Re: Anti-Inflation Act, [1976] 2 SCR 373

SUPREME COURT OF CANADA

Re: Anti-Inflation Act, [1976] 2 S.C.R. 373

Date: 1976-07-12

IN THE MATTER OF Section 55 of the Supreme Court Act

and

IN THE MATTER OF a Reference by the Governor in Council concerning the validity of the Anti-Inflation Act, as set out in Order in Council P.C. 1976-581 dated the 11th day of March 1976.

1976: May 31, June 1, 2, 3 and 4; 1976: July 12.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

REFERENCE BY THE GOVERNOR IN COUNCIL

Constitutional law—Power of Parliament in National Emergency to enact legislation on matters normally within exclusive provincial authority—"national emer­gency"—"national economic emergency"—Form of legislation—Absence of word "emergency" from preamble to Act—Requirement only of rational basis for Parliament's action rather than proof of exceptional circumstances—Anti-Inflation Act, 1975 (Can.), c. 75—Supreme Court Act, R.S.C. 1970, c. S-19, s. 55—British North America Act, ss. 91, 92.

Constitutional law—Legislation—Conditional legislation—Power of Province to extend the federal legisla­tion by executive rather than legislative action—Effect of an agreement executed by authority of provincial Order in Council—Anti-Inflation Act, 1975 (Can.), c. 75, s. 4(3).

The Anti-Inflation Act, 1974-75-76 (Can.), c. 75, was passed on December 15, 1975, with some retroactive effect from October 14, 1975, to provide for the restraint of profit margins, prices, dividends and com­pensation in Canada and thereby to accomplish the containment and reduction of the current levels of infla­tion which the Parliament of Canada recognized as contrary to the interests of all Canadians. Such containment and reduction of inflation was recognized by the Parliament of Canada as a matter of serious national concern. The Act provided for the establishment by the Governor in Council of guidelines for the restraint of prices and profit margins, compensation of employees and dividends, and by s. 4(1) applied to the Government

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of Canada and its agents and the Territorial Govern­ments and their agents. By s. 4(2) it did not purport to apply to matters generally within the provincial public sector, but ss. 4(3) and 4(4) provided that the Minister might, with the approval of the Governor in Council, enter into an agreement with the government of a province to make the act binding in accordance with the terms of the agreement in that province and its public sector. The Act as supplemented by the Guidelines which were promulgated on February 3, 1976, estab­lished supervision, control and regulation of prices, profits, wages, salaries, fees and dividends by way of moni­toring and limiting increases in order to combat inflation. By Order in Council P.C. 1976-581 dated March 11, 1976, the Governor General in Council invoked the authority conferred by s. 55 of the Supreme Court Act, R.S.C. 1970, c. S-19 and referred for the opinion of the Supreme Court the following two questions:

I) Is the Anti-Inflation Act, Statutes of Canada 1974-75-76, Chapter 75 (a copy of which Act and the Anti-Inflation Guidelines made thereunder are attached hereto as Annex "A") ultra vires the Parliament of Canada either in whole or in part, and, if so, in what particular or particulars and to what extent?

II) If the Anti-Inflation Act is intra vires the Parlia­ment of Canada, is the Agreement entitled "Between the Government of Canada and the Gov­ernment of the Province of Ontario", entered into on January 13, 1976, (a copy of which is annexed hereto together with copies of the Orders of the Governor in Council and the Lieutenant Governor in Council as Annex "B") effective under the Anti-Inflation Act to render that Act binding on, and the Anti-Inflation Guidelines made thereunder appli­cable to, the provincial public sector in Ontario as defined in the Agreement.

Held in answer to Question I (Beetz and de Grandpré JJ. dissenting):

No. The Act is not ultra vires in whole or in part. Held in answer to Question II:

No. The agreement is not effective to render the Anti-Inflation Act binding on and the Guidelines made thereunder applicable to the provincial public sector in Ontario as defined in the agreement.

Per Laskin C.J. and Judson, Spence and Dickson JJ.: The Anti-Inflation Act is valid legislation for the peace, order and good government of Canada and does not, in

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the circumstances under which it was enacted and having regard to its temporary character, invade provin­cial legislative jurisdiction. The Supreme Court would have been unjustified in concluding on the submission and all the material put before it that Parliament did not have a rational basis for regarding the Act as a measure which in its judgment, was temporarily neces­sary to meet a situation of economic crisis imperilling the well-being of the people of Canada as a whole and requiring Parliament's stern intervention in the interests of the country as a whole. The form of the Act, particu­larly the provisions respecting the provincial public sector, could not be regarded as indicative that the Government and Parliament were not seized with urgen­cy, or manifested a lack of any sense of crisis, in the establishment of the programme. Provincial governmen­tal concern about rising inflation and concurrent unem­ployment was a matter of public record and only two provinces had not entered into agreements to apply the Federal guidelines. That such contracting in was envisaged underlined the national character of the programme. The preamble to the Act was sufficiently indicative that Parliament was introducing a far-reach­ing programme prompted by what was in its view a serious national condition and the absence of the very word "emergency" was not unduly significant. The validity of the Act did not stand or fall on the preamble but the preamble provided a base for assessing the gravity of the circumstances giving rise to the legisla­tion. In considering the relevancy and weight of the extrinsic evidence and the assistance to be derived from judicial notice the Court need not go so far as to look at the material in terms of proof of the exceptional circum­stances as a matter of fact but merely to pursuade [sic] itself that there was a rational basis for the legislation under the head of power invoked in support of its validity.

In enacting the challenged legislation, Parliament was proceeding from legislative power bases entitling it to wage war on inflation through monetary and fiscal policies and to embrace within the Anti-Inflation Act some of the sectors covered by the Act without relying on its general power to legislate for the peace, order and good government of Canada. The particular economic circumstances justified it in invoking that general power to extend its embrace into sectors otherwise within provincial legislative power.

Having regard to the conclusion that the Act and Guidelines were validly enacted and promulgated as

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temporary measures to meet a national economic crisis, it was unnecessary to decide whether they could also be supported as dealing with matters which had attained national dimensions.

The agreement between the Government of Canada and the Government of the Province of Ontario was executed on behalf of the Government of Ontario by a provincial minister to whom authority for the execution was given by a provincial Order in Council. There was no statutory authorisation for the execution by the provincial Minister. Section 4(3) of the Act does not provide that, upon consummation of an agreement with the government of a province for the application of the Act and the Guidelines, they shall take effect pursuant to their terms; rather that they shall take effect in accordance with the terms of the agreement. There is no principle in Canada that the Crown may legislate by proclamation or order in Council to bind citizens when it so acts without the support of a statute of the legisla­ture. Thus the fact that the Crown can contract carries the matter no farther than that the contract may be binding on it or that it may sue the other contracting party on the contract. The agreement in question was not a contract in that sense at all, but an agreement to have certain legislative enactments become operative as provincial law. It could not have the effect claimed for it, that is, to render the Act binding on and the Guidelines applicable to the public sector in Ontario as the provincial executive had no authority to impose by mere agreement legal obligations upon persons in the Province.

Per Martland, Ritchie and Pigeon JJ.: Whether or not the Anti-Inflation Act is ultra vires must depend on whether or not the legislation was enacted to combat a national economic emergency. There is nothing to exclude the application of the principles enunciated in Co-operative Committee on Japanese Canadians v. Attorney General of Canada, [1947] A.C. 87, and Ref­erence as to the Validity of the Wartime Leasehold Regulations, [1950] S.C.R. 124, to a situation created not by war and the aftermath of it, but by highly exceptional economic conditions in time of peace. Such conditions exist where there can be said to be an urgent and critical situation adversely affecting all Canadians presenting an emergency which can only be effectively dealt with by Parliament in exercise of the power of s. 91 of the B.N.A. Act "to make laws for the peace, order and good government of Canada". However the author­ity of Parliament in this regard is limited to dealing with critical conditions and the necessity to which they give

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rise and must be confined to legislation of a temporary character.

The validity of the Act does not rest on the "national dimension" or "national concern" doctrine. At least since the Japanese Canadians case unless such national concern is made manifest by circumstances amounting to a national emergency Parliament is not entitled under the "peace, order and good government" clause to legislate on matters reserved to the Provinces under s. 92 of the B.N.A. Act. Parliament did not derive its authority to pass the Anti-Inflation Act from any of the enume­rated classes referred to in s. 91 of the B.N.A. Act. The source of the Federal power must, therefore, be found in the "peace, order and good government" clause and the federal authority to which that clause relates can only be extended to invade the provincial area when the legislation is directed to coping with a genuine national emergency.

To determine whether the legislation in question was indeed enacted to combat such an emergency it was essential for the purpose of disclosing the antecedent circumstances to consider not only the Act but the material which Parliament had before it, principally, the White Paper tabled in the House by the Minister of Finance. While neither the preamble to the Anti-Infla­tion Act nor any of its provisions specifically declare the existence of a national emergency, the language of the preamble read in the context of the White Paper made it unnecessary for Parliament to use a particular form of words to disclose its belief that an emergency existed. The White Paper discloses the conditions with which Parliament purported to cope in enacting the legislation and when the words "serious national concern" are read against the White Paper it is apparent that they were employed by Parliament in recognition of the existence of a national emergency.

Per Beetz and de Grandpré JJ., dissenting: The Anti-Inflation Act and the guidelines thereunder direct­ly and ostensibly interfere with classes of matters which have invariably been held to come within exclusive provincial jurisdiction, more particularly property and civil rights and the law of contract. Prima facie, the Act is pro tanto ultra vires of the Parliament of Canada. Two submissions were however made in support of its validity, the first based on the "national dimension or national concern doctrine", the second on the "national emergency doctrine".

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If the first submission is to be accepted its constitu­tional effects on the principles which underlie the distri­bution of powers would be very far reaching. If Parlia­ment has exclusive authority in relation to the "containment and reduction of inflation", as being of national dimension or concern, a fundamental feature of the constitution, its federal nature, the distribution of powers between Parliament and the Provincial Legisla­ture would disappear not gradually but rapidly. The submission does not however express the state of the law, it goes against the persistent trend of the authori­ties, and is founded on an erroneous characterization of the Act. The submission is predicated on the proposition that the subject matter of the Act is inflation or the containment and reduction of inflation. Even accepting that inflation was the reason for the Act, inflation was not its subject matter. In order to characterize an enactment one must look at its operation, at its effects and their scale rather than at its ultimate purpose where that is practically all embracing. Parliament may fight infla­tion with the powers at its disposal but cannot, apart from a declaration of national emergency or from con­stitutional amendment, fight inflation with powers exclusively reserved to the provinces as it has attempted to do in enacting the Anti-Inflation Act. The recogni­tion of the containment and reduction of inflation as a Federal head of power would render most provincial powers nugatory.

The second submission was that the inflationary situa­tion was, in October of 1975 and thereafter, such as to constitute a national emergency. In practice the emer­gency doctrine operates as a partial and temporary alteration of the distribution of powers. It is not true to say that the national concern or national dimension doctrine and the national emergency doctrine amount to the same. The power of Parliament to make laws in a great crisis knows no limits other than those dictated by the nature of the crisis. But one of the limits is the temporary nature of the crisis. The extraordinary nature and the constitutional features of the emergency power of Parliament dictate the manner and form in which it should be invoked and exercised. In cases where the existence of an emergency may be a matter of contro­versy, it is imperative that Parliament should not have recourse to its emergency power except in the most explicit terms indicating that it is acting on the basis of that power; and while such an indication is not conclu­sive to support the legitimacy of the action of Parlia­ment, its absence is fatal. Otherwise it is the Courts which would indirectly be called upon to proclaim the state of emergency whereas it is essential that this be

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done by a politically responsible body. There is nothing in the Anti-Inflation Act or the Guidelines to show that they have been passed to deal with a national emergency and its lack of comprehensiveness may be indicative of its ordinary character. Parliament did not rely on its extraordinary power in enacting this legislation and it was not necessary to make a finding of fact from the consideration of extrinsic material on whether Parlia­ment was entitled to rely on that power. However if the Court was entitled to look at extrinsic material of the type suggested, a policy statement in the House of Commons, statistics, an economic study, a speech of the Governor of the Bank of Canada it was not improper to read Hansard, not to construe and apply the provisions of the Act, but to ascertain its constitutional pivot. Reliance on statements in Hansard, while not essential to the conclusions, reinforce the view that the Act was not enacted with specific reference to a national emer­gency or under the extraordinary power, because it was believed, erroneously, that Parliament had the ordinary power to enact it under the national concern or national dimension doctrine.

REFERENCE by the Governor in Council con­cerning the validity of the Anti-Inflation Act. Act held not to be ultra vires in whole or in part, Beetz and de Grandpré JJ. dissenting; Agreement with Government of Ontario held to be ineffective.

J. Robinette, Q.C., and T. B. Smith, Q.C., for the Attorney General of Canada.

Roy McMurtry, Q.C., D. W. Mundell, Q.C., and John Cavarzan, for the Attorney General of Ontario.

Roger Thibaudeau, Q.C., and Gerald Beaudoin, Q.C., for the Attorney General of Quebec.

D. H. Vickers, H. Smith, and R. Edwards, for the Attorney General of British Columbia.

Lysyk, Q.C., and D. G. Bogdasavich, for the Attorney General of Saskatchewan.

Ross Paisley, Q.C., and W. Henkel, Q.C., for the Attorney General of Alberta.

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Maurice W. Wright, Q.C., P. W. Hogg and L. Soloway, for the Canadian Labour Congress.

J. W. Garrow and P. Gilchrist, for the Ontario Teachers' Federation.

A. E. Golden, W. R. Lederman, Q.C., and Paul J. Cavaluzzo, for Renfrew County Division, Dis­trict 25 Ontario Secondary School Teachers' Fed­eration and Ontario Secondary School Teachers' Federation.

Ian Scott, Q.C., S. T. Goudge and C. G. Paliare, for the Ontario Public Service Employees' Union and the Canadian Union of Public Employees and Canadian Union of Public Employees, Local 1230.

Lorne Ingle, for the United Steel Workers of America.  

The judgment of Laskin C.J. and Judson, Spence and Dickson JJ. was delivered by

THE CHIEF JUSTICE—By order in Council P.C. 1976-581 dated March 11, 1976, the Governor General in Council invoked the authority con­ferred by s. 55 of the Supreme Court Act, R.S.C. 1970, c. S-19 and referred the following two ques­tions to this Court for its opinion:

1. Is the Anti-Inflation Act, Statutes of Canada 1974-75-76, Chapter 75 (a copy of which Act and the Anti-Inflation Guidelines made thereunder are attached hereto as Annex "A") ultra vires the Parliament of Canada either in whole or in part, and, if so, in what particular or particulars and to what extent?

2. If the Anti-Inflation Act is intra vires the Parlia­ment of Canada, is the Agreement entitled "Between the Government of Canada and the Gov­ernment of the Province of Ontario", entered into on January 13, 1976, (a copy of which is annexed hereto together with copies of the Orders of the Governor in Council and the Lieutenant Governor in Council as Annex "B") effective under the Anti-Inflation Act to render that Act binding on, and the Anti-Inflation Guidelines made thereunder appli­cable to, the provincial public sector in Ontario as defined in the Agreement.

Attached to the Order of Reference as annex A were a copy of the Anti-Inflation Act and a copy of the Anti-Inflation Guidelines made thereunder;

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and attached as annex B were a copy of the agreement involved in the second question and copies of orders of the Governor General in Coun­cil and of the Lieutenant Governor in Council approving the entry into the agreement by the Governments of Canada and of Ontario which are the respective parties thereto.. Nothing else appears in or is attached to the Order of Reference.

The Bill which became the Anti-Inflation Act was introduced into the House of Commons on October 16, 1975 (notice having been given on October 14), and was passed on December 15, 1975, but with effect to a degree from October 14, 1975. Its long title and preamble are as follows:

An Act to provide for the restraint of profit margins, prices, dividends and compensation in Canada

WHEREAS the Parliament of Canada recognizes that inflation in Canada at current levels is contrary to the interests of all Canadians and that the containment and reduction of inflation has become a matter of serious national concern;

AND WHEREAS to accomplish such containment and reduction of inflation it is necessary to restrain profit margins, prices, dividends and compensation;

Its scope is indicated in ss. 3 and 4. Sufficient indication of that scope for the purposes of this Reference is provided by quoting s. 3(1), (2) and s. 4 (1), (2), (3), (4). They are as follows:

3. (1) The Governor in Council may from time to time cause to be published and made known guidelines for the guidance of all Canadians in restraining profit margins, prices, dividends and compensation.

(2) The Governor in Council may, by regulation, establish guidelines for the restraint of

(a) prices and profit margins of

(i) public sector suppliers of commodities or services,

(ii) private sector suppliers of commodities or services who employ five hundred or more persons in Canada,

(iii) suppliers of services prescribed by the regula­tions to be professional services,

(iv) persons carrying on business in the construc­tion industry who employ twenty or more persons in Canada, and

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(v) private sector suppliers of commodities or services who are from time to time declared by order of the Governor in Council made on the recommen­dation of the Anti-Inflation Board pursuant to sub-section 12(2) after an inquiry as provided for by that subsection, to be of strategic importance to the containment and reduction of inflation in Canada;

(b) compensation of

(i) employees of suppliers and persons whose prices or profit margins are subject to restraint in accordance with guidelines established pursuant to any of subparagraphs (a)(i), (ii), (iv) or (y),

(ii) employees, who are members of a profession, of persons whose prices or profit margins are subject to restraint in accordance with guidelines estab­lished pursuant to subparagraphs (a)(iii), and

(iii) all public sector employees not described in subparagraph (i) including, without restricting the generality of the foregoing, all Ministers of the Crown, all members of the Senate or House of Commons of Canada and all other persons holding public offices; and

(e) dividends.

4. (1) This Act is binding on Her Majesty in right of Canada, agents of Her Majesty in right of Canada, the governments of the Yukon Territory and Northwest Territories and agents of those governments.

(2) Subject to subsection (3), this Act is not binding on

(a) Her Majesty in right of a province and agents of Her Majesty in right of a province;

(b) municipalities in a province and municipal or public bodies performing a function of government in a province;

(c) corporations, commissions and associations described in paragraph 149(1)(d) of the Income Tax Act that are owned or controlled by Her Majesty in right of a province or a municipality in a province; and

(d) such other bodies in a province as provide what are generally considered to be public services and as are from time to time prescribed by the regulations for the purposes of that province.

(3) The Minister may, with the approval of the Gov­ernor in Council, enter into an agreement with the government of a province providing for the application of this Act and the guidelines to

(a) Her Majesty in right of that province,

(b) agents of Her Majesty in that right,

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(c) bodies described in paragraphs (2)(b) and (c), and

(d) bodies prescribed by the regulations pursuant to paragraph (2)(d),

or any of such bodies, agents and Her Majesty in that right, and where any such agreement is entered into, this Act is binding in accordance with the terms of the agreement and the guidelines apply in accordance with the terms thereof with effect on and after the day on and after which the guidelines apply, by virtue of the opera­tion of this Act, with respect to Her Majesty in right of Canada.

(4) The Minister may, with the approval of the Gov­ernor in Council, enter into an agreement with the government of a province providing for the application to

(a) Her Majesty in right of that province,

(b) agents of Her Majesty in that right,

(c) bodies described in paragraphs (2)(b) and (c), and

(d) bodies prescribed by the regulations pursuant to paragraph (2)(d),

or any of such bodies, agents and Her Majesty in that right, of such of the guidelines made under subsection 3(2) as are applicable to public sector suppliers of commodities or services and public sector employees and their employers, and for the administration and enforcement of those guidelines in their application thereto in a manner provided for in the agreement or as determined by the government of the province.

Administration is confided to an Anti-Inflation Board, with enforcement powers vested in an Administrator from whose orders an appeal, if timely, may be taken to an Anti-Inflation Appeal Tribunal. Nothing, so far as the questions before this Court are concerned, turns on the character or powers of the agencies set up under the Act.

Section 46 of the Act fixes an immediate in force date and prescribes a termination date sub­ject to earlier termination under a prescribed procedure, and provides also for extension of its operation by order in council, but subject to the overall control of Parliament. The section reads as follows:

46. (1) This Act shall come into force on the day immediately following the day it is assented to,

(2) This Act expires on December 31, 1978, or on such earlier date as may be fixed by proclamation or a

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motion for the consideration of the House of Commons that is approved by the House pursuant to subsections (6) and (7) unless, before December 31, 1978 or any earlier date fixed by proclamation or any such motion for the consideration of the House that is so approved by the House, an Order in Council is made to the effect that this Act shall continue in force for such period of time as may be set out in the Order in Council.

