34 LEXPERT MAGAZINE
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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.
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