Duff,
C.J.C.:—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
(1908)
40
S.C.R.
597
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
(1878)
2
O.A.R.
522;
and
it
may
be
worth
while
to
devote
a
sentence
or
two
to
Leprohon
’s
case.
The
trial
judge
was
Mr.
Justice
Moss
(afterwards
Chief
Justice
of
Ontario).
He
proceeded
(his
judgment
is
reported
in
40
U.C.Q.B.
at
480-484)
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
(1819)
4
Wheat.
316,
the
effect
of
which
may
be
summed
up
in
these
words,
quoted
by
Moss,
J.
from
the
judgment
of
Nelson,
J.
in
Buffington
v.
Day
(1870)
11
Wallace
113
at
123-124,
reported
sub
nom.
The
Collector
v.
Day)
:
il
.
.
.
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
him
to
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
ease
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
(1908)
40
S.C.R.
597,
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.
G06)
:
"
"
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
provinces
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,
2
O.A.R.
522
.
.
.
was
decided
in
1877.
Judicial
opinion
upon
the
construction
of
the
British
North
American
Act
has
swept
a
rather
wide
are
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
Ottawa
proceeded
with
the
views
expressed
by
the
Judicial
Committee
in
the
later
case
of
The
Bank
of
Toronto
v.
Lambe
(1887)
12
App.
Cas.
575.
Indeed,
although
Leprohon
v.
The
City
of
Ottawa
has
not
been
expressly
overruled,
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
was
approved
in
Caron
v.
The
King
[1924]
A.C.
999
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
John
was
not
founded
on
the
decision
of
the
Privy
Council
in
Webb
v.
Outrim
[1907]
A.C.
81,
a
decision
upon
the
Commonwealth
Act
of
Australia.
It
proceeded,
as
plainly
appears
from
the
judgments,
upon
the
view
that
the
reasoning
in
Leprohon
f
s
case
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
secs.
4,
5
and
6
and
the
last
clause
of
sec.
7
are
concerned
with
the
collection
and
the
recovery
of
the
taxes
imposed
upon
the
employees
by
sec.
3
and
7.
It
is
conceivable,
no
doubt,
that
a
province
might,
while
professing
to
act
under
clause
2
of
sec.
92
of
the
British
No^'th
America
Act,
attempt
to
invade
the
exclusive
legislative
authority
of
the
Parliament
of
Canada
under
clause
8
of
see.
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
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
to
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
[1932]
A.C.
41,
at
52
and
53.
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
sec.
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
sec.
3(1),
viz.,
the
levying
of
a
tax
for
the
purpose
of
raising
a
provincial
revenue.
Counsel
for
the
appellant
emphasized
secs.
4,
5
and
6
and
the
second
branch
of
sec.
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
sees.
3
and
7,
and
that
the
whole
of
the
series
of
enactments
beginning
with
sec.
3
and
ending
with
sec.
7
form
a
unum
quid
which
is
struck
with
invalidity
because
of
the
legislature’s
illegal
assumption
of
authority
in
enacting
secs.
4,
5
and
6
and
the
second
part
of
sec.
7.
There
are,
as
I
conceive,
three
conclusive
answers
to
this
contention.
First
of
all,
assuming
everything
in
sees.
4,
5
and
6
and
the
second
branch
of
sec.
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
(secs.
4,
5
and
6,
and
the
second
part
of
sec.
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
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,
sec.
11
of
The
Manitoba
Interpretation
Act
(e.
105,
R.S.M.
1913)
precludes
the
extension
of
secs.
4,
5
and
6
and
the
second
part
of
sec.
7
at
least
to
the
Crown
in
right
of
the
Dominion
or
in
right
of
any
province
other
than
Manitoba.
Reading
secs.
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,
sec.
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
sec.
6,
which
become
operative
in
any
case
in
which
an
employer
fails
to
observe
the
duty
created
by
sees.
4
and
5
to
collect
and
pay
over
any
tax
imposed
by
Part
1,
that
is
to
say,
by
sees.
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
or
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
[1891]
A.C.
455).
Since
subsee.
(1)
of
sec.
6
applies
to
all
employers
who
fail
to
collect
and
pay
over
taxes
under
the
provisions
of
Part
1,
and
subsec.
(2)
applies
to
everybody
who
contravenes
any
provision
of
Part
1,
this
is
solid’
ground
for
inference
that
the
duties
imposed
by
secs.
4
and
5,
in
respect
of
which
see.
6
provides
the
sanctions,
are
duties
which
the
statute
contemplates
shall
be
performed
in
the
province.
The
last
sentence
of
the
first
paragraph
of
see.
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
[1913]
A.C.
283).
This
observation
applies
equally
to
subsee.
(3)
of
sec.
4.
This
construction
of
secs.
4,
5
and
6
receives
powerful
support
by
reference
to
the
definition
of
‘‘employer’’
in
clause
(c)
of
sec.
2(1).
It
is
in
these
words:
"12.
(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
sec.
7
is
not
without
its
significance.
It,
by
reference,
makes
the
procedure
established
by
sees.
23,
23A
and
24
of
the
Income
Tax
Act
(C.A.
1924,
c.
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
sec.
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
sec.
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
understood
it,
proceeds
thus:
Where
the
word
^wages’’
occurs
in
secs.
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
see.
2(1)
(c),
that
the
definition
in
sec.
2(1)(d)(ii)
could
not
properly
be
applied
in
such
a
way
as
to
give
to
secs.
4
and
»
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
"
i
resident
‘
‘
and
"
4
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
sees.
4,
>
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
outght
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,
subsee.
(3)
of
see.
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,
it
is
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
sec.
5.
By
that
section,
the
employer
is
required
to
keep
4
'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
sec.
11
of
The
Manitoba
Interpretation
Act
(R.S.M.
1913,
ce.
105)
which
contains
this
provision:
"‘No
provisions
or
enactment
in
any
Act
shall
affect
in
any
manner
or
way
whatsoever
the
right
of
His
Majesty,
His
heirs
or
successors,
unless
it
is
expressly
stated
therein
that
His
Majesty
shall
be
bound
thereby;
.
.
.”
By
sec.
2
of
the
Act,
there
are
certain
cases
in
which
sec.
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
sec.
11
to
be
inapplicable
thereto,
nor,
in
view
of
what
I
have
said,
can
it,
I
think,
be
affirmed
that
see.
11
is
in
any
way
inconsistent
with
the
intent
and
object
of
the
statute.
Can
it
be
said
then
that
see.
11,
if
given
effect
to,
‘‘
would
give
to
any
word,
expression
or
clause’’
of
the
statute.
"‘any
interpretation
inconsistent
with
the
context?’’
There
is
nothing
in
the
context
which
is
inconsistent
with
sec.
11
unless
it
can
be
discovered
in
the
word
“‘wages,’’
reading
that
word
by
reference
to
the
explanatory
clause
in
the
interpretation
sec.
2(1)
(d).
It
does
not
appear
to
be
necessary
to
consider
the
question
whether,
by
force
of
sec.
2,
the
word
‘‘employer’’
in
these
sections
(sees.
4,
5,
6
and
the
second
part
of
see.
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
sec.
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.
[1932]
A.C.
514,
at
523-4,
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.
[1926]
A.C.
715.
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
(see.
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
sec.
11
to
them.
Indeed,
these
sections,
read
by
themselves,
in
the
absence
of
see.
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
sec.
2(1)
:
“unless
the
context
otherwise
requires.’’
It
results,
therefore,
from
the
terms
of
sec.
11
of
The
Manitoba
Interpretation
Act,
applied
by
the
light
of
the
general
considerations
adverted
to
above,
and
of
the
definition
of
the
term
"‘em-
ployer”
in
the
interpretation
section,
that
that
part
of
clause
(ii)
of
see.
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
secs.
4,
5
and
6
in
their
application
to
other
persons.
Since
the
application
of
these
enactments
to
His
Majesty
i
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
[1923]
A.C.
450,
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
011
the
understanding
that
no
Chinese
or
Japanese
shall
be
employed
in
connection
there-
with,
’
’
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
of
renewal.
’
‘
The
present
case
seems
clearly
to
fall
within
this
rule.
In
Attorney-General
for
Manitoba
v.
Attorney-General
for
Canada
[1925]
A.C.
561,
at
568,
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
the
brokers,
agents
and
others,
it
is
not
possible
for
any
court
of
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
[1924]
A.C.
328,
at
346.
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
sees.
4,
5
and
6
must
be
treated
as
inoperative
as
a
whole,
sees.
3
and
7
are,
in
themselves,
quite
sufficient.
Sec.
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
sec.
2(1)(c),
that
the
legislature
must
have
contemplated
that
sees.
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
eases
sees.
3
and
7
have
no
application.
The
rule
laid
down
by
Lord
Cairns
in
Partington
v.
Attorney-General
(1869)
L.R.
4
H.L.
100,
at
122,
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
sees.
3
and
7
is
not
in
any
way
dependent
upon
sees.
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
operation
of
secs.
3
and
7
are
in
any
degree
impaired.
See.
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
eases
in
which
the
employer
is
not
within
the
general
terms
of
secs.
4,
5
and
6,
sec.
7
equally
applies.
The
tax
is
imposed
by
see.
3
and
the
obligation
to
pay
the
tax
is
created
by
that
section
and
see.
7,
and
which
includes
by
reference
sec.
25(1)
of
the
Income
Tax
Act
(C.A.
Man.
1924,
c.
91,
as
amended)
which,
by
sec.
7,
applies
in
all
cases
within
sec.
3,
4
In
addition
to
all
other
remedies
herein
provided,
taxes,
penalties
and
costs
and
unpaid
portions
thereof
assessed
or
imposed
under
this
Act
may
be
recovered
as
a
debt
due
to
His
Majesty
from
the
taxpayer.’’
The
appellants
have,
in
my
view’,
presented
no
answer
to
the
claim
of
the
Crown.
The
judgment
of
Lamont
and
Davis,
JJ.
was
delivered
by
Davis,
J.:—These
appeals
were
heard
together
as
they
raise
substantially
the
same
question.
The
appellant
Worthington
is
an
officer
of
the
permanent
force
of
the
active
militia
of
Canada,
having
been
duly
commissioned
under
the
provisions
of
the
Militia
Act
of
Canada.
The
appellant
Forbes
is
a
civil
servant
employed
by
the
government
of
the
Dominion
of
Canada
in
the
Department
of
Agriculture.
Both
appellants
were
at
all
material
times.
continuously
resident.
within
the.
Province
of
Manitoba.
Both
appellants
seek
to
escape
from
the,
imposition
,
of
an
income
tax
upon
them
by
the
Province
of
Manitoba.
While
several
grounds
of
escape
were
urged
upon
11s
by.
counsel.
for
the
appellants,
the
main
contention
was
that,
the
Province.
had
no
right
to
impose
an
income
tax
upon
members.
of
the.
permanent
force
of
the
Canadian
militia
or
upon
Dominion
civil
servants,
as
such
imposition
of
income
tax
would
result
in
diminution
of
the
pay
or
salary
of
such.