(3) A motion for consideration of an Order in Coun­cil referred to in subsection (2) shall be laid before Parliament not later than three days after the Order is made or, if Parliament is not then sitting, within the first fifteen days next thereafter that Parliament is sitting, and each House shall, in accordance with the Rules of that House, take up and consider the motion, and all questions in connection with the motion taken up and considered by that House shall be debated without interruption and decided not later than the end of the third sitting day next after the day the motion is first so taken up and considered.

(4) If, at the conclusion of the consideration of an Order in Council pursuant to subsection (3), both Houses of Parliament do not resolve that the Order in Council be approved, it shall thereupon cease to have effect.

(5) Failure of either House or both Houses of Parlia­ment to resolve that an Order in Council referred to in subsection (2) be approved does not affect the validity of any action taken or not taken in reliance on the Order in Council prior to the conclusion of consideration thereof pursuant to subsection (3).

(6) Where, at any time after March 31, 1977 and before July 1, 1977, a motion for the consideration of the House of Commons, signed by not less than 50 members of the House, is filed with the Speaker to the effect that this Act shall expire on a date before Decem­ber 31, 1978 that is specified in the motion, the House of Commons shall, within the first fifteen days next after the motion is filed that the House is sitting, in accordance with the Rules of the House, take up and consider the motion, and if the motion, with or without amendments, is approved by the House, this Act expires on the date that is specified in the motion.

(7) All questions in connection with any motion taken up and considered by the House of Commons pursuant to subsection (6) shall be debated without interruption and decided not later than the end of the third sitting day next after the day the motion is first so taken up and considered.

The Act as supplemented by the Guidelines, which were promulgated on December 22, 1975

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and amended on February 3, 1976, establishes supervision, control and regulation of prices, profits, wages, salaries, fees and dividends by way of monitoring and limiting increases in order to combat inflation. Flexibility in administration is built into the Guidelines by making allowance for such matters as cost increases and productivity factors. The Guidelines are complex in their detail as well as in their language, and it is consoling that an elaboration of their terms is not a prerequisite to the determination of the answers to the two questions referred to this Court.

The agreement, the subject of the second ques­tion and made on January 13, 1976, between (according to its designation of parties) the Gov­ernment of Canada and the Government of the Province of Ontario, each represented by a respon­sible Minister, was entered into pursuant to s. 4(3) of the Anti-Inflation Act, rather than pursuant to s. 4(4) under which it would have been open to the Province to take over or agree on separate administration and enforcement. Entry into the agreement was authorized by an Order in Council of January 12, 1976, approved by the Lieutenant Governor of Ontario and by an order of January 13, 1976, of the Governor General in Council. The agreement provides that the Anti-Inflation Act and Guidelines shall apply to the provincial public sector, save that Part I of the Guidelines dealing with restraint of prices and profit margins should apply only to those portions of the provincial public sector set out in a Schedule. The provincial public sector is defined in s. 1(d) of the agreement as follows:

(d) "provincial public sector" means

(i) Her Majesty in right of the Province and agents of Her Majesty in right of the Province,

(ii) municipalities in the Province and municipal or public bodies performing a function of government in the Province,

(iii) corporations, commissions and associations described in paragraph 149(1)(d) of the Income Tax Act that are owned or controlled by Her Majesty in right of the Province or a municipality in the Province, and

(iv) such other bodies in the Province as provide what are generally considered to be public services

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and as are from time to time prescribed by the regulations made under section 39 of the federal act, and as are named in Schedule A to this agreement.

Provision is made for retroactive effect of the agreement from October 14, 1975, and also for termination, which may be coincident with the termination or expiration of the Anti-Inflation Act or may be effected unilaterally by either party by notice any time after January 15, 1977, termina­tion in such case to occur 90 days later.

Pursuant to an order made on March 18, 1976, upon an application by the Attorney General of Canada for directions, the Attorneys-General of British Columbia, Manitoba, Ontario and Sas­katchewan as well as the Attorney-General of Canada were given status as interested parties, as were the Canadian Labour Congress, the Ontario Teachers' Federation, the Renfrew County Divi­sion, District 25 Ontario Secondary School Teachers' Federation, the Ontario Public Service Employees' Union, the Canadian Union of Public Employees, and the Canadian Union of Public Employees, Local 1230. Subsequently, pursuant to the terms of a supplementary order of April 6, 1976, the Attorney-General of Alberta, the Attor­ney-General of Quebec and the United Steelworkers of America were added as interested parties. The Attorney-General of Manitoba later filed a notice of withdrawal. All the other parties afore-mentioned filed factums and were represented by counsel at the hearing.

The Attorney-General of Canada, having the carriage of the Reference, included in the Case (1) the Order of Reference and the Annexes thereto; (2) the federal Government's White Paper, entitled Attack on Inflation, being the policy statement of the Minister of Finance tabled in the House of Commons on October 14, 1975, as a prelude to the introduction of the bill, which became the Anti-Inflation Act, and to the Guidelines promulgated thereunder; and (3) the monthly bulletin of Statistics Canada for October 1975

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containing, inter alia, various consumer price indices showing the index positions for certain periods up to and including September, 1975. Leave was given in the order for directions of April 6,1976, to other interested parties to file additional materials, and the Canadian Labour Congress included as an appendix to its factum an untitled study by Professor Richard G. Lipsey, now a professor of economics at Queen's University, Kingston, Ontario, in which he dealt with (1) the harm caused by inflation, (2) Canadian inflation­ary experience, (3) the state of the Canadian economy in 1975 and (4) various policy options in dealing with inflation, among them a prices and incomes policy. Telegrams from a large number of economists supporting the analysis made by Professor Lipsey were also submitted by the Canadian Labour Congress. The Attorney-Gener­al of Canada, following the filing of Professor Lipsey's study and as permitted by the order for directions, filed in answer a transcript of a speech delivered on September 22, 1975, by the Governor of the Bank of Canada, Mr. Gerald Bouey. The Attorney-General of Ontario filed, after the per­mitted period for submitting answering material, a comment, prepared by the Ontario Office of Eco­nomic Policy, on the 1975 Economic Environment and the Anti-Inflation Program, designed to show the need for national action; and it also submitted a critique of Professor Lipsey's study, directed to the emphases of that study and to its interpretation of the historical context in which the federal anti-inflation programme was instituted.

All extrinsic materials filed in this Reference were subject to reserve by the Court as to their relevancy and as to their weight. They were addressed not to the construction of the terms of the Anti-Inflation Act but to its constitutional characterization, what was it directed to and was it founded on considerations which would support its validity under the legsilative power to which it was attributed. The material offered by the Attorney-General of Canada concerned the social and eco­nomic circumstances under which the Anti-Infla­tion Act was passed and the evils with which it purported to deal. The Canadian Labour Congress also related its material to the circumstances under

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which the Anti-Inflation Act was passed, but advanced that material as showing that the evils which prompted the Parliament of Canada to enact it did not provide a constitutional base for the legislation, especially when regard was had to its probable ineffectiveness to accomplish its alleged purpose. Arguments were addressed by parties contesting the validity of the Anti-Inflation Act that not only the extrinsic material but the terms of the Act as well disclosed that, far from dealing with a matter within exclusive federal competence, the Act invaded exclusive provincial legislative jurisdiction.

In order to assess how relevant and, if relevant, what weight should be assigned to the extrinsic material, it is necessary to examine the ambit of the legislative power under which the Anti-Infla­tion Act was enacted. It is my opinion that only in such a context can the Court be urged, whether through a doctrine of judicial notice or through an adaptation to constitutional purposes of the rules in Heydon's case, to consider extrinsic materials as bearing on the validity of challenged legislation. It may well be that in most situations it is unneces­sary to go beyond the terms of the impugned legislation to determine its validity. Yet, even where this has been deemed sufficient Courts have thought it proper to consider the operation and effect of the legislation as providing a key to its purpose, especially where the allegation is that the legislation has been cast in a colourable form. This was done by this Court in Reference re Alberta Legislation[1], and the Privy Council, on appeal, sub. nom. Attorney-General of Alberta v. Attor­ney-General of Canada[2], at p. 130, supported this approach. There, Lord Maugham speaking for the Judicial Committee, pointed out that a necessary step in a case of difficulty is to examine the effect of the legislation and "for that purpose the Court must take into account any public general knowl­edge of which the Court may take judicial notice, and may in a proper case require to be informed by evidence as to what the effect of the legislation will be".

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This Court supported such an approach to extrinsic evidence in Lower Mainland Dairy Prod­ucts Board v. Turner's Dairy Ltd.[3], at p. 583, where Taschereau J., as he then was, speaking for the majority of the Court said that "in certain cases, in order to avoid confusion extraneous evi­dence is required to facilitate the analysis of legis­lative enactments, and thus disclose their aims which otherwise would remain obscure or even completely concealed". The references by Lord Maugham to the admissibility of extrinsic evidence "in a proper case" and by Taschereau J. to admis­sibility of such evidence "in certain cases" support my view that no general principle of admissibility or inadmissibility can or ought to be propounded by this Court, and that the questions of resort to extrinsic evidence and what kind of extrinsic evi­dence may be admitted must depend on the consti­tutional issues on which it is sought to adduce such evidence.

This view is strengthened by the fact that this Court and the Privy Council have recognized that in some kinds of cases the effect of legislation has no bearing on its constitutional validity. Hence, extrinsic evidence as to its effect has no weight. Thus, in Attorney-General of Saskatchewan v. Attorney-General of Canada[4], the Privy Council, adopting a proposition of Rand J. in this Court in that case (see [1947] S.C.R. 394, at p. 413) said that "consequential effects are not the same thing as legislative subject matter. It is the 'true nature and character of the Legislation'—not its ultimate economic results—that matters", and cited Russell v. The Queen[5], at pp. 839-40 in support.

Taxing legislation provides, in my opinion, an apt illustration of the dangers of generalization so far as extrinsic material is concerned. Since the provincial taxing power is a limited one, namely a power to legislate in relation to "direct taxation within the Province in order to the raising of a revenue for provincial purposes", the operation and effect of what is in form provincial taxing

[Page 390]

legislation are relevant matters on which extrinsic evidence may be helpful to enable a Court to decide whether the legislation masks an imper­missible purpose or object. This was the view taken in the Alberta Bank Taxation case above-mentioned. On the other hand, this Court in its judg­ment in Texada Mines Ltd. v. Attorney-General of British Columbia[6], held, when concluding that certain provincial taxing legislation was invalid as imposing an export tax upon iron ore mined in the Province, that extrinsic evidence in the form of ministerial statements would not have been admis­sible, even if proved to have been made, to show that the legislation was ultra vires. The Court was able to come to that conclusion without the aid of such evidence. Another illustration, also in respect of provincial taxing legislation, where certain eco­nomic evidence was held by the majority of the Saskatchewan Court of Appeal to be inadmissible, is Cairns Construction Ltd. v. Government of Saskatchewan[7], affirmed on the merits by this Court. Culliton J.A., as he then was, noted that a legal test had been adopted of the meaning of a direct tax, which was not subject to variation by economic criteria applicable to the incidence of the tax in particular cases. Again, it was his view there that oral evidence relating to the method of administration of the Act was of no relevance on the issue of its constitutionality.

Where an exercise of the federal taxing power is challenged, there will, understandably, be even greater reluctance of a Court to admit extrinsic evidence to impugn the legislation because the federal taxing power is plenary. The Parliament of Canada is authorized to raise money "by any mode or system of taxation", and it would be an unusual case where this power, so apparently limit-Less, could be challenged as colourably used and thus make it appropriate for the Court to consider extrinsic material to show colourability. Thus, in Attorney-General of Canada v. Reader's Digest Association (Canada) Ltd.[8], this Court rejected a tender of extrinsic evidence in the form of the budget speech of the Minister of Finance and oral

[Page 391]

evidence touching it where such evidence was offered in support of a contention that certain federal taxing legislation was an encroachment on provincial legislative authority.

That was a different kind of case than Reference re Employment and Social Insurance Act[9], where the federal legislation combined a scheme of exac­tions with a scheme of disbursement which, in the view of the majority of this Court and of the Privy Council at that time, resulted in unconstitutional regulation. I would not exclude in a situation of this kind a proffer of extrinsic material, at least as relating to the circumstances under which the legislation was enacted, in order to assist the Court to decide whether it fell within the legislative authority upon which it purported to be founded. However, its relevancy and weight would, as I have already indicated, depend on whether it bore any relation to the ambit of the legislative author­ity relied on.

The present case is likewise one in which federal legislation is challenged as involving unconstitu­tional regulation, and I am of the opinion that extrinsic material, bearing on the circumstances in which the legislation was passed, may be con­sidered by the Court in determining whether the legislation rests on a valid constitutional base. There is no issue in this case as to the meaning of the terms of the legislation nor, in my opinion, is there any issue as to the object of the legislation. As will appear from what follows, the arguments of the proponents and the opponents of the Anti-Inflation Act turn substantially on whether the social and economic circumstances upon which Parliament can be said to have proceeded in pass­ing the Act were such as to provide support for the Act in the power of Parliament to legislate for the peace, order and good government of Canada. The extrinsic material proffered in this case was directed to this question and may, hence, be properly considered thereon.

—II—

I turn, therefore, for the purposes of the present case and in order to answer the first question

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referred to this Court, to an examination of the constitutional basis for the Anti-Inflation Act and its implementing Guidelines put forward by the Attorney-General of Canada, who was fully supported in his submissions by the Attorney-General of Ontario. Simply put, the Anti-Inflation Act is supported by the Attorney-General of Canada under the opening words of s. 91 of the British North America Act, as being a law for the peace, order and good government of Canada in relation to matters not coming within the classes of sub­jects assigned exclusively to the Legislatures of the Provinces. There are two prongs to this assertion, and they relate to two lines of judicial decision which have both given substance and placed limi­tations on the so-called general power of Parlia­ment. Fully spelled out, this general power, which is operative outside of the powers assigned to the provincial Legislatures, is also fed by a catalogue of exclusive enumerated federal powers which are declared to be paramount to and thus diminish the scope of provincial legislative authority. Among the federal enumerated powers that are material here are the powers in relation to the regulation of trade and commerce, in relation to currency and coinage, in relation to banking and the issue of paper money, in relation to interest, in relation to the raising of money by any mode or system of taxation and in relation to the borrowing of money on the public credit, i.e., of Canada.

Although it is conceded that the Parliament of Canada could validly legislate as it has done if it had limited the legislation to the federal public service and to enterprises or undertakings which are within exclusive federal legislative authority, such as interprovincial transportation and com­munication services, radio operations, aerial navi­gation, atomic energy enterprises, banks and works declared to be for the general advantage of Canada, the Anti-Inflation Act embraces sectors of industry and of services, including employers and employees therein, which are admittedly sub­ject in respect of their intraprovincial operation to provincial regulatory authority. I take it as undeni­able that it would have been open to each Province to impose price and wage restraints in those sectors, to the extent to which there was no invasion

[Page 393]

of federal powers such as that in relation to the regulation of trade and commerce. It is equally undeniable that each Province could have validly dealt with restraint of salaries and wages of persons in its public service. It is part of the submis­sion of the Attorney-General of Canada that Par­liament could have brought the members of the provincial public service under the Anti-Inflation Act and Guidelines without permitting Provinces to "contract in" under s. 4(3). and (4), and that the validity of the Act is not affected by their express exclusion from its coverage subject to inclusion under an agreement as prescribed by s. 4(3) or (4).

An argument on the inseverability of the Anti-Inflation Act, so far as concerned limiting it to matters concededly within federal authority, was raised by counsel for the Canadian Labour Con­gress; and an argument that s. 4(3) of the Act was ultra vires and severable even if the remainder of the Act was valid (which was, of course, contested) was made by counsel for the Renfrew County Division, District 25 Ontario Secondary School Teachers' Federation and the Ontario Secondary School Teachers' Federation. I find it unnecessary to deal with either of these submissions. As to the first of them, the Attorney-General of Canada made no submissions in support of severability and, indeed, his case is founded squarely on the validity of the Act in all its comprehensiveness. As to the second submission, this Court did not require a reply to it by the Attorney-General of Canada, being of the unanimous opinion that the position of the provincial public sector under s. 4(3) (and apart, of course, from the issue of its construction relative to the second question referred to this Court) did not differ for constitu­tional purposes from the position of the provincial private sector, and that, therefore, the Act in that respect could not be and need not be sundered. There was, however, an argument made by various of the provincial Attorneys-General who contested the validity of the Act, and by other parties in opposition thereto, based not only on s. 4(3) but as

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well on s. 4(2) (which, subject to s. 4(3) excluded the Act from any application to the provincial public sector) and on s. 5 ( authorizing an agreement with the government of any Province for facilitating cooperation with respect to the administration and enforcement of the Guidelines in the Province in such manner as is provided for under the agreement or by or under any law of the Province) directed to showing that the Act and Guidelines could not be justified as being for the peace, order and good government of Canada under any view of that legislative authority. I shall return to this argument, an important one, later in these reasons.

In founding himself upon the federal general power to make laws for the peace, order and good government of Canada, the Attorney-General in his primary submission takes its scope to be that expounded by Viscount Simon in Attorney-Gener­al of Ontario v. Canada Temperance Federation[10]. That case was a re-run, at a distance of more than sixty years, of the very issue brought before the Privy Council in Russell v. The Queen[11], the issue being the validity of the Canada Temperance Act enacted by the Parliament of Canada as a prohibi­tory statute with local option provisions. In the interval between the two decisions, a variance from the generalized scope of the peace, order and good government power as expounded in the Russell case developed through the judgments of Viscount Haldane speaking for the Privy Council In re Board of Commerce Act[12], Fort Frances Pulp & Power Co. Ltd. v. Manitoba Free Press Co. Ltd.[13] and Toronto Electric Commissioners v. Snider[14]. His views in these three cases were subsequently repeated by Lord Wright in Co-operative Com­mittee on Japanese Canadians v. Attorney-Gener­al of Canada[15], who relied there, with a modifica­tion, on the Fort Frances case and ignored completely the Canada Temperance Federation

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decision delivered by Viscount Simon earlier in the same year, 1946.

There is this to be said about the Fort Frances case and the Japanese Canadians case. Both involved federal legislation in the aftermath or near aftermath of war—a statute in the first men­tioned case and orders in council in the second—and the legislation was sustained in each of the two cases on the footing that federal power to deal with the emergency of war was implicit in the British North America Act, giving a special cast to its authority to legislate for the peace, order and good government of Canada, and immediate post-war conditions could also be embraced in this legisla­tive authority. Another illustration of this kind of valid winding-down legislation is provided by the judgment of this Court in Reference re Wartime Leasehold Regulations[16], where both the Fort Frances case and the Japanese Canadians case were cited as providing sufficient support to sustain the federal enactments.

There is another observation I would like to offer on the Canada Temperance Federation case and the Japanese Canadians case. Viscount Simon presided in the Privy Council in both cases and, in fact, was the only member who sat in both cases. With him in the Canada Temperance Federation case were Lords Thankerton, Roche, Greene and Goddard; with him in the Japanese Canadians case were Lords Wright, Porter and Uthwatt and Sir Lyman Duff, retired Chief Justice of Canada. It is hardly likely that Viscount Simon had forgotten in the Japanese Canadians case what he had written eleven months earlier. No recorded dis­sents in the Privy Council were then allowed, and it was not Viscount Simon who delivered the reasons of the Privy Council but Lord Wright. Sir Lyman Duff had delivered his own locus classicus (it was so designated by the Privy Council in the

[Page 396]

Labour Conventions[17] case, on the peace, order and good government power in his reasons in Reference re Natural Products Marketing Act[18], at p. 418, but it was completely ignored in the Canada Temperance Federation case just as the propositions in this latter case were ignored in the Japanese Canadians case.

It is evident to me that the commanding con­siderations in the Canada Temperance Federation case, in the Japanese Canadians case and in its forerunner, the Fort Frances case were the par­ticular legislation with which the Court had to deal and the circumstances in which that legisla­tion came under judicial scrutiny. Each of the cases had antecedents, the Russell case and the Board of Commerce case, and I wish to consider what they had to say and the context in which they spoke about the peace, order and good government power. It is well to point out here that there is another strand in the weave of Privy Council decisions on the peace, order and good government power which must be considered in any overall assessment of the scope of that power and that is the Local Prohibition case, Attorney-General of Ontario v. Attorney-General of Canada[19].

