Reference re legislative jurisdiction of Parliament of Canada to enact the Employment and Social Insurance Act (1935, c. 48)

Reference re legislative jurisdiction of Parliament of Canada to enact the Employment and Social Insurance Act (1935, c. 48)
Collection
Supreme Court Judgments
Date
1936-06-17
Report
[1936] SCR 427
Judges
Duff, Lyman Poore; Rinfret, Thibaudeau; Cannon, Lawrence Arthur Dumoulin; Crocket, Oswald Smith; Davis, Henry Hague; Kerwin, Patrick
On appeal from
Canada
Subjects
Constitutional law
Decision Content
Supreme Court of Canada
Reference re legislative jurisdiction of Parliament of Canada to enact the Employment and Social Insurance Act (1935, c. 48), [1936] S.C.R. 427
Date: 1936-06-17
In The Matter of a Reference as to whether The Parliament of Canada Had Legislative Jurisdiction to Enact The Employment and Social Insurance Act, Being Chapter 38 of The Statutes of Canada, 1935.
1936: January 31; 1936: February 1, 3; 1936: June 17.
Present: Duff C.J. and Rinfret, Cannon, Crocket. Davis and Kerwin JJ.
Constitutional law—The Employment and Social Insurance Act, 25-26 Geo. V, c. 38—Constitutional validity—Taxation—Property and civil rights.
The Employment and Social Insurance Act provides (Part I, sections 4 to 9 inclusive) for the administration of the Act by a Commission consisting of three members to be called the Employment and Social Insurance Commission, whose duties are defined in these sections. Part II (sections 10 to 14 inclusive) of the Act provides for the organization and administration by the Commission of an employment service for the Dominion of Canada with regional divisions and a central employment office and employment offices within each division. Part III (sections 15 to 38 inclusive) of the Act provides for the establishment of an Unemployment Insurance Fund out of which unemployment insurance benefits would be payable to all persons of the age of sixteen years and upwards who are engaged in any of the insurable employments specified in the Act. Such fund is to be derived partly from moneys provided by Parliament and partly from compulsory contributions by employers and workers. The statutory conditions governing the eligibility and ineligibility of insured contributors for the receipt of benefits are defined in the Act. Penalties are provided for fraudulently obtaining benefits or evading payment and for other violations of the Act or the regulations under it. Part IV (sections 39 to 41 inclusive) of the Act, under the heading “National Health,” charges the Commission with the duty of collecting information concerning any scheme, actual or proposed, for providing medical, dental, surgical and hospital care, and compensation for loss of earnings due to ill-health or accident. (Further particulars of the Act are contained in the judgments reported).
Held, per Rinfret, Cannon, Crocket and Kerwin JJ., that the Act is ultra vires of the Parliament of Canada; Duff C.J. and Davis J. holding that the Act is intra vires.
Per Rinfret, Cannon, Crocket and Kerwin JJ.—The validity of the legislation cannot be supported either as an exercise of the residuary power to make laws for the peace, order and good government of Canada, or as an exercise of the power to regulate trade and commerce.
The proposition that the Act could be supported in virtue of the power of the Dominion Parliament concerning statistics or criminal law need not retain our attention.
The legislation is not based on the Treaty of Peace (1919) and, therefore, no reliance for its validity can be made on section 132 of the B.N.A. Act.
Nor can it be supported under “the power to raise money by any mode or system of taxation,” or “the power to appropriate public money for any public purpose.” The statute, in its substance, is not an exercise of those powers. It clearly, indicates that the Parliament of Canada intended primarily to legislate with regard to employment service, to unemployment insurance and to health matters. It is not concerned either with public debt and property or with the raising of money by taxation. Its provisions for levying contributions for the creation of the Unemployment Insurance Fund are nothing more than provisions to enable the carrying out of the true and only purpose of the legislation. These contributions (or taxes, if they are to be so called) are mere incidents of the attempted regulation of employment service and unemployment insurance.