‘persons
and
constitute
interference
with
the
conduct
of
the
Federal
Government
in
matters
of
militia
and
of
the
civil
service
of
the
Dominion.
These
two
actions
were
brought
as
test
cases
and
we
have
had
the
benefit
of
full
and
helpful
arguments
by
counsel
in
the
appeals.
Apart
from
the
special
considerations
that
may
apply
to
persons
holding
office
or
employment
in
the
two
classifications
with
which
we
are
specially
concerned
in
these
appeals,
there
can
be
no
doubt
of
the
general
proposition
that
every
province
has
a
right
to
raise
revenue
for
provincial
purposes
by
direct
taxation
within
the
province.
That
power
was
very
clearly
given
to
the
provinces
by
sec.
92
2;
,
Sub-head
(2),
of
the
British
North
America
Act.
Turning
then
to
the
special
legislation
with
which
we
are
concerned,
the
Province
of
Manitoba
has
what
may
be
called
a
general
income
tax,
imposed
under
the
provisions
of
The
Income
Tax
Act,
being
ch.
91
of
the
Manitoba
Statutes
Consolidation
of
1924
with
subsequent
amendments.
By
sec.
8
of
the
statute
there
shall
be
assessed,
levied
and
paid
upon
the
income
during
the
preceding
year
of
every
person
:
‘(a)
residing
or
ordinarily
resident
in
Manitoba;
or
(b)
who
remains
in
Manitoba
during
any
calendar
year
for
a
period
or
periods
equal
to
one
hundred
and
eighty-three
days;
(c)
who
is
employed
in
Manitoba
during
such
year
;
(d)
who
not
being
resident
in
Manitoba
is
carrying
on
business
in
Manitoba
during
such
year
;
(e)
who
not
being
resident
in
Manitoba
derives
income
for
services
rendered
in
Manitoba
during
such
year
otherwise
than
in
the
course
of
regular
or
continuous
employment
for
any
person
resident
or
carrying
on
business
in
Manitoba
;
a
tax
at
the
rate
applicable
to
persons
other
than
corporations
and
joint
stoek
companies
set
forth
in
the
first
schedule
of
this
Act
upon
the
amount:
of
income
in
excess
of
the
exemptions
provided
in
this
Act;
provided
that
the
said
rates
shall
not
apply
to
corporations
and
joint
stock
companies,
but
shall
apply
to
income
of
personal
corporations,
as
provided
for
in
8B.
of
this:
Act.
(1931,
e,
25,
s.
11).
‘In
addition
to
the
taxes
provided
by
the
schedule
there
shall
be
assessed,
levied
and
paid
a
tax
of
five
per
cent.,
on
the
tax
payable
by
persons
with
an
income
of
five
thousand.
dollars
or
over,
before
any
allowance
is
made
for
deductions
and
exemptions.
(1932,
c.
49,
s.
8).’’
By
the
interpretation
section
of
the
statute
(see.
2
(J))
"‘tax-
payer”
is
defined
to
mean
1
"
any
person
pay
ing,
liable
to
pay,
or
believed
by
the
Minister
to
be
liable
to
pay,
any
tax
imposed
by
this
Act.’’
For
the
purpose
of
the
statute
an
extended
meaning
is
given
to
the
word
44
income”
by
sec.
3
and
the
word
is
used
as
“including
the
salaries,
indemnities
or
other
remuneration
of
all
persons
whatsoever
whether
the
said
salaries,
indemnities
or
other
remuneration
are
paid
out
of
the
revenues
of
His
Majesty
in
respect
of
His
government
of
Canada
or
of
any
province
thereof,
or
by
any
person,
and
all
other
gains
or
profits
of
any
kind
derived
from
any
source
within
or
without
the
province
whether
received
in
money
or
its
equivalent,
with
the
exemptions
and
deductions
hereinafter
respectively
set
out.
‘
‘
A
long
list
of
detailed
exemptions
and
deductions
from
taxation
under
the
Act
is
provided
by
sees.
4
and
5,
with
none
of
which
exemptions
or
deductions
we
are
specially
concerned
in
these
appeals.
Sees.
23A,
24
and
25
of
the
statute
deal
with
the
collection
and
enforcement
of
the
tax.
It
may
be
observed
in
passing
that
see.
25(1)
provides
that,
“In
addition
to
all
other
remedies
herein
provided,
taxes,
penalties
and
costs
and
unpaid
portions
thereof
assessed
or
imposed
under
this
Act
may
be
recovered
as
a
debt
due
to
His
Majesty
from
the
taxpayer.”
In
1933
the
Province
of
Manitoba
passed
an
Act
to
impose
a
special
tax
on
incomes.
This
Act
is
known
as
The
Special
Income
Tax
Act,
and
it
is
with
this
statute
that
we
are
particularly
concerned.
It
is
divided
into
two
main
parts.
Part
I
is
headed
"Taxation
of
Wages’’
and
Part
II
is
headed
Taxation
on
Income
other
than
Wages.’’
The
question
before
us
falls
to
be
determined
mainly
under
Part
I
of
this
statute,
it
being
admitted
that
the
tax
sought
to
be
collected
from
each
of
the
appellants
has
been
imposed
under
Part
I
of
the
statute.
To
fully
understand
and
appreciate
the
nature
and
scope
of
the
taxation
under
Part
I,
it
is
necessary
to
study
the
provisions
of
Part
II
as
well
as
the
provisions
of
the
general
income
tax
Act
above
mentioned,
being
The
Income
Tax
Act
of
1924
with
amendments.
Part
II
of
The
Special
Income
Tax
Act
imposes
(sec.
8
(1))
upon
every
person
other
than
a
corporation
an
annual
tax
of
two
per
centum
upon
the
value
of
his
taxable
income,
other
than
wages
as
to
which
a
tax
has
been
paid
under
Part
I,
and
such
tax
shall
be
ascertained
and
collected
in
accordance
with
the
provisions
of
this
part.
By
see.
8(2)
the
tax
imposed
by
this
part
shall
apply
in
respect
of
all
taxpayers,
other
than
corporations,
within
the
scope
of
The
Income
Tax
Act,
or
who
would
be
within
the
scope
of
that
Act
if
no
deductions
or
exemptions
were
allowed
therein.
I
have
set
out
above
the
defintion
of
44
taxpayer”
in
the
general
Act.
The
Special
Income
Tax
Act
having
been
assented
to
on
May
4,
1933,
it
was
provided
by
sec.
9
that
the
tax
imposed
by
Part
II
for
the
year
1933
should
be
based
on
the
income
of
the
taxpayer
for
the
year
1932
and
the
tax
for
each
year
thereafter
on
the
income
for
the
previous
year;
and
by
sec.
12(2)
the
tax
imposed
on
a
taxpayer
by
Part
II
shall
be
assessed
and
levied
and
payable
annually
at
the
same
times
as
the
annual
income
tax
under
The
Income
Tax
Act
is
assessed,
levied
and
made
payable.
The
legislature
of
Manitoba,
faced
with
the
obvious
delay
in
raising
revenue
under
Part
II
of
the
special
Act
on
the
basis
of
an
annual
assessment,
adopted
for
practical
expediency
a
method
of
taxation
whereby
revenue
would
be
raised
at
once
in
monthly
payments
on
the
basis
of
a
tax
of
two
per
centum
upon
the
amount
of
all
wages
earned
or
‘accruing
due
on
or
after
the
first
day
of
May,
1933.
This
monthly
assessment
and
collection
of
the
taxes
on
wages
was
undoubtedly
adopted
as
a
matter
of
practical
expediency
to
produce
revenue
at
once
without
awaiting
an
annual
payment
on
the
basis
of
the
provisions
of
Part
II
of
the
Act.
It
is
to
be
recalled
that
by
see.
8(1)
of
Part
II
the
annual
tax
of
two
per
centum
upon
the
value
of
the
taxpayer’s
taxable
income
excludes
“‘‘
wages
as
to
which
a
tax
has
been
paid
under
Part
I.”
Now
in
Part
I
it
is
provided,
see.
3(1),
that
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.
‘‘Employee’’
by
see.
2(1)(b)
"‘means
any
person
who
is
in
receipt
of
or
entitled
to
any
wages’’;
and
‘‘wages’’
by
sec.
2(1)
(d),
"include
all
wages,
salaries,
and
emoluments
from
any
source
whatsoever,
including
""
(i)
any
compensation
for
labour
or
services,
measured
by
the
time,
piece,
or
otherwise
;
"‘(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
;
"‘(iii)
personal
and
living
expenses
and
subsistence
when
they
form
part
of
the
profit
or
remuneration
of
the
employee
;
and
"‘(iv)
emoluments,
perquisities,
or
privileges
incidental
to
the
office
or
employment
of
the
employee
which
are
reducible
to
a
money
value.
‘
‘
It
was
argued
that
sec.
4
under
part
I
indicates
that
the
tax
in
substance
is
on
the
employer’s
payroll.rather
than
on
the
employee
and
that
the
tax
is
therefore
indirect
and
beyond
the
power
of
the
province
to
impose.
Sec.
4
is
as
follows
:
"4.
(1)
Every
employer
at
the
time
of
payment
of
wages
to
an
employee
shall
levy
and
collect
the
tax
imposed
on
the
employee
by
this
part
in
respect
of
the
wages
of
the
employee
earned
or
accruing
due
during
the
period
covered
by
the
payment,
and
shall
deduct
and
retain
the
amount
of
the
tax
from
the
wages
payable
to
the
employee,
and
shall,
on
or
before
the
fifteenth
day
of
the
month
next
following
that
in
which
the
payment
of
wages
takes
place,
or
at
such
other
time
as
the
regulations
prescribe,
pay
to
the
administrator
the
full
amount
of
the
tax.
No
employee
shall
have
any
right
of
action
against
his
employer
in
respect
of
any
moneys
deducted
from
his
wages
and
paid
over
to
the
administrator
by
the
employer
in
compliance
or
intended
compliance
with
this
section.
‘
‘
(2)
Every
employer
shall,
with
each
payment
made
by
him
to.the
administrator
under
this
section,
furnish
to
the
administrator
a
return
showing
all
taxes
imposed
by
this
part
on
the
employees
of
the
employer
in
respect
of
wages
during
the
period
covered
by
the
return,
which
shall
be
in
the
form
and
verified
in
the
manner
prescribed
by
the
administrator.
"‘(3)
Every
employer
who
deducts
or
retains.
the
amount
of
any
tax
under
this
part
from
the
wages
of
his
employee
shall
be
deemed
to
hold
the
same
in
trust
for
His
Majesty
and
for
the
payment
over
of
the
same
in
the
manner
and
at
the
time
provided
under
this
part.”
See.
4
is
the
machinery
set
up
for
the
collection
of
the
tax.
For
the
purpose
of
carrying
into
effect
the
provisions
of
parts
IT
and
II
of
The
Special
Income
Tax
Act,
it
is
provided
by
sec.