The basis upon which the Privy Council in the Russell case sustained the Canada Temperance Act as being legislation for the peace, order and good government of Canada is disclosed by the following excerpts from its reasons. Thus, "the declared object of Parliament in passing the Act is that there should be uniform legislation in all the Provinces respecting the traffic in intoxicating liq­uors with a view to promote temperance in the Dominion" (at p. 841). Again, "what Parliament is dealing with in legislation of this kind is not a matter in relation to property and its rights but one relating to public order and safety. That is the primary matter dealt with ..." (at p. 838). Again, "laws of this nature designed for the promotion of public order, safety or morals, and which subject those who contravene them to criminal procedure

[Page 397]

and punishment belong to the subject of public wrongs rather than to that of civil rights. They are of a nature which fall within the general authority of Parliament to make laws for the peace, order and good government of Canada, and have direct relation to criminal law, which is one of the enumerated classes of subjects assigned exclusively to the Parliament of Canada" (at p. 839). Further, "Parliament deals with the subject as one of gener­al concern to the Dominion, upon which uniformi­ty of legislation is desirable, and the Parliament alone can so deal with it. There is no ground or pretence for saying that the evil or vice struck at by the Act in question is local or exists only in one province, and that Parliament, under colour of general legislation, is dealing with a provincial matter only ... The present legislation is clearly meant to apply a remedy to an evil which is assumed to exist throughout the Dominion ... In statutes of this kind [with local option] the legisla­tion is general and the provision for the special application of it to particular places does not alter its character" (at pp. 841-2).

The reasons manifest deference to Parliament's judgment that there was an evil of nationwide proportions to which it was entitled to address general legislation to effect a cure. There is noth­ing in the reasons to suggest that the probable effectiveness or ineffectiveness of the chosen remedy had anything to do with the validity of the legislation. It does not appear, however, that any extrinsic evidence was adduced beyond the history of the legislation and references to provincial liquor licensing legislation. The Russell case was decided in an era when extrinsic evidence was narrowly received and when the Privy Council viewed the British North America Act as an ordi­nary statute to be construed on the same basis as other statutes: see Bank of Toronto v. Lambe[20], at p. 579. This may explain the reluctance to inter­fere with the Parliamentary judgment as to the

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generality of the evil, especially at so early a period in the judicial interpretation of the British North America Act; but it by no means meant that Parliament's assessment of circumstances calling for the exercise of its general power was immune from judicial review.

It is, I think, a material factor in the decision in the Russell case that the challenged legislation had some base in one of the federal enumerated powers, namely, criminal law, which gave it some fixity as being within federal competence. I observe, too, that Russell v. The Queen was an invitation to the Privy Council to review the deci­sion of this Court on the same Act, given in Fredericton v. The Queen[21], where it was sustained as a measure in relation to the regulation of trade and commerce, and that the Privy Council said that they were not to be taken to be dissenting from the view of this Court by reason of not finding it necessary to consider whether the Canada Temperance Act fell within a federal enumerated power. Although the Supreme Court gave its judgment in Fredericton before the Privy Council decided the Parsons[22] case, the Privy Council's view as to the trade and commerce basis of the Canada Temperance Act came after it had examined the trade and commerce power in Parsons.

The Privy Council in the Local Prohibition case accepted Russell v. The Queen as authoritatively determining that the Canada Temperance Act was valid legislation for the peace, order and good government of Canada, but by reason of the prohibitory character of that Act it was of the opinion that it could not have been sustained as being in relation to the regulation of trade and commerce. It may be doubted that this is today a valid distinction but it is unnecessary to pursue that question here. What does emerge from the Local Prohibition case are certain standards for the invocation of the federal general power which,

[Page 399]

from one point of view, tighten but do not alter the grounds upon which the Russell case was decided and, from another point of view, establish a point of departure which, ultimately, through the judg­ments of Viscount Haldane in the Board of Com­merce, Fort Frances and Snider cases, narrowed its scope considerably. The two views of the stand­ards relate, of course, to the breadth of judgment which the Courts would be called upon to exercise when legislation was supported or challenged as being validly enacted under the general power.

There are two passages in the reasons of Lord Watson in the Local Prohibition case which are relevant here, and in quoting them I do so without enlarging on Lord Watson's overall approach to the heads of legislative power in the British North America Act. The first passage is as follows (at p. 360):

... the exercise of legislative power by the Parliament of Canada, in regard to all matters not enumerated in s. 91, ought to be strictly confined to such matters as are unquestionably of Canadian interest and importance, and ought not to trench upon provincial legislation with respect to any of the classes of subjects enumerated in s. 92. To attach any other construction to the general power which, in supplement of its enumerated powers, is conferred upon the Parliament of Canada by s. 91, would, in their Lordship's opinion, not only be contrary to the intendment of the Act, but would practically destroy the autonomy of the provinces. If it were once conceded that the Parliament of Canada has authority to make laws applicable to the whole Dominion, in relation to matters which in each province are substan­tially of local or private interest, upon the assumption that these matters also concern the peace, order, and good government of the Dominion, there is hardly a subject enumerated in s. 92 upon which it might not legislate, to the exclusion of the provincial legislatures.

The second passage is in these words (at p. 361):

... Their Lordships do not doubt that some matters, in their origin local and provincial, might attain such dimensions as to affect the body politic of the Dominion, and to justify the Canadian Parliament in passing laws for their regulation or abolition in the interest of the Dominion. But great caution must be observed in distin­guishing between that which is local and provincial, and therefore within the jurisdiction of the provincial legisla­tures, and that which has ceased to be merely local or

[Page 400]

provincial, and has become matter of national concern, in such sense as to bring it within the jurisdiction of the Parliament of Canada... .

These words, spoken in the course of a case, a Reference, which concerned the validity of provin­cial legislation and questions touching provincial legislative power, were taken up by the Supreme Court of Canada and by the Privy Council in later cases. Duff J., as he then was, indicated in his reasons in In re Companies[23], at p. 431, that as a result of the Local Prohibition case and of the Manitoba Licence Holders' case[24], it was not pos­sible to hold that the Parliament of Canada could validly invoke its general power to enact uniform legislation for the whole of Canada when it related to matters which if dealt with by a single Province would fall within the catalogue of provincial powers in heads 1 to 15 of s. 92 of the British North America Act. I agree, of course, that the mere desire for uniformity cannot be a support for an exercise of the federal general power. Uniformi­ty is almost invariably involved in federal legisla­tion but the Russell case was not founded on that alone. This was recognized when this Court and the Privy Council considered the Board of Com­merce case which, like the Russell case, involved federal peace-time legislation not of a temporary character.

The legislation, the Combines and Fair Prices Act, 1919, in addition to providing for the investi­gation and restriction of combines and monopolies, authorized the Board of Commerce, established under the Board of Commerce Act, 1919, to enquire into and to restrain or prohibit (1) the making of unfair profits for or upon the holding or disposition of necessaries of life; and (2) all prac­tices with respect to the holding or disposition of necessaries of life as, in the opinion of the Board, are designed or calculated unfairly to enhance the cost or price of such necessaries of life. "Necessar­ies of life" were defined by the Combines and Fair Prices Act to mean articles of food and clothing,

[Page 401]

fuel and such other articles as may be prescribed by the Board by special regulation. The Act pro­hibited unreasonable accumulation or withholding of necessaries of life, and required that any surplus of such necessaries be offered for sale at reasonable and fair prices. The powers vested in the Board were in support of these provisions. In brief, the legislation was directed to prevent undue hoarding and profiteering in food, clothing and fuel, and to require that such articles be made available at fair prices. Its drastic character is obvious and, as already indicated, it was not tem­porary legislation.

The question of the validity of the legislation arose upon a stated case, as provided by the Board of Commerce Act, respecting a proposed order of the Board to restrain clothing merchants in the City of Ottawa from making unfair profits and from unfairly enhancing their prices by their mark-up methods. A good deal of the argument of the case, both before the Supreme Court and in the Privy Council, concerned contentions based upon the trade and commerce power and upon the criminal law power. Reliance was placed upon these powers as well as upon the federal general power. In the present case, there was no submis­sion by the Attorney-General of Canada that the Anti-Inflation Act was supportable on any other basis than upon the general power. I refer to the reasons in the Board of Commerce case only with respect to that contention, although it is obvious from those reasons that the other contentions had a bearing on the disposition of the submission on the general power.

The Supreme Court divided evenly on the validi­ty of the Combines and Fair Prices Act, and the reasons of Anglin J. who supported the legislation (speaking also for Sir Louis Davies C.J.C. and for Mignault J.) and the reasons of Duff J., who found it invalid, expose the relevant considerations on each side of the issue: see (1920), 60 S.C.R. 456.

Anglin J. assessed the challenged legislation as follows (at p. 467):

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Effective control and regulation of prices so as to meet and overcome in any one province what is general­ly recognized to be an evil—"profiteering"—an evil so prevalent and so insidious that in the opinion of many persons it threatens today the moral and social well-being of the Dominion—may thus necessitate investiga­tions, inquiry and control in other provinces. It may be necessary to deal with the prices and the profits of the growers or other producers of raw material, the manu­facturers, the middlemen and the retailers. No one provincial legislature could legislate so as to cope effec­tively with such a matter and concurrent legislation of all the provinces interested is fraught with so many difficulties in its enactment and in its administration and enforcement that to deal with the situation at all adequately by that means is, in my opinion, quite impracticable.

Viewed in this light it would seem that the impugned statutory provisions may be supported, without bringing them under any of the enumerative heads of s. 91, as laws made for the peace, order and good government of Canada in relation to matters not coming within any of the classes of subjects assigned exclusively to the legisla­tures of the provinces, since, in so far as they deal with property and civil rights, they do so in an aspect which is not "from a provincial point of view local or private" and therefore not exclusively under provincial control.

He found support for his assessment not only in the Russell case but in the Local Prohibition case as well, and then went on in the following vein (at pp. 470-1):

It may be said that if the subject matter of the Domin­ion legislation here in question, when its true aspect and real purpose are considered, relates to public order, safety or morals, affects the body politic of the Domin­ion and is a matter of national concern, so that it can be supported under the general peace, order and good government provision of s. 91 without recourse to any of the enumerated heads, it is unnecessary and inadvisable to attempt to bring it under head No. 2 ... [However], I think it is better that legislation such as that with which we are now dealing, which undoubtedly affects what would ordinarily be subject matters of provincial jurisdiction, should, if possible, be ascribed to one of the enumerated heads of s. 91. I prefer, therefore, to rest my opinion upholding its constitutional validity on the power of the Dominion Parliament to legislate for "the Regulation of Trade and Commerce" as well as on its power to make laws for the peace, order and good government of Canada in regard to matters which,

[Page 403]

though not referable to any of the enumerated heads of s. 91, should, having regard to the aspect in which and the purpose for which they are dealt with, properly be held not to fall within any of the enumerated heads of s. 92-to "lie outside all the subject matters" thereby "entrusted to the province".

Duff J. was initially concerned in his reasons with the submissions on the federal trade and commerce power, and it was only after rejecting it as a valid support for the legislation that he turned to the general power. He approached this issue on the following basis (at p. 506):

Two conditions govern the legitimate exercise of this power. First—it is essential that the matter dealt with shall be one of unquestioned Canadian interest and importance as distinguished from matters merely local in one of the provinces; and, secondly, that the legisla­tion shall not trench upon the authority of the province in respect of the matters enumerated in section 92.

This suggests that the federal general power is residuary in a limited sense and it casts doubt on what Lord Watson said in the Local Prohibition case. Duff J. did not think that Russell v. The Queen provided any principle applicable to the case before him, pointing out that the Provinces were not represented there and that it was largely an unargued case because of an admission that if there had been no local option provisions the legis­lation as immediately applicable throughout Canada would have been valid. Further, it was his view that subsequent cases on liquor legislation in the Privy Council, especially the Manitoba Licence Holders' case, supra, justified the view that the Russell case was supportable under the general power because provincial liquor legislation had been attributed to s. 92(16) ("matters of a local or private nature in the Province"), and that the result might have been different if s. 92(13) ("property and civil rights in the Province") had been the source of provincial authority on that subject. Thus, he asserted (at p. 508):

[Page 404]

There is no case of which I am aware in which a Dominion statute not referable to one of the classes of legislation included in the enumerated heads of sec. 91 and being of such a character that from a provincial point of view, it should be considered legislation dealing with "property and civil rights", has been held com­petent to the Dominion under the introductory clause;

It is fairly clear from a canvass of the case law since the decision in the Russell case that the foregoing statement proceeds from the view expressed by Viscount Haldane in the Insurance Reference case, Attorney-General of Canada v. Attorney-General of Alberta[25], where he said this:

There is only one case, outside the heads enumerated in s. 91, in which the Dominion Parliament can legislate effectively as regards a province, and that is when the subject matter lies outside all the subject matters enu­meratively entrusted to the province under sect. 92. Russell v. the Queen is an instance of such a case.

Beyond the formulary considerations, demanded by the obligation of obedience to Privy Council decisions, Duff J. expressed concerns which were reflected in the submissions in the present case by those opposing the Anti-Inflation Act. He spoke as follows:

... The scarcity of necessaries of life, the high cost of them, the evils of excessive profit taking, are matters affecting nearly every individual in the community and affecting the inhabitants of every locality and every province collectively as well as the Dominion as a whole. The legislative remedy attempted by section 18 is one of many remedies which might be suggested. One could conceive, for example, a proposal that there should be a general restriction of credits, and that the business of money lending should be regulated by a commission appointed by the Dominion Government with powers conferred by Parliament. Measures to increase produc­tion might conceivably be proposed and to that end nationalization of certain industries and even compulso­ry allotment of labour. In truth if this legislation can be sustained under the residuary clause, it is not easy to put a limit to the extent to which Parliament through the instrumentality of commissions (having a large discre­tion in assigning the limits of their own jurisdiction, see sec. 16), may from time to time in the vicissitudes of

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national trade, times of high prices, times of stagnation and low prices and so on, supersede the authority of the provincial legislatures. I am not convinced that it is a proper application of the reasoning to be found in the judgments on the subject of the drink legislation, to draw from it conclusions which would justify Parliament in any conceivable circumstance forcing upon a province a system of nationalization of industry.

No question of nationalization of industry was involved in the Board of Commerce case, but the apprehension of Duff J. posed a recurring ques­tion, one ultimately for this Court as the guardian of constitutional integrity, of reconciling federal-provincial legislative authority without at the same time seeking to control legislative policy which, under a doctrine of parliamentary supremacy within the limits of legislative power, is a matter solely for Parliament or the Legislatures of the Provinces. Nationalization or near nationalization has been exhibited in provincial legislation as well as in federal legislation since Duff J. wrote his reasons in the Board of Commerce case.

When that case came to the Privy Council a new formulation of the scope of the general power emerged, one which qualified the view taken by Anglin J. but which conceded possible resort to it beyond the rigid formulation suggested by Duff J. The following passage from the reasons of Viscount Haldane elaborates the new doctrine:

The first question to be answered is whether the Dominion Parliament could validly enact such a law. Their Lordships observe that the law is not one enacted to meet special conditions in wartime. It was passed in 1919, after peace had been declared, and it is not confined to any temporary purpose, but is to continue without limit in time, and to apply throughout Canada. No doubt the initial words of s. 91 of the British North America Act confer on the Parliament of Canada power to deal with subjects which concern the Dominion gener­ally, provided that they are not withheld from the powers of that Parliament to legislate, by any of the express heads in s. 92, untrammelled by the enumeration of special heads in s. 91. It may well be that the subjects of undue combination and hoarding are matters in which the Dominion has a great practical interest. In

[Page 406]

special circumstances, such as those of a great war, such an interest might conceivably become of such paramount and overriding importance as to amount to what lies outside the heads in s. 92, and is not covered by them. The decision in Russell v. The Queen ((1882), 7 App. Cas. 829) appears to recognize this as constitutionally possible, even in time of peace; but it is quite another matter to say that under normal circumstances general Canadian policy can justify interference, on such a scale as the statutes in controversy involve, with the property and civil rights of the inhabitants of the Provinces. It is to the Legislatures of the Provinces that the regulation and restriction of their civil rights have in general been exclusively confided, and as to these the Provincial Legislatures possess quasi-sovereign author­ity. It can, therefore, be only under necessity in highly exceptional circumstances, such as cannot be assumed to exist in the present case, that the liberty of the inhabi­tants of the Provinces may be restricted by the Parlia­ment of Canada, and that the Dominion can intervene in the interests of Canada as a whole in questions such as the present one. For, normally, the subject-matter to be dealt with in the case would be one falling within s. 92. Nor do the words in s. 91, the "Regulation of trade and commerce", if taken by themselves, assist the present Dominion contention. It may well be, if the Parliament of Canada had, by reason of an altogether exceptional situation, capacity to interfere, that these words would apply so as to enable that Parliament to oust the exclu­sive character of the Provincial powers under s. 92.

Nowhere in his reasons does Viscount Haldane refer expressly to the Local Prohibition case and to Lord Watson's view of the general power. There is perhaps an indirect reference in the statement that, in special circumstances, a matter in which there is federal interest may rise above the matters in s. 92 and so justify resort to the general power in peace time, as in the case of Russell v. The Queen. Generally, however, his exposition of the general power is that of being available only in abnormal or exceptional circumstances when it is not capable of a purely residuary application outside of the heads of s. 92 and the enumerations in s. 91. No such residuary application was possible in the Board of Commerce case under Viscount

[Page 407]

Haldane's doctrine, and there were no such abnor­mal or exceptional circumstances as to make it applicable in peace time as permanent legislation. Whereas in the Russell case the Privy Council referred to "an evil which is assumed to exist throughout the Dominion" (presumably by Par­liament, and there was no countering submission in view of the admission above referred to that the Canada Temperance Act would have been valid if made imperative without local option), in the Board of Commerce case the Privy Council referred to "necessity in highly exceptional cir­cumstances such as cannot be assumed to exist in the present case". In my view (and I am fortified in it by what Viscount Haldane said on the ques­tion of evidence in the Fort Frances case, decided less than two years later), nothing said in the Board of Commerce case precluded the tender of extrinsic material, addressed, of course, to the standard of abnormal or exceptional circumstances which the Privy Council in that case felt had to be shown if the Parliament of Canada sought support for legislation under the general power, otherwise than in respect of its purely residuary character.

The Fort Frances case satisfied the standards prescribed in the Board of Commerce case because it involved a scheme of controls which had been established in respect of newsprint as a wartime measure and although the statute immediately at issue was enacted after the cessation of hostilities, it provided for the continuation of the controls until the proclamation of peace, being thus of temporary duration. There was no need of extrin­sic evidence to show exceptional circumstances where war was concerned; the Court could take judicial notice of that.

The Fort Frances case is the first of the Privy Council cases in which the word "emergency" is used. Related to war, the Privy Council had no doubt that it gave a new aspect to the business of government, rising above anything in the provin­cial catalogue of powers. Here then was a particu­lar application of what Lord Watson said in the Local Prohibition case; and it should be recalled that Lord Watson did not limit the possibility of

[Page 408]

matters attaining national dimensions (appropriate for federal legislation under the general power) to the emergency of war. But in terms of such a state of affairs, the Privy Council in the Fort Frances case, was not disposed to question very closely the judgment of Parliament as to the measures neces­sary to deal with it. In its words, "exceptional necessity ... must be taken to have existed when the war broke out", and, as to the interests of the Dominion generally which required protection, "the Dominion Government which in its Parlia­ment represents the people as a whole must be left with considerable freedom to judge" (at p. 705).

The Fort Frances case is curious in an important respect because the reasons appear to suggest that in time of war there is a power implicit in the Constitution which, irrespective of what is in ss. 91 and 92, endows the Parliament of Canada with extraordinary authority to protect the general in­terest. I find it difficult to accept this as a tenable proposition in the face of a line of cases both in the Privy Council and in this Court which, subject to certain exceptions not material either to the Fort Frances case or to the present case, hold that the British North America Act exhausts the whole range of legislative power: see, for example, Murphy v. C.P.R. and Attorney-General of Canada[26], at p. 643.

I prefer to regard the reference to the superven­ing federal power as engaging the authority of Parliament to legislate for the peace, order and good government of Canada.

What had to be determined in the Fort Frances case was whether the deference to governmental and Parliamentary judgment at the outbreak of war continued at the termination of the war. As to this, Viscount Haldane had the following to offer:

... It may be that it has become clear that the crisis which arose is wholly at an end and that there is no justification for the continued exercise of an exceptional interference which becomes ultra vires when it is no

[Page 409]

longer called for. In such a case the law as laid down for distribution of powers in the ruling instrument would have to be invoked. But very clear evidence that the crisis has wholly passed away would be required to justify the judiciary, even when the question raised was one of ultra vires which it had to decide, in overruling the decision of the Government that exceptional meas­ures were still requisite... .

