Lexpert Magazine

November/December 2018

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

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34 LEXPERT MAGAZINE | NOVEMBER/DECEMBER 2018 Notionally, this mark-up is paid by the retail- ers, but in reality it is absorbed by the produ- cers. e AGLC applies different mark-up rates to different classes of liquor. Historic- ally, it has applied higher rates to beer pro- duced by large, multi-national corporations than to beer produced by small, domestic "cra" brewers. Prior to October 28, 2015, the lower mark- up rate applied to all cra beer produced any- where in Canada. On that date, a new mark- up regime (the "2015 mark-up") came into effect, giving favourable treatment to cra beer produced in British Columbia, Alberta and Saskatchewan. Shortly thereaer, Steam Whistle Brewing Inc. ("Steam Whistle"), an Ontario cra brewer, commenced an action against the AGLC, claiming that the regime was unconstitutional. On August 5, 2016, the mark-up regime was again altered. Under the new regime (the "2016 mark-up"), all brewers were charged the same rate. However, the Province of Alberta simultaneously created a program which provided Alberta cra brewers with a grant identical to the difference they paid under the 2015 and 2016 mark-ups. Great Western Brewing Company Ltd. ("Great Western"), a Saskatchewan cra brewer, then sued the AGLC. Steam Whistle and Great Western argued that the mark-up is a tax that violates s. 53 of the Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, Appendix II, No 5 (the "Con- stitution"). ey also argued that the mark- up constitutes a barrier to interprovincial trade that violates s. 121 of the Constitution. ey sought declaratory relief and restitution of amounts paid under the mark-up. On January 18, 2016, an interim injunc- tion was granted in favour of Steam Whistle preventing the application of the 2015 mark- up. Instead, Steam Whistle was to continue to pay $0.51/L, the rate it paid prior to the 2015 mark-up. On November 8, 2016, both Applicants received a further injunction from Justice E. C. Wilson preventing the application of the 2016 mark-up. Great Western would in- stead pay $0.48/L, the price it paid under the 2015 mark-up. Decision: the 2015 and 2016 mark-ups contravene s. 121 of the Constitu- tion. Steam Whistle is entitled to restitution of $163,964.98. Great Western is entitled to restitution of $1,938,660.06. e applicants have been successful and are entitled to costs. is is the first time that a law has been successfully challenged on the grounds that it violates section 121 of the Constitution Act, 1867. An appeal of the decision is scheduled to be heard in Calgary on April 9, 2019. Douglas C. Hodson, Q.C. and Kristen MacDonald of MLT Aikins LLP acted for Great Western Brewing Company Ltd. Andrew E. Stead and Preet Saini of Mc- Millan LLP acted for Steam Whistle Brew- ing Inc. Sean P. McDonough and Robert J. Nor- mey of the Ministry of Justice and Solicitor General of Alberta acted for Her Majesty the Queen In Right of Alberta and the Alberta Gaming and Liquor Commission. BIG SUITS VIEW 2019 Canada's leading in-house counsel discuss their top priorities and challenges for 2019 TUNE IN JANUARY 2019 canadianlawyermag.com/inhouse/videos Presented by

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