16
thereof
that
the
Lieutenant-Governor-in-Council
may
make
regulations
governing
the
administration
of
the
Act
and
that
such
regulations
shall
have
the
force
of
law
as
if
made
part
of
the
Act.
Turning
to
the
regulations
made
by
the
Lieu-
tenant-Governor-in-Council
we
find
the
following
:
"
3.
If
an
employer
be
satisfied
that
the
total
wages
of
an
employee
during
a
period
of
twelve
months
will
not
exceed
a
sum
which
entitled
the
employee
to
exemption
under
this
Act,
the
employer
shall
not
be
obliged
to
collect
or
remit
the
tax.
He
shall,
nevertheless,
show
the
total
amount
paid
such
employee.
“4.
An
employer
shall
not
be
liable
to
collect
a
tax
from
a
person
casually
and
not
regularly
employed
where
in
any
case
he
is
satisfied
that
the
wages
of
the
employee
during
the
period
of
twelve
months
will
not
exceed
a
sum
which
entitled
the
employee
to
exemption
under
this
Act.
‘6.
Every
employer
who
levies
and
collects
any
tax
imposed
under
said
Act
with
respect
to
wages
of
any
employee
shall,
as
rerauneration
for
his
collection
and
payment
thereot
to
the
Provincial
Treasurer,
be
entitled
to
deduct
from
the
amount
so
paid
two
per
centum
of
such
payments
and
in
no
ease
shall
such
deduction
be
less
than
ten
cents.
‘
‘
There
is
nothing
to
justify
the
contention
of
the
appellants
that
the
taxation
of
wages
under
the
statute
is
in
substance
an
indirect
tax
on
the
employer’s
payroll.
Sec.
3
of
Part
I
above
set
out
is
the
charging
section
and
as
Lord
Thankerton
said
in
Provincial
Treasurer
of
Alberta
v.
Kerr
[1933]
A.C.
710,
at
720,
"The
identification
of
the
subject-matter
of
the
tax
is
naturally
to
be
found
in-
the
charging
section
of
the
statute,
and
it
will
only
be
in
the
case
of
some
ambiguity
in
the
terms
-of
the
charging
section
that
recourse
to
other
sections
is
proper
or
necessary.’’
Sec.
7
of
Part
I
provides
that
in
case
the
wages
earned
or
accruing
due
to
an
employee
are
paid
to
him
without
the
tax
imposed
thereon
being
deducted
therefrom
by
111s
employer,
it
shall
be
the
duty
of
the
employee
to
forthwith
pay
the
tax.
That
section
does
not
impose
a
liability
upon
the
employer
for
the
tax.
Sec.
6(1)
provides
that,
if
an
employer
in
violation
of
the
provisions
of
Part
I
fails
to
collect
and
pay
over
any
tax
imposed
by
Part
I,
the
administrator
of
the
Act
may
demand
and
collect
from
him,
that
is
the
employer,
as
a
penalty
ten
per
cent
of
the
tax
payable
and
in
addition
the
employer
is
liable
to
a
fine.
Sec.
6(2)
draws
the
distinction
between
the
tax
payable
and
moneys
in
the
hands
of
an
employer.
""
Nothing
contained
in
this
section
nor
the
enforcement
of
any
penalty
thereunder
shall
suspend
or
affect
any
remedy
for
the
recovery
of
any
tax
payable
under
this
part
or
of
any
moneys
in
the
hands
of
an
employer
belonging
to
His
Majesty.”
The
somewhat
inapt
language
used
in
sec.
that
,
that
"all
the
provisions
of
sections
23,
23A,
24
and
25
of
"The
Income
Tax
Act’’
shall,
mutatis
mutandis,
apply
to
the
collection
and
recovery
of
the
tax
so
imposed
from
the
employer
and
employee,
or
either
of
them”
cannot
be
read,
having
regard
to
the
statute
taken
as
a
whole,
as
imposing
the
tax
upon
the
employer.
The
collection
and
recovery
of
the
tax,
and
not
its
imposition,
is
the
substance
of
the
language
used.
The
imposition
of
the
tax
upon
the
employee
is
clearly
made
in
the
charging
section
(see.
3(1))
and
secs.
4,
5,
6
arid
7
do
not
attempt
to
impose
the
tax
as
such
upon
the
employer
but
merely
provide
for
the
collection
of
the
tax
by
the
employer,
and
in
respect
of
which
collection
the
employer
is
entitled,
under
regulation
6
above
set
out,
to
remuneration
to
the
extent
of
two
per
centum
of
the
amount
collected
and
paid
over
by
him
to
the
Provincial
Treasurer.
The
collection
and
recovery
provisions
are
clearly
within
the
competence
of
the
provincial
legislature.
My
conclusion,
therefore,
is
that
the
imposition
of
the
tax
on
wages
under
Part
I
of
the
statute
is
direct
taxation
to
raise
revenue
for
provincial
purposes
within
the
province
and
valid
under
sec.
92,
sub-head
(2),
of
the
British
North
America
Act.
The
appellant
Worthington,
an
officer
of
the
permanent
force
of
the
active
militia
of
Canada,
contends
through
his
counsel,
firstly,
that
the
pay
of
a
soldier
is
a
gratuity
from
the
Crown
and
cannot
in
any
sense
be
regarded
as
wages,
and
secondly,
that
in
any
case
a
soldier
is
immune
from
income
taxation
by
provincial
governments,
as
such
taxation
involves
a
diminution
in
the
pay
and
allowance
of
the
soldier
and
constitutes
an
interference
with
national
defence
and
is
beyond
the
competence
of
any
province.
The
Militia
Act,
R.S.C.
1927,
c.
132,
see.
45,
provides
in
part
as
follows:
"‘(1)
Officers,
warrant
officers
and
non-commissioned
officers
of
the
Permanent
Force
shall
be
entitled
to
daily
pay
and
allowances
at
rates
to
be
prescribed,’’
and
the
Regulations
issued
pursuant
to
the
Militia
Act,
called
Pay
and
Allowance
Regulations,
state
(No.
43)
:
"‘In
compliance
with
section
8
of
the
Militia
Pension
Act,
a
deduction
of
5
per
cent,
will
be
made
from
the
pay
of
every
officer
and
warrant
officer,
and
this
will
be
calculated
on
his
total
emoluments,
including
the
amounts
granted
for
lodging,
fuel,
light,
rations,
and
servants,
as
set
forth
in
article
74,
notwithstanding
that
he
may
be
provided
with
these
in
kind
instead
of
in
money,
but
excluding
any
married
allowance
or
allowances
for
forage,
travelling
or
transfer.’’
The
word
"‘emoluments’’
is
used.
The
word
"‘wages’’
in
The
Special
Income
Tax
Act
is
defined
(see.
2(1)
(d)
as
above
set
out)
to
include
44
all
wages,
salaries,
and
emoluments
from
any
source
whatsoever,”
and
the
defintion
is
sufficiently
wide
to
cover
the
pay
and
allowance
of
an
officer
in
the
militia.
As
to
the
second
point,
that
this
taxation
by
the
province
is
unconstitutional
as
causing
a
diminution
in
the
soldier’s
pay
and
interfering
with
national
defence,
the
statute
imposes
a
provincial
tax
of
general
application
and
cannot
be
construed
as
legislation
respecting
the
salaries
of
soldiers
as
such.
It
is
taxation
aimed
at
citizens
at
large
and
there
is
no
ground,
in
the
absence
of
express
provision,
to
protect
the
military
man
from
the
incidence.
of
the
general
tax.
It
is
a
tax
upon
persons
within
the
province
who
are
receiving
wages
within
the
broad
definition
of
that
word
as
used
in
the
statute
and
the
amount
of
the
tax
(2
per
cent)
is
not
such
as
can
be
said
to
constitute
any
interference
with
the
federal
government
in
relation
to
its
soldiers.
The
British
North
America
Act
has
made
two
broad
divisions
in
the
distribution
of
legislative
power,
one
Dominion
and
the
other
Provincial.
Within
these
two
divisions
the
different
legislatures
possess
their
own
legislative
jurisdiction.
To
the
provinces
have
been
given
generally
all
matters
of
local
municipal
government.
The
execution
of
certain
prescribed
duties
of
a
local
character
are
entrusted
to
the
provinces
in
relation
to
education,
the
establishment,
maintenance
and
management
of
public
and
reformatory
prisons,
hospitals
and
asylums
in
and
for
the
province,
the
administration
of
justice,
municipal
institutions,
local
works
and
undertakings,
property
and
civil
rights,
and
generally
all
matters
of
a
merely
local
or
private
nature
in
the
province.
These
public
services
entail
enormous
expenditures
of
money
by
the
provinces,
and
when
a
general
levy
upon
all
its
citizens
is
imposed
by
a
province
for
the
purpose
of
raising
revenue
by
direct
taxation
within
the
province,
it
does
not
create
any
conflict
between
federal
and
provincial
authority
such
as
to
entitle
a
military
officer
who
actually
resides
in
the
province
to
escape
from
the
incidence
of
the
purely
local
taxation.
There
is
nothing
in
the
legislation
directed
against
the
salary
of
the
military
officer
as
such
and
he
must,
like
all
other
good
citizens,
carry
his
burden
of
the
local
taxation
of
the
province
within
which
he
resides.
This
Court
in
Abbott
v.
City
of
Saint
John
(1908)
40
S.C.R.
597
held
that
notwithstanding
No.
8
of
sec.
91,
which
provides
that
the
Dominion
Parliament
shall
have
exclusive
legislative
authority
over
the
fixing
of
and
providing
for
the
salaries
and
allowances
of
civil
and
other
officers
of
the
government
of
Canada,
a
civil
or
other
other
officer
of
the
government
of
Canada
may
be
lawfully
taxed
in
respect
of
his
income,
as
such,
by
the
municipality
in
which
he
resides,
under
the
authority
of
provincial
legislation.
The
principle
of
that
case
applies
to
the
facts
of
this
appeal
and
is
clearly
binding
upon
us.
The
appellant
in
the
other
case,
Forbes,
who
is
a
Dominion
civil
servant,
stands
in
no
different
position
from
that
of
the
appellant
Worthington.
Both
appeals
should
be
dismissed,
but
under
the
circumstances
without
costs.
CANNON,
J.
(dissenting)
delivered
the
following
judgment
in
the
Forbes
appeal
:—In
support
of
the
competency
of
the
provincial
legislature
to
impose
this
2
per
cent
tax
under
The
Special
Income
Tax
Act
upon
the
salary
or
wages
of
a
Dominion
civil
servant
who
is
within
the
province
in
the
same
manner
as
it
is
imposed
upon
all
other
persons
of
the
province,
the
respondent
invokes
the
decision
in
Abbott
v.
City
of
Saint
John
(1908)
40
S.C.R.
597,
which
was
applied
in
City
of
Toronto
v.
Morson
(1917)
40
O.L.R.
227,
and
approved
by
the
Judicial
Committee
,
of
the
vy.
