Forbes v. The Attorney General of Manitoba / Worthington v. The Attorney General of Manitoba

Forbes v. The Attorney General of Manitoba / Worthington v. The Attorney General of Manitoba
Collection
Supreme Court Judgments
Date
1936-01-15
Report
[1936] SCR 40
Judges
Duff, Lyman Poore; Lamont, John Henderson; Cannon, Lawrence Arthur Dumoulin; Crocket, Oswald Smith; Davis, Henry Hague
On appeal from
Manitoba
Subjects
Taxation
Decision Content
Supreme Court of Canada
Forbes v. The Attorney General of Manitoba / Worthington v. The Attorney General of Manitoba, [1936] S.C.R. 40
Date: 1936-01-15
Frederick Franklin Worthington (Defendant) Appellant;
and
The Attorney-General of The Province of Manitoba (Plaintiff) Respondent.
James Forbes (Defendant) Appellant;
and
The Attorney-General of The Province of Manitoba (Plaintiff) Respondent.
1935: May 10, 13, 14, 15; 1936: January 15.
Present: Duff C.J. and Lamont, Cannon, Crocket and Davis JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA
Assessment and taxation—Constitutional law—The Special Income Tax Act, Man., 1933, c. 44 (Part I: Taxation of Wages)—Constitutionality—Direct or indirect taxation—Whether tax imposed on employee or upon wages in employer’s hands—Application, effect, and validity of the Act as to pay, allowance, or wages, received by an officer of the permanent force of the active militia of Canada, or by a civil servant of the Dominion Government—B.N.A. Act, ss. 92 (2), 91 (7) (8).
The imposition of the tax on wages by Part I of The Special Income Tax Act of Manitoba, 1933, c. 44, is direct taxation, and is intra vires. The tax is imposed upon the employee; it is not in substance a tax on the employer’s pay roll. Sees. 4, 5, 6 and the second part of s. 7 of the Act do not attempt to impose the tax as such upon the employer but merely provide for the collection and recovery of the tax.
The appellants, both resident within the province, one an officer of the permanent force of the active militia of Canada, the other a civil servant of the Dominion Government, were each held to be liable for the said tax in respect of the pay, allowance or wages received by him from the Government of Canada.
Abbott v. City of Saint John, 40 Can. S.C.R. 597, cited and applied.
Judgments of the Court of Appeal for Manitoba, 42 Man. L.R. 540, 569, affirmed.
Cannon and Crocket JJ. dissented.
Per Duff C.J.: (1) Even assuming everything in said ss. 4, 5, 6 and second part of s. 7 which imposes any duty or liability upon the employer to be struck from the Act as ultra vires, there would still stand enactments valid and complete for the purpose of making the taxes in question exigible from the taxpayer. (2) Said ss. 4, etc., read by the light of well settled and well known canons of construction, do not extend to the Crown or to the officers of the Crown in the right of the Dominion or of any province, other, at all events, than Manitoba, or to the revenues of the Crown in these respective rights; and further, even if this were not so, the form and character of the legislation is such that the enactments, in so far as they relate to such governments and such revenues, must be treated as severable, and the enactments would still have their full operation as regards other employers and other revenues. (3) Sec. 11 of The Manitoba Interpretation Act, R.S.M. 1913, c. 105, precludes the extension of said ss. 4, etc., at least to the Crown in right of the Dominion or in right of any province other than Manitoba.