When then, in the present instance, can it be said that the necessity altogether ceased for maintaining the exceptional measure of control over the newspaper print industry introduced while the war was at its height? At what date did the disturbed state of Canada which the war had produced so entirely pass away that the legisla­tive measures relied on in the present case became ultra vires? It is enough to say that there is no clear and unmistakable evidence that the Government was in error in thinking that the necessity was still in existence at the dates on which the action in question was taken by the Paper Control Tribunal

Their Lordships find themselves unable to say that the Dominion Government had no good reason for thus temporarily continuing the paper control after actual war had ceased, but while the effects of war conditions might still be operative. They are, therefore, unable to accept the propositions submitted to them in the power­ful argument for the appellants... .

I think it useful to bring into account here what Lord Wright said on the matter of evidence in the Japanese Canadians case which, like the Fort Frances case, involved war and immediate post-war legislation of a transitional nature, but also raised other points, by reason of the character of the legislation, that were not present in the Fort Frances case. The following paragraph of the reasons of Lord Wright is consistent with the view taken of postwar emergency conditions in the Fort Frances case; he said (at p. 108):

... The preamble to the Transitional Act states clear­ly the view of the Parliament of the Dominion as to the necessity of imposing the powers which were exercised. The argument under consideration invites their Lordships, on speculative grounds alone, to overrule either the considered decision of Parliament to confer the powers or the decision of the Governor in Council to

[Page 410]

exercise them. So to do would be contrary to the princi­ples laid down in Fort Frances Pulp & Power Co. v. Manitoba Free Press Co. and accepted by their Lordships earlier in this opinion.

There is, however, another passage in Lord Wright's reasons which does not limit the emer­gency aspect of the federal power to war alone; and in it Lord Wright also departs from the Fort Frances case in indicating that evidence must be adduced to counter the assertion that an emergen­cy has arisen no less than to show that it no longer exists. This is what he said (at p. 101):

... On certain general matters of principle there is not, since the decision in Fort Frances Pulp & Power Co. v. Manitoba Free Press Co., any room for dispute. Under the British North America Act property and civil rights in the several Provinces are committed to the Provincial legislature, but the Parliament of the Domin­ion in a sufficiently great emergency, such as that arising out of war, has power to deal adequately with that emergency for the safety of the Dominion as a whole. The interests of the Dominion are to be protected and it rests with the Parliament of the Dominion to protect them. What those interests are the Parliament of the Dominion must be left with considerable freedom to judge. Again, if it be clear that an emergency has not arisen, or no longer exists, there can be no justification for the exercise or continued exercise of the exceptional powers. The rule of law as to the distribution of powers between the Parliaments of the Dominion and the Par­liaments of the Provinces comes into play. But very clear evidence that an emergency has not arisen, or that the emergency no longer exists, is required to justify the judiciary, even though the question is one of ultra vires, .n overruling the decision of the Parliament of the Dominion that exceptional measures were required or were still required. To this may be added as a corollary that it is not pertinent to the judiciary to consider the wisdom or the propriety of the particular policy which is embodied in the emergency legislation. Determination of the policy to be followed is exclusively a matter for the Parliament of the Dominion and those to whom it has delegated its powers. Lastly, it should be observed that the judiciary are not concerned when considering a question of ultra vires with the question whether the executive will in fact be able to carry into effective operation the emergency provisions which the Parlia­ment of the Dominion either directly or indirectly has made....

[Page 411]

This Court gave effect to the Fort Frances case and to the Japanese Canadians case in Reference re Validity of the Wartime Leasehold Regu­lations[27] which, like them, involved transitional wartime legislation.

Toronto Electric Commissioners v. Snider, which invalidated the federal Industrial Disputes Investigation Act of 1907, which was not limited to industries which as such were subject to federal regulation, is as notorious for what it had to say about an assumed foundation for the decision in the Russell case as for what it added to the elucidation of the federal general power as pre­sented in the Board of Commerce and in the Fort Frances cases. Anglin C.J.C. in his dissenting reasons in The King v. Eastern Terminal Elevator Co.[28], at p. 438, justly took exception to the attempt to put the Russell case on a foundation of an existing emergency of intemperance, putting the national life of Canada in unanticipated peril. Viscount Simon in the Canada Temperance Fed­eration case likewise, and more authoritatively, rejected this explanation of the Russell case. The Snider case did not limit resort to the federal general power, where its purely residuary aspect could not be invoked, to the peril of war, although war was given as an illustration. Viscount Haldane put the matter in these words:

... No doubt there may be cases arising out of some extraordinary peril to the national life of Canada, as a whole, such as the cases arising out of a war, where legislation is required of an order that passes beyond the heads of exclusive Provincial competency. Such cases may be dealt with under the words at the commencement of s. 91, conferring general powers in relation to peace, order and good government, simply because such cases are not otherwise provided for. But instances of this, as was pointed out in the judgment in Fort Frances Pulp and Power Co. v. Manitoba Free Press are highly exceptional.

…

What emerges from the lines of cases up to the Snider case are differences more of degree than of kind about the scope of the federal general power. It is true that neither the Russell case nor, indeed,

[Page 412]

Lord Watson's observations in the Local Prohibi­tion case fitted into Viscount Haldane's emphasis on the need for exceptional circumstances, but even on that standard there was no preclusion against finding that a peace-time crisis would warrant resort to the general power in support of federal legislation.

Lord Watson's "national dimensions" proposi­tion, which appears to have been studiously ignored by the Privy Council through to the Snider case, was mentioned by it in the Labour Conven­tions case[29], where Lord Atkin said of Lord Wat­son's words that "they laid down no principle of constitutional law, and were cautious words intended to safeguard possible eventualities which no one at the time had any interest or desire to define" (at p. 353). It is my view that a similar approach of caution is demanded even today, both against a loose and unrestricted scope of the gener­al power and against a fixity of its scope that would preclude resort to it in circumstances now unforeseen. Indeed, I do not see how this Court can, consistently with its supervisory function in respect of the distribution of legislative power, preclude in advance and irrespective of any superv­ening situations a resort to the general power or, for that matter, to any other head of legislative authority. This is not to say that clear situations are to be unsettled, but only that a Constitution designed to serve this country in years ahead ought to be regarded as a resilient instrument capable of adaptation to changing circumstances.

There is, in my opinion, some incongruity in the Privy Council in the Labour Conventions case first stating that Lord Watson's words were not to be taken as establishing any constitutional principle and then following this immediately with a "locus classicus" approbation of the way in which Duff C.J.C. dealt with those words in his reasons in

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Reference re Natural Products Marketing Act[30], Chief Justice Duff properly observes that Lord Watson's two sentences respecting matters in origin local or provincial which might attain na­tional dimensions must be taken in context of Lord Watson's general exposition of the scheme of legis­lative power, and the Chief Justice then proceeds as follows (at pp. 418-20):

... there has been a disposition not to attend to the limits implied in the carefully guarded language in which the Board expressed itself. It has been assumed, apparently, that they lay down a rule of construction the effect of which is that all matters comprised in any one of the enumerated subdivisions of section 92 may attain "such dimensions as to ... cease to be merely local or provincial" and become in some other aspect of them matters relating to the "peace, order and good government of Canada" and subject to the legislative jurisdic­tion of the Parliament of Canada.

As we have said, Lord Watson's language is carefully guarded. He does not say that every matter which attains such dimensions as to effect (sic) the body politic of the Dominion falls thereby within the introductory matter of section 91. But he said that "some matters" may attain such dimensions as to affect the body politic of the Dominion and, as we think the sentence ought to be read having regard' to the context, in such manner and degree as may "justify the Canadian Parliament in passing laws for their regulation or abolition ..." So, in the second sentence, he is not dealing with all matters of "national concern" in the broadest sense of those words, but only those which are matter of national concern "in such sense" as to bring them within the jurisdiction of the Parliament of Canada.

The application of the principle implicit in this passage must always be a delicate and difficult task... .

Referring again to context, Duff C.J. added (at p. 421):

... In performing the very difficult task of deciding upon such questions, the courts must have regard to the provisions of the B.N.A. Act as a whole and to the practical application of the introductory enactment of section 91 in the decisions of the courts. In considering these decisions, it is important to read what is said in the light of the thing that was decided; and it is fundamental

[Page 414]

that the interpretation and application of sections 91 and 92 of the B.N.A. Act cannot be controlled by particular expressions used in a judgment torn from their context and given the broadest meaning of which the words are capable without any reference to that context or to the particular controversy to which the language was directed.

Chief Justice Duff attempted in his extensive reasons in the Natural Products Marketing Refer­ence a synthesis of the preceding case law touching the general power but, significantly, he began his discussion with the following prelude (at p. 416):

...There is no dispute now that the exception which excludes from the ambit of the general power all matters assigned to the exclusive authority of the legislatures must be given its full effect. Nevertheless, it has been laid down that matters normally comprised within the subjects enumerated in section 92 may, in extraordinary circumstances, acquire aspects of such paramount sig­nificance as to take them outside the sphere of that section.

What followed was a reconciliation of Lord Wat­son's national dimensions approach with Viscount Haldane's notion of the extraordinary, by requir­ing that there be some crisis or peril to support federal legislation for the peace, order and good government of Canada, of which war, present or apprehended, was an example. This did not exclude peacetime crises, although in respect of these (as illustrated by the Board of Commerce case) there was a reluctance to approve drastic controls without more support than that offered by the nature of the legislation. There was no preamble in the Combines and Fair Prices Act, 1919, which was the subject of the Board of Com­merce case to indicate that there was any unusual or exceptional circumstance requiring legislation of that character and, indeed, the association of the anti-hoarding and anti-profiteering provisions with anti-combine and anti-monopoly provisions, both under the administration of a permanent Board was not calculated to persuade the Privy Council that there was any abnormal situation calling for intervention in such a localized way as was revealed by the facts on which the case proceeded.

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The synthesis made by Duff C.J. necessitated a watering down of the effect of the Russell case, because on the face of its reasons there was no indication of extraordinary circumstances, and the mere advantage of uniformity and the desirability of nationwide controls were not enough to give it a national dimension when it was not enough in the Snider case.

I come, finally, to the Canada Temperance Fed­eration case. The Privy Council was fully entitled to overrule the Russell case and could have mar­shalled intervening observations in various cases to support it in doing so. But it felt, to use its own words, that "the decision now sought to be overruled has stood for over sixty years ... and [it] must be regarded as firmly embedded in the con­stitutional law of Canada and it is impossible now to depart from it" (at p. 206). The importance of Viscount Simon's reasons in the Canada Temperance Federation case lies not only in his rejection of the explanation of the Russell case given in the Snider case but also in his restatement of the scope of the federal general power without advertence either to the Board of Commerce case or to the Fort Frances case and even without reference to Lord Watson's observations in the Local Prohibi­tion case. Of course, as I have already noted, general propositions must be viewed in the context of the facts and issues out of which they arise, and I emphasize again the point made earlier that it would be unwise to nail down any head of legisla­tive power in such firm fashion as to make it incapable of application to situations as yet unforeseen.

Two passages in Viscount Simon's reasons are central to the position taken by the Attorney-Gen­eral of Canada in support of the Anti-Inflation Act. The first reads as follows (at pp. 205-6):

... the British North America Act nowhere gives power to the Dominion Parliament to legislate in mat­ters which are properly to be regarded as exclusively within the competence of the provincial legislatures merely because of the existence of an emergency. Secondly, they can find nothing in the judgment of the Board in 1882 [in the Russell case] which suggests that

[Page 416]

it proceeded on the ground of emergency; there was certainly no evidence before that Board that one existed. The Act of 1878 was a permanent, not a temporary, Act, and no objection was raised to it on that account. In their Lordships' opinion, the true test must be found in the real subject matter of the legislation: if it is such that it goes beyond local or provincial concern or inter­ests and must from its inherent nature be the concern of the Dominion as a whole (as, for example, in the Aeronautics case and the Radio case), then it will fall within the competence of the Dominion Parliament as a matter affecting the peace, order and good government of Canada, though it may in another aspect touch on matters specially reserved to the provincial legislatures. War and pestilence, no doubt, are instances; so, too, may be the drink or drug traffic, or the carrying of arms. In Russell v. The Queen, Sir Montague Smith gave as an instance of valid Dominion legislation a law which pro­hibited or restricted the sale or exposure of cattle having a contagious disease. Nor is the validity of the legisla­tion, when due to its inherent nature, affected because there may still be room for enactments by a provincial legislature dealing with an aspect of the same subject in so far as it specially affects that province.

It is to be noticed that the Board in Snider's case nowhere said that Russell v. The Queen was wrongly decided. What it did was to put forward an explanation of what it considered was the ground of the decision, but in their Lordships' opinion the explanation is too nar­rowly expressed. True it is that an emergency may be the occasion which calls for the legislation, but it is the nature of the legislation itself, and not the existence of emergency, that must determine whether it is valid or not.

The second passage is in these terms (at p. 207):

... To legislate for prevention appears to be on the same basis as legislation for cure. A pestilence has been given as an example of a subject so affecting, or which might so affect, the whole Dominion that it would justify legislation by the Parliament of Canada as a matter concerning the order and good government of the

[Page 417]

Dominion. It would seem to follow that if the Parlia­ment could legislate when there was an actual epidemic it could do so to prevent one occurring and also to prevent it happening again... .

I note that the first of the above-quoted passages was referred to in the Margarine case, Canadian Federation of Agriculture v. Attorney-General of Quebec[31], at p. 197 and was immediately coun­tered by a reference to the Labour Conventions case which included the accolade to the reasons of Chief Justice Duff in the Natural Products Mar­keting Act Reference. The Privy Council then contented itself with saying that there were no facts in the Order of Reference or any others of which it could take judicial notice that could "lead to the conclusion that there exist in the present case the conditions which may override the normal distribution of powers in ss. 91 and 92" (at p. 198). This determination, in my view, was supportable under either or both of the lines of authority to which reference was made in the Margarine case, since what was involved was prohibitory fed­eral legislation directed against the manufacture or sale of a product which, on the facts stated in the Order of Reference, was a nutritious product without danger to health.

The Attorney-General of Canada, supported by the Attorney-General of Ontario, put his position in support of the Anti-Inflation Act on alternative bases. He relied, primarily, on the Canada Tem­perance Federation case, contending that the Act, directed to containment and reduction of inflation, concerned a matter which went beyond local or private or provincial concern and was of a nature which engaged vital national interests, among them the integrity of the Canadian monetary system which was unchallengeably within exclu­sive federal protection and control. He urged, in the alternative, that there was an economic crisis amounting to an emergency or exceptional peril to economic stability sufficient to warrant federal intervention, and, if not an existing peril, there was a reasonable apprehension of an impending one that justified federal intervention through the

[Page 418]

legislation in question which was designed to support measures and policies of a fiscal and mone­tary character which were undoubtedly within Parliament's legislative authority.

The Attorney-General of Quebec and the Attor­ney-General of Saskatchewan contended that the Act could be supported only on an "emergency" basis but took no position on whether such a basis of support was shown. The Attorney-General of British Columbia and the Attorney-General of Alberta both took the position that the legislation ex facie was an unconstitutional interference with the provincial private sector, being an interference with provincial regulatory authority, with contrac­tual arrangements in the Provinces and with the operation of businesses within provincial legislative authority. They conceded that the Parliament of Canada could enact such legislation in an emer­gency, but the mere existence or persistence of inflation did not, in their submission, evidence an emergency which required federal action only and, in any event, there was no sufficient evidence, either from the terms of the Anti-Inflation Act or otherwise, to show that an emergency existed.

Similar views were expressed by counsel for the Canadian Labour Congress, counsel for the Teachers' organizations, counsel for the Public Employees' organizations and counsel for the United Steelworkers of America. In particular, it was contended by all contesting the validity of the Anti-Inflation Act on the primary ground upon which it was supported, that inflation could not be taken as a "matter" for constitutional purposes since it merely summarized an array of economic matters separately susceptible to provincial regula­tion or treatment. It did not have the discreteness of such matters as were involved in the Radio case, In re Regulation and Control of Radio Communi­cation in Canada[32], and in the Aeronautics case, In re Regulation and Control of Aeronautics in Canada[33],

[Page 419]

both of which upheld the validity of federal regulatory legislation in respect of those matters. Again, it was contended that the propo­nents of the Anti-Inflation Act could find no comfort for their position in the judgment of this Court in Munro v. National Capital Commission[34], which, although applying the Canada Temperance Federation approach, plainly dealt with a matter outside of any local or provin­cial interests. Similarly, it was submitted that both Pronto Uranium Mines Ltd. v. Ontario Labour Relations Board[35] and Johannesson v. West St. Paul[36] (also proceeding on that approach and holding that provincial legislation could not con­trol the location of an airport or the operation of a uranium mine) were cases where the matters in question were completely outside of provincial competence.

Since there was, in general, a concession by those opposing the legislation that it would be valid if it were what I may call crisis legislation, and since the _proponents of the legislation urged this as an alternative ground on which its validity should be sustained, it appears to me to be the wise course to consider first whether the Anti-Inflation Act can be supported on that footing. If it is sustainable as crisis legislation, it becomes unnecessary to consider the broader ground advanced in its support, and this because, especially in con­stitutional cases, Courts should not, as a rule, go any farther than is necessary to determine the main issue before them.

The competing arguments on the question whether the Act is supportable as crisis legislation raised four main issues: (1) Did the Anti-Inflation Act itself belie the federal contention because of the form of the Act and, in particular, because of the exclusion of the provincial public sector from its imperative scope, notwithstanding that it is framed as a temporary measure albeit subject to

[Page 420]

extension of its operation? (2) Is the federal con­tention assisted by the preamble to the statute? (3) Does the extrinsic evidence put before the Court, and other matters of which the Court can take judicial notice without extrinsic material to back it up, show that there was a rational basis for the Act as a crisis measure? (4) Is it a tenable argument that exceptional character could be lent to the legislation as rising beyond local or provincial concerns because Parliament could reasonably take the view that it was a necessary measure to fortify action in other related areas of admittedly federal authority, such as that of monetary policy?

I have referred to the first of these issues earlier in these reasons. It goes to the form of the Anti-Inflation Act and to the question whether the scope of the compulsory application of the Anti-Inflation Act may be taken to indicate that the Parliament of Canada did not act through any sense of crisis or urgency in enacting it. I note that the federal public service, a very large public service, is governed by the Act and the Guidelines, that private employers of five hundred or more persons are subject to the Act and Guidelines, that the construction industry is particularly dealt with by making those who employ twenty or more persons in that industry subject to the Act and Guidelines and that the Act and Guidelines apply also to persons in various professions, including architects, accountants, dentists, engineers, law­yers, doctors and management consultants. Again, the Act provides for bringing within the Act and Guidelines businesses, irrespective of numbers employed, which are declared by order in council to be of strategic importance to the containment and reduction of inflation in Canada. Having regard to the enormous administrative problems which the programme entails, the coverage is com­prehensive indeed in its immediately obligatory provisions. What is left out of compulsory coverage is the provincial public sector, including the municipal public sector, but provision is made for bringing this area into the programme under the Guidelines by agreements under s. 4(3) or s. 4(4) ors. 5.

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I do not regard the provisions respecting the provincial public sector as an indicator that the Government and Parliament of Canada were not seized with urgency or manifested a lack of any sense of crisis in the establishment of the programme. Provincial government concern about rising inflation and concurrent unemployment was a matter of public record prior to the inauguration of the programme, and this Court was provided with copies of agreements that eight of the ten Provinces had made with the federal Government for the application therein of the federal Guidelines. Only British Columbia and Saskatchewan had not entered into agreements. With private industry and private services bound to the extent that they are, and with the federal public service also bound, I see it as a reasonable policy from the standpoint of administration to allow the Provinces to contract into the programme in respect of the provincial public sector under their own adminis­tration if this was their preference rather than by simply accepting, as they could, the federal administration. Since the "contracting in" is envisaged on the basis of the federal Guidelines the national character of the programme is underlined.

One of the submissions made by counsel for Secondary School Teachers' organizations con­cerned provincial co-operation, but it was put in terms of an objection to the validity of the federal legislation, the proposition being that inflation was too sweeping a subject to be dealt with by a single authority, i.e., the federal Parliament, and that the proper constitutional approach, at least as a first approach, was through federal-provincial co-oper­ation in terms of their respective powers under the respective enumerations in ss. 91 and 92. If this is meant to suggest that Parliament cannot act in relation to inflation even in a crisis situation, I must disagree. No doubt, federal-provincial co-operation along the lines suggested might have been attempted, but it does not follow that the federal policy that was adopted is vulnerable because a co-operative scheme on a legislative power basis was not tried first. Co-operative feder­alism may be consequential upon a lack of federal legislative power, but it is not a ground for denying it.