Council
in
Caron
v:
The.King
[1924]
A.C.
999,
In
this
last
case,
their
Lordships
could
see
no
reason
in
principle
why.
any.
of.
the
sources
of
income
of
a
taxable
citizen
should.
be;
removed
from:
the
power
of
taxation
of
the
Parliament
of.
Canada.
They
.also
referred
with
approval
to
the
judgment
of
Sir
Louis
Davies,
J:
in
Abbott
V.-
City
of
Saint
John
as
follows:
He
was
dealing
with
thé
imposition
of
tax
by
the
Province
upon
a
Dominion
official,
which
imposition,
it
was
contended,
contravened
the
provisions
of
head
2
of
s.
91;
a
provision
which
gives
to
the
Dominion
‘the
fixing
of
and
providing
for
the
salaries
and
allowances
of
civil
and
other
officers
of
the
Government
of
Canada.’
He
said:
‘The
Province
does
not
attempt
to
interfere
directly
with
the
exercise
of
the
Dominion
power,
but
merely
says
that,
when
exercised,
the
recipients
of
the
salaries
1
Shall
be’
amenable
to
provincial
legislation
in
like
manner
as
all
other
residents.
.
.
.
It
is
said,’
he
continued,
‘the
Legislature
might
authorize
an
income
tax
denuding
a
Dominion
‘
official
of
a
tenth
or
even
a
fifth
of
his
official
income,
and,
in
this
way,
paralyze
the
Dominion
service
and
impair
the
efficiency
of
the
service.
But
it
must
be
borne
in
mind
that
the
law
does
not
provide
for
a
special
tax
on
Dominion
officials
"but
for
a
general
undiseriminatory
tax
upon
the
incomes
of
residents
and
the
Dominion
officials
could
only
be
taxed
upon
their
incomes
in
the
same
ration
and
proportion
as
other
residents.
At
any
rate,
if,
under
the
guise
of
exercising
power
of
taxation,
confiscation
of
a
substantial
part
of
official
and
other
salaries
were
attempted,
it
would
be
then
time
enough
to
consider
thé
question
and
not
to
assume
beforehand
such
a
suggested
misuse
of
the
power’.”’
Moreover,
the
Privy
Council
considered
that
the
Dominion
Income
Tax
Acts
were
not
discriminating
statutes.
They.
were
statutes
for
imposing
on
all
citizens
contributions
according
to
their
annual
means
regardless
of,
or,
it
may
be
said,
not
having
regard
to
the
source
from
which
their
annual
means
are
derived.
The
appellant
says:
"That
case
is
clearly
distinguishable
from
the
one
at
bar
for
there
the
Court
was
dealing
with
a
general
income
tax
statute
and
held
that
a
Dominion
Government
Official’s
salary
should
be
included
in
computing
his
general
income
‘but
that
case
was
not
one
of
a
statute
placing
a
tax
upon
his
salary
but
was
merely
a
general
income
statute.”
I
Are
Dominion
civil
servants
entitled
to
retain
the:
full
salary
which
the
Legislature
of
Manitoba
is
attempting
to
reduce
by
a
tax
as
"
wages
‘
‘
earned
and
paid
within
the
province
?
Without
discussing,
for
the
moment,
whether
or
not
the
statute
under
consideration
imposes
a
direct
or
indirect
tax,
it
might
pe
advisable
to
ascertain
what
is
the
meaning
of
the
word
"‘taxation’’
used
in
sees.
91
and
92
of
the
British
North
America
Act.
A
tax
is
an
enforced
contribution
in
money
levied
on
persons,
property
or
income
by
the
proper
authority
for
the
support
of
government.
The
province
is
empowered
to
make
laws
in
relation
to
direct
taxation
within
the
province
in
order
to
the
raising
of
a
revenue
for
provincial
purposes.
This
is
evidently
confined
to
the
levying
of
money
and
this
taxation
must
be
imposed
equally
on
all
citizents.
No
one
is
supposed
to
be
conscripted
into
the
public
service
under
the
guise
of
taxation.
Can
there
be
equality
of
taxation
as
between
the
ordinary
citizen
enjoying
all
the
civil
rights
and
liberties
and
privileges
of
free
agents
and
a
person
living
in
the
province
who
is
in
the
service
of
the
federal
government?
Does
the
civil
servant
enjoy
the
same
liberties
as
the
other
subjects
in
the
province?
Has
he
the
same
right
to
freedom
of
speech
and
discussion
at
public
meetings?
and
especially,
does
he
enjoy
the
right
to
strike
or
the
right
to
withhold
his
labour,
so
long
as
he
commits
no
breach
of
contract
or
tort
or
crime?
See
Halsbury,
Laws
of
England,
2nd
Edition,
Vo.
Constitutional
Law,
No.
437—pages
391-392.
Can
he,
at
will,
leave
the
province
to
earn
his
living
elsewhere?
Has
he,
like
other
citizens,
absolute
freedom
to
use
as
he
intends
his
working
power
or
his
earning
capacity?
In
other
words,
is
he,
as
far
as
his
wages
are
concerned,
to
be
considered
as
a
free
agent
who
can
refuse
to
work?
The
Civil
Service
Act
(R.S.C.
1927,
c.
22)
contains
these
provisions
:
"‘44.
The
Commission
shall
by
regulation
prescribe
working
hours
for
each
portion
of
the
civil
service,
and
there
shall
be
kept
and
used
in
each
branch
of
the
civil
service
a
book,
system
or
device
approved
by
the
Commission
for
preserving
a
record
of
the
attendance
of
the
employees.
l
A^.
The
deputy
head
may
grant
to
each
officer,
clerk
or
other
employee
a
yearly
leave
of
absence
for
a
period
not
exceeding
eighteen
days
in
any
one
fiscal
year,
exclusive
of
Sundays
and
holidays,
after
they
have
been
at
least
one
year
in
the
service.
4
"
2.
Every
such
officer,
clerk
or
employee
shall
take
the
leave
so
granted
at
such
time
each
year
as
the
deputy
head
determines.
55.
No
deputy
head,
officer,
clerk
or
employee
in
the
civil
service
shall
be
debarred
from
voting
at
any
Dominion
or
provincial
election
if,
under
the
laws
governing
the
said
election,
he
has
the
right
to
vote
;
but
no
such
deputy
head,
officer,
clerk
or
employee
shall
engage
in
partisan
work
in
connection
with
any
election,
or
contribute,
receive
or
in
any
way
deal
with
any
money
for
any
party
funds.
"‘2.
Any
person
violating
any
of
the
provisions
of
this
section
shall
be
dismissed
from
the
civil
service.
‘
‘
Moreover,
any
permanent
or
temporary
employment
in
the
service
of
the
Government
of
Canada
disqualifies
the
holder
thereof
as
a
candidate
to
a
seat
in
Parliament.
See
also
article
160
of
the
Criminal
Code—imposing
special
criminal
liability
on
civil
servants.
This
means
that
the
civil
servant
must
give
and
is
considered
as
having
dedicated
all
his
activities
and
work
to
the
State
and
is
entitled
to
receive
in
return
the
compensation
fixed
for
the
civil
service
to
which
he
belongs.
His
activities
are
even
restricted
during
his
vacation
or
outside
of
his
office
hours.
This
appears
clearly
by
the
following
Orders
in
Council
:
(a)
P.C.
1802,
of
the
7th
day
of
August,
1931,
which
enacts
that
‘Where
any
employee
is
known
to
be
using
any
of
his
annual
leave
for
the
purpose
of
engaging
in
temporary
employment
in
connection
with
the
operation
of
any
race
track,
exhibition,
or
in
the
selling
of
goods
of
any
kind,
thereby
depriving
wholly
unemployed
people
of
such
temporary
work,
he
shall,
on
the
production
of
evidence
proving
the
said
offence
to
the
satisfaction
of
the
Deputy
Head,
be
subject
to
immediate
suspension,
investigation
and
appropriate
discipline,
except
in
cases
where,
for
sufficient
cause
shown,
the
Minister
of
Labour
shall
have
granted
special
permission
authorizing
such
temporary
employment.’’
(b)
P.C.
95,
of
the
16th
day
of
January,
1932:
^Whereas
section
2
of
the
Civil
Service
Superannuation
Act,
chapter
24
of
the
Revised
Statutes
of
Canada,
1927,
provides
that:
"
"
"
Civil
servant
‘
means
and
includes
any
permanent
officer,
clerk
or
employee
in
the
Civil
Service
as
herein
defined,
"(i)
who
is
in
receipt
of
a
stated
annual
salary
of
at
least
six
hundred
dollars;
and
""
(ii)
who
is
required,
during
the
hours
or
periods
of
his
active
employment,
to
devote
his
constant
attention
to
the
performance
of
the
duties
of
his
position
and
the
conditions
of
whose
employment
for
the
period
or
periods
of
the
year
over
which
such
employment
extends
precludes
his
engaging
in
any
other
substantially
gainful
service
or
occupation.
"‘And
whereas
the
Secretary
of
State
of
Canada
reports
that
‘civil
servants’
within
the
meaning
of
the
said
Act
have
heretofore
been
accustomed
to
become
candidates
in
municipal
and
civic
elections,
and
thereafter,
if
elected,
to
accept
municipal
and
civic
offices,
or
to
engage
in
other
substantially
gainful
services
and
occupations,
which
preclude
such
civil
servants
from
devoting
their
constant
attention
to
the
performance
of
the
duties
of
their
respective
positions
in
the
Civil
Service
of
Canada;
"‘Now
therefore
His
Excellency
the
Governor
General
in
Council,
on
the
recommendation
of
the
Secretary
of
State
of
Canada,
is
pleased
to
order
and
it
is
hereby
ordered
that
anyone,
who
may
now
be
or
hereafter
may
become
a
civil
servant
within
the
meaning
and
intent
of
said
Act,
shall
hereafter
be
precluded
from
becoming
a
candidate
of
any
municipal
or
civic
election,
or
from
engaging
in
any
other
substantially
gainful
service
or
occupation,
without
first
having
obtained
leave
of
absence,
without
pay,
from
his
duties
as
such
civil
servant
for
the
term
of
the
municipal
or
civic
office
which
he
proposes
to
accept
or
for
the
period
or
periods
of
the
year
over
which
it
is
proposed
that
such
other
gainful
Service
or
occupation
shall
extend.
which
was
amended
by
(c)
P.C.
2465,
of
the
7th
day
of
November,
1932,
as
follows:
“Provided
always
that
the
Minister
administering
or
in
charge
of
any
Department
may,
in
his
discretion,
grant
permission
to
any
of
his
officers,
clerks
or
employees,
to
accept
a
municipal
or
civic
office
which
does
not
carry
with
it
a
salary,
honorarium
or
other
emolument
exceeding
five
hundred
dollars
per
annum,
if,
in
the
opinion
of
the
Minister,
the
acceptance
of
such
office
does
not
interfere
with
the
proper
and
regular
performance
of
his
duties
as
a
civil
servant.