It being well understood, and in fact conceded, that the subject-matters of the Act fall within the legislative authority of the provinces, the Dominion Parliament may not, under pretext of the exercise of the power to deal with its property or to raise money by taxation, indirectly accomplish the ends sought for in this legislation.
The effect of the Act under submission is “to attach statutory terms to contracts of employment” (Lord Haldane in Workmen’s Compensation Board v. Canadian Pacific Railway, [1920] A.C. 184); and its immediate result is to create civil rights as between employers and employees. The Dominion Parliament cannot use its power of taxation to compel the insertion of conditions of that character in ordinary employment contracts.
Per Duff C. J. and Davis J. dissenting.—The aims stated in the preamble of the Act are legitimate, provided, of course, that the enactments themselves are within the ambit of the legislative powers possessed by Parliament. Reading subdivision 1 of section 91 and subdivision 3 of the B.N.A. Act together, the proper conclusion is that Parliament has exclusive authority to raise money by any mode or system of taxation for disposition by Parliament for any purpose for which it is competent to Parliament to apply the assets of the Dominion in virtue of subdivision 1. In effect, subdivision 1 endowes the High Court of Parliament with full discretionary authority to dispose of the public assets of the Dominion, and no other court is invested with jurisdiction to examine any purported exercise of that authority with a view to pronouncing upon its validity, subject only to the rule that the courts are always entitled to determine whether, in truth, any given enactment of Parliament professing to be an exercise of a given authority is not really an enactment of that character; but one relating to a subject over which Parliament has no jurisdiction.
The provisions requiring compulsory contributions by employers and employed possess the essential elements of legislation respecting taxation. On their true, construction, they have that character because, first, it would not be competent to a provincial legislature to enact them in the context in which they stand, which demonstrates that the contributions are exacted for the purpose of raising moneys for exclusive disposition by Parliament; and, second, there is no adequate ground for holding that they are, either in purpose or in immediate effect, outside the ambit of the powers under subdivision 3.
So also as regards the enactments concerning the disposition of the proceeds of the levies upon employers and employed and of the contribution from the Dominion treasury. They are not enactments in respect of property and civil rights in any one province or in all of the provinces. They would not be competent as enactments by any or all of the provincial legislatures, and there is no adequate ground for affirming that these enactments are not legislation in relation to the subjects within the scope of subdivision 1. Parliament can in the legitimate exercise of its exclusive authority under subdivisions 1 and 3 of section 91 of the B.N.A. Act, levy taxes for the purpose of raising money to constitute a fund to be expended, in conformity with the directions of Parliament, in unemployment benefits, and provide for a contribution to that fund from the Dominion treasury, and in executing these exclusive powers, Parliament is not subject to any control by the courts as to the form of the taxation or the incidence of it or as touching the manner or conditions of the payment of benefits.
Complete discretionary authority respecting the form and incidence of taxation under subdivision 3, and respecting the disposal of all public assets under subdivision 1, are essential to enable Parliament to discharge the responsibilities entrusted to it.
Legislation for raising money for disposition by Parliament under subdivision 3 of section 91, and directing the disposition of it under subdivision 1, is necessarily excluded from the jurisdiction of the provinces by the concluding words of section 91; and there is no sufficient ground for affirming that, in the enactments of this statute, Parliament is not exercising its powers under these subdivisions, or, in other words, that under the guise of doing so it is invading a provincial field from which it is excluded, for the purpose of attaining a result which it has full power to attain by legislating within fields in which it has exclusive authority.
REFERENCE by His Excellency the Governor General in Council to the Supreme Court of Canada, in the exercise of the powers conferred by section 55 of the Supreme Court Act (R.S.C. 1927, c. 35), of the following question: Is the Employment and Social Insurance Act, or any of the provisions thereof and in what particular or particulars or to what extent, ultra vires of the Parliament of Canada?
