Mr. BARRETTE (Translation):

I was paired with the hon. member for St. John-Iberville (Mr. Rheaume). Had I voted, I -would have voted against the amendment.

Mr. DUGUAY (Translation):

I was paired with the hon. member for Bagot (Mr. Dumaine). Had I voted, I would1 have voted against the amendment.

Motion agreed to on division, and bill read the third time and passed.

Mr. BENNETT:

May I direct the hon. gentleman's attention to the fact that I was not dealing with1 school taxes; I was dealing with school lands, trust lands.

Mr. MACKENZIE (Vancouver):

I gladly aocept the correction of the right hon. gentleman but I suggest that the same principle applies to these objections which1 have been taken by the province of British Columbia.

Mr. BENNETT:

I do not wish to interrupt, but I should like to tell the hon, gentleman, inorder that he may not misunderstand what I said, that it will be recalled that in the transfer

Farmers' Creditors Act

of the resources to the provinces there was a special provision with respect to these lands. What I was trying to convey to the hon. member for Maoleod (Mr. Coote) was that I did not carry it in my mind but that it was a very special provision and the lands were charged with the trust upon the effect of which I was not expressing an opinion.

Mr. MACKENZIE (Vancouver):

I gladly accept the explanation of the Prime Minister but the point I am emphasizing is the idea of conferring, which was mentioned by the Prime Minister the other day.

Now let us come to this most extraordinary bill, one of the weirdest concoctions ever dished up in this house by a bewildered government. It says:

On and after the 1st day of July, 1935, the Farmers' Creditors Arrangement Act, 1934, shall cease to be in force in the province of British Columbia except in the case of a proposal approved by the court or confirmed by the board of review before the aforesaid first day of July, and in the case of any such proposal the said Farmers' Creditors Arrangement Act, 1934, shall continue to be in force as if this act had not been enacted.

If I read the provisions of this proposed legislation aright it means that in regard ito the fifty-eight settlements already effected, the legislation endorsed by this house last year is to be effective. That is, this parliament is going to say by this bill that the legislation now protested and contested, rightly or wrongly, by the province of British Columbia is still to be in effect in regard to those very cases which caused the dissension, but it is not going to be in effect with respect to any cases that may arise after the first day of July. So all these settlements may be rendered invalid if the provincial authorities of British Columbia choose to proceed with their litigation. If the province of British Columbia happens to win the dispute all these settlements may be declared invalid. Further than that the whole act will be declared ultra vires, because that is one of the declarations asked for in the endorsement on the writ, and though that would 'be only a declaration by the Supreme Court of British Columbia it would be very dangerous indeed to the whole existence of this legislation to which this parliament agreed a year ago. So this very legislation, which is introduced in a most peculiar fashion, which is sectional legislation, must have the inevitable result of threatening the validity of the statute right across the Dominion of Canada. I suggest that anyone who supports this bill, regardless of the dispute that may exist as between the provincial and federal jurisdiction, is helping to render invalid the operation of

this act throughout the whole of the dominion.

I suggest to the Prime Minister and the Minister of Finance that the government adopt the suggestion made by the Prime Minister the other day and enter into a conference, not only with the province of British Columbia but with every single province of the dominion, because there have been rumours of disputes in other provinces as well. I think this bill should be amended at the present session, not by the measure we have before us now but to provide that when any dispute arises between a board of review acting under the jurisdiction of the legislation of last year, and any provincial authority, there shall be a conference between the agent or representative of the provincial government in each case, and that settlement or terms be arrived at. I think that is the only way this legislation can be made effective. That is the only way it can really be made effective.

I am opposing second reading of the bill.

I am afraid it is introduced in a spirit of petty, political pique against the government of a province. I am not defending that government; as a lawyer I believe the legal position they have taken is sound. But as one who supported the legislation last year, and as the legislation proposed is imperilling the future existence of the act I still appeal to the Minister of Finance to have the bill withdrawn and to ha/ve a real amendment passed which will render effective the legislation of last year and the intent of parliament.

Right Hon. R. B. BENNETT (Prime Minister) :

Mr. Speaker, the hon. member has made some reference to my observations of last year when this bill was before the house. If he would take the trouble to peruse what was said he would find that I did point out that the Supreme Court of Canada followed the decision of the judicial committee of the privy council in Leroux and the Royal Bank, and that that decision on the reference made in the preceding year on the Companies Creditors Arrangement Act was the foundation upon which we came to this house. We would have come to the house before with the legislation but until we had a decision from the Supreme Court of Canada as to the validity of the Companies Creditors Arrangement Act we did not feel that we should do so. The grave constitutional doubt had been resolved in our favour. The discussion was lengthy and took place over a considerable time. I did point out that the Supreme Court of Canada had followed the decision in the Leroux case, which was the

Farmers' Creditors Act

decision of the judicial committee of the privy council, as warranting the conclusion at which that court had arrived.

I recall many qualified practitioners were of the opinion that the Companies Creditors Arrangement Act was not within our competence, but after the decision of the judicial committee in the Leroux case, and its adoption, it was binding upon our courts and the validity of our statute was upheld. The position in this matter is simple, and I ask the hon. member, as a member of the legal profession, if he has any complaint to make with respect to this line of argument. First, there have been fifty-eight cases disposed of. The province attorned to the jurisdiction in that regard and raised no question as to the adequacy of the terms of the decision of the board of review, or whatever the case may be. At least that is the information which the Minister of Finance has, as was intimated to the house the other day.