[Page 422]

I appreciate that Viscount Haldane espoused co-operative federalism in the Board of Commerce case (see [1922] 1 A.C. 191, at p. 201) but that was to relieve against a lack of federal power. Moreover, when he came to consider the propriety of the federal legislation in the Fort Frances case, he noted that the situation that had to be dealt with "is not one that can be reliably provided for by depending on collective action of the Legisla­tures of the individual Provinces agreeing for the purpose" (see [1923] A.C. 695, at p. 704).

The Attorney-General of Canada relied upon the preamble to the Anti-Inflation Act both in respect of his primary argument and in respect of his alternative argument. He emphasized the words therein "that the containment and reduction of inflation has become a matter of serious national concern" and as well the following words that "to accomplish such containment and reduction of inflation it is necessary to restrain profit margins, prices, dividends and compensation" (the underlined words were especially emphasized). I do not regard it as telling against the Attorney-General's alternative position that the very word "emergen­cy" was not used. Forceful language would not carry the day for the Attorney-General of Canada if the circumstances attending its use did not support the constitutional significance sought to be drawn from it. Of course, the absence of any preamble would weaken the assertion of crisis conditions, and I have already drawn attention to the fact that no preamble suggesting a critical economic situation, indeed no preamble at all was included in the legislation challenged in the Board of Commerce case.

The preamble in the present case is sufficiently indicative that Parliament was introducing a far-reaching programme prompted by what in its view was a serious national condition. The validity of the Anti-Inflation Act does not, however, stand or fall on that preamble, but the preamble does provide a base for assessing the gravity of the circum­stances which called forth the legislation.

This brings me to the third of the four issues above-mentioned, namely, the relevancy and weight of the extrinsic evidence and the assistance to be derived from judicial notice. When, as in this

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case, an issue is raised that exceptional circum­stances underlie resort to a legislative power which may properly be invoked in such circumstances, the Court may be asked to consider extrinsic ma­terial bearing on the circumstances alleged, both in support of and in denial of the lawful exercise of legislative authority. In considering such material and assessing its weight, the Court does not look at it in terms of whether it provides proof of the exceptional circumstances as a matter of fact. The matter concerns social and economic policy and hence governmental and legislative judgment. It may be that the existence of exceptional circum­stances is so notorious as to enable the Court, of its own motion, to take judicial notice of them without reliance on extrinsic material to inform it. Where this is not so evident, the extrinsic material need go only so far as to persuade the Court that there is a rational basis for the legislation which it is attributing to the head of power invoked in this case in support of its validity.

There is before this Court material from Statis­tics Canada, upon which the Court is justified in relying, which, proceeding from a base of 100 in 1971, shows that the purchasing power of the dollar dropped to 0.78 by September, 1974 and to 0.71 in September, 1975. On the same base, the cost of living index rose to 127.9 by September, 1974 and to 141.5 by September, 1975, with food, taken alone, and weighted at 28 per cent of all the items taken into calculaton [sic], showing a rise to 147.3 in September, 1974 and 166.6 in September, 1975. These are figures from the Consumer Price Index monitored by Statistics Canada, and I note that Professor Lipsey in his study states that "the measure [of inflation] that is of most direct rele­vance to the person in the street is the rate of inflation of the CPI". He defines inflation as "a monetary phenomenon in the sense that a rise in the price level is the same thing as a fall in the value of money (i.e. a fall in its purchasing pow­er)". What the Consumer Price Index shows, and Professor Lipsey himself relies on its figures, is that for the first time in many years Canada had a double digit inflation rate for successive years, i.e., in 1974 and 1975, the Index rising 10.9 per cent in 1974 above its reading for 1973 and being 10.8 per cent higher in 1975 than it was in 1974. Some

[Page 424]

monthly drops slightly below double digit rises do not materially affect the relevance of the annual figures.

There have been inflationary periods before in our history but, again referring to Professor Lip­sey's study, "the problem of the coexistence of high unemployment and high inflation rates was not, however, encountered before the late 1960's". These twin conditions continued to the time that the Government and Parliament acted in establish­ing its prices and incomes policy under the Anti-Inflation Act and Guidelines, and were the prime reason for the policy.

Among the submissions in opposition to the contention of crisis was an assertion that the Gov­ernment and Parliament did not act upon the phenomenon of concurrent rising inflation and rising unemployment when they were first dis­cerned, nor even after they began to persist. I do not see that this is an answer to the issue if those conditions were still apparent when Parliament chose to act. Its judgment as to the appropriate time for intervening as it did may be open to political or economic contestation, but I cannot agree that by waiting for some time before acting the Government and Parliament can be said by the Court to have disentitled themselves to rely upon the power to legislate as Parliament did for the peace, order and good government of Canada.

There is another consideration that arises from the submissions, particularly those of the Canadi­an Labour Congress, in opposition to the validity of the Anti-Inflation Act as a measure justified by crisis circumstances. The consideration I refer to is based on Professor Lipsey's study and on his con­clusion that the policy adopted in the Anti-Infla­tion Act is not one that can, on the basis of experience elsewhere and on his appraisal as an economist, be expected to reduce the rate of infla­tion by more than one to two per cent. The answer to this submission is simple, and it is an answer that has been consistently given by the Courts,

[Page 425]

namely, that the wisdom or expendiency or likely success of a particular policy expressed in legisla­tion is not subject to judicial review. Hence, it is not for the Court to say in this case that because the means adopted to realize a desirable end, i.e., the containment and reduction of inflation in Canada, may not be effectual, those means are beyond the legislative power of Parliament.

I would not exclude the possibility that the means chosen to deal with an alleged evil may be some indicator of whether that evil exists as a foundation for legislation. Professor Lipsey is candid enough to say in his study that whether "a problem is serious enough to be described as a crisis must be partly a matter of judgment". The general question to which his study is directed is, to use his words, "could an economist say that the Canadian economy faced an economic crisis, or was in a critical situation, in October 1975?" He answers this question in the negative on the basis, inter alia, of comparative assessment of different periods, and he is supported in this view by many other economists. The Court cannot, however, be concluded by the judgment of an economist, distin­guished as he is in the opinion of his peers, on a question of the validity of the exercise of the legislative power invoked in this case. The econom­ic judgment can be taken into account as an element in arriving at an answer to the question whether there is a rational basis for the governmental and legislative judgment exercised in the enactment of the Anti-Inflation Act. It cannot determine the answer.

In my opinion, this Court would be unjustified in concluding, on the submissions in this case and on all the material put before it, that the Parlia­ment of Canada did not have a rational basis for regarding the Anti-Inflation Act as a measure which, in its judgment, was temporarily necessary to meet a situation of economic crisis imperilling the well-being of the people of Canada as a whole and requiring Parliament's stern intervention in the interests of the country as a whole. That there may have been other periods of crisis in which no

[Page 426]

similar action was taken is beside the point.

The rationality of the judgment so exercised is, in my view, supported by a consideration of the fourth of the issues which I enumerated above. The fact that there had been rising inflation at the time federal action was taken, that inflation is regarded as a monetary phenomenon and that monetary policy is admittedly within exclusive fed­eral jurisdiction persuades me that the Parliament of Canada was entitled, in the circumstances then prevailing and to which I have already referred, to act as it did from the springboard of its jurisdic­tion over monetary policy and, I venture to add, with additional support from its power in relation to the regulation of trade and commerce. The Government White Paper refers to a prices and incomes policy as one element in a four-pronged programme of which the first engages its fiscal and monetary authority; and although the White Paper states that the Government rejects the use of severe monetary and fiscal restraints to stop infla­tion because of the alleged heavy immediate cost in unemployment and foregone output, it could seek to blend policies in those areas with a prices and incomes policy under the circumstances revealed by the extrinsic material.

Since no argument was addressed to the trade and commerce power I content myself with observ­ing only that it provides the Parliament of Canada with a foothold in respect of "the general regula­tion of trade affecting the whole dominion", to use the words of the Privy Council in Citizens Insur­ance Co. v. Parsons[37], at p. 113. The Anti-Inflation Act is not directed to any particular trade. It is directed to suppliers of commodities and services in general and to the public services of govern­ments, and to the relationship of those suppliers and of the public services to those employed by and in them, and to their overall relationship to the public. With respect to some of such suppliers and with respect to the federal public service, federal legislative power needs no support from the exist­ence of exceptional circumstances to justify the

[Page 427]

introduction of a policy of restraint to combat inflation.

The economic interconnection with other suppliers and with provincial public services, underlined by collective bargaining conducted by, or under the policy umbrella of trade unions with Canada-wide operations and affiliations, is a matter of public general knowledge of which the Court can take judicial notice. The extrinsic ma­terial does not reveal any distinction in the opera­tion and effect of inflation in respect of those economic areas which are ordinarily within and those ordinarily outside of effective federal regula­tory control. In enacting the Anti-Inflation Act as a measure for the peace, order and good government of Canada, Parliament is not opening an area of legislative authority which would otherwise have no anchorage at all in the federal catalogue of legislative powers but, rather, it is proceeding from legislative power bases which entitle it to wage war on inflation through monetary and fiscal policies and entitle it to embrace within the Anti-Inflation Act some of the sectors covered thereby but not all. The circumstances recounted above justify it in invoking its general power to extend its embrace as it has done.

For all the foregoing reasons, I would hold that the Anti-Inflation Act is valid legislation for the peace, order and good government of Canada and does not, in the circumstances under which it was enected [sic] and having regard to its temporary character, invade provincial legislative jurisdiction. It is open to this Court to say, at some future time, as it in effect said in the Margarine case[38], that a statutory provision valid in its application under circumstances envisaged at the time of its enactment can no longer have a constitutional applica­tion to different circumstances under which it would, equally, not have been sustained had they existed at the time of its enactment.

—III—

The second question referred to this Court relates to the construction of s. 4(3) of the Anti-Inflation Act and to whether the intergovernmental

[Page 428]

agreement between Canada and Ontario, for the application of the Act and the Guidelines to the provincial public sector, was consummated in a manner that would make it effective in Ontario pursuant to s. 4(3). This is not necessarily the same thing as determining whether the agreement was consummated in accordance with s. 4(3). because that depends on what s. 4(3) prescribes, if it prescribes anything at all, as to the manner of consummation of an agreement to take effect thereunder.

The Attorney-General of Quebec, the Attorney-General of British Columbia, the Attorney-Gener­al of Saskatchewan and the Attorney-General of Alberta made no submissions on this question. The other parties to this Reference opposing the validi­ty of the Anti-Inflation Act also opposed the validity of the Ontario agreement.

The agreement was executed on behalf of the Government of Canada, as the named party there—to of the First Part, by the Acting Minister of Finance authorized so to do by an order of the Governor in Council. It was executed on behalf of the Government of Ontario, as the named party thereto of the Second Part, by a provincial Minister, the Treasurer of Ontario and Minister of Economics and Intergovernmental Affairs, to whom authority for the execution was given by a provincial Order in Council.

It will be convenient to reproduce again s. 4(3) of the Anti-Inflation Act which reads as follows:

4....

(3) the Minister may, with the approval of the Gover­nor in Council, enter into an agreement with the government of a province providing for the application of this Act and the guidelines to

(a) Her Majesty in right of that province,

(b) agents of Her Majesty in that right,

(c) bodies described in paragraphs (2) (b) and (c) and

(d) bodies prescribed by the regulations pursuant to paragraph (2)(d),

or any of such bodies, agents and Her Majesty in that right, and where any such agreement is entered into, this Act is binding in accordance with the terms of the agreement and the guidelines apply in accordance with

[Page 429]

the terms thereof with effect on and after the day on and after which the guidelines apply, by virtue of the opera­tion of this Act, with respect to Her Majesty in right of Canada.

No question arises as to the propriety of the execution and of the binding effect of the agreement so far as the Government of Canada is concerned. Section 4(3) provides statutory authori­zation for the federal Minister to act as he did. It is common ground that there was no statutory authorization for the execution of the agreement by the provincial Minister. Two contentions are made in support of the efficacy of the provincial execution: first, s. 4(3) is conditional legislation, and on the assumed validity of the Anti-Inflation Act (and it must be taken to be valid for the purposes of the second question now under discus­sion), the execution of the agreement on behalf of the Crown in right of Ontario, on the authority of an order approved by the personal representative of Her Majesty in Ontario, was the act prescribed by the statute to make its provisions effective in the Ontario public sector under the terms of the statute and by virtue of its operation; second, it is submitted that the provincial Executive (the Lieu­tenant-Governor in Council) is the proper author­ity to make agreements in the name of the Crown in right of the Province or, what is the same thing, in the name of the Government of Ontario, and that it can do so here without provincial authoriz­ing legislation because there is a common law capacity and power to make agreements in the name of the Crown, especially agreements not involving the expenditure of public money, unless there is a statutory restriction and there was none here.

The submissions in support of the agreement were predicated on the contention that Parliament could have imposed its system of controls directly upon the provincial public sector without providing for a "contracting in" agreement and that the method of bringing that sector within the scope of the Act and Guidelines was a policy decision for Parliament. Counsel for the Canadian Labour Congress took issue with this proposition, contend­ing that it was beyond federal competence to make the provincial public sector subject to the Act and Guidelines, even if the Act was otherwise valid

[Page 430]

and, at the very least, it was beyond federal competence to bring the provincial public service itself, and especially that part of it which consists of government departments which are directly under the Crown or Ministers of the Crown, within the purview of the Act and Guidelines. Counsel was driven to say that this could not be done in any circumstances, even in the case of war, because it would involve an interference with pro­vincial decision-making, and with the quality of the provincial public service; and he sought to draw an analogy with federal Crown immunity from provincial regulatory legislation, asserting that Crown immunity must work both ways. Another analogy put forward was in respect of the immunity of federally-incorporated companies from provincial legislation "which would deny them their status or essential capacities" (to quote the words of the factum of the Canadian Labour Congress) and, similarly, in respect of the immuni­ty of undertakings or enterprises within federal regulatory jurisdiction from provincial laws which would sterilize or mutilate them or affect them in some vital part.

I do not find it necessary to say anything more about these assertions of immunity for the provin­cial public sector or public service or departments of the provincial government than that they misconceive the paramount authority of federal legis­lative power when exercised, and the all-embracing legislative authority of the Parliament of Canada when validly exercised for the peace, order and good government of Canada. Counsel who made ,the assertions aforesaid conceded that there could be regulation of the provincial public sector or public service, but not stultification. I see no stul­tification under the Anti-Inflation Act and Guide-lines if the terms regulation and stultification carry their ordinary meanings. Although it did not clearly appear that the concession aforesaid as to regulation covered provincial government depart­ments, I make no distinction as to them in reject­ing the submission that the Anti-Inflation Act in effect made any aspect of the provincial public service inoperative.

Counsel for the parties contesting the validity of the agreement did not dispute the power of Parliament

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to enact conditional legislation, nor its power to delegate legislative authority to a subordinate provincial body, although there was a qualification expressed if the subordinate body was the Lieuten­ant-Governor in Council. Whether that qualifica­tion is a tenable one having regard to what was decided on the point in Ex parte Kleinys[39] need not be determined because, in my opinion, s. 4(3) does not involve any delegation of legislative power by Parliament. There is not here any delegate upon which a power to enact legislation is con­ferred; rather there is an incorporation of federal enactments as supervening law in Ontario. Again, there is no delegation of administrative power by Parliament; if anything, there is delegation by the Government of Ontario to the federal authorities. Administration and enforcement of the Act and the Guidelines are to proceed as a federal exercise, although the scope of the application of the Act and Guidelines to the provincial public sector is governed by the agreement.

I do not construe s. 4(3) as being conditional legislation. The scheme of the provision is far different from that involved in the Canada Tem­perance Act which was considered by this Court in Smith v. Attorney-General of Canada[40] In this latter case, the only question was whether the condition prescribed by s. 152 of Part IV of the Canada Temperance Act for making the prohibitions of that Part applicable in Ontario had been met. No issue arose as to wheth­er the federal enactment was conditional legisla­tion; it clearly was. Section 4(3) of the Anti-Inflation Act does not provide that upon the consummation of an agreement for the application of the Act and the Guidelines, they shall take effect pursuant to their terms; rather does it provide that they shall take effect in accordance with the terms of the agreement. I am of opinion that the Attorneys-General of Canada and of Ontario would give an interpretation to the words in s. 4(3) "by virtue of the operation of this Act" which takes them out of context. They would construe those words as making the Act and Guidelines operative under the terms of the Act when an agreement has been consummated under s. 4(3).

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They do no such thing. Those words refer to the determination of the operative date of the applica­tion of the Guidelines to Her Majesty in right of Canada. This is made evident by s. 3 (2) (b) (i) (iii) of the Act, respecting the making of regulations referable to public sector employees, and by the amendment to s. 4 of the Guidelines effected by P.C. 1976-176 of January 27, 1976. Hence it is that all that the words in question do is make the Guidelines effective under the agreement on and after the day on and after which they apply to Her Majesty in right of Canada. What is important, however, is that the Guidelines apply in accordance with the terms of the agreement not in accordance with the terms of the Act.

Even if this were not so, and it was arguable that an agreement is merely the triggering mech­anism (to use the term applied by counsel for the Attorney-General of Canada), it remains impor­tant to determine whether the Parliament of Canada has set the trigger in the sense that it has given the authorization not only to a federal minister but to the provincial Executive to enter into a s. 4(3) agreement. It is not suggested that the au­thority of the provincial Executive for the execu­tion of the agreement in the name of the Government of Ontario came from Parliament. Of course, it was open to Parliament to say what form of agreement it would accept, but in designating an agreement with the "government of a province" it did not thereby determine either how the provin­cial government would effect execution nor on what authority the execution would be effected in the name of the provincial government.

Where then did this authority come from? It could have come only from independent executive authority because, admittedly, it was not backed by provincial legislative authority as was the case in respect of the agreements with all the other Provinces save Newfoundland which, like Ontario, proceeded by order in council.

If the agreement alone has the effect contended for, it imposes the Guidelines and accompanying sanctions on the provincial public sector, thereby altering the existing law of Ontario and precluding changes in that law that are inconsistent with the Guidelines: see s. 4.(1) of the Anti-Inflation Act. I

[Page 433]

am unable to appreciate how the provincial Execu­tive, suo motu, can accomplish such a change. I agree, of course, that the Executive or a Minister authorized by it may be the proper signatory to an agreement to which the Government of Ontario is a party. That, however, is merely the formality of execution; and even if the agreement is binding upon the Government of Ontario as such, on the analogy of treaties which may bind the contracting parties but yet be without domestic force, that would not make the agreement part of the law of Ontario binding upon persons purportedly affected by it.

The contention of the Attorney-General of Ontario that the Crown in right of Ontario, repre­sented by the Lieutenant-Governor, has a common law power and capacity to enter into agreements if there are no statutory restrictions does not answer the question of authority to effect changes in Ontario law through such agreements. The issue here is not prerogative power alone or the author­ity to exercise a prerogative power when given by order in council so as to place responsibility for it upon the Ministers present at the meeting of the Executive Council. Nor does the issue engage any concern with responsible government and the political answerability of the Ministers to the Legislative Assembly. Rather what is at issue is the right of the Crown, although duly protected by an order in council, to bind its subjects in the Province to laws not enacted by the Legislature nor made applicable to such subjects by adoption under authorizing legislation. There is no principle in this country, as there is not in Great Britain, that the Crown may legislate by proclamation or order in council to bind citizens where it so acts without the support of a statute of the Legislature: see Dicey, Law of the Constitution (10th ed. 1959), pp. 50-54.