The Order in Council referring the question to the Court reads as follows:
The Committee of the Privy Council have had before them a report, dated 31st October, 1935, from the Minister of Justice, referring to the Employment and Social Insurance Act, chapter 38 of the statutes of Canada, 1935, which was passed for the purposes set out in the recitals contained in the preamble of the said Act.
The Minister observes that doubts exist or are entertained as to whether the Parliament of Canada had legislative jurisdiction to enact the said Act, either in whole or in part, and that it is expedient such question should be referred to the Supreme Court of Canada for judicial determination.
The Committee, accordingly, on the recommendation of the Minister of Justice, advise that the following question be referred to the Supreme Court of Canada, for hearing and consideration, pursuant to section 55 of the Supreme Court Act,—
Is the Employment and Social Insurance Act, or any of the provisions thereof and in what particular or particulars or to what extent, ultra vires of the Parliament of Canada?
E. J. Lemaire,
Clerk of the Privy Council.
*The judgment of Duff C.J. and Davis J. was delivered by
Duff C.J.—The preamble to the statute is as follows:—
WHEREAS the Dominion of Canada was a signatory, as part of the British Empire, to the Treaty of Peace made between the Allied and Associated Powers and Germany, signed at Versailles, on the 28th day of June, 1919; and whereas the said Treaty of Peace was confirmed by the Treaties of Peace Act 1919; and whereas, by article 23 of the said Treaty, each of the signatories thereto agreed that they would endeavour to secure and maintain fair and humane conditions of labour for men, women and children, both in their own countries and in all countries to which their commercial and industrial relations extend, and by article 427 of the said Treaty declared that the well-being, physical, moral and intellectual, of industrial wage-earners is of supreme international importance; and whereas it is desirable to discharge the obligations to Canadian labour assumed under the provisions of the said Treaty; and whereas it is essential for the peace, order and good government of Canada to provide for a National Employment Service and Insurance against unemployment, and for other forms of Social Insurance and for the purpose of maintaining on equitable terms, interprovincial and international trade, and to authorize the creation of a National Fund out of which benefits to unemployed persons throughout Canada will be payable and to provide for levying contributions from employers and workers for the maintaining of the said Fund and for contributions thereto by the Dominion: Therefore His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:—
No one of the aims stated in this preamble is illegitimate as an ultimate aim of legislation by the Parliament of Canada. If the subject matter of the enactment is within the ambit of the powers vested in Parliament it is lawful for Parliament to exercise those powers for the attainment of any or all of the objects set forth.
The immediate effect of the statute is to provide, by the means prescribed, a system of unemployment insurance. The essential elements of the scheme are the creation of the Fund—the Unemployment Insurance Fund—which is provided in part from compulsory contributions by employers and employees in the insured employments, and in part by contributions from the Dominion Treasury under the authority of Parliament. The administration of the Fund is entrusted to a Board and unemployment benefits are payable by the Board out of the Fund to designated classes of unemployed persons under prescribed statutory conditions.
The exclusive legislative authority of Parliament extends inter alia to the subject “The Public . . Property.” It cannot be doubted, we think, that “property” here is used in its broadest sense, and includes every kind of asset. This legislative authority is exercisable “notwithstanding anything in this Act.” There is always, of course, the qualification, and everything hereinafter said is subject to that qualification, that Parliament is incapable of acquiring jurisdiction over matters within the exclusive competence of the provinces by legislating upon those matters under the pretence of exercising a power which does not embrace within its ambit the real subject matter of the legislation. Subject to that qualification, we know of no authority by which His Majesty’s Courts have jurisdiction to examine, with a view to pronouncing upon its validity, legislation by Parliament in relation to the disposition of the assets committed to its control by section 91, B.N.A. Act.