Per Cannon J. (dissenting): A provincial government cannot by a tax such as that in question affect the salary or wages paid, or the pay or allowance made, by the Government of Canada to a Dominion civil servant or a soldier of the permanent force. To do so would impair the status and essential rights of such civil servant or soldier, which are under exclusive Dominion authority. Abbott v. City of Saint John (supra) cannot be regarded as binding in the present case, owing to changes in conditions, and is distinguishable in regard to the nature of the tax there in question. Caron v. The King, 64 Can. S.C.R. 255, [1924] A.C. 990, is distinguishable, having regard to the nature of the position of the person there objecting to the tax. Moreover, it is at least doubtful if the pay and allowances to a soldier of the permanent force of the active militia of Canada are “wages” within the meaning of the Act in question, and in construing it (a taxing Act) the subject should be given the benefit of that doubt. Moreover, Part I of the Act attempts to strike first directly at the source of wages, before they reach the employee, expecting direct payment from the employer, and through him to reach the employee indirectly; such legislation is ultra vires; and, having regard to the design of the Act, the part so ultra vires cannot be severed from the provision in s. 7 for payment by the employee, so as to save the latter provision from invalidity (Attorney-General for Manitoba v. Attorney-General for Canada, [1925] A.C. 561, at 568).
Per Crocket J. (dissenting)—The primary purpose and effect of Part I of the Act is to impose the tax, not upon the employee or upon the income from wages received by him, but upon the earned and accruing wages of the employee in the hands of the employer before they are paid to the employee; and so far as its provisions seek to tax federal salaries or other pay or allowances in the hands of the Government of Canada they are entirely void and inoperative. The provisions of s. 7 purporting to impose upon the employee the liability to pay the tax only in the event of its not having been deducted from his wages and paid by the employer, cannot reasonably be severed, in an action brought against an employee of the Dominion Government, from the provisions of the previous sections, which in their application to the salaries, pay and allowances of civil and other employees of the Dominion Government are ultra vires of the legislature, the liability for payment of the tax having been primarily placed upon the employer and only secondarily or conditionally upon the employee. The secondary liability of the employee cannot fairly be held, in a taxing statute, to stand alone if the primary liability out of which it arises or for which it is substituted is unconstitutional and void. APPEALS by the defendants from the judgments of the Court of Appeal for Manitoba[1] dismissing their appeals from judgments in favour of the plaintiff in the County Court of Winnipeg.
The plaintiff, the Attorney-General of the Province of Manitoba, suing for and on behalf of His Majesty the King in the Right of the Province of Manitoba, claimed in each case from the defendant, under the provisions of The Special Income Tax Act, ch. 44 of the Statutes of Manitoba, 1933, a tax of two per centum upon certain sums alleged to have been “wages” within the meaning of said Act earned by the defendant from May 1, 1933, to December 31, 1933, and paid to him by the Government of Canada without the said tax having been deducted therefrom.
Both defendants were at all material times continuously resident within the province of Manitoba. The defendant Worthington was an officer of the permanent force of the active militia of Canada. The defendant Forbes was a civil servant employed by the Government of Canada in the Department of Agriculture. The sums in respect of which the tax was sought to be recovered were alleged by plaintiff to have been respectively earned by each defendant as such officer and as such civil servant respectively.
The defendants each denied any liability to pay the said tax.
The defendant Worthington claimed (inter alia) that his presence in Manitoba was solely in performance of his duties as an officer as aforesaid, and according to the duties and exigencies of his service to the King; that any sums in question in fact received by him were received by him from the King pursuant to royal warrant for the payment thereof, under sign manual of the Governor General of Canada, as the King’s representative, from and out of moneys appropriated to His Majesty for the upkeep of His forces in Canada and in accordance with rates laid down by pay and allowance regulations for the militia of Canada; that in so far as the Act in question assumes or purports to declare such sums to be “wages” within the meaning of the Act and purports to tax the defendant upon said sums, it is ultra vires because: the taxes provided to be levied and collected under Part I of the Act are indirect taxation; the Act attempts to legislate in respect of the status, privileges and prerogatives of His Majesty the King as Commander in Chief of the militia of Canada and of the authority thereover exercised by His Excellency the Governor General of Canada as His Majesty’s representative in that behalf; by various (specified) provisions of the Act the legislature has sought to impose certain duties and obligations and penalties on His Majesty and His said representative; by the Act the legislature attempts to interfere with and legislate in respect of the relationship between His Majesty the King and the officers and men of His militia in Canada; by Imperial and Dominion legislation and regulations, in force in Canada, it is provided that the pay of any officer or soldier shall be paid without any deduction other than the deductions authorized by The Army Act (Imperial) or any other Act to be enacted by the Parliament of Great Britain, or by any royal warrant for the time being. The defendant claimed that if Part I of the Act were construed as applicable to him it was ultra vires; and alternatively claimed that the sums alleged to have been received by him included the value of allowances for lodging, fuel and fight, which sums were in fact never received by him, and that the provisions of the Act empowering the administrator to determine the monetary value of any such allowances were ultra vires, and constituted indirect taxation and taxation of property held by the King in right of the Dominion of Canada; that, should it be held that the Act was competently enacted, the King is not an “employer” within the Act.
