let both orders of government do what they want.

 

Admitted Free’ and s. 121

 JB: I’d like to ask both of you about probably the most commented on aspect of this case, the Court’s interpretation of s. 121, and particularly their comment that, “We don’t know why the drafters used the expression ‘admitted free’,  but then they go on to reject what s. 121 says on its face and interpret it as something much more narrow. So what on earth is going on here?

 

ML: So I think part of it does come from this need to read the provision in harmony with the rest of the Constitution, including the property and civil rights power granted to the provinces. The court also leans on the federalism principle, which is fine. The federalism principle is the abstract idea that the constitution grants a fair amount of power to the provinces, and we need to read the provision in a way that’s consistent with that.

So I think the Court got the balance wrong, but it was grappling with serious considerations and a real need to read constitutional provisions in harmony with one another. The court was reluctant to restrict governments’ ability to regulate the economy.

It gave with one hand, in saying that s. 121 applies to non-tariff trade barriers; a point that was somewhat ambiguous on the jurisprudence. But then it left the door wide open with its rational connection test and its primary purpose analysis. It said ‘yes, there’s this broadly worded provision which applies to all kinds of trade barriers, but it essentially won’t have any effect, at least on provincial measures, as long as those measures are within provincial jurisdiction.” So it ended up derogating from the broad phrasing of s. 121 and ultimately undermining what could have been an important structural limitation of the constitution.

 

JB: Constitutional provisions are abstract creations of language, and this is where the thick walls of regulatory bias in Canada really show up, I think. Asher?

 

AH: The court is so fond of talking about the realities of our society and how things change—but the court has never been shy about sticking its neck out on social issues like prostitution, same-sex marriage, or safe injection sites. The court has always been willing to say, ‘We are the guardians of the Constitution’, whether based on a straight reading of the text or some sort of living tree doctrine. The Court has been bold. So it’s a bit strange for the Court to suddenly get cold feet about interfering with governments and what they want to do.

And deference is a fine principle, but you can’t abandon it so freely in the social realm and then apply it so religiously in the economic realm. It’s the kind of thing that you either apply or you don’t.

And the same thing has happened with stare decisis, where in Bedford you have this very lax rule, and here the Court is saying we have to be very careful about overturning a past precedent. And that’s a fine thing to say, but it’s inconsistent with recent jurisprudence.

 

Vertical Stare Decisis

 JB: Let’s turn to stare decisis. One of the most interesting questions we were waiting to have resolved in Comeau was how the Bedford principle—that a judge can overrule vertically binding stare decisis– would apply to historical interpretation of a statute. The court said there is a categorical difference between a trial judge taking notice of changing social conditions and overruling binding principle, and merely having a new historical interpretation of a statute.

Isn’t there some basis in the suggestion that changing social conditions are by definition impossible for a judge to anticipate, whereas the history of the principles which inspired the drafters of the Constitution were equally available to the judges in Gold Seal?

 

AH:  I do think there’s an attempt to put the genie back in the bottle, and I want to say there’s very good language in this case on stare decisis generally that will be great to cite in future decisions. Whoever wrote this decision must have had a mind to laying down good foundational principles. There’s great language on how important stare decisis is. So all of that is great, but there’s two problems on the stare decisis front.

One is this new stare decisis test from Bedford. I see what you’re saying that courts can’t anticipate changing social conditions. But we have to take a step back for a second.  Before Bedford, overruling vertical stare decisis was almost not a thing at all, and overruling horizontal stare decisis typically required that the decision had been decided incorrectly.

And that’s really what was at issue in Comeau. There were a number of things that the historian who testified in Comeau probably shouldn’t have been allowed to testify to, and that shouldn’t have been admissible as going to the ultimate issue, but in terms of the evidence of what was going on in 1864-67, and what people wanted, all of that goes to the correct interpretation of s. 121. And so on a horizontal stare decisis analysis, traditionally that would be a major consideration for the Court. The Court ought to have considered that if the court in Gold Seal had this evidence at the time, they would have seen that s. 121 actually provides more than just protection from tariff barriers, ergo Gold Seal is an incorrect decision.

Now, traditionally, changing social circumstances isn’t even a consideration on a horizontal analysis. You can tie it to the living tree doctrine, I suppose. But if you go through the history of living tree cases, I can’t think of even one case where the court has expressly used the living tree doctrine to overturn one of its own past precedents. So that idea that you can use the living tree doctrine to overturn past precedent is still somewhat controversial, whereas overturning your own precedent because it was decided incorrectly is well established.

So, if the court is willing to say that you can use the living tree doctrine to overturn vertical stare decisis, you should definitely be able to overturn vertical stare decisis based on correctness as well. It’s extremely arbitrary, and it just makes no sense to my mind.

 

ML: I’m sympathetic to what Asher said and what he’s written on this, I will say this is probably the first of many unintended consequences of Bedford that the Court is going to have to deal with. From what I can tell, what the trial judge did here in accepting new historical evidence wasn’t overtly at odds with what the Court said in Bedford and Carter, but it probably was at odds with what the Court meant. It seems like what the Court wanted to do in Bedford and Carter was to create greater flexibility for trial courts to use the Charter as an open-ended tool for social change, and that’s where the special emphasis on evidence going to social facts comes in, and where evidence relating to the history of the enactment of the constitutional provision doesn’t have the same resonance. And so this is where I will say, and this goes along with what Asher said, that it does seem like the Court is less concerned with allowing trial judges to get decisions right and more concerned with enabling judicial policy-making discretion, especially with regards to the Charter, and not so much with respect to the economic provisions of the Constitution.