Some reference was made on the argument to sections 102 and 106 B.N.A. Act, but we cannot find anything in those sections which in any way qualifies the authority bestowed by section 91. The phrase in section 106 “shall be appropriated by the Parliament of Canada for the public service” cannot, with propriety, be read, especially in view of the words already mentioned “notwithstanding anything in this Act,” as restricting the discretion of the High Court of Parliament to determine finally what objects are and what objects are not within the scope of the words “for the public service of Canada.”
It cannot, therefore, we think—and we do not think this was disputed on the argument, although we do not desire to put what we have to say upon any suggested admission—at all events, it cannot, we think, be disputed, even with plausibility, that, in point of strict law, Parliament has authority to make grants out of the public monies to individual inhabitants of any of the provinces, for example, for relief of distress, for reward of merit, or for any other object which Parliament in its wisdom may deem to be a desirable one. The propriety of such grants, the wisdom of such grants, the convenience or inconvenience of the practice of making such grants, are considerations for Parliament alone, and have no relevency in any discussion before any other Court concerning the competence of Parliament to authorize them.
We are satisfied, therefore, that, if Parliament, out of public monies exclusively, were to constitute a fund for the relief of unemployment and to give to unemployed persons a right to claim unemployment benefits, to be paid out of that fund upon such conditions as Parliament might see fit to prescribe, no plausible argument could be urged against the validity of such legislation.
It seems equally clear that it is exclusively within the discretion of Parliament to determine the manner in which the public assets shall be appropriated and applied for such purposes. The proceeds of any given tax, the sales tax, for example, might be validly appropriated for the purposes of such a fund. The appropriation might be affected antecedently by a direction that all or part of the proceeds of the tax should form such a fund in the hands of the Minister of Finance, or of any agency that might be designated for the purpose. The statute might take the form of requiring the Minister of Finance to pay into the fund monies from time to time provided by Parliament. True, the expectations of the authors of the scheme or of the intended beneficiaries might in any such case be falsified. Future Parliaments might find themselves in a state of financial embarrassment making it impossible to carry out the plan, or, if you like, regardless of the consequent disappointment and suffering, under altered views of policy or duty, abrogate the scheme and discontinue the payment of the benefits. But such possibilities and contingencies have no bearing upon the validity of such an enactment.
By section 35 (2) the statute now before us enacts as follows:—
The Minister of Finance shall also deposit in like manner from time to time out of moneys provided by Parliament an amount equal to one-fifth of the aggregate deposits from time to time made as aforesaid after deducting from the said aggregate deposits any refunds of contributions from time to time made under the provisions of this Act from the Fund. Some comment was made upon this provision; but the gist of the comment was that the observance of the mandate laid upon the Minister of Finance is necessarily contingent upon some further legislative act making available “monies provided by Parliament.”
The enactment, nevertheless, is an enactment dealing with the public assets of the Dominion; it gives an explicit direction to the Minister of Finance as to the application of “monies provided by Parliament” for the purposes of the statute. The circumstance that the fate of the scheme may be dependent upon the action of future Parliaments is a circumstance which is of no pertinence in a question of the authority of the Parliament to give such a direction.
The real weight of the arguments against the legislation is to be found in the contention that the provisions of the statute are enactments on the subject of “property and civil rights” and not enactments touching any subject falling within the enumerated heads or the introductory words of section 91 B.N.A. Act. This argument has two branches. First of all, it is said that, as regards compulsory contributions, the legislation creates a compulsory contract between the persons liable to contribute and the Crown, or the Minister of Finance, to whom, in effect, the contributions are payable. Second, it is said, adapting the language of Lord Haldane in delivering the judgment in Workmen’s Compensation Board v. C.P.R.[1], that the statute attaches statutory terms to contracts of employment; and that this is the real pith and substance of it.
The Dominion contends that the compulsory contributions are contributions which Parliament is competent to exact under the third subdivision of section 91, by which the exclusive legislative authority of Canada extends to all matters within the subject “The raising of money by any mode or system of taxation.” As introductory to an examination of the argument on behalf of the Dominion, some brief general observations on this third subdivision of section 91 will not be out of place.
