News / Halifax

'Dismissed:' Halifax craft brewery loses court fight with NSLC

Unfiltered Brewing was claiming that the NSLC’s Retail Sales Mark-up Allocation was unconstitutional.

A flight of beer at a micro brewery tasting room is shown in this file photo.

Staff / Metro

A flight of beer at a micro brewery tasting room is shown in this file photo.

A Halifax craft brewery has lost its fight with the Nova Scotia Liquor Corporation to have a controversial fee scrapped.

A decision released on Wednesday by Nova Scotia Supreme Court Justice Glen McDougall dismisses Unfiltered Brewing’s claim that the NSLC’s Retail Sales Mark-up Allocation (RSMA) is invalid.

In his decision, McDougall writes that the RSMA “is in pith and substance a proprietary charge within the authority of NSLC pursuant to its statutory mandate.”

“Accordingly, Unfiltered’s application to rule the remittance invalid is dismissed.”

The RSMA is a charge of five per cent of a brewer’s wholesale price on beer sold, sampled or given away outside of NSLC locations, including at bars and restaurants. When Unfiltered commenced its legal action, the fee was 50 cents per litre, but the provincial government changed it last April. The new fee amounts to about half as much as the old one, and is in line with a similar fee charged to wineries and distilleries.

Unfiltered’s lawyer, Richard Norman argued in court last March that the RSMA is invalid and unconstitutional because it’s a tax, and the corporation doesn’t have the legal authority from the province to charge taxes – whether it’s 50 cents per litre or five per cent of wholesale.

McDougall ruled that the RSMA meets the legal test for a tax, but that’s not what it is.

Rather, McDougall ruled it’s a propriety charge – one “levied by a province in the exercise of proprietary rights over its public property.”

Despite the NSLC never coming in contact with beer sold by Unfiltered, McDougall ruled that it can still charge a fee for what amounts to expropriation of public property.

“It seems clear,” McDougall wrote, citing past cases, “that a provincial liquor commission can exercise proprietary rights over liquor that it neither pays for nor possesses. Unfiltered has not shown a legal basis to find that the law cannot deem the beer to be property of NSLC in these circumstances.”

Unfiltered owner Andrew Murphy is out of the country, but told Metro he’d comment on the ruling once he’s had a chance to get legal advice.

NSLC spokesperson Beverley Ware said the corporation appreciates and respects the court’s decision.

“We are pleased with it but we have just received the decision so we will need to take some time to review it over the next few days,” she said.

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