The defendant Forbes claimed (inter alia) that he was not a person who would be liable to any such taxation; that he was not an employee as defined in the Act; that he had not received any moneys upon which any taxation could be levied by the provincial legislature; that the provincial legislature could not pass legislation intercepting or attempting to intercept moneys in the hands, of the Dominion; that the statute is ultra vires, as providing for indirect taxation, and otherwise.
In the Court of Appeal, in the Worthington case, Dennistoun and Robson, JJ.A., dissented from the judgment of the Court dismissing the defendant’s appeal; in the Forbes case, the Court was unanimous in dismissing the defendant’s appeal.
In each case special leave to appeal to the Supreme Court of Canada was granted by the Court of Appeal for Manitoba.
H. Phillipps, K.C. for the appellant Worthington.
C. E. Finkelstein for the appellant Forbes.
I. Pitblado K.C. and W. E. McLean for the respondent.
Duff C.J.—I agree entirely with the judgment of Mr. Justice Davis.
I must confess, I have never had any doubt upon the question raised by these appeals touching the construction and effect of the British North America Act. The legislative authority of the provinces, with respect to direct taxation within a province, does, admittedly, embrace the power to levy taxes upon the residents of the province in respect of their incomes; and it would seem to be axiomatic that a resident of the province is none the less so because he is an official, or an employee, or a servant, of the Dominion Government or Parliament, or a person in receipt of emoluments from that Government or Parliament.
In Abbott v. City of Saint John[2] it was held that there is nothing in the statute which exempts such persons, or the salaries, wages or emoluments received by such persons, from the jurisdiction of the provinces in relation to the subject of taxation. In that case, this Court had to consider the judgment of the very able judges who decided Leprohon v. City of Ottawa[3]; and it may be worth while to devote a sentence or two to Leprohon’s case3.
The trial judge was Mr. Justice Moss[4] (afterwards Chief Justice of Ontario). He proceeded upon principles which had been laid down in judgments of the Supreme Court of the United States, notably in the judgment of Marshall C. J. in McCulloch v. Maryland[5], the effect of which may be summed up in these words, quoted by Moss J.[6] from the judgment of Nelson J. in Buffington v. Day[7]:
* * * there is no express constitutional prohibition upon the States against taxing the means or instrumentalities of the General Government; but it was held, and we agree properly held, to be prohibited by necessary implication, otherwise States might impose taxation to an extent that would impair, if not wholly defeat, the operations of the Federal authorities when acting in their appropriate sphere.
Mr. Justice Moss himself proceeds:
In this case the Central authority, in the exercise of its appropriate functions, appointed the plaintiff to a position of emolument. In the exercise of its proper powers it assigned to him a certain emolument. This emolument the plaintiff is entitled to receive for the discharge of duties for which the Central Government is bound to provide. I do not find in the British North America Act that there is any express constitutional prohibition against the Local Legislatures taxing such a salary, but I think that upon the principles thus summarized in the case which I have just cited there is necessarily an implication that such power is not vested in the Local Legislature.
The learned judges in the Court of Appeal for Ontario base their conclusions upon the same grounds.