The authority, it will be noticed, is an authority to legislate in relation to the raising of money. There is no limitation in those words as respects the purpose or purposes to which the money is to be applied. An enactment, the real purpose of which is to raise “money by any mode or system of taxation,” is not examinable by the courts as to its validity by a reference to the motives by which Parliament is influenced, or the ultimate destination of the proceeds of the tax. We speak, of course, subject to the qualification explained above which we shall not restate. There is one express qualification in the B.N.A. Act. That is contained in section 125 and precludes the taxation of the public property of the Dominion or of the provinces. Reading the words of subdivisions 1 and 3 together, we have no doubt that the words of subdivision 3 necessarily mean that Parliament is empowered to raise money, for the exclusive disposition of Parliament, by any mode or system of taxation.
In passing, it will not be out of place to observe that, reading the words of head no. 3 in this way helps to remove the difficulty which has been suggested in reconciling the language of head no. 3 of section 91 with head no. 2 of section 92, “direct taxation for provincial purposes within the province.” If you read head no. 2 of section 92 with section 126, and by the light of the observations of Lord Watson in St. Catherine Milling Co. v. The Queen[2] there is, we think, solid ground for the conclusion that the words “for provincial purposes” mean neither more nor less than this: the taxing power of the legislatures is given to them for raising money for the exclusive disposition of the legislature. In this view, the subdivision of section 91 which deals with taxation, and section 92 which deals with the same subject, are on different planes and cannot come into conflict.
Even if to the words “for provincial purposes” in head no. 2 of section 92 there be ascribed a more restrictive operation, it seems clear enough that the power to legislate for taxation under that head, which is concerned with taxation for the purpose of raising monies for the exclusive disposition of the local legislature (even assuming, as we say, that in such disposition the provincial legislature is subject to some additional limitation imposed by the phrase “provincial purposes”) there is nothing in this head which can conflict with the exclusive authority given by the third head of section 91 “notwithstanding anything in this Act” to raise money by any mode or system of taxation for the exclusive disposition of Parliament. The two enactments are still on different planes. The one is concerned with raising money to be appropriated by the provincial legislatures exclusively, the other is concerned with raising money to be appropriated by Parliament exclusively for those purposes to which it thinks it advisable to devote the public assets of the Dominion.
At all events, it seems to be abundantly clear that there is nothing in either section 91 or section 92 which precludes the Dominion from raising money by any mode or system of taxation to be expended in the relief of distress among the inhabitants of any one or more provinces by direct application for the benefit of the inhabitants as individuals, still less for raising money to be expended for the relief of the inhabitants of the Dominion, almost all of whom are necessarily inhabitants of the provinces. The inhabitants of the provinces are taxable by the Dominion in order to raise moneys for any purpose in the furtherance of which it is competent to the Dominion to expend such moneys in exercise of its exclusive and plenary control over the public assets.
It is not improper here, we think, to advert to the character of the legislative powers of Parliament. We have had occasion to observe in connection with one of the other references that certain negative provisions of the Statute of Westminster emphasize in the most significant way the scope and character of these powers. First, there are the Recitals that
* * * it is meet and proper to set out by way of preamble to this Act that, inasmuch as the Crown is the symbol of the free association of the members of the British Commonwealth of Nations, and as they are united by a common allegiance to the Crown, it would be in accord with the established constitutional position of all the members of the Commonwealth in relation to one another that any alteration in the law touching the Succession to the Throne or the Royal Style and Titles shall hereafter require the assent as well of the Parliaments of all the Dominions as of the Parliament of the United Kingdom:
and that,
* * * it is in accord with the established constitutional position that no law hereafter made by the Parliament of the United Kingdom shall extend to any of the said Dominions as part of the law of that Dominion otherwise than at the request and with the consent of that Dominion: Then, there is the enactment, section 7 (1), which, in categorical terms, provides that nothing in the Act shall be deemed to apply to the repeal, amendment or alteration of the British North America Acts, 1867 to 1930, or any order, rule or regulation made thereunder.
