Lord Atkin:-

This is an appeal from the judgment of the Supreme Court, delivered on 17th June 1936, in the matter of a reference by the Governor-General in Council, dated 5th November 1935, asking whether the Employment and Social Insurance Act, 1935, was ultra vires of the Parliament of Canada. The majority of the Supreme Court, Rinfret, Cannon, Crocket and Kerwin, JJ. answered the question in the affirmative, the Chief Justice and Davis, J. dissenting. The Act in its preamble recited Art. 23 of the Treaty of Peace, by which in the Covenant of the League of Nations the members of the League agreed that they would endeavour to maintain fair and humane conditions of labour (omitting however in the recital that this agreement was subject to and in accordance with the provisions of international conventions existing or hereafter to be agreed), and Art. 427 of the said treaty, by which it was declared that the well-being, physical, moral and intellectual, of industrial wage earners, was of supreme international importance. It then recited that it was desirable to discharge the obligations to Canadian labour assumed under the provisions of the said treaty; and that it was essential for the peace, order and good government of Canada to provide for a national employment service and insurance against unemployment, andc. It consists of five Parts, Employment and Social Insurance Commission (Ss. 4-9), Employment Service (Ss. 10-14), Unemployment Insurance (Ss. 15-38), National Health (Ss. 39-41), and General (Ss. 42-48). In substance the Act provides for a system of compulsory unemployment insurance. Part 1 sets up a commission charged with administering the Act and obtaining information and making proposals to the Governor in Council for making provision for the assistance of persons during unemployment who would not be entitled to unemployment insurance benefit under Part 3. Part 2 provides for the organization by the commission of employment offices similar to the labour exchanges in the United Kingdom. Part 3 provides for unemployment insurance, while Part 4 merely provides that the commission shall co-operate with other authorities in the Dominion or Provinces and shall collect information concerning any plan for providing medical care or compensation in cases of ill-health. Part 5 provides for regulations and reports. There are three schedules. The first defines employment within the meaning of Part 3 and excepted employments which include employment in agriculture and forestry, in fishing, and in lumbering and logging. The second enacts the weekly rates of contribution and rules as to payment and recovery of contributions paid by employers on behalf of employed persons. The third enacts the rates of unemployment benefit and supplementary provisions concerning the payment of unemployment benefit.

The substance of the Act is contained in the sections constituting Part 3. They set up a now familiar system of unemployment insurance under which persons engaged in employment, as defined in the Act, are insured against unemployment. The funds required for making the necessary payments are to be provided partly from money provided by Parliament, partly from contributions by employed persons and partly from contributions by the employers of those persons. The two sets of contributions are to be paid by revenue stamps. Every employed person and every employer is to be liable to pay contributions in accordance with the provisions of Sch. 2, the employer being liable to pay both contributions in the first instance, recovering the employed person's share by deduction from his wages, or if necessary in certain cases by action.

There can be no doubt that prima facie provisions as to insurance of this kind, especially where they affect the contract of employment, fall within the class of property and civil rights in the Province, and would be within the exclusive competence of the Provincial Legislature. It was sought however to justify the validit