The fact that the Crown can contract carries the matter no farther than that the contract may be binding upon it or that it may sue the other contracting party on the contract. What we have here is not a contract in this sense at all, but an agreement to have certain legislative enactments become oprative [sic] as provincial law. Reference re Troops in Cape Breton[41]

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does not assist the Attor­ney- General of Ontario. The issue there con­cerned the liability of the Province of Nova Scotia to pay to the Crown in right of Canada the expenses and costs of sending part of the active militia in aid of the civil authorities in Cape Breton. This aid was solicited pursuant to a requis­iion [sic] of the Attorney-General of Nova Scotia as provided by the federal Militia Act, and the troops sent in pursuant to the requisition were later withdrawn pursuant to a notification from that Attor­ney-General that their services were no longer required. The Militia Act required the Province to pay the expenses and costs of the services of the troops, and the Attorney-General gave an undertaking in the requisition that the Province would pay for such services. The provincial Attorney-General did not have the backing of a provincial order in council, but on the other hand the Prov­ince did not disavow his authority during the period that the troops served under the requisition. This Court held that although the Attorney-Gen­eral could act as he did without any authorizing order in council or legislation because the powers he exercised were given him by the federal statute, nonetheless the Province was not obliged to pay because the statute did not contemplate such an obligation proceeding from a contract between the Province and the Dominion. Indeed, the federal Government in argument did not contend that such a duty could be imposed on the Province against its wishes. This Court added that only the Legislature could appropriate provincial revenues.

There is nothing in Reference re Troops in Cape Breton that even suggests any power in the provin­cial Crown, let alone a Minister, to agree to the adoption of laws binding on the inhabitants of the Province. Nor is any assistance to be derived from Attorney-General of Canada v. Higbie[42]. It con­cerned simply the determination as between the Crown in right of a Province and the Crown in right of Canada which of them owned certain property, the foreshore of a certain harbour, and whether they could settle their dispute as to ownership by complementary orders in council, embodying

[Page 435]

a settlement agreement, without having statutory authorization for the agreement. The two Governments were dealing with Crown land, of which it was open to either to prove that factually it was the owner. It was because it was uncertain whether either could provide such proof that they entered into a settlement agreement.

The Attorney General of Ontario also relied on the judgment of the High Court of Australia in New South Wales v. Bardolph[43]. In so far as it affirms the capacity of the Crown to contract or the binding effect of a contract entered into on behalf of the Crown by a government official on the authority of a responsible Minister charged with supervision of the governmental function out of which the alleged contract arose, it deals with an issue which is not germane to the present case. It is one thing for the Crown in right of a Province to contract for itself; it is a completely different thing for it to contract for the application to its inhabitants, and to labour organizations in the Province, of laws to govern their operations and relations without statutory authority to that end. This would be, in effect, to legislate in the guise of a contract. The terms of the present agreement, at their narrowest, embrace more than what the Crown can bring under contractual obligation of its own authority.

I should add this: the fact that the Legislature is said not to be an entity with power to contract and that (to use the words of the Privy Council in Attorney-General of British Columbia v. Es­quimalt & Nanaimo Railway Co.[44], at p. 110, "legislation and contracts are entirely different methods of creating rights and liabilities", adds nothing to provincial executive authority to impose by mere agreement legal obligations upon persons in the Province.

In my opinion, the agreement made between the Government of Canada and the Government of Ontario pursuant to s. 4(3) does not have the effect claimed for it by the Attorney-General of Canada and the Attorney-General of Ontario.

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—IV—

In the result, I would answer the two questions referred to this Court as follows:

Question 1; No. The Act is not ultra vires in whole or in part.

Question 2: No. The agreement is not effective to render the Anti-Inflation Act binding on and the Guidelines made thereunder applicable to the provin­cial public sector in Ontario as defined in the agreement.

The judgment of Martland, Ritchie and Pigeon JJ. was delivered by

RITCHIE J.—I have had the privilege of reading the reasons for judgment of the Chief Justice and his comprehensive review of the authorities satis­fies me that the answer to the question of whether or not the Anti-Inflation Act, hereinafter referred to as the "Act", is ultra vires the Parliament of Canada, must depend upon whether or not the legislation was enacted to combat a national eco­nomic emergency. I use the phrase "national emer­gency" in the sense in which I take it to have been used by Lord Wright in Co-operative Committee on Japanese Canadians v. Attorney General of Canada[45] (hereinafter referred to as the Japanese Canadians case) and accepted by this Court in the Reference as to the Validity of the Wartime Leasehold Regulations[46]. In those cases the "emer­gency" was occasioned by war and the aftermath of war, but I see nothing to exclude the application of the principles there enunciated from a situation created by highly exceptional economic conditions prevailing in times of peace.

In my opinion such conditions exist where there can be said to be an urgent and critical situation adversely affecting all Canadians and being of such proportions as to transcend the authority vested in the Legislatures of the Provinces and thus presenting an emergency which can only be effectively dealt with by Parliament in the exercise of the powers conferred upon it by s. 91 of the British North America Act "to make laws for the

[Page 437]

peace, order and good government of Canada". The authority of Parliament in this regard is, in my opinion, limited to dealing with critical condi­tions and the necessity to which they give rise and must perforce be confined to legislation of a tem­porary character.

I do not consider that the validity of the Act rests upon the constitutional doctrine exemplified in earlier decisions of the Privy Council, to all of which the Chief Justice has made reference, and generally known as the "national dimension" or "national concern" doctrine. It is not difficult to envisage many different circumstances which could give rise to national concern, but at least since the Japanese Canadians case, I take it to be established that unless such concern is made mani­fest by circumstances amounting to a national emergency, Parliament is not endowed under the cloak of the "peace, order and good government" clause with the authority to legislate in relation to matters reserved to the Provinces under s. 92 of the British North America Act. In this regard I am in full agreement with the reasons for judg­ment prepared for delivery by my brother Beetz which I have had the advantage of reading, and I have little to add to what he has said.

I should also say, however, that I cannot find that the authority of Parliament to pass legislation such as the present Act stems from any of the enumerated classes of subjects referred to in s. 91. The source of the federal power in relation to the Anti-Inflation Act must, in my opinion, be found in the "peace, order and good government" clause, and the aura of federal authority to which that clause relates can in my view only be extended so as to invade the provincial area when the legisla­tion is directed to coping with a genuine emergen­cy in the sense to which I have made reference.

In order to determine whether the legislation here in question was enacted to combat such an emergency, it is necessary to examine the legisla­tion itself, but in so doing I think it not only permissible but essential to give consideration to the material which Parliament had before it at the time when the statute was enacted for the purpose

[Page 438]

of disclosing the circumstances which prompted its enactment. The most concrete source of this infor­mation is, in my opinion, the White Paper tabled in the House by the Minister of Finance and made a part of the case which was submitted on behalf of the Attorney General of Canada.

The preamble to the Anti-Inflation Act is quoted in full in the reasons for judgment of the Chief Justice and it is unnecessary for me to repeat it. It is enough to say that it manifests a recognition of the fact "that inflation in Canada at current levels is contrary to the interest of all Canadians" and that it has become a matter of such serious national concern as to make it neces­sary to enact this legislation. Neither the terms of the preamble nor any provisions of the Act specifi­cally declare the existence of a national emergen­cy, nor is there anything in the Act which could of itself be characterized as a proclamation that such a situation exists, but when the language of the preamble is read as I have suggested in conjunc­tion with the White Paper, it does not appear to me that it was necessary for Parliament to use any particular form of words in order to disclose its belief that an emergency existed. The "Introduc­tion" and "Conclusion" of the White Paper appear to me to be descriptive of the conditions with which Parliament purported to cope in enacting the legislation. The "Introduction" contains the following statement:

Canada is in the grip of serious inflation.

If this inflation continues or gets worse there is a grave danger that economic recovery will be stifled, unemployment increased and the nation subjected to mounting stresses and strains.

It has thus become absolutely essential to undertake a concerted national effort to bring inflation under control.

There are no simple or easy remedies for quickly resolving this critical problem. The inflationary process in Canada is so deeply entrenched that it can be brought under control only by a broad and comprehensive program of action on a national scale.

The "Conclusion" contains the following passage:

As a first essential, it is imperative that we take determined action as a nation to halt and reverse the

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spiral of costs and prices that jeopardizes the whole fabric of our economy and of our society.

When the words "serious national concern" are read against the background of these excerpts from the White Paper it becomes apparent that they were employed by Parliament in recognition of the existence of a national Emergency.

The provisions of the Act quite clearly reveal the decision of Parliament that exceptional measures were considered to be required to combat this emergency and it has not been seriously suggested that these provisions were colourably enacted for any other purpose.

I am accordingly satisfied that the record discloses that in enacting the Anti-Inflation Act the Parliament of Canada was motivated by a sense of urgent necessity created by highly exceptional cir­cumstances and that a judgment declaring the Act to be ultra vires could only be justified by reliance on very clear evidence that an emergency had not arisen when the statute was enacted. In this regard I reiterate what was said by Lord Wright in the Japanese Canadians case, supra, at p. 101, in the following passage:

Again, if it be clear that an emergency has not arisen, or no longer exists, there can be no justification for the exercise or continued exercise of the exceptional powers. The rule of law as to the distribution of powers between the Parliaments of the Dominion and the Parliaments of the Provinces comes into play. But very clear evidence that an emergency has not arisen, or that the emergency no longer exists, is required to justify the judiciary, even though the question is one of ultra vires, in overruling the decision of the Parliament of the Dominion that exceptional measures were required or were still required. To this may be added as a corollary that it is not pertinent to the judiciary to consider the wisdom or the propriety of the particular policy which is embodied in the emergency legislation.

In my opinion, the evidence presented to the Court by those opposed to the validity of the legislation did not meet the requirements set by Lord Wright and I am unable to say that the exceptional meas­ures contained in the Act were not required.

[Page 440]

It is for these reasons I am in agreement with the Chief Justice that the first question posed by this Reference should be answered in the negative.

As to the second question posed by the Refer­ence, I am in complete agreement with the reasons for judgment of the Chief Justice.

The judgment of Beetz and de Grandpré JJ. was delivered by

BEETZ J. (dissenting)—The first of the two questions referred to this Court for its opinion, relates to the constitutional validity of the Anti-Inflation Act. Two main submissions were advanced in support of the Act. The Chief Justice whose reasons I have had the advantage of reading takes the view that the Act is valid on the basis of the second submission and he does not express an opinion with respect to the first. As my conclusions differ from those of the Chief Justice on the second submission, I find it necessary to deal with both. My task on the other hand is lightened since the Chief Justice quotes the two questions referred to us, the relevant parts of the Act and so many of the authorities.

Before I deal with submissions made in support of validity, I should say a few words about the Act.

The Anti-Inflation Act authorizes the imposi­tion of guidelines for the restraint of prices, profit margins, dividends and compensation in those sectors of the economy which it specifies and which may be described as the federal public sector, the federal private sector and the provincial private sector. With provincial consent, the guidelines can be extended, in whole or in part, to the provincial public sector. It is conceded that the Parliament of Canada has legislative competence to enact such legislation with respect to both the public and private federal sectors and to regulate prices, profit margins, dividends and compensation for commodities and services supplied by the federal government and its agencies or by private institu­tions or undertakings coming within exclusive fed­eral jurisdiction such as banks, railways, bus lines and other transportation undertakings extending beyond the limits of a province, navigation and

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shipping undertakings and the like.

However, the Anti-Inflation Act is not confined to the federal public and private sectors. It extends compellingly to a substantial part of the provincial private sector, which is the most important one in quantitative terms and which comprises, for instance manufacturers of commodities such as automobiles and clothes, department stores and other large retailers, hotels, insurance companies, trust companies, all large suppliers of services, professionals such as doctors, dentists and lawyers.

The control and regulation of local trade and of commodity pricing and of profit margins in the provincial sectors have consistently been held to lie, short of a national emergency, within exclusive provincial jurisdiction. (In re The Board of Com­merce Act, 1919, and the Combines and Fair Prices Act, 1919[47]; Shannon v. Lower Mainland Dairy Products Board[48]; Home Oil Distributors Ltd., v. Attorney General of British Columbia[49]; Reference re Natural Products Marketing Act[50]; Canadian Federation of Agriculture v. Attorney General for Quebec[51]; Carnation Company Lim­ited v. Quebec Agricultural Marketing Board[52]; Macdonald v. Vapor Canada Ltd.[53]. The same is true generally of the contract of employment, including wages, whether concluded on an individual basis or collectively in the context of labour relations: Unemployment Insurance Reference[54]; Labour Conventions Reference[55]; Toronto Electric Commissioners v. Snider[56]; Canadian Pacific Railway v. Attorney General for British Columbia—the Empress Hotel case[57].

[Page 442]

The Anti-Inflation Act, therefore, and the Guidelines directly and ostensibly interfere with classes of matters which have invariably been held to come within exclusive provincial jurisdiction, more particularly property and civil rights and the law of contract. They do not interfere with provin­cial jurisdiction in an incidental or ancillary way, but in a frontal way and on a large scale. Prima facie, the Anti-Inflation Act is pro tanto ultra vires of the Parliament of Canada which, under s. 91 of the Constitution, cannot make laws in rela­tion to matters

"coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces".

Two submissions have been made in support of the validity of the Anti-Inflation Act. The first submission relates to a constitutional doctrine founded on judicial decisions and known as the national dimension or national concern doctrine. The second submission relates to another constitu­tional doctrine also founded on judicial decisions and known as the national emergency doctrine.

—I—

The first submission made by Counsel for Canada and for Ontario is that the subject matter of the Anti-Inflation Act is the containment and the reduction of inflation. This subject matter, it is argued, goes beyond local provincial concern or interest and is from its inherent nature the concern of Canada as a whole and falls within the compe­tence of Parliament as a matter affecting the peace, order and good government of Canada. It was further submitted that the competence of Par­liament over the subject of inflation may be supported by reference to the following heads of s. 91 of the Constitution:

2. The Regulation of Trade and Commerce

3. The raising of Money by any Mode or System of Taxation

4. The Borrowing of Money on the Public Credit

14. Currency and Coinage

15. Banking, Incorporation of Banks and the Issue of Paper Money

[Page 443]

16. Savings Banks

17.  Interest

18. Legal Tender.

These heads of powers were invoked as indica­tive of the breadth of Parliament's competence in economic matters and as giving additional assistance to the Anti-Inflation Act. Counsel relied on various cases amongst which Attorney General of Ontario v,. Canada Temperance Federation[58]; In re The Regulation and Control of Aeronautics in Canada[59]; In re Regulation and Control of Radio Communication in Canada[60]; Johannesson v. Rural Municipality of West St. Paul[61]; Munro v. National Capital Commission[62].

Some of the extremely far reaching conse­quences of this submission must be underlined with respect to the so-called subject matter of inflation or its containment as well as in relation to the principles underlying the distribution of powers between Parliament and the Provincial Legisla­tures.

If the first submission is to be accepted, then it must be conceded that the Anti-Inflation Act could be compellingly extended to the provincial public sector. Parliament has not done so in this case as a matter of legislative policy but, it could decide to control and regulate at least the max­imum salaries paid to all provincial public servants notwithstanding any provincial appropriations, budgets and laws. Parliament could also regulate wages paid by municipalities, educational institu­tions, hospitals and other provincial services as well as tuition or other fees charged by some of these institutions for their services. Parliament could occupy the whole field of rent controls. Since in time of inflation there can be a great deal of speculation in certain precious possessions such as land or works of arts, Parliament could move to prevent or control that speculation not only in regulating the trade or the price of those possessions

[Page 444]

but by any other efficient method reasonably connected with the control of inflation. For exam­ple Parliament could presumably enact legislation analogous to mortmain legislation and even extend it to individuals. Parliament could control all inventories in the largest as in the smallest under-takings, industries and trades. Parliament could ration not only food but practically everything else in order to prevent hoarding and unfair profits. One could even go further and argue that since inflation and productivity are greatly interdepend­ent, Parliament could regulate productivity, estab­lish quotas and impose the output of goods or services which corporations, industries, factories, groups, areas, villages, farmers, workers, should produce in any given period. Indeed, since practi­cally any activity or lack of activity affects the gross national product, the value of the Canadian dollar and, therefore, inflation, it is difficult to see what would be beyond the reach of Parliament. Furthermore, all those powers would belong to Parliament permanently; only a constitutional amendment could reduce them. Finally, the power to regulate and control inflation as such would belong to Parliament to the exclusion of the Legis­latures if, as is contended, that power were to vest in Parliament in the same manner as the power to control and regulate aeronautics or radio com­munication or the power to develop and conserve the national capital (Aeronautics, Radio, Jahannesson and Munro cases); the provinces could probably continue to regulate profit margins, prices, dividends and compensation if Parliament saw fit to leave them any room; but they could not regulate them in relation to inflation which would have become an area of exclusive federal jurisdiction.

[Page 445]

Such are the constitutional imports of the first submission in terms of the so-called subject matter of inflation.

Its effects on the principles which underlie the distribution of other powers between Parliament and the Legislatures are even more far-reaching assuming there would be much left of the distribu­tion of powers if Parliament has exclusive author­ity in relation to the "containment and reduction of inflation".

If the first submission is correct, then it could also be said that the promotion of economic growth or the limits to growth or the protection of the environment have become global problems and now constitute subject matters of national concern going beyond local provincial concern or interest and coming within the exclusive legislative author­ity of Parliament. It could equally be argued that older subjects such as the business of insurance or labour relations, which are not specifically listed in the enumeration of federal and provincial powers and have been held substantially to come within provincial jurisdiction have outgrown provincial authority whenever the business of insurance or labour have become national in scope. It is not difficult to speculate as to where this line of rea­soning would lead: a fundamental feature of the Constitution, its federal nature, the distribution of powers between Parliament and the Provincial Legislatures, would disappear not gradually but rapidly.

I cannot be persuaded that the first submission expresses the state of the law. It goes against the persistent trend of the authorities. It is founded upon an erroneous characterization of the Anti-Inflation Act. As for the cases relied upon by Counsel to support the submission, they are quite distinguishable and they do not, in my view, stand for what they are said to stand.

I have mentioned above several of the authori­ties relating to the control and regulation of local

[Page 446]

trade, to marketing, to the contract of employment and to property and civil rights, which are in contradiction with the first submission. There is no need to repeat them. But I should like to add a few quotations drawn from those authorities and others.

In the Insurance Reference case[63], the dissenting judges had referred to the magnitude of the insur­ance business, described as "enormous if not colos­sal" and thought it had attained such dimensions as to affect the body politic of Canada so that Parliament could regulate it under its general power or under its trade and commerce power. Duff J., as he then was, who, with the majority, took a different view, had this to say on the dimensions of the insurance business: (at p. 304)

"I do not think that the fact that the business of insurance has grown to great proportions affects the question in the least, The importance of some such provisions as this Act contains may be conceded. The question is: On what ground can it be contended that this is a matter which because of its importance has ceased to be substantially of local interest? The matter of the solvency and honesty of persons assuming fiduci­ary relations is at least as important as the matter of the solvency of the insurance companies. It would be dif­ficult to argue that the qualifications of trustees and executors and financial agents is a matter with which the Dominion could deal by a uniform law applicable to the whole Dominion. The Act before us illustrates the extremes to which people may be carried when acting upon the theory that because a given matter is large and of great public importance it is for that reason a matter which is not substantially local in each of the provinces".

The Judicial Committee agreed with the majori­ty of this Court. It held that the trade and com­merce power did not extend to the regulation of a particular trade and that the regulation of the insurance business-apart from such as was car­ried on by foreign companies-could not be effected by Parliament. It endorsed the position of Duff J., in the following words:

"No doubt the business of insurance is a very important one, which has attained to great dimensions in Canada.

[Page 447]

But this is equally true of other highly important and extensive forms of business in Canada which are today freely transacted under provincial authority. Where the British North America Act has taken such forms of business out of provincial jurisdiction, as in the case of banking, it has done so by express words which would have been unnecessary had the argument for the Domin­ion Government addressed to the Board from the Bar been well founded".

Attorney General for Canada v. Attorney General for Alberta, [1916] 1 A.C. 588). (at p. 597)

In the Board of Commerce case, this Court and the Judicial Committee were called upon to decide the validity of federal legislation enacted to prevent by administrative process postwar exploita­tion of scarcity in necessaries of life by hoarding as well as unfair profits and combines in restraint of trade. The legislation was not a temporary one and did not purport to be a measure to deal with a national emergency. The members of this Court divided equally. Duff J., who took the view that the legislation was invalid, made the following comment on the question whether the legislation came under the general power of Parliament:

"The consequences of this proposed view of the residuary clause, can be illustrated by the present legis­lation. The scarcity of necessaries of life, the high cost of them, the evils of excessive profit taking, are matters affecting nearly every individual in the community and affecting the inhabitants of every locality and every province collectively as well as the Dominion as a whole. The legislative remedy attempted by section 18 is one of many remedies which might be suggested. One could conceive, for example, a proposal that there should be a general restriction of credits, and that the business of money lending should be regulated by a commission appointed by the Dominion Government with powers conferred by Parliament. Measures to increase produc­tion might conceivably be proposed and to that end nationalization of certain industries and even compulso­ry allotment of labour. In truth if this legislation can be sustained under the residuary clause, it is not easy to put a limit to the extent to which Parliament through the instrumentality of commissions (having a large discre­tion in assigning the limits of their own jurisdiction, see sec. 16), may from time to time in the vicissitudes of national trade, times of high prices, times of stagnation

[Page 448]

and low prices and so on, supersede the authority of the provincial legislatures". ((1920), 60 S.C.R. 512, at p. 513).