 

AH: It goes back to what I was saying earlier. It’s as if we’re getting two kinds of Constitutions here, and it’s similar to the contrast between Charter decisions and division of powers decisions. In division of powers decisions the Court talks about facilitating what governments want to do. Can you imagine if courts used this language in the Charter realm? In the Charter decisions, the Court always talks about being the Guardians of the Constitution. They don’t talk about it that much in the division of powers realm.

And so too in the Charter realm, there’s going to be a more lax stare decisis analysis, whereas in the economic realm, there’s a much more rigorous application of stare decisis.

 

JB: Yes, it’s like there’s a good constitution and a bad constitution. The good constitution is the Charter—the Court is so generous in imposing social programs, and dictating governmental actions. But then it’s very stingy when it comes to provisions like s. 121.

 

Implications for Trans Mountain pipeline

 JB: So a lot have wondered how the Trans Mountain dispute might be affected by this decision. Some have speculated that provinces may feel emboldened by this decision, but others have said that Comeau ought to make clear that provinces can’t rely on their own jurisdiction to enact barriers to clearly interprovincial projects like a pipeline.

 

ML: The decision reinforces what we already know about ss. 91 and 92—we already knew, without reference to s. 121, that provinces couldn’t pass legislation whose primary purpose was to create an interprovincial trade barrier. To the extent that either BC or Alberta’s legislation is primarily about creating an interprovincial trade barrier, it will be struck down. This does re-iterate that provinces can’t intentionally create trade barriers. On the other hand, I think what the Trans Mountain disputes and other trade disputes in Canadian history have shown is the uncertainty of a test that’s all about the pith and substance of legislation and whether a measure is sufficiently connected to a broader legislative scheme.

BC and Alberta probably have a sense that what they’re proposing to do might be unconstitutional, but under the cooperative federalism approach, they figure they might as well give it a try and see if they can use it for leverage. There’s so much uncertainty in construing the purpose of a measure that they might just get away with it, and at very least will have a plausible argument that they can do it.

And that all points to the need for a robust interpretation of a provision like 121, one that says even if creating a discriminatory trade barrier isn’t the primary purpose of an enactment, even if a province takes care to hide a trade barrier within a broader legislative scheme, it can still be a problem if it’s not properly justified. So I think there was a missed opportunity here for the Court to lay down a doctrine that would have created greater certainty around interprovincial trade barriers and put a stop to the escalating internal trade wars that happen in Canada, which are somewhat embarrassing.

On the one hand, yes, there’s some language in the case that would allow you to call into question what these provincial governments are doing, but on the other hand the Court could have done a lot more to create clarity around trade barriers and particularly around the fact that provinces shouldn’t be allowed to set them up except when they’re truly necessary.

 

JB: BC conceivably could set up a regulatory scheme that would block the pipeline and connect it to health and safety provincial objectives. Given the low hurdle of rational connection, I think it would be quite easy for them.

ML: You might be right. It’s possible that the federal government could try and rely on extrinsic evidence and say the real purpose of the enactment is to block a pipeline, and that might be what the outcome turns out, but certainly there’s some cover for British Columbia, if it does couch its measures in a broader scheme that concerns environmental protection.

 

AH: I think, with the pipeline issue, it’s much more likely, from a practical point of view, that the Court would find BC’s actions to be problematic. In the pipeline case, the Province of BC is essentially trying to frustrate a regulatory scheme from coming into place, whereas Comeau was about allowing provinces to act as they wish. I would not be surprised if the language from Comeau gets read a little more broadly, where the Court says that “primary purpose” really just meant “dominant purpose” and finds the BC law unconstitutional.

And of course, if the federal government steps in, you get the issue of paramountcy, where there’s no doubt they can act under the trade and commerce power, the declaratory power, as well as potentially under the peace, order and good government power. The federal government has ample footing to act, and to the extent its law comes into conflict with B.C.’s law, the doctrine is clear that any federal law would prevail.

 

ML: I think that’s quite right, even if the BC law is a valid enactment it could be inapplicable if it frustrates federal law, and s. 121 doesn’t really have anything to do with that.

 

JB: Any silver linings?

 

ML: One of the themes that emerged from the Court at the hearing was that free trade might be good policy, but if you want good policy enacted you should go take it up with politicians, with Parliament or your provincial legislature. The court’s role is to interpret the structure of the Constitution, rather than to enact good policy. And that’s fair. But one thing I think the court missed is that there is a structural element to the question of free internal trade. Lots of governments in Canada talk a good game on free trade, but there’s a structural problem, what you would call in game theory a collective action problem.

You have 14 governments that all have to come to some sort of agreement. And they might all think free trade is good in general terms, but they might also like to pursue specific agendas that advantage their own residents at the expense of other Canadians. Each government has an incentive to defect from what would be an optimal situation for everyone. That’s why when governments sit down to discuss internal free trade agreements, you end up with these long lists of protectionist exceptions, policies that are exempted from free trade requirements.

And that’s why it makes sense in structural terms to tie the hands of governments through a constitutional commitment to free trade, which we have in s. 121, so they won’t be tempted to defect from the free trade guarantee and enact protectionist policies that advantage specific interest groups. So from my perspective, this is a structural issue, not just a question of good policy or bad policy.

 

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