In Abbott v. City of Saint John[8], four of the five judges of this Court were clearly of the view that this reasoning was not admissible for the purpose of determining the limits of the powers vested in the provinces by the British North America Act. Davies J. said (at p. 606):
Time and again the Judicial Committee have declined to give effect to this anticipatory argument or to assume to refuse to declare a power existed in the legislature of the province simply because its improvident exercise might bring it into conflict with an existing power of the Dominion.
At page 618, I observed,
* * * Leprohon v. The City of Ottawa[9] * * * was decided in 1877. Judicial opinion upon the construction of the British North America Act has swept a rather wide arc since that date; to mention a single instance only, it would not be a light task to reconcile the views upon which Leprohon v. The City of Ottawa9 proceeded with the views expressed by the Judicial Committee in the later case of The Bank of Toronto v. Lambe[10]. Indeed, although Leprohon v. The City of Ottawa9 has not been expressly over-ruled, the grounds of it have been so thoroughly undermined by subsequent decisions of the Judicial Committee, that it can,—I speak, of course, with the highest respect for the eminent judges who took part in it,—no longer afford a guide to the interpretation of the British North America Act. Abbott v. City of Saint John[11] was approved in Caron v. The King[12] and both decisions are, of course, binding upon this Court.
In view of an argument addressed to us, one may, perhaps, observe that Abbott v. City of Saint John11 was not founded on the decision of the Privy Council in Webb v. Outrim[13], a decision upon the Commonwealth Act of Australia. It proceeded, as plainly appears from the judgments, upon the view that the reasoning in Leprohon’s case[14] had been swept away by subsequent decisions of the Judicial Committee of the Privy Council on the British North America Act.
I agree with Mr. Justice Davis that the provisions of sections 4, 5 and 6 and the last clause of section 7 are concerned with the collection and the recovery of the taxes imposed upon the employee by sections 3 and 7.
It is conceivable, no doubt, that a province might, while professing to act under clause 2 of section 92 of the British North America Act, attempt to invade the exclusive legislative authority of the Parliament of Canada under clause 8 of section 91 in respect of the
fixing of * * * the salaries and allowances of civil and other officers of the Government of Canada.
Attempts on the part of both the Parliament of Canada and the legislatures of the provinces to employ their admitted powers for the purpose of legislating in a field from which they are excluded by the terms of the British North America Act have sometimes come before the courts. One of the most recent cases of the kind concerned an attempt on the part of the Dominion to make use of its powers in respect of taxation in order to exercise legislative control over a subject withdrawn from its jurisdiction by the British North America Act. The attempt failed for the reasons given by Lord Dunedin, speaking on behalf of the Judicial Committee, in In re the Insurance Act of Canada[15].
If a province should attempt to employ its authority in respect of taxation for the purpose of invading the field of jurisdiction marked out and exclusively appropriated to the Dominion by clause 8 of section 91, then such an attempt must necessarily fail. But there is in truth no reason for imputing such a character to the legislation now before us. The statute, no doubt, specifically mentions wages earned by employees of His Majesty in the right of the Dominion or in right of any province of Canada, but there is no suggestion that there is any discrimination between such employees who are subject to the tax created by this statute. Nor could there be any ground for a suggestion, nor, indeed, does anybody suggest, that the purpose of this statute is anything other than that which is expressed in section 3 (1), viz., the levying of a tax for the purpose of raising a provincial revenue.
Counsel for the appellant emphasized sections 4, 5 and 6 and the second branch of section 7. The argument, if I understood it, appeared to be that these sections are ultra vires because they constitute an attempt to impose duties upon the Crown, or the officers of the Crown in the right of the Dominion, or of provinces of Canada other than Manitoba, with respect to the disposal of the revenues of the Crown in such rights; that these provisions are inextricably connected with those of sections 3 and 7, and that the whole of the series of enactments beginning with section 3 and ending with section 7 form a unum quid which is struck with invalidity because of the legislature’s illegal assumption of authority in enacting sections 4, 5 and 6 and the second part of section 7.