The Judicial Committee held the legislation invalid: it was not passed because of highly excep­tional circumstances; it interfered with property and civil rights; it was not aided by the power of Parliament over trade and commerce or over criminal law.

In the Natural Products Marketing Act case[64], Duff J., referred again to the great importance of the legislation invalidated in the Board of Com­merce case: (at pp. 422, 423)

"The statute was supported on various grounds and, among others, on the ground that in the year 1919, when it was enacted, the evils of hoarding and high prices in respect of the necessaries of life had attained such dimensions 'as to affect the body politic of Canada.' Nobody denied the existence of the evil. Nobody denied that it was general throughout Canada. Nobody denied the importance of suppressing it. Nobody denied that it prejudiced and seriously prejudiced the well being of the people of Canada as a whole, or that in a loose, popular sense of the words it 'affected the body politic of Canada,' Nevertheless, it was held that these facts did not constitute a sufficient basis for the exercise of jurisdic­tion by the Dominion Parliament under the introductory clause in the manner attempted. The Board said that in special circumstances, such as those of a great war, the interest of the Dominion in the matters might conceiv­ably become of such paramount and overriding impor­tance as to lie outside the heads of section 92 and not be covered by them. But it is, they held, quite another matter to say that under normal circumstances, general Canadian policy can justify interference, on the scale of the statutes then in controversy, with the property and civil rights of the inhabitants of the provinces."

His opinion was affirmed by the Judicial Com­mittee and was explicitly approved on the question of the general power of Parliament:

"There was a further attempt to support the Act upon the general powers to legislate for the peace, order and

[Page 449]

good government of Canada. Their Lordships have already dealt with this matter in their previous judg­ments in this series and need not repeat what is there said. The judgment of the Chief Justice in this case is conclusive against the claim for validity on this ground." ([1937] A.C. 377 at p. 387).

In the Unemployment Insurance reference[65], the following submission, amongst others, was made in the factum of the Attorney General for Canada in support of the Employment and Social Insurance Act, 1935 (Can.), c. 38.

It is submitted that the Employment and Social Insur­ance Act is a law for the peace, order and good government of Canada within the scope of the residuary power of the Parliament of Canada,

(a) because unemployment presents characteristics which render it unquestionably a matter of national interest and importance and has attained such dimen­sions as to affect the body politic of the Dominion;

(b) because unemployment, through the operation of technological developments and other economic causes, has become, from a national and not a merely local or provincial point of view, a seasonal and cyclical condition and in consequence a recurrent problem of national proportions, interest and importance;

(c) because unemployment being a national problem, it is for the Parliament of Canada to determine the best method of coping with it, with a view to averting or diminishing its effects;

(d) because the said Act is, in its pith and substance, designed to deal with unemployment as a national problem to the end of preventing and abating the effects of unemployment; and

(e) because the subject matter of the said Act tran­scends the scope of provincial legislative authority under s. 92.

As in the present case, Ontario supported the federal legislation on substantially the same grounds.

Still, the majority of this Court held the legisla­tion ultra vires of Parliament and was affirmed by the Judicial Committee. Counsel for Canada is reported to have conceded that there was not "an emergency in the strict sense" but again re-invoked

[Page 450]

the great dimensions of the problem of unemploy­ment. The Judicial Committee had this to say:

"A strong appeal, however, was made on the ground of the special importance of unemployment insurance in Canada at the time of, and for some time previous to, the passing of the Act. On this point it becomes unneces­sary to do more than to refer to the judgment of this Board in the reference on the three labour Acts, and to the judgment of the Chief Justice in the Natural Prod­ucts Marketing Act which, on this matter, the Board have approved and adopted. It is sufficient to say that the present Act does not purport to deal with any special emergency. It founds itself in the preamble on general world-wide conditions referred to in the Treaty of Peace: it is an Act whose operation is intended to be perma­nent: and there is agreement between all the members of the Supreme Court that it could not be supported upon the suggested existence of any special emergency. Their Lordships find themselves unable to differ from this view." ([1937] A.C. 355, at p. 365).

It took a constitutional amendment to add "Unemployment insurance" to the list of specific federal powers. (British North America Act, 1940 (U.K.))

Those authorities, particularly the Board of Commerce case, upon which Parliament, the Prov­inces and the Courts have relied for so many years as expressing the state of the law are totally incompatible with the first submission.

This submission is predicated upon the proposi­tion that the subject matter of the Anti-Inflation Act, its pith and substance, is inflation or the containment and reduction of inflation.

To characterize a law is but to give a name to its content or subject matter in order to classify it into one or the other of the classes of matters men­tioned in s. 91 or s. 92 of the Constitution. These classes of matters are themselves so many labels bearing a more or less specific name, except the general power of Parliament to make laws in relation to matters not coming within the classes of matters exclusively assigned to the Provinces—a label specific only in a negative way—and except the power of the Provinces in relation to all mat­ters of a merely local or private nature—a label

[Page 451]

unspecific except mainly with regard to dimen­sions—. This leaves some forty-six specific labels, thirty-one of which are in the federal list and fifteen of which are in the provincial list.

But there are in language a great many expres­sions other than those used for the labels in the federal and the provincial lists. Those innumerable other expressions, often broader and more exten­sive than those of s. 91 and s. 92, may, apart from any issue of colourability, be employed in the title of a statute or to describe a statute. The expression "inflation" or "the containment and reduction of inflation" are of that nature. Needless to say, their use in the title of a statute or as an attempt to characterize a statute does not suffice by far in disposing of the characterization or in taking the matter with which in fact they deal outside the ambit of provincial jurisdiction. It is necessary to look at the reality of the matter or of the matters with which in effect they deal.

It is possible to invent such matters by applying new names to old legislative purposes. There is an increasing tendency to sum up a wide variety of legislative purposes in single, comprehensive designations. Control of infla­tion, environmental protection, and preservation of the national identity or independence are examples.

Many matters within provincial jurisdiction can be transformed by being treated as part of a larger subject or concept for which no place can be found within that jurisdiction. This perspective has a close affinity to the notion that there must be a single, plenary power to deal effectively and completely with any problem. The future of the general power, in the absence of emergency, will depend very much on the approach that the courts adopt to this issue of characterization.

"Sir Lyman Duff and the Constitution" by Professor Gerald LeDain, Q.C., as he then was, (1974), 12 Osgoode Hall Law Journal, 261 at p. 293.

(See also "Unity and Diversity in Canadian Federalism" by Professor W.R. Lederman, Q.C.,

[Page 452]

(1975), 53 Canadian Bar Review 596. I am much indebted to these two articles).

The "containment and reduction of inflation" can be achieved by various means including mone­tary policies,—a federal field—, the reduction of public expenditures,—federal, provincial and municipal—and the restraint of profits, prices and wages,—a federal or a provincial field depending on the sector—.

I have no reason to doubt that the Anti-Infla­tion Act is part of a more general program aimed at inflation and which may include fiscal and monetary measures and government expenditure policies. I am prepared to accept that inflation was the occasion or the reason for its enactment. But I do not agree that inflation is the subject matter of the Act. In order to characterize an enactment, one must look at its operation, at its effects and at the scale of its effects rather than at its ultimate purpose where the purpose is practically all embracing. If for instance Parliament is to enact a tax law or a monetary law as a part of an anti-inflation program no one will think that such laws have ceased to be a tax law or a monetary law and that they have become subsumed into their ulti­nate purpose so that they should rather be charac­terized as "anti-inflation laws", an expression which, in terms of actual content, is not meaning­ful. They plainly remain and continue to be called a tax law or a monetary law, although they have been enacted by reason of an inflationary situa­tion. When the Bank of Canada changes its rate of interest, it must obviously take inflation into account; even if inflation is the main reason for such a measure, this measure will still be charac­terized by everyone as a central banking measure relating to interest. The same would also be said of a measure relating to the issue of currency; although it may have been dictated by inflationary trends, it remains a measure relating to currency, coinage or the issue of paper money. Similarly, the Anti-Inflation Act is, as its preamble states, clearly a law relating to the control of profit margins, prices, dividends and compensation, that is, with respect to the provincial private sector, a law relating to the regulation of local trade, to contract

[Page 453]

and to property and civil rights in the provinces, enacted as part of a program to combat inflation. Property and civil rights in the provinces are, for the greater part, the pith and substance or the subject matter of the Anti-Inflation Act. Accord­ing to the Constitution, Parliament may fight inflation with the powers put at its disposal by the specific heads enumerated in s. 91 or by such powers as are outside of s. 92. But it cannot, apart from a declaration of national emergency or from a constitutional amendment, fight inflation with powers exclusively reserved to the provinces, such as the power to make laws in relation to property and civil rights. This is what Parliament has in fact attempted to do in enacting the Anti- Infla­tion Act.

The authorities relied upon by Counsel for Canada and Ontario in support of the first submis­sion are connected with the constitutional doctrine that became known as the national concern doctrine or national dimension doctrine. Sir Montague Smith was the first, I believe, to use the expression "a subject of general concern to the Dominion" in Russell v. The Queen[66] at p. 841, and Lord Watson, in the Local Prohibition case[67], coined the two names later given to the doctrine: (at p. 361)

"Their Lordships do not doubt that some matters, in their origin local and provincial, might attain such dimensions as to affect the body politic of the Dominion, and to justify the Canadian Parliament in passing laws for their regulation or abolition in the interest of the Dominion. But great caution must be observed in distin­guishing that which is local and provincial and therefore within the jurisdiction of the provincial legislatures, and that which has ceased to be merely local or provincial, and has become matter of national concern, in such a sense as to bring it within the jurisdiction of the Parlia­ment of Canada".

The Russell case is a special case. It is not easy to reconcile with the Local Prohibition case unless it be thought that the promotion of temperance is

[Page 454]

a matter of concurrent jurisdiction such as agricul­ture and immigration. Lord Watson implied some reservations about the ratio in Russell when he wrote as follows in the Local Prohibition case: (at p. 362)

The judgment of this Board in Russell v. Reg. has relieved their Lordships from the difficult duty of con­sidering whether the Canada Temperance Act of 1886 relates to the peace, order and good government of Canada, in such sense as to bring its provisions within the competency of the Canadian Parliament ... neither the Dominion nor the Provinces were represented in the argument . .. It .. . appears ... that the decision in Russell v. Reg. must be accepted as an authority to the extent to which it goes, namely, that the restrictive provisions of the Act of 1886, when they have been duly brought into operation in any provincial area within the Dominion, must receive effect as valid enactments relat­ing to the peace, order and good government of Canada."

Viscount Haldane was also to make an attempt at explaining Russell away in Snider. It is perhaps unfortunate that a case with a history as cheq­uered as Russell be sometime regarded as the authority which gave birth to the national concern doctrine. The issue was the validity of the Canada Temperance Act, 1878 (it was to be included in subsequent revisions of the federal statutes). This Act, wherever put in force in Canada, prohibited the sale of intoxicating liquors except in wholesale quantities or for certain purposes, regulated traffic in the excepted cases and made violations of the prohibitions and regulations offences punishable by fine and third and subsequent offences punishable by imprisonment. The Act was held to be intra vires of Parliament. The Judicial Committee came close to characterizing the Act as relating to criminal law; however it found it unnecessary to classify its provisions in the classes of subjects enumerated in s. 91 of the Constitution; it found that the subject of the Act was to promote temperance throughout Canada by means of a uniform law; this subject, although it affected property and civil rights in some incidental way, did not fall within any of the classes of subjects assigned exclusively to the provincial legislatures and was one of general concern.

[Page 455]

Even before the Russell case, it had been assumed by the Judicial Committee in Citizens Insurance Company of Canada v. Parsons[68], at pp. 116, 117, that the incorporation of companies for objects other than provincial falls within the gener­al power of Parliament as it does not come within the enumerated powers of the provinces. This was affirmed later in John Deere Plow Company v. Wharton[69], at p. 340 with the additional comment that this subject "may be properly regarded as a matter affecting the Dominion generally and cov­ered by the expression `the peace, order, and good government of Canada'."

In the Aeronautics case, the Judicial Committee held that the whole subject of aeronautics belonged to exclusive federal jurisdiction: an empire treaty under s. 132 which gave jurisdiction to Parliament covered almost every conceivable matter relating to aerial navigation; Parliament could also legislate with respect to other aspects of the subject under some of its specific powers; if any small portion of the subject was left, jurisdic­tion to deal with it was not expressly vested in the provinces and it necessarily fell within federal jurisdiction; the Judicial Committee was also influenced by the fact that "aerial navigation is a class of subject which has attained such dimen­sions as to affect the body politic of the Dominion".

The ratio of the Radio case is not altogether clear. It is linked with the power to implement treaties other than empire, treaties, a question with which we are not concerned here. It was held that the control and regulation of radio communication came within exclusive federal authority because broadcasting was an undertaking connecting prov­inces together and extending beyond the limits of provinces; it also came under the power of Parlia­ment with respect to telegraphs, this word being given a wide sense; the Aeronautics case however could not be put on one side; there were various sentences in the Aeronautics case "which might be

[Page 456]

literally transcribed to" the Radio case; federal jurisdiction being based on the "pre-eminent claims of s. 91", it was unnecessary to discuss whether broadcasting could have been held to fall within property and civil rights or matters of a merely local or private nature.

In the Canada Temperance Federation case, the Judicial Committee was asked to overrule Russell. This the Judicial Committee was not prepared to do Russell having stood for over sixty years and the Canada Temperance Act having been put in operation for varying periods in many places. It fell upon Viscount Simon again to explain Russell. He quoted Viscount Haldane's explanation accord­ing to which Russell could only be supported on the assumption that, in 1878, the evil of intemper­ance was so great and general as to amount to a situation of national emergency, and he wrote: (at p. 205)

The first observation which their Lordships would make on this explanation of Russell's case is that the British North America Act nowhere gives power to the Dominion Parliament to legislate in matters which are properly to be regarded as exclusively within the compe­tence of the provincial legislatures merely because of the existence of an emergency. Secondly, they can find nothing in the judgment of the Board in 1882 which suggests that it proceeded on the ground of emergency; there was certainly no evidence before that Board that one existed. The Act of 1878 was a permanent, not a temporary, Act, and no objection was raised to it on that account. In their Lordships' opinion, the true test must be found in the real subject matter of the legislation: if it is such that it goes beyond local or provincial concern or interests and must from its inherent nature be the concern of the Dominion as a whole (as, for example, in the Aeronautics case and the Radio case) then it will fall within the competence of the Dominion Parliament as a matter affecting the peace, order and good government of Canada, though it may in another aspect touch on matters specially reserved to the provincial legislatures. War and pestilence, no doubt, are instances; so, too, may be the drink or drug traffic, or the carrying of arms.

[Page 457]

It is to be doubted that Viscount Simon intended to formulate an important constitutional doctrine on the basis of a case as exceptional as Russell. But he had to find a form of words that would account for Russell. It is significant that, less than a year later, the Judicial Committee was to revert to the national emergency doctrine in Co-opera­tive Committee on Japanese Canadians v. Attor­ney General for Canada[70].

In Johannesson, this Court upheld exclusive fed­eral jurisdiction over the subject of aeronautics even though this jurisdiction could no longer be supported by an imperial treaty and by s. 132 of the Constitution. The approaches taken by various members of this Court vary. The Canada Temperance Federation case was referred to and quoted together with the Radio case and the Aeronautics case. It was pointed out that in obiter the Aeronautics case supported federal jurisdiction apart from s. 132 and this view seems to have met with the approval of the majority.

In the Munro case, this Court referred to the Canada Temperance case and to Johannesson. It held that the subject matter of the National Capi­tal Act was the establishment of a region consist­ing of the seat of the Government of Canada and a surrounding area which was to be developed, conserved and improved "in order that the nature and character of the seat of the Government of Canada may be in accordance with its national signifi­cance." That subject was a "single" matter of national concern and was not mentioned in s. 91 and s. 92 of the Constitution; it therefore came within the sole jurisdiction of Parliament.

In my view, the incorporation of companies for objects other than provincial, the regulation and control of aeronautics and of radio, the development, conservation and improvement of the Na­tional Capital Region are clear instances of dis­tinct subject matters which do not fall within any of the enumerated heads of s. 92 and which, by nature, are of national concern.

[Page 458]

I fail to see how the authorities which so decide lend support to the first submission. They had the effect of adding by judicial process new matters or new classes of matters to the federal list of powers. However, this was done only in cases where a new matter was not an aggregate but had a degree of unity that made it indivisible, an identity which made it distinct from provincial matters and a sufficient consistence to retain the bounds of form. The scale upon which these new matters enabled Parliament to touch on provincial matters had also to be taken into consideration before they were recognized as federal matters: if an enumerated federal power designated in broad terms such as the trade and commerce power had to be con­strued so as not to embrace and smother provincial powers (Parson's case) and destroy the equilibri­um of the Constitution, the Courts must be all the more careful not to add hitherto unnamed powers of a diffuse nature to the list of federal powers.

The "containment and reduction of inflation" does not pass muster as a new subject matter. It is an aggregate of several subjects some of which form a substantial part of provincial jurisdiction. It is totally lacking in specificity. It is so pervasive that it knows no bounds. Its recognition as a federal head of power would render most provin­cial powers nugatory.

I should add that inflation is a very ancient phenomenon, several thousands years old, as old probably as the history of currency. The Fathers of Confederation were quite aware of it.

[Page 459]

It was argued that other heads of power enume­rated in s. 91 of the Constitution and which relate for example to the regulation of trade and com­merce, to currency and coinage, to banking, incor­poration of banks and the issue of paper money may be indicative of the breadth of Parliament's jurisdiction in economic matters. They do not enable Parliament to legislate otherwise than in

relation to their objects and it was not argued that the Anti-Inflation Act was in relation to their objects. The Act does not derive any assistance from those powers any more than the legislation found invalid in the Board of Commerce case.

For those reasons, the first submission fails. —II—

The second submission made in support of the validity of the Anti-Inflation Act is that the infla­tionary situation was in October of 1975 and still is such as to constitute a national emergency of the same significance as war, pestilence or insurrection and that there is in Parliament an implied power to deal with the emergency for the safety of Canada as a whole; that such situation of excep­tional necessity justified the enactment of the impugned legislation. The following cases, amongst others, were relied upon: Fort Frances Pulp and Power Co. v. Manitoba Free Press[71]; Co-operative Committee on Japanese Canadians v. Attorney General for Canada[72]; Reference as to the Validity of the Wartime Leasehold Regulations[73].

Before I deal with this second submission I should state at the outset that I am prepared to assume the validity of the following propositions:

the power of Parliament under the national emergency doctrine is not confined to war situa­tions or to situations of transition from war to peace; an emergency of the nature contemplated by the doctrine may arise in peace time;

inflation may constitute such an emergency;

Parliament may validly exercise its national emergency powers before an emergency actually occurs; a state of apprehended emergency or crisis suffices to justify Parliament in taking preventive measures including measures to contain and

[Page 460]

reduce inflation where inflation amounts to state of apprehended crisis.

In order to decide whether the Anti-Inflation Act is valid as a national emergency measure, one must first consider the way in which the emergen­cy doctrine operates in the Canadian Constitution; one must find, in the second place whether the Anti-Inflation Act was in fact enacted on the basis that it was a measure to deal with a national emergency in the constitutional sense.

In referring to the emergency doctrine, the Judi­cial Committee has sometimes used expressions which would at first appear to indicate that there is no difference between the national dimension or national concern doctrine and the emergency doctrine, the latter being but an instance of the first, or that the distribution of powers between Parlia­ment and the provincial legislatures is not altered by a state of emergency, or again that when Parliament deals with a matter which in normal times would be an exclusively provincial matter, it does so under a federal aspect or in a new relation which lies outside of s. 92 of the Constitution.

Counsel for Canada and for Ontario have relied upon them for the proposition that the difference between the national concern doctrine and the emergency doctrine is one of semantics, which perhaps explains why the Ontario factum does not support the validity of the Anti-Inflation Act on the basis of an emergency although Counsel for Ontario said that his position did not, because of that reason of semantics, differ from that of Coun­sel for Canada. The latter insisted that the differ­ence between the two doctrines is only one of form but made two separate submissions based on each of the two doctrines.