’
It
therefore
appears
abundantly
that
the
federal
civil
servant
is
bound
by
law
to
render
his
service
exclusively
to
the
State.
Contrary
to
the
ordinary
citizen,
he
is—toward
the
Government,
in
the
public
interest—in
a
state
of
servitude.
He
has
accepted
this
‘‘capitis
diminution
for
an
indemnity
fixed
by
Parliament.
II
Since
the
Abbott
case
(1908)
40
S.C.R.
597,
new
elements
have
appeared
in
this
constitutional
problem.
Parliament
has
imposed
on
federal
employees
the
War
Time
Income
Tax.
It
has
even
introduced
the
dangerous
practice—which
has
found
ready
imitators—of
disregarding
the
respectable
principle
of
the
sanctity
of
contracts
by
reducing
by
10
per
cent
the
salaries
by
the
unilateral
action
of
one
of
the
contracting
parties
claiming
inability
to
pay.
Now,
what
is
the
position
of
a
civil
servant
when
a
proportion
of
his
salary
is
taken
away
by
provincial
legislation?
Towards
the
State,
he
is
not,
and
cannot
be,
in
the
same
position
as
the
ordinary
taxpayer
who
is
required
to
contribute
his
share
in
money
for
public
purposes.
The
civil
servant,
if
subject
to
this
taxation,
is
required
to
contribute
the
same
quota
in
money
plus
his
services
which
must
nevertheless
be
given
to
the
nation
gratuitously
in
the
proportion
of
the
deduction
made
from
his
salary
by
the
impost.
In
this
case,
he
would
be
bound
by.
provincial
legislation
to
give
100
per
cent
services
for
98
per
cent
indemnity.
I
see
nothing
in
the
British
North
America
Act,
either
in
sec.
91
or
92,
empowering
any
provincial
government
to
compel
any
citizen
to
give
gratuitously,
in
whole
or
in
part,
his
services
to
the
central
government
and
to
the
public.
Taxation
under
the
British
North
America
Act
must
be
in
money
and
not
in
money
plus
services.
Now
in
this
case
the
effect
of
taxation
on
men
bound
to
give
all
their
working
hours
to
the
public
is
to
discriminate
against
them
by
imposing
a
levy
of
money
plus
2
per
cent
of
their
services
as
a
gratuitous
extra
contribution
to
the
nation
more
than
what
the
other
citizens
of
the
Province
are
called
upon
to
contribute—for
local
purposes.
Under
the
old
system
of
serfdom
the
State
had
a
direct
claim
upon
the
bodies,
the
goods,
the
time
of
the
serfs.
This
has
long
ago
disappeared;
but
the
effect
of
this
kind
of
legislation
is
to
impose
statutory
labour
upon
publie
servants
who,
having
to
bear
the
disadvantages,
disabilities
and
the
reduction
of
their
status
as
citizens,
have
a
right
to
claim
as
their
own,
as
intangible
by
no
authority
but
that
of
Parliament,
the
compensation
fixed
for
their
work.
Common
sense
indicates
that,
in
order
to
have
a
contented
public
servant,
willing
and
ready
to
renounce
some
of
the
rights
and
privileges
of
ordinary
citizens,
he
must
feel
that
both
his
tenure
of
office
and
his
salary
are
secure
and
not
subject
to
reduction
in
proportion
to
the
means
and
needs
of
the
province
or
municipality
where
his
superior
officers
may
send
him
td
perform:
his
publie
duties.
It
may
be:
noted
that
in
rendering
judgment
i
in
Abbott
v.
City
of
Saint
John,
Sir
Louis
Davies
expressly
reserved
to
this
court
the
faculty
of
reconsidering
the
question
involved
if
confiscation.
of
a
substantial
part
of
official
or
other
salaries
were,
attempted.
Rebus
sic
stantibus,
the
decision
was
supposed
to
stand.
But
the
situation
is
now
entirely,
different.
A
small
provincial
or
municipal
tax
in
1908,
in
the
happy
pre-war
days,
before
any
federal.
War
Income
Tax
could
be
anticipated,
when
a
10
per
cent
reduction
of
the
federal
salaries
was
not
within
the
realm
of.
possibilities,
before
Canada
plunged,
into
the
vortex.
of
European
militarism,
when
a
world-wide
depression
did
not
threaten
the
municipalities
and
provinces
with
bankruptcy,
may
have
seemed
a
negligible
matter,
and
de
minimis
non
curat
praetor.
But
now.
we
must
face
the
situation
as
it
is;
the
fact
indisputedly
is
that.
the
efficiency
of
federal
services
is
threatened
if
they
have
to.
provide
besides
the
exigencies
of
Parliament,
to
the
pressing
and
ever
increasing
needs
of
the
local
administrations:
As
Sir
Frederick
Pollock
says
in
45
Law.
Quarterly
eview.
(1929),
pp.
293
and
foil.
:
""
[The
court]
must
find
and
apply
the
rule
which
in
all
the
circumstances
appears
most
reasonable.
.
.
.
The
duty
of
the
court
is
to
keep
the
rules
of
law
in
harmony
with
the
enlightened
common
sense
of
the
nation.
Such
a
itty,
being
put
upon
fallible
men,
cannot
be
performed
with
invariable
and
equal
success.
It
is
a
matter
of
judgment,
know
ledge
of
the
world,
traditional
or
self-
acquired
bent
of
opinion,
and,
perhaps
above
all
of
temperament.
Caution
and
valour
are
both
needed
for
the
fruitful
constructive
interpretation
of
legal
principles.
The
court
should
be
even
valiant
to
override
the
merely
technical
difficulties
of
professional
thinking,
and
also
current
opinions
having
some
show
of
authority,
in
the
search
for
a
solution
which
will
be
acceptable
and
in
a
general
way
intelligible
to
reasonable
citizens,
or
the
class
of
them
whom
the
decision
concerns.
.
.
.
Discretion
is
good
and
very
necessary,
but
without
valour
the
law
would
have
no
vitality
at
all.
We
are,
therefore,
free,
notwithstanding
the
doctrine
of
stare
decisis,
and
I
deem
it
our
duty,
to
reopen
the
broad
question
of
the
power
of
the
legislature
under
the
guise
of
direct
taxation
within
the
province
to
interefere
with
the
salaries
fixed
and
provided
for
by
the
Parliament
of
Canada
for
its
civil
and
other
officers.
Moreover,
it
may
not
be
amiss
to
point
out
that
Abbott
was
a
tide
waiter
in
the
outside
service
of
the
Department
of
Customs,
at
a
salary
of
$600
per
year;
and
it
is
not
clear,
from
the
report
of
the
case,
that
in
the
year
1907
such
employees
were
precluded
from
engaging
in
gainful
occupation
outside
of
official
duties.
He
complained
that
the
City
of
Saint
John
assessed
his
salary
and
attempted
to
levy
the
sum
of
$2.22
for
county
taxes
and
$11.30
for
city
taxes.
The
court
of
New
Brunswick,
relying
on
a
decision
of
the
Privy
Council
in
Webb
v.
Outran
[1907]
A.C.
81,
affecting
the
Commonwealth
of
Australia,
set
aside
the
jurisprudence
which
had
prevailed
in
Canada
since
Confederation
and
which
had
been
very
ably’
set
forth
and
established
in
the
powerful
judgments
of
Spragg,
C.,
Hagarty,
C.J.C.P.
and
Burton
and
Patterson,
JJ.A.
in
Leprohon
v.
Corporation
of
The
City
of
Ottawa
(1878)
2
Ont.
App.
Rep.
522
When
the
Abbott
case
came
before
this
Court,
Girouard,
J.
wrote
a
strong
dissenting
opinion
and
refused
to
set
aside
the
consistent
and
almost
unanimous
doctrine
of
our
courts
on
the
sole
authority
of
Webb
v.
Outrim.
It
is
difficult
to
understand
why
the
considered
conclusions
of
most
eminent
judges
of
our
country,
who,
being
in
a
better
position
to
determine
exactly
the
spirit
and
effect
of
the
Confederation
pact
adopted
in
their
lifetime,
thought
that,
on
this
continent
of
America,
the
principles
accepted
by
Chief
Justice
Marshall
and
other
eminent
judges
of
the
Supreme
Court
of
the
United
States
with
reference
to
the
constitution
of
the
neighbouring
country
and
the
reciprocal
independence
of
National
and
State
instrumentalities
were
to
be
adopted
as
a
simple
matter
of
common
sense
and
propriety,
should
have
been
set
aside
to
follow
a
decision
of
the
Judicial
Committee
concerning
the
interpretation
of
the
Australian
constitution
which
is
substantially
different
from
ours,
as
appears
in
the
judgments
of
the
High
Court
of
Australia
when
it
subsequently
refused
to
accept
the
Privy
Council
views
in
Baxter
v.
Commissioners
of
Taxation,
New
South
Wales
(1907)
4
Commonwealth
Law
Reports,
1087,
and
Cooper
v.
Commissioner
of
Income
Tax
for
the
State
of
Queensland
(1907)
4
Comm.
L.R.
1304.
It
will
be
sufficient
to
quote
sec.
107
of
the
Australian
constitution
to
show
the
complete
divergence
with
Canada
as
to
the
division
of
powers
:
“Every
power
of
the
Parliament
of
a
Colony
which
has
become
or
becomes
a
State,
shall,
unless
it
is
by
this
Constitution
exclusively
vested
in
the
Parliament
of
the
Commonwealth
or
withdrawn
from
the
Parliament
of
the
State,
continue
as
at
the
establishment
of
the
Commonwealth,
or
as
at
the
admission
or
establishment
of
the
State,
as
the
case
may
be.’’
See
Clement
on
the
Canadian
Constitution,
3rd
ed.,
pages
375
and
642,
and
23
Law
Quarterly
Review
(1907)
373—about
this
much
criticized
decision.
In
Caron
v.
The
King
(1922)
64
S.C.R.
255;
[1924]
A.C.
999,
the
appellant
refused
to
pay
the
Dominion
Income
Tax
on
his
salary
as
Minister
of
Agriculture
for
the
province
of
Quebec
and
his
indemnity
as
a
Member
of
the
Legislature.
This
Court
said
that
the
case
was
the
converse
of
Abbott
v.
The
City
of
Saint
John
(1908)
40
S.C.R.
597,
considered
the
authority
of
the
Dominion
to
impose
a
tax
on
the
salary
of
a
provincial
official
and
declared
itself
unable
to
distinguish
the
two
cases.
With
all
due
deference
and
diffidence,
I
would
point
out,
however,
that
the
facts
in
those
two
eases
differed,
because
the
Minister
of
Agriculture
or
a
Member
of
the
Legislature
of
the
province
of
Quebec
is
not
bound,
for
the
salary
or
indemnity
received
as
such,
to
devote
his
entire
time
or
earning
power
to
the
province.
These
positions
are
not
permanent
and,
as
members
of
the
Executive
or
of
the
Legislature,
they
are
entirely
free
to
enjoy
all
the
civil
rights
of
citizens;
they
are
expected
to
have
other
gainful
occupation
and
are
not
restricted
as
are
members
of
the
federal
civil
service.