There are, as I conceive, three conclusive answers to this contention. First of all, assuming everything in sections 4, 5 and 6 and the second branch of section 7 which imposes any duty or liability upon the employer to be struck from the statute as ultra vires, there would still stand enactments valid and complete for the purpose of making the taxes in question exigible from the taxpayer. I shall elaborate this later.
Second, the impeached enactments (sections 4, 5 and 6, and the second part of section 7), read by the light of well settled and well known canons of construction, do not, as it appears to me, extend to the Crown or to the officers of the Crown in the right of the Dominion or of any province of the Dominion, other, at all events, than Manitoba, or to the revenues of the Crown in these respective rights; and further, even if this were not so, the form and character of the legislation is such that the enactments, in so far as they relate to such governments and such revenues, must be treated as severable, and that the enactments would still have their full operation as regards other employers and other revenues.
Thirdly, section 11 of The Manitoba Interpretation Act (ch. 105, R.S.M. 1913) precludes the extension of sections 4, 5 and 6 and the second part of section 7 at least to the Crown in right of the Dominion or in right of any province other than Manitoba.
Reading sections 4, 5 and 6 without reference to the interpretation clauses, but in light of accepted rules of construction, it is clear that these sections must be construed as imposing duties and liabilities only upon employers within the territorial jurisdiction of the Legislature of Manitoba, and as dealing with moneys or revenues having a situs which would enable the Legislature to exercise control over them. The general rule, I think, is stated with perfect accuracy in the treatise on Statutes in Lord Halsbury’s collection, Vol. 27, section 310, at p. 163,
When Parliament uses general words it is dealing only with persons or things over which it has properly jurisdiction; it would be futile to presume to exercise a jurisdiction which it could not enforce.
The presumption in favour of this general rule is fortified in this case by the penal provisions of section 6, which become operative in any case in which an employer fails to observe the duty created by sections 4 and 5 to collect and pay over any tax, imposed by Part 1, that is to say, by sections 3 and 7. Such penal provisions, expressed in general terms, ought not to be construed so as to bring within their sweep employers who are neither domiciled nor resident in Manitoba and whose moneys, out of which the wages are paid, are in their possession beyond the limits of that province, nor to acts or defaults of such employers committed outside the province (MacLeod v. Attorney-General for New South Wales[16]). Since subsection 1 of section 6 applies to all employers who fail to collect and pay over taxes under the provisions of Part 1, and subsection 2 applies to everybody who contravenes any provision of Part 1, this is solid ground for the inference that the duties imposed by sections 4 and 5, in respect of which section 6 provides the sanctions, are duties which the statute contemplates shall be performed in the province. The last sentence of the first paragraph of section 4 ought not to be overlooked. It professes to provide for a discharge pro tanto of the obligation of the employer to pay the wages of the employee in the manner prescribed, that is to say, by payment of the tax to the province. Now the obligation of the employer would, as a rule, being a simple contract debt, have its situs at the residence of the employer; and the legislature of the province would be impotent to regulate the conditions of its discharge when the employer’s residence is not in the province (Royal Bank of Canada v. The King[17]). This observation applies equally to subsection 3 of section 4.
This construction of sections 4, 5 and 6 receives powerful support by reference to the definition of “employer” in clause (c) of section 2 (1). It is in these words:
2 (1) (c) “Employer” includes every person, manager, or representative having control or direction of or responsible, directly or indirectly, for the wages of any employee, and in case the employer resides outside the province, the person in control within the province shall be deemed to be the employer;
The Legislature seems to have recognized that the enactments of Part 1, imposing duties upon employers and penalties for failing to perform them, could not be operative in respect of employers and their acts and property outside of the province. The last part of section 7 is not without its significance. It, by reference, makes the procedure established by sections 23, 23A and 24 of the Income Tax Act (C.A. 1924, ch. 91, as amended) available for the collection and recovery of the tax. They are made available for recovery and collection, not only from the taxpayer, the person on whom the tax is imposed, but, as well, for the enforcement of payment by the employer pursuant to the obligation created by section 4. Now, it is obvious from inspection that these sections of the Income Tax Act are only intended to apply to employers having goods in Manitoba susceptible to distress.