I put this case to the house-a simple one: The government is anxious that all the prov-vinces should have boards of review deal with creditors' liabilities or farmers' liabilities to them as well as to all the other creditors. Although some of the provinces feel that there might be still some question, they have uniformly taken the view that it is desirable that this board of review, which is a judicial board, presided over in every case by a justice of the supreme court of a province- and that was the reason we provided for a justice in the act of last year-should deal also with questions that arise between the province and its creditors, in whatever way they might arise. In all the provinces this worked out satisfactorily; they have not complained. They have been glad to expedite and to assist in this arrangement. But in British Columbia they have launched a lawsuit and have asked that this act be declared ultra vires. The dominion government has not appeared in the lawsuit and does not propose to appear. All they are going to do is to stand by and let the court make an injunction perpetual as against- that is the effect; an interim injunction perpetual-and this statute merely conforms to that act. The temporary injunction having been issued, to-morrow application will be made to have it made perpetual. The dominion government will not appear, and it must be made perpetual so far as we are concerned.

Mr. GRAY:

Why do we need this act?

Mr. BENNETT:

Because we are giving effect legislatively to what the court has done judicially.

Mr. MACKENZIE (Vancouver):

Suppose it is ultra vires; what effect would it have?

Mr. BENNETT:

Not the slightest, because the other provinces have indicated they have no complaint to make, and that they are very glad to see this matter dealt with in this way. So far as this legislation is concerned it is to give effect by parliament to what the courts will to-morrow decide if the injunction is made perpetual at the instance of the province of British Columbia. That is all there is to it. It is a very ordinary and proper course to follow, when the province asked that it be done. It vrould be bad policy for the dominion to enter into a long and costly litigation in this matter. If the province of British Columbia states, "This is a statute beyond your legislative competence," we are not going to argue with them. They do not want it in that province, and the attorney general has launched his litigation. He has obtained an interim injunction which he proposes to make permanent, and by legislation we are giving effect to his wishes in that regard.

Mr. WOODSWORTH:

Has that decision any validity in other provinces?

Mr. BENNETT:

No, not at all.

Mr. EULER:

If this bill were not passed would not the situation be exactly the same?

Mr. BENNETT:

No, it would leave it o_pen to further contest with respect to individual cases, and it is to avoid any possible misunderstanding on the part of those who have sought the advantage of the act that we are making it perfectly clear that parliament is respecting the wish of the provincial government and leaving the act non-operative within that province.

Hon. E. N. RHODES (Minister of Finance):

Mr. Speaker, I had not intended to discuss the legal or constitutional phase of the matter, but had I so intended, in view of the observations of the Prime Minister (Mr. Bennett) it would now be unnecessary. I should like however to say a word in reply to the hon. member for Vancouver Centre (Mr. Mackenzie). Within my recollection as an hon. member of this house I have never known of any measure which has met with such uniform approval and unanimity of opinion as the Farmers' Creditors Arrangement Act. In

Farmers' Creditors Act

fact it will be recalled that last year encomiums were so embarrassing that several days elapsed before we could have second reading of the bill. That situation is well known. As is evidenced by the large numbei of settlements-5,852 in number-made up to the end of May it would appear that the act has operated extremely well.

The hon. member has said that this is sectional legislation. It is, but why? It is sectional because a sectional attitude has been taken by one of the nine provinces. The act has been accepted by the remaining eight provinces; they have given cordial cooperation and the result is apparent to all. I assure my hon. friend in all solemnity and seriousness that the political complexion of the government of British Columbia has had no bearing whatsoever upon the attitude taken by this government in bringing the bill before the house. It would have been presented if the political complexion of the provincial government had been Conservative, Co-operative Commonwealth Federation, or otherwise. It w'as brought down in no sense of political pique but as a matter of great regret, because it was the one spot upon the escutcheon, if I may use that term in the operation of the act.

The only place in which the act has been challenged is British Columbia, and as I pointed out the other day the government of that province has taken steps to resist the act; it does not wish the act to be operative in British Columbia. But, coming to the second point: would we be wise to imperil the operation of the act throughout Canada by standing aside and allowing the province of British Columbia to challenge its constitutionality in the courts? I think upon reflection the hon. member will realize that in describing the bill he rather embroidered his language. It would have been very simple to bring in a bill to withdraw the operation of the Farmers' Creditors Arrangement Act in the province of British Columbia. What we are seeking to do is to preserve their rights to those who have effected settlements. There are some 58 cases where settlements were effected, as I recall-I may be wrong in this respect-without reference to the province. In other words, the rights of the province are not involved but assuming that they have been involved in any of these cases, the settlements have been accepted and it was only in connection with the Copeland case that British Columbia intervened and resisted the application of the act. Stripped to the bare essentials the attitude of the British Columbia

government means that they are prepared to allow private individuals, trust companies, banks, mortgage companies, loan companies and the dominion itself to make contributions in effecting settlements for the benefit of farmers in need while they themselves refuse to cooperate.

Mr. MACKENZIE (Vancouver):

They are doing it in another way.