Subject to the restrictions in the Statute of Westminster and the British North America Act, and to whatever restrictions may be implied in the status of the Dominion, as owing a common allegiance to the Crown with the other members of the British Commonwealth, the Parliament of Canada is invested with plenary authority to legislate for the peace, order and good government of Canada over the whole field of legislative action, saving only those fields which, by the enactments of the British North America Act, have been withdrawn from it and assigned exclusively to the provincial legislatures.
This authority is not a delegated authority, as, for example, that of the legislative bodies of the United States. It is an authority which exists in virtue of the supreme law of the state and is of the same order, subject, of course, to the restrictions mentioned, as the legislative authority of the Imperial Parliament.
The language of subdivision 3 could hardly be broader. “Any mode or system of taxation” leaves in Parliament unlimited discretion so long as the essentials of taxation are present.
By section 17 of the statute now before us, the employed and employer are “liable” to pay contributions in accordance with the provisions of the second schedule of the Act which prescribes the rate of contribution. The payments are to be made by means of revenue stamps and section 18 authorizes the Governor in Council by regulation to provide for the payment of contributions
by means of revenue stamps affixed to or impressed upon books or cards * * * and such stamps and the devices for impressing the same shall be prepared and issued in such manner as may be prescribed by such regulation.
By subsection 2,
* * * the Commission may make regulations providing for any matters relating to the payment and collection of contributions payable under this Act, and in particular for—
(a) regulating the manner, times and conditions, in, at and under which payments are to be made; (b) the entry in or upon unemployment books or cards of particulars of contributions and benefits paid in respect of the persons to whom the unemployment books or cards relate;
(c) the issue, sale, custody, production and delivery up of unemployment books or cards and the replacement of unemployment books or cards which have been lost, destroyed or defaced; and
(d) the offering of reward for the return of an unemployment book or card which has been lost and for the recovery from the person responsible for the custody of the book or card at the time of its loss of any reward paid for the return thereof.
By section 31, the failure to pay any contribution which an employer or an employee is liable to pay under the Act is constituted an offence punishable by fine or imprisonment or both. By section 35 (1) it is provided:
The Minister of Finance shall from time to time deposit in the Bank of Canada, to the credit of the Commission, in an account to be called “The Unemployment Insurance Fund” (hereinafter referred to as “The Fund”), all revenue received from the sale of unemployment insurance stamps and all contributions, if any, paid otherwise than by means of such stamps (including contributions recovered by process of law) under the provisions of this part of this Act.
The Governor General in Council, by section 18 (1) is authorized to make regulations touching the payment and collection of contributions payable under the Act. This section (35 (1)) which in unqualified terms lays upon the Minister of Finance the duty to pay into the Fund “all revenue received from the sale of unemployment insurance stamps and all contributions and all contributions (if any) paid otherwise than by means of such stamps (including those recovered by process of law)” manifests very clearly the intention that the compulsory contributions shall be paid to the government and shall be recoverable by process of law; although it is left to the Governor General in Council to make specific provision by regulation for the collection and payment of such contributions.
Now let it be observed, in the first place, that on the hypothesis on which we are proceeding, if the monies raised by these compulsory contributions are monies raised “by any mode or system of taxation,” these enactments are within the powers of Parliament, but, if the attack upon the legislation is well founded, Parliament has no authority to obtain money in this way. It would appear that, having regard to the nature of the legislative authority vested in Parliament, and to the wide discretion reposed in Parliament touching the manner in which monies are to be raised under subdivision 3, a court ought to observe a high degree of caution in pronouncing upon the invalidity of an enactment, by which monies become by compulsion of law payable by individuals to the Dominion Treasury for a public purpose, on the ground that, in truth, it does not possess its prima facie character, that of a taxing statute, but is legislation intending to do what Parliament has otherwise no manner of authority to do. We are disposed to think that something approaching a demonstration ought to be required to lead one to such a conclusion.