The provision upon which the argument of the appellant largely rests is that of section 2 (1) (d) (ii), which is in these words:
(ii) the salaries, indemnities, or other remuneration of members of the Senate and House of Commons of the Dominion and officers thereof, members of the Provincial Legislative Councils and Assemblies, members of municipal councils, commissions, or boards of management, and of any judge of any Dominion or provincial court, and of all persons whatsoever, whether such salaries, indemnities, or other remuneration are paid out of the revenues of His Majesty in right of the Dominion or in right of any province thereof, or any person;
The argument, as I understand it, proceeds thus: Where the word “wages” occurs in sections 4, 5 and 6, you must substitute therefor the explanatory phrases of the interpretation section. Now, in the first place, it is important to observe that under this interpretation section, these explanatory clauses only apply “where the context does not otherwise require” (sec. 2 (1)). I should have thought it reasonably clear, in view of the considerations I have mentioned, and especially in view of section 2 (1) (c), that the definition in section 2 (1) (d) (ii) could not properly be applied in such a way as to give to sections 4 and 5 the scope necessary to make them applicable to the payment of wages by, for example, a provincial government, other than that of Manitoba, or to an employee of that government. It is unnecessary to discuss the effect of the words “resident” and “residence” as applied to the Crown. The general principle of construction to which I have referred would, I should have thought, obviously have excluded from the scope of the general words of sections 4, 5 and 6 wages payable by the Crown in the right of another province and, necessarily, out of the revenue of that province and by authority of legislative appropriation or statute. Every consideration in favour of the rule which restricts the operation of the general words of a provincial statute, in such a way as to exclude from them property situate outside the territorial jurisdiction of the legislature and persons and the acts of persons outside that jurisdiction, applies with greatly multiplied force in favour of the view that these sections ought not to be construed as extending to the officials of the government of another province, or to the acts of such officials in dealing with the assets and revenues of the province. A fortiori, they ought not to be construed as attempting to impose legal obligations and duties on the Crown in the right of the Dominion, or the officials of the Crown in the right of the Dominion, or as assuming to direct under penal sanctions the disposition of the revenues of the Dominion. No court ought, it seems to me, to attribute to the legislature of a province an intention to enact legislation so obviously beyond the scope of its legitimate action in absence of almost intractable words.
Again, subsection 3 of section 4 provides that the amount of the tax, after having been deducted and retained by the employer, shall be held in trust for His Majesty in the right of the province. This seems to be an illuminating provision. The term employer, must, as we have seen, receive some qualification. What is the qualification here? In the first place, the moneys deducted would in most cases where payable by the Dominion, or a provincial government, not have a situs in Manitoba, and that alone is sufficient for excluding such governments from the scope of the term. But beyond that, is it conceivable that a legislature of a province of Canada would assume to declare the Dominion Government or another provincial government a trustee of its revenues for that province? We cannot, I think, in the absence of some plain words, impute such an intention to the legislature.
Then, there is a special observation as regards section 5, By that section, the employer is required to keep “at some place in the province” a list of his employees with their residences. Obviously, such a provision is inoperative in relation to employers not domiciled or resident in the province. Plainly here effect must be given to the presumption excluding persons outside the jurisdiction of the legislature.
I now turn to the effect of section 11 of The Manitoba Interpretation Act (R.S.M. 1913, ch. 105) which contains this provision:
No provisions or enactment in any Act shall affect in any manner or way whatsoever the rights of His Majesty, His heirs or successors, unless it is expressly stated therein that His Majesty shall be bound thereby; * * *
By section 2 of the Act, there are certain cases in which section 11 does not; apply. These cases are where that section,
(a) is inconsistent with the intent and object of any such Act, or (b) would give to any word, expression or clause of any such Act an interpretation inconsistent with the context, or (c) is in any such Act declared not applicable thereto. There is nothing in the statute before us which declares section 11 to be inapplicable thereto, nor, in view of what I have said, can it, I think, be affirmed that section 11 is in any way inconsistent with the intent and object of the statute.
