Kingstreet Investments: Taking a Pass on the Defence of Passing On

Canadian Business Law Journal, Vol. 46, No. 1, pp. 36-49, 2008

U Toronto, Legal Studies Research Paper No. 1023789

19 Pages Posted: 23 Oct 2007 Last revised: 17 Sep 2009

See all articles by Benjamin Alarie

Benjamin Alarie

University of Toronto - Faculty of Law

Date Written: October 22, 2007

Abstract

The passing on defence is frequently invoked by defendants as a defence to claims for restitution. The defence was invoked by the Province in Kingstreet Investments v. New Brunswick in response to claims for the return of unconstitutional indirect taxes on sales of alcoholic beverages to licensees. Although the defence was accepted in principle by both the trial judge and the New Brunswick Court of Appeal, it was rejected soundly by the Supreme Court of Canada.

In this comment I show that the passing on defence is economically irrelevant if one assumes that (i) there is perfect information; and (ii) adjudication is costless and error-free. I then argue that relaxing these assumptions suggests that the passing on defence is economically relevant, and that the correct response is to reject the defence, though only partly for the reasons advanced by the Supreme Court in Kingstreet Investments.

Keywords: restitution, passing on, irrelevance

JEL Classification: K00, K10, K34, K42

Suggested Citation

Alarie, Benjamin, Kingstreet Investments: Taking a Pass on the Defence of Passing On (October 22, 2007). Canadian Business Law Journal, Vol. 46, No. 1, pp. 36-49, 2008; U Toronto, Legal Studies Research Paper No. 1023789. Available at SSRN: https://ssrn.com/abstract=1023789

Benjamin Alarie (Contact Author)

University of Toronto - Faculty of Law ( email )

Jackman Law Building
78 Queen's Park
Toronto, Ontario M5S 2C5
Canada
416-946-8205 (Phone)
416-978-7899 (Fax)

HOME PAGE: http://www.law.utoronto.ca/faculty-staff/full-time-faculty/benjamin-alarie

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