Let it not be overlooked that we are not here dealing with an attempt on the part of Parliament to do something it has no power to do. We have not before us an attempt under the guise of taxation to regulate insurance contracts, or an attempt under the guise of criminal legislation to regulate insurance contracts, or an attempt under the guise of legislation for the regulation of mines to regulate in relation to aliens. The statute before us has nothing of that character. If we are right in what we have already said, it is entirely competent to Parliament to resort, as sources for the provision of the unemployment fund, to taxes levied on employers and employees and to taxes levied “by any mode or system” which Parliament in its discretion may adopt.
We ask ourselves then, What are the indicia in this statute which compel us to conclude that Parliament, instead of resorting to taxation which it had authority to do, has resorted to legislation in regard to civil rights which it had no authority to enact?
The essentials of taxation are present. The contributions are levied by Parliament directly. That the contributions are to be paid by revenue stamps is prescribed by Parliament; but the Governor General in Council is to regulate payment and collection. Payment is compulsory. Contributions are recoverable by process of law and failure to pay is an offence punishable by fine and imprisonment. The contributions are payable into the public treasury of the Dominion, and are to be paid by the Minister of Finance into a fund which is to be applied as directed by Parliament. In Lower Mainland v. Crystal Dairy[3] Lord Thankerton, speaking for the Judicial Committee of the Privy Council, said:—
In the opinion of their Lordships, the adjustment levies are taxes. They are compulsorily imposed by a statutory Committee consisting of three members, one of whom is appointed by the Lieutenant-Governor in Council, the other two being appointed by the dairy farmers within the district under s. 6 of the Act. They are enforceable by law, and a certificate in writing under the hand of the chairman of the Committee is to be prima facie evidence in all Courts that such amount is due by the dairy farmer (s. 11). A dairy farmer who fails to comply with every determination, order or regulation made by Committee under the Act is to be guilty of an offence against the Act (s. 13) and to be liable to a fine under s. 19. Compulsion is an essential feature of taxation: City of Halifax v. Nova Scotia Car Works, Ltd.[4]. Their Lordships are of opinion that the Committee is a public authority, and that the imposition of these levies is for public purposes. Under s. 22 the Lieutenant-Governor in Council has power to suspend the functions of a Committee, if its operations are adversely affecting the interests of consumers of milk or manufactured products, and the Committee is to report annually to the Minister and to send him every three months the auditor’s report on their accounts (s. 12, subs. 2, and s. 8A). The fact that the moneys so recovered are distributed as a bonus among the traders in the manufactured products market does not, in their Lordships’ opinion, affect the taxing character of the levies made.
The judgment of the majority of this Court in Lawson v. Interior Tree, Fruit and Vegetable Committee of Direction[5] is to the same effect,
In Workmen’s Compensation Board v. C.P.R.[6], assessments upon employers, for the purpose of providing an accident fund out of which compensation was payable by the Compensation Board to persons injured by accident in the course of their employment and to dependents in case of death, were held to fall within the denomination “direct taxation” within the meaning of section 92 (2) of the British North America Act.
Subsection 3 of section 17 and subsection 1 of section 33 require notice in this connection. As to the first of these enactments, the subject does not appear to admit of extended argument, but we ourselves are unable to perceive any valid reason for holding that the authority to make laws in relation to the “raising of money by any mode or system of taxation” does not embrace the authority to require “A” to pay in the first instance a tax in respect of which “B” is liable, and to give “A” a right to reimbursement from “B” out of “B’s” monies in “A’s” hands, or otherwise.