Can it be said then that section 11, if given effect to, “would give to any word, expression or clause” of the statute “an interpretation inconsistent with the context?” There is nothing in the context which is inconsistent with section 11 unless it can be discovered in the word “wages,” reading that word by reference to the explanatory clause in the interpretation section 2 (1) (d).
It does not appear to be necessary to consider the question whether, by force of section 2, the word “employer” in these sections (sections 4, 5, 6 and the second part of section 7) should be extended to include His Majesty in right of the province of Manitoba. The statute as a whole is for the behoof of His Majesty in right of that province. On the other hand, the tone of the sections in question (4, 5, 6 and the enactments of the Income Tax Act referentially introduced by the second part of section 7), as well as the substance of some of the provisions of these sections, are not entirely consonant with the idea that they are intended to apply to His Majesty in any capacity.
It is, however, unnecessary to pass upon this point. Our concern is with the application of these provisions to His Majesty in right of the Dominion and of the other provinces of Canada. Is His Majesty in these capacities comprehended within the general term “employer”?
In re Silver Brothers, Ltd.[18] contains observations by Lord Dunedin, delivering the judgment of the Judicial Committee, valuable for our present purpose touching the effect of an enactment by the legislature of a province which, if operative, would prejudicially affect the rights of the Crown in relation to its revenues and assets under the control of another legislative jurisdiction in Canada. He says:
The next point made was that the provisions of s. 16 do not apply-when what is being done is not to affect the Crown prejudicially, but to give a benefit to the Crown, and along with this it is urged that there is only one Crown, and reference is made to the case of Attorney-General for Quebec v. Nipissing Central Ry. Co.[19]. It is quite true that the section refers to cases where the Crown would be “bound,” i.e., subjected to liability, and not to those where the Crown is benefited. But the fallacy lies in the application of this truth to the case in question. Quoad the Crown in the Dominion of Canada the Special War Revenue Act confers a benefit, but quoad the Crown in the Province of Quebec it proposes to bind the Crown to its disadvantage. It is true that there is only one Crown, but as regards Crown revenues and Crown property by legislation assented to by the Crown there is a distinction made between the revenues and property in the Province and the revenues and property in the Dominion. There are two separate statutory purses. In each the ingathering and expending authority is different.
I have already called attention to the fact that the legislature in the interpretation clause (s. 2 (1) (c)) seems to recognize the rule of interpretation which presumptively imputes to the legislature an intention of limiting the direct operation of its enactments to persons and things within its jurisdiction. When these sections are examined as a whole, the form, as well as the substance of them, enormously strengthens this presumption. The immediate context, therefore, offers no obstacle whatever to the application of section 11 to them. Indeed, these sections, read by themselves, in the absence of section 11 and in the absence of the interpretation clause, would be applied upon the footing that “employer” does not include His Majesty in right of the Dominion or of another province. Such being the case, it would appear that effect ought to be given to the introductory words of section 2(1): “unless the context otherwise requires.” It results, therefore, from the terms of section 11 of The Manitoba Interpretation Act, applied by the light of the general considerations adverted to above, and of the definition of the term “employer” in the interpretation section, that that part of clause (ii) of section 2(1) (d) which refers to remuneration
paid out of the revenues of His Majesty in right of the Dominion or in right of any province thereof
ought not, by reason of the restriction which must be placed upon the general term “employer,” to be regarded as governing the interpretation of the term “wages” in these sections.