In
view
of
this
material
difference
as
to
the
fundamental
facts
of
the
present
case
with
those
in
Caron
v.
The
King,
I
am
of
opinion
that
the
judgments
of
this
Court
and
of
the
Privy
Council
in
Caron
v.
The
King
are
not
binding
on
us
in
the
premises.
The
respondent
has
also
quoted
City
of
Toronto
v.
Morson
(1917)
40
Ont.
L.R.
227,
where
the
Appellate
Division
of
Ontario
held
that
the
defendant,
one
of
the
judges
of
a
county
court,
was
not
exempt
from
municipal
taxation
under
provincial
legislation
in
respect
of
his
salary
or
income
as
such
judge.
The
fundamental
error
of
this
finding
is
to
be
found
in
the
reasons
of
Mulock,
C.J.
and
Riddell,
J.,
put
tersely
by
the
latter
as
follows
(p.
232)
:
"As
to
the
power
of
the
province
to
tax
such
salaries,
Leprohon
v.
City
of
Ottawa
(1878)
2
O.A.R.
522
decided
that
this
power
did
not
exist;
and,
had
that
decision
stood,
we
should
be
bound
to
allow
this
appeal.
But
the
Supreme
Court
of
Canada,
in
the
case
of
Abbott
v.
The
City
of
Saint
John,
has
deprived
it
of
all
authority;
and,
unless
we
are
to
disregard
the
Supreme
Court
decision
we
must
hold
that
the
power
exists.
‘
‘
Clearly
the
learned
judges
in
appeal
assimilated
one
of
His
Majesty’s
judges
to
a
civil
servant.
The
exemption
from.
taxation
by
provincial
legislation
of
the
salaries
of
judges
would
be
based
partly
on
different
considerations
than
those
that
would
apply
to
civil
servants.
Judges
are
not
servants
of
the
Crown;
they
are
called
to
decide
as
between
the
subject
and
the
Crown;
and
since
the
Act
of
Settlement
their
complete
independence,
economic
and
otherwise,
has
to
be
safeguarded
in
the
public
interest.
Even
Parliament,
in
order
to
reduce
their
salaries,
had
to
impose
a
special
tax
whose
validity
is
not
to
be
affirmed
or
denied
in
the
present
case
where
the
question
does
not
arise.
Suffice
it
to
say
that
the
case
of
Abbott
v.
City
of
Saint
John
should
not
have
been
considered
as
a
binding
precedent
by
the
Court
of
Appeal
of
Ontario
when
a
substantially
different
ques-
tion
was
before
them.
Therefore,
the
Morson
decision
has
nothing
to
do
with
the
case
we
are
now
considering
and,
in
any
event,
was
based
on
a
wrong
appreciation
of
the
subjectmatter
that
was
at
the
root
of
this
court’
S
decision
in
the
Abbott
case.
III
It
has
been
said
that
both
the
Dominion
Parliament
and
the
Provincial
Legislature
have
each
been
given
sovereign
powers
within
the
scope
of
sees.
91
and
92
of
the
British
North
America
Act.
The
Imperial
Parliament
also
gave
to
each,
of
them
the
fixing
of,
and
providing
for,
the
salaries
and
allowances
of
civil
and
other
officers
for
the
respective
government
of
Canada
and
of
the
provinces.
These
salaries
or
emoluments
are
attached
to
the
position
and
are
paid
to
the
individual
who
happens
to
dis-
discharge
the
commission
or
the
public
duties
assigned
to
him.
In
this
case,
the
salary
is
payable
by
the
federal
departments.
If
the
Dominion,
to
carry
011
the
nation’s
business,
has
one
of
its
officials
living
in
one
of
the
provinces,
can
it
be
said
that
the
salary
attached
to
the
position
whose
duties
for
federal
purposes
are
carr
led
out
within
the
geographical
limits
of
the
province,
become
a
‘‘thing’’
within
the
province
and
may
be
taxed
for
local
purposes
for
the
sole
reason
that
the
remittance
may
reach
the
recipient
outside
of
the:
Capital
of
the
Country?
It
seems
to
me
that
the
principle
of
extra-territoriality,
as
in
the
case
of
the
representative
of
a
foreign
power,
should
apply
qua
salary
to
the
mutual
benefit
and
advantage
of
the
officials
of
the
two
sovereign
powers
co-existing
and
organized
in
this
country
under
sec.
91(8)
and
see.
92(4)
of
the
British
North
America
Act.
In.
Attorney-General
for
Ontario
v.
Attorney-General
for
Canada
[1912]
A.C.
571,
at
583,
Lord
Loreburn
said:
"‘In
the
interpretation
of
a
completely
self-governing
Constitution
founded
upon
a
written
organic
instrument,
such
as
the
British
North
America
Act,
if
the
text
is
explicit
the
text
is
conclusive,
alike
in
what
it
directs
and
what
it
forbids.
When
the
text
is
ambiguous,
as,
for
example,
when
the
words
establishing
two
mutually
exclusive
jurisdictions
are
wide
enough
to
bring
a
particular
power
within
either,
recourse
must
be
had
to
the
context
and
scheme
of
the
Act.”
The
purpose
of
the
constitution
was
the
creation
of
a
new
Dominion.
Canada
was
intended
to
take
its
place
among
the
free
nations
with
such
attributes
and
sovereignty
as
were
consistent
with
its
being
still
under
the
Crown.
It
is
essential
to
the
attribute
of
the
sovereignty
of
any
government
that
it
shall
not
be
interfered
with
by
any
external
or
internal
power.
The
only
interference,
therefore,
to
be
permitted
is
that
prescribed
by
the
constitution
itself.
A
similar
consequence
follows
with
respect
to
the
constituting
provinces.
In
their
case,
however,
the
central
government
is
empowered
to
interfere
in
certain
prescribed
cases.
But
under
the
scheme
of
the
document,
there
are
a
number
of
subjects
upon
which
the
legislative
power
of
both
the
Dominion
and
the
provinces
may
be
exercised.
In
such
a
state
of
things,
if
questions
arise
which
interfere
with
the
exercise
of
the
sovereign
power
of
the
two
sovereign
authorities
concerned,
then
the
doctrine
Quando
lex
aliquid
concedit,
concéder
e
videtur
et
illud
sine
quo
res
ipsa
valere
non
potest
applies,
as
it
must
be
the
construction
of
all
grants
of
powers.
It
follows
that
a
grant
of
a
sovereign
power
includes
a
grant
of
a
right
to
disregard
any
attempt
by
any
authority
to
control
its
exercise.
A
remarkable
illustration
of
the
application
of
this
maxim
is
afforded
in
Attorney-General
for
Canada
v.
Cain
and
Attorney-General
for
Canada
v.
Gilhula
[1906]
A.C.
542,
where
it
was
held
that
the
doctrine
might
be
applied
so
as
to
exercise
said
powers
even
beyond
territorial
limits.
This
view
is
emphasized
in
British
Coal
Corporation
v.
The
King
[1935]
A.C.
500,
at
518.
Under
see.
91
of
the
British
North
American
Act,
the
exclusive
Legislative
Authority
of
the
Parliament
of
Canada
extends
to
all
matters
coming
within
the
classes
of
subjects
next
hereinafter
enumerated;
that
is
to
say
:
*****
‘
‘
(8)
The
fixing
of
and
providing
for
the
salaries
and
allowances
of
civil
and
other
officers
of
the
Government
of
Canada.
*****
‘And
any
matter
coming
within
any
of
the
classes
of
subjects
enumerated
in
this
section
shall
not
be
deemed
to
come
within
the
class
of
matters
of
a
local
or
private
nature
comprised
in
the
enumeration
of
the
classes
of
subjects
by
this
Act
assigned
exclusively
to
the
Legislatures
of
the
Provinces.’’
'
Therefore,
the
Dominion
Parliament
alone
can
fix
compensation
to
the
Dominion
civil
servants
and
the
same
cannot
be
altered
and
no
deduction
made
therefrom
except
by
Parliament.
By
the
Civil
Service
Act,
R.S.C.
1927,
c.
22,
as
amended
by
the
Act
22
and
23
Geo.
V,
c.
40,
Parliament
has
enacted
new
legislation
regarding
the
civil
servants
that
come
within
that
statute.
This
remuneration
is
fixed
under
this
statute,
and
see.
10,
subsec.
1,
provides
as
follows
:
"10.
(1)
The
civil
service
shall,
as
far
as
practicable,
be
classified
and
compensated
in
accordance
with
the
classification
of
such
service
dated
the
first
day
of
October,
one
thousand
nine
hundred.
and
nineteen,
signed
by
the
Commission
and
confirmed
by
chapter
ten
of
the
statutes
of
the
year
one
thousand
nine
hundred
and
nineteen,
second
session,
and
with
any
amendments
or
additions
thereto
thereafter
made;
and
references
in
this
Act
to
such
classification
shall
extend
to
include
any
such
amendments
or
additions.’’
This
being
an
Act
of
Parliament,
it
is
evident
that
no
Provincial
Legislature
could
interfere
with,
deduct
from
or
pass
any
legislation
compelling
a
Dominion
civil
servant
to
give
up
his.
salary
or
any
portion
thereof.
It
is
Parliament
and
Parliament
alone
that
can
make
any
alterations
in
the
law
as
it
stands
under
the
Civil
Service
Act.
Even
the
Dominion
Government
itself
could
not
without
special
enactment
by
Parliament
change,
alter
or
deduct
from
a
Dominion
civil
servant
any
portion
of
the
compensation
to
which
he
would
be
entitled
and
which
has
been
set
by
the
Civil
Service
Act.
IV
If
The
Special
Income
Tax
Act
of
the
Manitoba
Legislature
taxes
and
attempts
to
intercept
in
the
hands
of
the
Dominion
a
portion
of
the
remuneration
which
is
fixed
by
the
Dominion
Parliament
as
compensation
to
the
Dominion
civil
servant,
would
this
be
within
the
legislative
power
of
the
Provincial
Legislature
?
The
answer
must
be
in
the
negative.
Is
the
exemption
from
provincial
interference
by
taxation
or
otherwise
necessarily
incidental
to
the
exercise
of
the
powers
conferred
upon
the
Parliament
of
Canada
by
head
(8)
of
see.
91?
It
is
for
the
courts
to
lay
down
the
line
of
necessity
in
this
case.
See:
Montreal
Street
Ry.
Co.
v.
City
of
Montreal
(1910)
48
S.C.R.
197,
per
Duff,
J.,
at
p.
229—with
whom
Chief
Justice
Sir
Charles
Fitzpatrick
and
Girouard,
J.
coneurred,
which
decision
was
upheld
in
the
Privy
Council
[1912]
A.C.
333.
The
same
law
which
has
preseribed
bounds
to
the
legislative
power
has
imposed
upon
the
judges
the
duty
of
seeing
that
these
bounds
are
not
overstepped.
L’Union
St.