As to section 33, we are disposed to think that the provision in question, although unusual, is not beyond the power of Parliament to enact as an additional means for insuring the payment of contributions by employers and the satisfactory working of the scheme. However that may be, that provision is plainly severable. It is not a necessary part of the legislative scheme. Assuming it to be ultra vires and to afford some evidence of an intention on the part of Parliament to legislate for regulating the relations between employer and employee, such evidence is not sufficiently powerful to deprive the legislation of its prima facie character, which, as we have said, is that of an enactment in respect of the subject matter of head no. 3 of section 91.
There remains the broad contention that the provisions of the statute viewed as a whole disclose a scheme under which a statutory contract arises imposing upon employers and employees a contractual duty to contribute to an insurance fund and conferring upon insured persons contractual rights to be paid unemployment benefits out of that fund when the statutory prerequisites are observed.
In Workmen’s Compensation Board v. C.P.R.[7], it was held, as we have seen, that the assessments levied upon employers in order to provide an accident fund out of which compensation was to be paid to employees injured by accident were in the nature of taxes.
Their Lordships’ Board in that case had to consider a section of the Compensation Act under which, where the accident happened on a ship or a railway outside the province, and the workman was a resident of the province, and the nature of the employment was such that the work or service performed by the workman had to be performed both within and without the province, the workman or his dependents should be entitled to recover compensation if the circumstances were such that he would have possessed such a right had the accident happened within the province. It was held that it was competent to the provincial legislature to give such a right of recovery in such circumstances, as a statutory condition of the contract of employment made with a workman resident within the province.
This right, it was said, arises, not out of tort, but out of the workman’s statutory contract, and, it was added, their Lordships think it is a legitimate provincial object to secure that every workman resident within the province who so contracts should possess it as a benefit conferred on himself as a subject of the province.
The statute also provides that in any case where compensation was payable in respect of an accident happening elsewhere than in the province, if the employer had not contributed fully to the accident fund in respect of his workmen engaged in the service in which the accident happened, the employer should pay to the Board the full amount of the compensation payable in respect of the accident, and that the payment of this sum should be enforceable in the same manner as an assessment. As regards this provision, their Lordships observed:
* * * it also appears to them to be within the power of the province to enact that, if the employer does not fully contribute to the accident fund out of which the payment is normally to be made, the employer should make good to that fund the amount required for giving effect to the title to compensation which the workman acquired for himself and his dependents.
The question before their Lordships concerned the competence of the provincial legislature under the powers vested in it by section 92 to enact this legislation. A ship, the property of the C.P.R. Co., had been lost at sea outside Canadian territorial waters, and it was argued, on behalf of the respondent company, that the right the legislature professed to give the workman in such circumstances, and the liability the legislation professed to impose upon the owner of the ship, was necessarily a right and a liability having a situs outside the province, and consequently not within the authority of the province to create, in exercise of its jurisdiction concerning “property and civil rights” within the province. This argument was based mainly, if not exclusively, upon the decision of the Judicial Committee in Royal Bank v. The King[8].
The judgment does not in terms state that the liability of the ship owner, where he has not fully contributed to the accident fund in respect of the employees engaged in the service in which the accident occurred, to make good such contribution in the manner mentioned was a liability arising out of the statutory term attached to the contract. The liability to pay assessments in the first instance is treated as a liability to pay a tax. As to the special duty arising from the failure to keep up his contributions, there seems to be no reason to think it was placed upon any other footing. At p. 192[9] their Lordships point out that the fundamental question was whether or not
a contract of employment made with persons within the province has given a title to a civil right within the province to compensation.
Their Lordships proceed,
The compensation, moreover, is to be paid by the Board and not by the individual employer concerned.
Then their Lordships observe that the C.P.R. Co., carrying on business in the province of British Columbia, is subject to the jurisdiction of the provincial legislature to enact laws within certain limits imposing civil duties upon it. There is no suggestion that the liability under this special provision is of a character different from the civil duty in respect of assessments made for the purpose of providing compensation for employees whose duties