Apart from these considerations, it would appear that those parts of the definition of “wages” which relate to moneys payable out of revenues of the Dominion are severable from the other parts of the definition. If you excise these references, you do not affect the meaning of the enactments of sections 4, 5 and 6 in their application to other persons. Since the application of these enactments to His Majesty in the right of the Dominion, or His Majesty’s officers, or to the revenues of His Majesty in the right of the Dominion, would be ultra vires, there seems to me no reason why, in treating that part of the statute as null, the validity of these enactments in other respects should be impeachable. In Brooks-Bidlake and Whittal Ltd. v. Attorney-General for British Columbia[20], the Judicial Committee, dealing with the statutory stipulation of a timber licence under the British Columbia Crown Lands Act, which provided that
this licence is issued and accepted on the understanding that no Chinese or Japanese shall be employed in connection therewith,
held that, by reason of the Japanese Treaty Act, 1913, enacted by the Dominion Parliament, the stipulation as regards Japanese was void; but that it must prevail as regards the employment of Chinese. The words of the judgment (at p. 458) are:
The stipulation is severable, Chinese and Japanese being separately named; and the condition against employing Chinese labour having been broken, the appellants have no right to renewal.
The present case seems clearly to fall within this rule.
In Attorney-General for Manitoba v. Attorney-General for Canada[21], the Judicial Committee had to deal with a case in which they were obliged to hold that an enactment which was ultra vires in some respects, but which would, in a separate enactment, have been valid in some other respects, must be treated as invalid as a whole, because, in view of the circumstances, it was quite impracticable for a court of law to effect the necessary division. The words of the judgment are,
If the statute seeks to impose on the brokers and agents and the miscellaneous group of factors and elevator companies who may fall within its provisions, a tax which is in reality indirect within the definition which has been established, the task of separating out these cases of such persons and corporations from others in which there is a legitimate imposition of direct taxation, is a matter of such complication that it is impracticable for a court of law to make the exhaustive partition required. In other words, if the statute is ultra vires as regards the first class of cases, it has to be pronounced to be ultra vires altogether. Their Lordships agree with Duff J. in his view that if the Act is inoperative as regards brokers, agents and others, it is not possible for any court to presume that the Legislature intended to pass it in what may prove to be a highly truncated form. There can be no doubt, if in substance the severance of part of the legislation which is ultra vires from the statute as a whole would have the effect of “transforming it into one to which the legislature has not given its assent,” then it would be beyond the province of any court to deal with the matter in that way (Attorney-General for Ontario v. Reciprocal Insurers[22]. In view of what has already been said, such an objection would, as it appears to me, in the present case, be groundless.
Again, even if one could come to the conclusion that sections 4, 5 and 6 must be treated as inoperative as a whole, sections 3 and 7 are, in themselves, quite sufficient. Section 3 provides:
3. (1) In addition to all other taxes to which he is liable under this or any other Act, every employee shall pay to His Majesty for the raising of a revenue for provincial purposes a tax of two per centum upon the amount of all wages earned by or accruing due to him on or after the first day of May, 1933, which tax shall be levied and collected at the times and in the manner prescribed by this part;
It is the employee on whom it is to be imposed, but the tax is to be “collected at the times and in the manner prescribed by this part.” Now, it is perfectly clear, as I have already pointed out, especially in view of section 2 (1) (c), that the legislature must have contemplated that sections 4, 5 and 6 would fail of application in many cases; in all cases in which the employer is resident outside of Manitoba, has all his assets and revenues outside of Manitoba, and has no representative in Manitoba who has any control or direction or responsibility in relation to the wages to be taxed. It would be quite inadmissible to hold that in such cases sections 3 and 7 have no application. The rule laid down by Lord Cairns in Partington v. Attorney-General[23] is this:
If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute.
The operation of sections 3 and 7 is not in any way dependent upon sections 4, 5 and 6 or any of them taking effect against the employer. There is no ground for holding that, when the last mentioned sections do not affect the employer, because he and his assets are beyond the territorial jurisdiction of the legislature, the operations of sections 3 and 7 are in any degree impaired. Section 7 plainly includes such a case, which already falls within the words:
In case the wages earned or accruing due to an employee are paid to him without the tax imposed thereon being deducted therefrom by his employer, * * *
And in all cases in which the employer is not within the general terms of sections 4, 5 and 6, section 7 equally applies.
The tax is imposed by section 3 and the obligation to pay the tax is created by that section and section 7, and whic