I disagree with the proposition that the national concern or national dimension doctrine and the emergency doctrine amount to the same. Even if it could be said that "where an emergency exists it is the emergency which gives the matter its dimension

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of national concern or interest" (LeDain, op. cit. p. 291) the emergency does not give the matter the same dimensions as the national con­cern doctrine applied for instance in the Aeronau­tics case, in the Johannesson case or in the Munro case. The national concern doctrine illustrated by these cases applies in practice as if certain heads such as aeronautics or the development and con­servation of the national capital were added to the categories of subject matters enumerated in s. 91 of the Constitution when it is found by the Courts that, in substance, a class of subjects not enume­rated in either s. 91 or s. 92 lies outside the first fifteen heads enumerated in s. 92 and is not of a merely local or private nature. Whenever the na­tional concern theory is applied, the effect is per­manent although it is limited by the indentity [sic] of the subject newly recognized to be of national dimensions. By contrast, the power of Parliament to make laws in a great crisis knows no limits other than those which are dictated by the nature—of the crisis. But one of those limits is the temporary nature of the crisis.

In my view, the verbal precautions taken by the Judicial Committee in the Fort Frances case, pp. 704 to 706, and in other cases reflect its concern over the fact that a power of such magnitude as the national emergency power had to be inferred. But further passages, some of which are even to be found in the very judgments which in other parts appear to say the contrary, make clear that, in practice, the emergency doctrine operates as a partial and temporary alteration of the distribution of powers between Parliament and the Provincial Legislatures.

Thus, in the Fort Frances case, where the emer­gency doctrine was first applied, and the language of which is otherwise so guarded, Viscount Hal­dane said, at p. 704:

"The general control of property and civil rights for normal purposes remains with the Provincial Legisla­tures. But questions may arise by reason of the special circumstances of the national emergency which concern nothing short of the peace, order and good government of Canada as a whole".

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The implication is inescapable that the control of property and civil rights for purposes other than normal purposes may pass to Parliament, because of the emergency. But it remains a control of property and civil rights in the provinces.

Later, in the same case, and more tellingly, Viscount Haldane referred to the end of a crisis and had this to say:

"In such a case the law as laid down for the distribution of powers in the ruling instrument "(the Constitution)" would have to be invoked". p. 706.

Therefore, the law as laid down for the distribu­tion of powers in the ruling instrument could not be invoked during the crisis.

In the Labour Conventions case[74], at p. 353, Lord Atkin referred to the emergency doctrine and wrote that the circumstances of that case were far from

"the conditions which may override the normal distribu­tion of powers in ss. 91 and 92".

The same words were repeated by Lord Morton of Henryton in Canadian Federation of Agricul­ture v. Attorney General for Quebec[75], at p. 198.

In the Japanese Canadians case, Lord Wright wrote at p. 101:

"if it be clear that an emergency has not arisen, or no longer exists, there can be no justification for the exer­cise or continued exercise of the exceptional powers. The rule of law as to the distribution of powers between the Parliaments (sic) of the Dominion and the Parliaments of the Provinces comes into play".

In Reference re Wartime Leasehold Regu­lations[76], at p. 130, Rinfret J., as he then was, characterized the impugned regulations as follows:

There is no doubt that under normal conditions the subject matter of rents belongs to the provincial jurisdic­tion under the Head of Property and Civil Rights, in Section 92 of The British North America Act. There is

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equally no doubt that under abnormal conditions, such as the existence of war, parliament may competently assume jurisdiction over rents.

It is true, however, that other members of the Court used less plain language in that case.

Perhaps it does not matter very much whether one chooses to characterize legislation enacted under the emergency power as legislation relating to the emergency or whether one prefers to consid­er it as legislation relating to the particular subject matter which it happens to regulate. But if one looks at the practical effects of the exercise of the emergency power, one must conclude that it oper­ates so as to give to Parliament for all purposes necessary to deal with the emergency, concurrent and paramount jurisdiction over matters which would normally fall within exclusive provincial jurisdiction. To that extent, the exercise of that power amounts to a temporary pro tanto amendment of a federal Constitution by the unilateral action of Parliament. The legitimacy of that power is derived from the Constitution: when the security and the continuation of the Constitution and of the nation are at stake, the kind of power commensu­rate with the situation "is only to be found in that part of the Constitution which establishes power in the State as a whole". (Viscount Haldane in the Fort Frances case, p. 704).

The extraordinary nature and the constitutional features of the emergency power of Parliament dictate the manner and form in which it should be invoked and exercised. It should not be an ordinary manner and form. At the very least, it cannot be a manner and form which admits of the slightest degree of ambiguity to be resolved by interpreta­tion. In cases where the existence of an emergency may be a matter of controversy, it is imperative that Parliament should not have recourse to its emergency power except in the most explicit terms indicating that it is acting on the basis of that power. Parliament cannot enter the normally forbidden area of provincial jurisdiction unless it gives an unmistakable signal that it is acting pursuant to its extraordinary power. Such a signal is not conclusive to support the legitimacy of the action of Parliament but its absence is fatal. It is

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the duty of the courts to uphold the Constitution, not to seal its suspension, and they cannot decide that a suspension is legitimate unless the highly exceptional power to suspend it has been expressly invoked by Parliament. Also, they cannot entertain a submission implicitly asking them to make findings of fact justifying even a temporary interfer­ence with the normal constitutional process unless Parliament has first assumed responsibility for affirming in plain words that the facts are such as to justify the interference. The responsibility of the Courts begins after the affirmation has been made. If there is no such affirmation, the Constitution receives its normal application. Otherwise, it is the Courts which are indirectly called upon to proclaim the state of emergency whereas it is essential that this be done by a politically responsible body.

We have not been referred to a single judicial decision, and I know of none, ratifying the exercise by Parliament of its national emergency power where the constitutional foundation for the exer­cise of that power had not been given clear utterance to. And, apart from judicial decisions, I know of no precedent where it could be said that Parlia­ment had attempted to exercise such an extraordi­nary power by way of suggestion or innuendo.

The use of the national emergency power enables Parliament to override provincial laws in potentially every field: it must be explicit.

This is not to say that Parliament is bound to use ritual words. Words such as "emergency" are not necessarily required and they may indeed be used in a non constitutional sense since Parliament can enact emergency or urgent legislation in fields prima facie coming within its normal authority. Thus the Maritime Transportation Union Trustee Act, 1963 (Can.), c. 17, referred in its preamble to a report indicating:

"that within the shipping industry in Canada an emer­gency situation has developed that endangers navigation and shipping on the St. Lawrence Seaway with a conse­quent threat to the economy of Canada, the international

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relations of Canada, and peace, order and good government on the St. Lawrence Seaway, and in the ports and on the sea coasts of Canada".

[Emphasis added.]

In such cases, urgent or emergency legislation is enacted by Parliament under its ordinary powers. What is required from Parliament when it purports to exercise its extraordinary emergency power in any situation where a dispute could arise as to the existence of the emergency and as to the constitutional foundation of its action, is an indica­tion, I would even say a proclamation, in the title, the preamble or the text of the instrument, which cannot possibly leave any doubt that, given the nature of the crisis, Parliament in fact purports to act on the basis of that power. The statutes of Canada and the Canada Gazette contain several examples of laws, proclamations and orders-in-council which leave room for no doubt that they have been enacted pursuant to the exceptional emergency power of Parliament, or issued or passed under the authority of an act of Parliament enacted by virtue of that power. Those dealing with wartime or post wartime conditions usually present no difficulty given the global aspect of modern warfare, the total conscription of activities which it is susceptible to impose upon nations, and the general recognition of the factual situation. The trigger of the War Measures Act, R.S.C. 1970, c. W-2, is the issuance of a proclamation declaring a state of war or a state analogous to war. The National Emergency Transitional Powers Act, 1945 (Can.), c. 25, and The Con­tinuation of Transitional Measures Act, 1947 (Can.), c. 16, both affirmed the continuation of a national emergency. The Emergency Powers Act, 1951, R.S.C. 1952, c. 96, enacted during the Korean war affirmed the existence of an interna­tional emergency threatening the security of Canada.

Other measures have dealt with peace time emergencies. The Energy Supplies Emergency Act, 1973-74 (Can.), c. 52,

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apparently as yet unproclaimed, has a long title:

An Act to provide a means to conserve supplies of petroleum products within Canada during periods of national emergency caused by shortages or market dis­turbances affecting the national security and welfare and the economic stability of Canada, and to amend the National Energy Board Act.

[Emphasis added]

— It empowers the Executive to proclaim the state of emergency and to authorize a program for the mandatory allocation of petroleum products within Canada.

Needless to say, I express no view as to the constitutionality of those measures, but I quote them as illustrations of cases where there could be no uncertainty as to the constitutional basis upon which Parliament had purported to act.

The Anti-Inflation Act fails in my opinion to pass the test of explicitness required to signal that it has been enacted pursuant to the national emer­gency power of Parliament.

The preamble has been much relied upon:

WHEREAS the Parliament of Canada recognizes that inflation in Canada at current levels is contrary to the interests of all Canadians and that the containment and reduction of inflation has become a matter of serious national concern;

AND WHEREAS to accomplish such containment and reduction of inflation it is necessary to restrain profit margins, prices, dividends and compensation;

The words "a matter of serious national con­cern" have been emphasized.

I remain unimpressed.

The death penalty is a matter of national con­cern. So is abortion. So is the killing or maiming of innumerable people by impaired drivers. So is the traffic in narcotics and drugs. One can conceive of several drastic measures, all coming within the ordinary jurisdiction of the Parliament of Canada, and which could be preceded by a preamble recit­ing that a given situation had become a matter of serious national concern. I fail to see how the

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adding of the word "serious" can convey the mean­ing that Parliament has decided to embark upon an exercise of its extraordinary emergency power. The Canada Water Act, 1969-70 (Can.), c. 52 on the constitutionality of which, again, I refrain from expressing any view, contains a preamble where it is stated that pollution of the water resources of Canada has become "a matter of urgent national concern". Is the Canada Water Act an emergency measure in the constitutional sense? It does not seem to present itself as such. How is a matter of serious national concern to be distinguished from a matter of urgent national concern? I cannot read the preamble of the Anti-Inflation Act as indicating that the act was passed to deal with a national emergency in the constitu­tional sense.

Counsel for Canada has also insisted upon the temporary nature of the Anti-Inflation Act. I note that the duration of the act could, under s. 46, be extended by order-in-council with the approval of both Houses of Parliament, although I am not inclined to attach undue importance to this point. Nonetheless, while it would be essential to the validity of a measure enacted under the national emergency power of Parliament that it be not permanent, still the temporary character of an act is hardly indicative and in no way conclusive that it constitutes a measure passed to deal with a national emergency: Parliament can and often does enact temporary measures relating to matters coming within its. normal jurisdiction.

I have dealt with the arguments based on the preamble and the limited duration (s. 46) of the Anti-Inflation Act.

There is nothing in the rest of the Act and in the Guidelines to show that they have been passed to deal with a national emergency. There is much, on the other hand, within the Act and the Guidelines, in terms of actual or potential exemptions which is inconsistent with the nature of a global war

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launched on inflation considered as a great emer­gency. It would not be within our province to judge the efficacy and wisdom of the legislation if it were truly enacted to deal with an extraordinary crisis but its lack of comprehensiveness may be indica­tive of its ordinary character.

Under s. 4(2)(a) and (b) of the Guidelines, the provisions to restrain prices and profit margins do not apply to the sale of unprocessed agricultural food or feed products by the original producer thereof nor to the sale of unprocessed fish and fish products by a fisherman. Thus the majority of farmers and fishermen are exempted from the Guidelines and their prices are passed on to processors, wholesalers, retailers and consumers of food.

As indicated in the policy statement tabled in the House of Commons by the Minister of Finance the provinces are asked to undertake a program of rent control but they remain free to do as they please in this field. Rents are an important element of the cost of living and were centrally controlled during the national emergency of the last World War.

Under s. 4(2) of the Anti-Inflation Act, the guidelines for the restraint of prices and profit margins do not apply to the private sector suppliers of commodities and services who employ less than five hundred persons in Canada nor to persons carrying on business in the construction industry who employ less than twenty persons in Canada and the Guidelines for the restraint of compensation do not apply to the employees of those suppliers and contractors. We have not been provided with figures which would indicate the magnitude of this exemption, but I would venture to say that it involves at least several hundred thousand persons. Furthermore, and although the federal public sector is governed by the Anti-Inflation Act, by Order-in-Council P.C. 1976-176, dated January 27, 1976, the Government of Canada has amended the Guidelines and exempted from the price and profits restraints the federal

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public sector except seventeen Crown Corporations and agencies.

Also, the Anti-Inflation Act does not apply to the provincial public sector except by provincial consent. The provincial public sector is a most substantial one as it comprises all provincial offices, all municipal offices, all public bodies performing a function of government in the provinces and all other bodies as provide what are generally considered to be public services. These would pre­sumably include all the public education institu­tions, all public hospitals, all public producers of energy, etc. A province which opts into the scheme of the Anti-Inflation Act may do so for only part of the Guidelines to only part of the provincial public sector.

It may be argued that those exemptions and options were put into the Act and the Guidelines in order to make their administration lighter and easier or as a matter of federal-provincial comity. Still, a situation of national emergency does not, at first sight, lend itself to opting in and opting out formulae nor to large scale exemptions.

We have been invited to go outside the Act and the Guidelines and consider extrinsic evidence and take judicial notice of facts of public knowledge.

It is a fact for instance that provincial govern­ments were seriously concerned about rising infla­tion and that eight of the ten provinces have entered into agreements with the Government of Canada for the application of the federal Guidelines. But I cannot regard that concern and these agreements as a recognition that Parliament was acting under its national emergency power when it enacted the Anti-Inflation Act. Only Parliament, or under a law of Parliament, the Government of Canada, can assume responsibility for declaring a state of national emergency; it would be delicate and probably unwarranted for the Courts to count provinces and to evaluate the degree of provincial

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support in such a matter. However, to the extent that it may be thought that provincial support was forthcoming in this case, it should be recalled that five of the ten provinces chose not to take part in the proceedings; of the five that did take part, two, British Columbia and Alberta, conceded that Par­liament had the authority to enact legislation such as the Anti-Inflation Act in a state of national emergency but argued that the Act was invalid as there was no evidence that an emergency existed; two provinces, Quebec and Saskatchewan, made the same concession but took no position as to whether the Act was valid on an emergency basis; the remaining province, Ontario, supported the validity of the Act since there was no distinction, in the opinion of its counsel, between the emergen­cy basis and the other main basis upon which Ontario pleaded in favour of the Act. In the result, we are left with a federal statute which in no way refers ,to a situation of national emergency supported by one province whose support was quali­fied by the opinion that national emergency is synonymous with national concern.

We were provided with a wealth of extrinsic material the consideration of which, it was expected, would enable us to make a finding of fact as to whether or not inflation had reached a level which justified Parliament's reliance on its extraordinary power or as to whether or not there was a rational basis for Parliament to judge that it could rely upon that power. I do not reach that point, of course, since I hold the view that Parliament did not rely upon its extraordinary power. It seems to me however that, if we are entitled to look at extrinsic material such as a policy statement tabled in the House of Commons by the Minister of Finance, statistics, an economic study, a speech delivered by the Governor of the Bank of Canada, it is not improper for us to read Hansard in this case, in order not to construe and apply the provi­sions of the Anti-Inflation Act, but to ascertain its constitutional pivot. A perusal of the Debates reveals that between October 14, 1975, when the policy statement was tabled,—the Anti-Inflation Bill C-73

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was read for the first time in the Com­mons on October 16, 1975,—and the third reading and the passing of the bill in the Senate on Decem­ber 10, 1975, the question was raised repeatedly in both Houses and in Committee as to what was the constitutional foundation of the bill and as to whether it was not necessary expressly to declare a state of emergency in order to insure its constitu­tionality. The replies vary but slightly; their gener­al tenor is to the effect that Parliament has jurisdiction to pass the bill as drafted under the peace, order and good government power—which is rather unrevealing—in addition to other specific federal powers enumerated in s. 91 of the Consti­tution. The closest that a Minister comes to referring to an emergency is in reply to the question whether it was the government's position that con­ditions of real emergency did exist at that moment. The answer given by the Acting Prime Minister is as follows:

"... the legislation now before the House rests, in part at least, upon the peace, order and good government clause in the Constitution, and therefore in that sense there is an emergency". Commons Debates, October 22, 1975, p. 8440.

This however is qualified by a statement made the same day by the same Minister in reply to a suggestion that it was necessary that the bill be explicit with respect to the mention of a national emergency. The statement reads as follows:

Mr. Speaker, when this bill was being drafted the government had the advice of the law officers of the Crown who advised us that it could be defended under the peace, order and good government provisions of the British North America Act and perhaps under other provisions as well. A decision was made to draft it in this form on the best advice the government could receive. Commons Debates, October 22, 1975, p. 8443.

I finally wish to quote a statement made by the Minister of Finance, who had introduced the Anti-Inflation Bill, when he appeared before the Stand­ing Committee on Finance, Trade and Economic

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Affairs. He was asked about the constitutional foundation of the Bill. Here is his reply:

... All depends on the phrase of Section 91 you have just read quoting "peace, order and good government". The opinion of the government on constitutionality is based on some cases that were pleaded before the judi­cial committee of the privy council in 1946, for instance the Canada Temperance Federation case, and, since then before the Supreme Court, Thamieson and St. Paul (presumably Johannesson v. Rural Municipality of West St. Paul) and Munro and the National Capital Commission. Accordingly, when you have a scheme which goes beyond reasons that are strictly local, provin­cial or private, when you have a national scheme like this one, there can be a federal jurisdiction under which to legislate on those matters. It is within this frame of analysis that we assume the federal government has the necessary jurisdiction for this bill.

Minutes of Proceedings and Evidence of the Standing Committee on Finance and Economic Affairs, Issue No. 62, October 30, 1975, p. 46.

Reliance upon those statements is not essential to my conclusions. However, they reinforce my opinion that the Anti-Inflation Act was enacted in this form because it was believed, erroneously, that Parliament had the Ordinary power to enact it under the national concern or national dimension doctrine, that is, a basis which coincides identically with the first submission made to us by Counsel for Canada. Parliament did not purport to enact it under the extraordinary power which it possesses in time of national crisis.

The Anti-Inflation Act is in my opinion ultra vires of Parliament in so far at least as it applies to the provincial private sector; but severability having not been pleaded by Counsel for Canada, I would declare the Act ultra vires of Parliament in whole.

* * *

The second constitutional question is predicated upon the validity of the Anti-Inflation Act. Since however this is a constitutional reference I believe I should state my opinion with respect to the second question as if I held the view that the

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Anti-Inflation Act is intra vires. I agree with the Chief Justice's disposition of the second question.

In the result, I would answer the two questions referred to this Court as follows:

Question 1: Yes. The Anti-Inflation Act is ultra vires of the Parliament of Canada in whole.

Question 2: No. The agreement is not effective to render the Anti-Inflation Act binding on and the Guidelines made thereunder applicable to the provin­cial public sector in Ontario as defined in the agreement.

Questions answered as follows:

Question 1. (BEETZ and DE GRANDPRÉ JJ. dissenting): No. The Act is not ultra vires in whole or in part.

Question 2. (per curiam): No. The agreement is not effective to render the Anti-Inflation Act binding on and the Guidelines made thereunder applicable to the provincial public sector in Ontario as defined in the agreement.

Solicitor for the Attorney General of Canada: D. S. Thorson, Ottawa.

Solicitor for the Attorney General of British Columbia: David H. Vickers, Victoria.

Solicitor for the Attorney General of Manitoba: G. E. Pilkey, Winnipeg.

Solicitor for the Attorney General of Ontario: F. W. Callaghan, Toronto.

Solicitor for the Attorney General of Saskatch­ewan: K. Lysyk, Regina.

Solicitor for the Attorney General of Quebec: Robert Normand, Quebec.

Solicitor for the Canadian Labour Congress: Soloway, Wright, Houston & Co., Ottawa.

Solicitor for the Ontario Teachers' Federation: Blake, Cassels & Graydon, Toronto.

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Solicitors for the Renfrew County Division, District 25 Ontario Secondary School Teachers' Federation: Golden, Levinson, Toronto.

Solicitors for the Ontario Public Service Employees' Union, for the Canadian Union of Public Employees and for the Canadian Union of Public Employees Local 1230: Cameron, Brewin & Scott, Toronto.

Solicitor for the United Steel Workers of America: Lorne Ingle, Toronto.