Jacques
v.
Belisle
(1872)
20
L.C.J.
29,
at
39,
per
Duval,
C.J.
Can
it
be
denied
that,
under
existing
conditions
in
Canada
since
the
war,
the
reduction
of
the
salaries
of
Dominion
employees
in
proportion
to
the
needs
of
the
provinces
or
municipalities,
which
in
some
cases
are
very
great
and
are
increasing
alarmingly,
would,
if
added
to
the
deductions
imposed
by
the
Dominion
Parliament,
amount
to
confiscation
of
a
substantial
part
thereof
and
would
as
a
necessary
consequence
seriously
impair
the
efficiency,
morale
and
economic
independence
of
the
national
service?
It
is
a
patent
fact
to
anyone
conversant
with
Canadian
conditions,
and
any
attempt
by
a
Province
to
confiscate
even
in
part
the
stipend
fixed
by
Parliament,
whatever
name
may
be
given
to
the
operation,
under
whatever
disguise
it
may
be
presented,
is
an
unauthorized
assumption
of
a
power
which
is
essentially
national
in
its
scope
and
operation
and
is
expressly
denied
to
the
Province
by
the
last
phrase
of
sec.
91.
The
Dominion
alone
ean
fix
the
salaries;
and
onee
fixed,
they
cannot
be
changed
or
reduced
by
the
Province.
According
to
elementary
common
sense,
without
the
necessity
of
recourse
to
learned
legal
distinctions
or
disquisitions,
a
salary
minus
a
tax
of
2,
5
or
10
per
cent
is
a
reduced
salary
pro
tanto.
Such
reduction
in
the
ease
of
Dominion
servants
can
be
effected
by
Parliament
only
in
the
exercise
of
its
exclusive
jurisdiction
under
head
(8)
of
91.
Now
the
respondent
contends
that
the
Act
contemplates
and
contains
such
an
interference.
I
quote
from
the
factum
of
the
Attorney-General
:
"
"
It
is
submitted
that
the
Civil
Servant
is
an
employee
‘
and
that
which
he
receives,
viz.,
salary,
is
‘
wages’
within
the
meaning
of
the
statute.
"
"
The
"
employee,
‘
who
is
required
to
pay
the
tax
imposed
by
section
3
of
the
Act,
is
defined
by
section
2(1)
(
b)
as
meaning
‘any
person
who
is
in
receipt
of,
or
entitled
to,
any
""wages.”
’
The
final
determination,
therefore,
of
who
is
an
employee,
”
must
depend
upon
the
definition
of
wages.
‘
‘‘i
"The
opening
words
of
the
definition
of
‘wages'
contained
in
section
2(1)(d)
are
as
follows:
""Wages''
include
all
wages,
salaries
and
emoluments
from
any
source
whatsoever
.
.
.
‘
"‘It
is
submitted
that
no
matter
what
term
is
used
in
describing
the
remuneration
paid
to
a
Civil
Servant
for
his
services,
such
remuneration
will
fall
within
the
scope
of
that
portion
of
the
definition
of
‘wages’
quoted
above.
But
the
definition
of
‘wages’
is
still
broader
in
its
scope
for
it
continues
:
including
(i)
any
compensation
for
labour
or
services,
measured
by
the
time,
piece
or
otherwise
;
A.
(ii)
the
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.”
‘‘It
is
submitted
on
behalf
of
the
respondent
that
the
words
‘the
salaries,
indemnities
and
other
remuneration
.
.
.
of
all
persons
whatsoever,’
in
the
above
quotation,
plainly
comprehend
the
salary
or
remuneration
of
the
Civil
Servant.
’
’
I
should
now
come
to
the
legislation
submitted
to
our
scrutiny,
which
provides
in
part
:
"PART
I
‘‘Taxation
OF
WAGES
“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
to
him
on
or
after
the
first
day
of
May,
1935,
which.
tax
shall
be
levied
and
collected
at
the
times
and
in
the
manner
prescribed
by
this
part;
.
.
.
"4.
(1)
Every
employer
at
the
time
of
payment
of
wages
to
an
employee
shall
levy
and
collect
the
tax
imposed
on
the
employee
by
this
part
m
respect
of
the
wages
of
the
employee
earned
or
accruing
due
during
the
period
covered
by
the
payment,
and
shall
deduct
and
retain
the
amount
of
the
tax
from
the
wages
payable
to
the
employee,
and
shall,
on
or
before
the
fifteenth
day
of
the
month
next
following
that
in
which
the
payment
of
wages
takes
place,
or
at
such
other
time
as
the
regulations
prescribe,
pay
to
the
administrator
the
full
amount
of
the
tax.
No
employee
shall
have
any
right
of
action
against
his
employer
in
respect
of
any
moneys
deducted
from
his
wages
and
paid
over
to
the
administrator
by
the
employer
in
compliance
or
intended
compliance
with
this
section.
"‘(2)
Every
employer
shall,
with
each
payment
made
by
him
to
the
administrator
under
this
section,
furnish
to
the
administrator
a
return
showing
alt
taxes
imposed
by
this
part
on
the
employees
of
the
employer
in
respect
of
wages
during
the
period
covered
by
the
return,
which
shall
be
in
the
form
and
verified
in
the
manner
prescribed
by
the
administrator.
"
‘(3)
Every
employer
who
deducts
or
retains
the
amount
of
any
tax
under
this
part
from
the
wages
of
his
employee
shall
be
deemed
to
hold
the
same
in
trust
for
His
Majesty
and
for
the
payment
over
of
the
same
in
the
manner
and
at
the
time
provided
under
this
part.
‘6.(1)
If
an
employer,
in
violation
of
the
provisions
of
this
part
fail
to
collect
and
pay
over
any
tax
imposed
by
this
part,
the
administrator
may
demand
and
collect
from
him
as
a
penalty
ten
per
cent.
of
the
tax
payable,
and
he
shall
in
addition
be
liable
to
a
fine
of
ten
dollars
for
each
day
of
default,
but
not
to
more
than
two
hundred
dollars.
il
(2)
Every
person,
who
contravenes
any
provision
of
this
part
in
respect
of
which
no
penalty
is
otherwise
provided,
shall
be
liable
to
a
fine
not
exceeding
five
hundred
dollars,
and
each
day’s
continuance
of
the
act
or
default
out
of
which
the
offence
arises
shall
constitute
a
separate
offence;
but
nothing
contained
in
this
section
nor
the
enforcement:
of
any
penalty
thereunder
shall
suspend
or
affect
any
remedy
for
the
recovery
of
any
tax
payable
under
this
part
or
of
any
moneys
in
the
hands
of
an
employer
belonging
to
His
Majesty.
"‘7.
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,
it
shall
be
‘the
duty
of
the
employee
to
forthwith
pay
the
tax,
and
all
the
provisions
of
sections
23,
23A,
24
and
25
of
The
Income
Tax
Act
shall,
mutatis
mutandis,
apply
to
the
collection
and
recovery
of
the
tax
so
imposed
from
the
employer
and
employee,
or
either
of
them.”
It
would
appear
that
sec.
7
makes
the
employee
liable
secondarily
and
conditionally,
if—against
the
clear
purpose
of
the
legislator—the
salary
has
been
paid
to
him;
the
operation
of
the
whole
Act
as
contemplated
by
the
legislature
seems
to
strike
at
the
employer
first
and
directly
for
the
recovery
of
the
tax
on
his
accruing
obligation
to
pay
wages;
this
is
intercepting
it
and
preventing
its
receipt
by
the
officer
to
whom
it
is
due.
This,
as
pertinently
remarked
by
Mr.
Clement
in
his
work
on
the
Constitution,
3rd
ed.,
p.
642,
can
be
enacted
by
the
federal
parliament
only.
Moreover,
if
the
employer
pays
the
tax,
it
is
expected,
and
in
fact
it
is
embodied
in
the
Act,
that
he
will
recoup
himself
:
“‘he
shall
deduct
and
retain
the
amount
of
the
tax
from
the
wages
payable
to
the
employee”
to
whom
a
right
of
action
is
denied
by
sec.
4(1)
against
the
employer
in
respect
of
any
moneys
so
deducted
and
paid
over
to
the
provincial
collector.
Now,
direct
taxes
are
those
that
are
levied
upon
the
very
person
who
is
supposed
as
a
general
thing
to
bear
their
burden.
When
a
person
pays
one
of
these
taxes,
he
is
likely
to
bear
the
burden
himself
and
is
not
likely
to
shift
it
to
another.
Indirect
taxes
are
those
that
are
collected
from
one
person
(the
employer
according
to
the
operation
of
Part
I
of
the
Act)
and
then
transferred
in
whole
or
in
part
by
that
person
to
another
(in
this
case
the
employee).
The
distinction
between
direct
and
indirect
taxation
is
made
clear
by
considering
the
manner
in
which
the
tax
is
levied.
"‘Direct
taxes
are
amongst
those
levied
on
permanent
and
recurring
occasions
and
are
assessed
according
to
some
list
or
roll
of
persons.
The
taxpayer
is
regarded
as
definitely
and
pemanently
ascript
to
the
treasury.
Indirect
taxes,
on
the
other
hand,
are
levied
according
to
a
tariff
on
the
occurrence
of
transactions
and
events
which
are
not
previously
ascertainable
as
regards
particular
persons.
The
amount
of
a
direct
tax
assessed
in
this
way
is
certain
and
regular,
while
an
indirect
tax
is
uncertain
and
irregular,
as
regards
individuals.
(Nicholson
).”’
Under
Part
I
of
the
Act,
no
employee
is
required
to
make
returns—only
the
employer.
No
penalty
against
the
employee
is
enacted;
but
we
find
a
heavy
one
against
the
employer
who
would
dare
not
to
disclose
his
payroll
and
deduct
the
tax.
Reading
the
whole
modum
operands
of
this
Part
I,
1
feel
inclined
to
classify
it
as
a
clear
attempt
by
the
legislature
to
strike
first
directly
at
the
source
of
these
wages,
before
they
reach
the
employee,
expecting
direct
payment
from
the
employer
and
indirectly
by
the
wage
earner;
this
would
be
ultra
vires
of
sec.
92(2),
as
understood
and
applied
in
a
long
line
of
decisions.
But
is
it
necessary
to
declare
the
Act
ultra
vires
in
its
entirety?
Would
it
be
sufficient
in
this
case
to
say
that
it
cannot
affect
the
salaries
or
"wages’’
or
other
remunerations
paid
out
of
the
revenues
of
His
Majesty
in
the
right
of
the
Dominion
?
It
seems
obvious
that
the
bones
and
sinews
of
Part
I
consist
in
the
interception
of
wages
in
the
hands
of
the
employer.
Now’,
as
shown
above,
the
respondent
says
that
the
‘
‘
employer”
referred
to
in
the
statute
includes
the
Crown,
but
does
not
claim
that
the
rights
of
the
Dominion
Crown
can
be
or
are
affected
by
the
collecting
secs.
4,
5,
6
and
7.
