May 24, 2019

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Private wine store sues liquor authorities over out-of-province 'bootleggers'

A local private wine seller is suing a Crown corporation and the regulator for allegedly turning a blind eye to bootlegging operations illicitly shipping wine into Manitoba in an effort to avoid provincial taxes and undercut independent retailers.

The accusations were laid out in a statement of claim filed Friday by lawyer Robert Tapper of Tapper Cuddy LLP on behalf of Banville & Jones Wine Company in the Court of Queen’s Bench.

The Liquor, Gaming and Cannabis Authority of Manitoba and the Manitoba Liquor & Lotteries Corp. are named as defendants in the lawsuit.

“If this is allowed to continue it will potentially be a deathblow to independent wine stores,” Tapper told the Free Press.

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A local private wine seller is suing a Crown corporation and the regulator for allegedly turning a blind eye to bootlegging operations illicitly shipping wine into Manitoba in an effort to avoid provincial taxes and undercut independent retailers.

The accusations were laid out in a statement of claim filed Friday by lawyer Robert Tapper of Tapper Cuddy LLP on behalf of Banville & Jones Wine Company in the Court of Queen’s Bench.

The Liquor, Gaming and Cannabis Authority of Manitoba and the Manitoba Liquor & Lotteries Corp. are named as defendants in the lawsuit.

"If this is allowed to continue it will potentially be a deathblow to independent wine stores," Tapper told the Free Press.

Since 1994, the province has permitted licensed, private retailers to sell wine in Manitoba. There are currently six speciality wine stores and two food and wine stores licensed for private sales in Winnipeg.

Banville & Jones Wine Co. on St Mary's Road in Winnipeg.

JOHN WOODS / WINNIPEG FREE PRESS

Banville & Jones Wine Co. on St Mary's Road in Winnipeg.

If a private retailer chooses to carry a product that’s sold in Liquor Marts, they’re required to sell the product at the same price as MLL. They’re also allowed to ship in non-listed products through the Crown corporation.

Non-listed products can be sold for a price set by the private retailer. However, the province levies taxes on wine when it’s shipped through MLL.

The statement of claim says any other entity selling alcohol in the province is operating illegally and committing the practice known colloquially as bootlegging.

Tapper alleges there are commercial operations — from other provinces, the U.S. and Europe — that increasingly ship wine directly to consumers in Manitoba, such as marketed wine of the month clubs. This allows them to bypass the taxes levied on local private retailers, Tapper said.

"The Manitoba levy system increases the price of wine by hundreds of per cent. These companies make their living at the mid- to high-priced bottles of wine. I’m not talking about $10 bottles... With high-end product these companies are shipping bottles in at a fraction of the cost," Tapper said

MLL did not respond to a request for comment Monday. A spokeswoman for LGCA said the regulator had not yet seen the statement of claim and would not comment on a case before the courts.

JOHN WOODS / WINNIPEG FREE PRESS

The lawsuit alleges Banville & Jones Wine has repeatedly sought meetings with MLL, but the company’s complaints were ignored. It furthered claimed the MLL and LGCA refused contractually-obligated arbitration and mediation on the issue.

Banville & Jones Wine is seeking an injunction against the province to have them investigate and put a stop to the alleged loopholes for out-of-province wine sellers, as well as damages and costs.

The crux of the case will come down to whether the court decides sales made by out-of-province wine retailers to local consumers constitute Manitoba contracts, Tapper said.

"They’re advertising in Manitoba electronically, people in Manitoba see these ads, they make purchases with a Manitoba credit card, and the products are shipped to Manitoba. That’s a Manitoba contract," Tapper said.

"To me it’s pretty clear what they’re doing and what they’re intending to do. They’re moving around the Manitoba taxes."

The Crown corporation and regulator have not yet filed a statement of defence and none of the allegations have been proven in court.

ryan.thorpe@freepress.mb.ca

Twitter: @rk_thorpe

Ryan Thorpe

Ryan Thorpe
Reporter

Ryan Thorpe likes the pace of daily news, the feeling of a broadsheet in his hands and the stress of never-ending deadlines hanging over his head.

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History

Updated on Monday, January 28, 2019 at 9:02 PM CST: Final version with edits.

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