The
contract
of
employment
by
the
Crown
cannot
be
severed
and
if
the
salary
cannot
be
intercepted
in
the
hands
of
the
government
because
it
is
earned
and
paid
purely
and
solely
to
carry
out
the
business
of
the
country,
it
should
be
left
alone
by
provincial
taxation
after
it
reaches
the
employee.
Sec.
7
must
be
read
with
the
preceding
sections,
and
if,
admittedly,
the
Federal
Crown
cannot
be
forced
to
make
returns
and
payment
to
the
Province,
the
same
protection
should
enure
to
the
benefit
of
the
other
party
to
this
particular
contract
of
employment.
It
would
seem
that
the
tax
is
"
"
the
exaction
.
.
.
of
a
percentage
duty
on
services”
of
which
Lord
Cave
said
that
it
‘
‘‘
would
ordinarily
be
regarded’’
and
should
be
classified
"‘as
indirect
taxation’’—City
of
Halifax
v.
Fairbanks
Estate
[1928]
A.C.
117,
at
125,
quoted
by
Rinfret,
J.,
in
rendering
judgment
for
this
Court
in
City
of
Charlottetown
v.
Foundation
Maritime
Ltd.
[1932]
S.C.R.
589,
where
the
authorities
are
very
accurately
and
concisely
reviewed.
V
The
appellant
does
not
claim
protection
as
a
resident
of
Manitoba,
but
as
an
instrumentality
of
the
Dominion
government.
The
present
Chief
Justice,
in
his
judgment
in
the
Abbott
case
(1908)
40
S.C.R.
597,
referred
to
Bank
of
Toronto
v.
Lambe
(1887)
12
App.
Cas.
575.
But
we
cannot
at
this
date
overlook
the
reasoning
of
the
Privy
Council
in
Attorney-General
for
Manitoba
v.
Attorney-General
for
Canada
[1929]
A.C.
260,
where
was
declared
ultra
vires
a
provincial
Act
which
interfered,
directly
and
substantially,
with
the
status
and
capacity
conferred
on
certain
companies
by
Dominion
legislation
intra
vires
under
sec.
91.
In
this
present
case
also,
this
legislation
is
not
saved
by
the
fact
that
all
wage-earners
in
the
Province
are
aimed
at
and
that
there
is
no
special
discrimination
against
Dominion
employees.
“The
matter,’’
says
Lord
Sumner:
at
p.
268,
"‘de-
pends
upon
the
effect
‘of
the
legislation
not
upon
its
purpose.
”
The
effect
in
this
case
is
clearly
to
impair
the
status
and
earnings
of
a
class
of
persons
who
are
entitled
to
look
to
the
Dominion
Parliament
as
the
exclusive
authority
with
‘power
to
fix
and
determine
such
matters.
A
fortiori
in
the
case
of
a
federal
civil
servant,
should
the
words
of
Lord
Sumner
apply,
mutatis
mutandis,
when
he
says
at
p.
267:
settled
""As
a
matter
of
construction
it
is
now
well
settled
that,
in
the
case-of
a
company
incorporated
by
Dominion
authority
with
power
to
carry
on
its
affairs
in
the
provinces
generally,
it
is
not
competent
to
the
legislatures
of
those
provinces
so
to
legislate
as
to
impair
the
‘status
and
essential
capacities
of
the
company
in
a
substantial
degree.
‘
‘
It
is
my
firm
view
that,
as
a
matter
of
fact,
the
Province
of
Manitoba,
by
the
Act
under
consideration,
does,
in
effect
if
not
purposely,
impair
the
status
and
essential
rights
of
the
civil
service
to
receive
whole
and
without
reduction
the
salary
fixed
and
voted
by
Parliament.
By
doing
so,
the
statute
is
bound
to
affect
and
reduce
the
efficiency
of
the
service
for
the
reasons
above
given.
Now,
if
admittedly
Part
I
of
the
statute
is
ultra
vires,
as
applying
to
the
employer,
because
the
tax
as
collected
would
have
to
be
charged
back
to
the
employee,
can
the
illegal
part
of
the
statute
be
severed
from
the
allegedly
legal
part,
sec.
7
?
The
answer
is
found
in
a
judgment
of
the
Privy
Council
in
Attorney-General
for
Manitoba
v.
Attorney-General
for
Canada
[1925]
A.C.
561,
at
568,
where
Lord
Haldane
said:
66
.
.
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.
‘
‘
Vi
This
statute
is
designed
to
exact
a
percentage
not
from
the
total
income,
but
from
the
"‘wages
or
salaries’’
at
their
source:
This
would
be
sufficient
to
distinguish
this
case
from
Abbott
v.
City
of
Saint
John
(1908)
40
8.C.R.
597,
in
which,
as
pointed
out
by
Sir
Louis
Davies,
the
statute
did
not
provide
for
a
special
tax
on
the
wages
of
Dominion
officials,
but
was
a
general
undiscriminatory
tax
upon,
the
total
incomes
of
all
residents
in
the
province.
In
this
view,
this
appeal
could
be
maintained,
even
if
this
Court
considered
itself
bound
by
the
rule
stare
decisis.
VII
The
statute
is
essentially
an
attempt
to
reach
the
wage
earner
indirectly
through
the
employer
who,
to
all
intents
and
purposes,
is
the
taxpayer
and
the
only
one
subject
to
penalties
under
the
scheme
of
Part
I
of
the
Act.
In
this
respect,
this
Part
I
of
the
statute
providing
for
the
interception
before
payment,
with
such
provisions
for
recoupment
as
shown
above,
must
be
held
to
be
obnoxious
to
the
restrictions
imposed
upon
the
provincial
authority.
I
would,
therefore,
allow
the
appeal
without
costs,
as
agreed
between
the
parties,
and
dismiss
the
action.
CANNON,
J.
(dissenting)
delivered
the
following
judgment
in
the
Worthington
appeal:—Mntatis
mutandis,
my
reasons
in
the
case
of
James
Forbes
v.
The
Attorney-General
of
Manitoba
would
apply
to
this
case.
In
addition,
sec.
91(7)
of
the
British
North
America
Act
confers
exclusive
authority
to
the
Parliament
of
Canada
on
4
Militia,
Military
and
Naval
Service,
and
Defence.’’
The
power
was
exercised
by
the
enactment
of
the
Militia
Act,
R.S.C.
1927,
c.
132.
See.
32
of
the
latter
provides
for
the
fixing
of
pay
and
allowances
of
the
officers
and
men
of
the
permanent
force
which,
under
sec.
22,
consist
of
such
permanently
embodied
corps,
enrolled
for
continuous
service.
Appellant,
therefore,
must
give
all
his
time
to
the
nation
and
cannot
engage
in
any
other
gainful
occupation.
He
is
entitled
to
receive
from
the
Consolidated
Fund
upon
warrant
directed
by
the
Governor
General
to
the
Minister
of
Finance
the
emoluments
granted
to
him
for
the
dignity
of
the
State
and
for
his
decent
support.
Flarty
v.
Odium
(1790)
3
Term.
R.
681;
100
E.R.
801.
Sees.
139,
140
and
141
of
the
Militia
Act
provide
that
"regulations
for
the
organization,
discipline,
efficiency
and
good
government”
of
the
militia
made
by
the
Governor
in
Council
shall,
on
publication,
have
the
same
force
in
law
as
if
they
formed
part
of
the
Militia
Act.
Accordingly,
the
following
regulations
may
be
noted
:
"‘35.
Officers
shall,
on
appointment
in
or
promotion
to
the
ranks
or
grades
set
forth
in
these
Regulations,
be
entitled
to
receive
the
rates
of
pay
therefor
as
herein
prescribed,
subject
to
such
deductions,
forfeitures
or
limitations
as
may
from
time
to
time
be
authorized
by
statute
or
by
regulations
duly
approved
by
the
Governor-General-in-Council.
"‘46.
Warrant
officers,
non-commossioned
officers
and
men
shall
on
enlistment
in
or
promotion
to
the
ranks
or
grades
hereinafter
specified
be
entitled
to
pay
at
the
following
rates,
subject
to
such
deductions,
forfeitures
or
limitations
as
may
from
time
to
time
be
authorized
by
regulations
duly
approved
by
the
Governor-General-in-Council.’’
In
my
opinion,
no
deductions
from
such
pay
may
be
lawfully
made
by
any
other
authority,
and
the
provisions
of
Part
I
of
the
Act
in
question,
if
they
really,
as
the
respondent
contends,
require
deductions
to
be
made
in
respect
of
"‘Pay
and
Allowances
‘
‘
of
any
officers,
warrant
officers,
non-commissioned
officers
or
men,
are
beyond
the
competence
of
the
Legislative
Assembly
of
the
province
of
Manitoba
to
enact.
The
Pay
and
Allowances
prescribed,
being
matters
of
the
King’s
bounty,
are
such
as
in
the
discretion
of
His
Majesty
will
be
sufficient
for
the
maintenance
of
the
position
and
dignity
of
the
King’s
officers
and
soldiers.
This
is
exemplified
by
considering
the
following
regulation,
which
likewise
has
the
force
of
law,
namel
:
"‘King's
Regulations
and
Orders,
Paragraph:
"‘1006.
(2)
A
subaltern
with
sufficient
means
to
maintain
himself
and
family
in
a
manner
befitting
his
position
as
an
officer
may,
upon
the
recommendation
of
his
Commanding
Officer,
be
permitted
by
the
Minister
to
marry.’’
Quite
obviously,
such
law,
denying
the
civil
right
of
marriage
to
a
subaltern
officer,
except
with
the
approval
of
his
Commanding
Officer
and
permission
of
the
Minister,
is
enacted
for
no
other
purpose
than
that
no
calls
shall
be
made
upon
the
"Pay
and
Allowances’’
of
such
subaltern
officer
beyond
those
which,
in
the
opinion
of
constituted
authority,
such
"Pay
and
Allowances”
will
enable
him
to
discharge
and
still
maintain
himself
This,
under
our
system,
has
always
been
considered
as
a
matter
of
policy
in
the
interest
of
the
public
weal.
in
the
position
and
with
the
dignity
befitting
an
officer.
Even
if
the
Legislature
were
competent,
it
is
at
least
doubtful
whether
or
not
the
"‘pay
and
allowances’’
are
"‘wages’’
within
the
meaning
of
Part
I
of
the
Act,
and,
therefore,
as
this
is
a
matter
of
taxation,
the
appellant
subject
should
be
given
the
benefit
of
the
doubt
and
should
not
be
compelled
to
pay
by
straining
the
definition
of
the
word.
The
King
v.
Crabbs
[1934]
S.C.R.
523.
I
would
agree
with
the
conclusions
of
Mr.
Justice
Robson
that
the
province
could
not
by
any
means
take
away
from
the
pay
and
allowances
of
military
officers
and,
further,
that
the
Act
should
not
be
read
as
intending
to
do
so.
I
would
allow
the
appeal,
without
costs,
as
per
agreement
of
parties,
and
dismiss
the
action.
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