On November 4, 1935, Prime Minister King referred all of R.B.'s 'New Deal' legislation to the Supreme Court. The court found much of the legislation to be ultra vires due to the federal government infringing on the provincial property and civil rights as listed in the British North America Act's Section 92. King, for good measure, then referred everything to the Judicial Committee of the Privy Council. The council agreed with the Supreme Court.
The decision of the Supreme Court and Privy Council committee became the tipping point for a debate that had been brewing for years. The powers of the federal government versus those of the provincial governments became a huge issue. In August of 1937 Prime Minister King created the Royal Commission on Dominion-Provincial Relations. He had R.B.'s full support. The Rowell-Sirois Report defined the division of power along the same line that R.B. had seen when he introduced his 'New Deal' legislation.
In 1940 King acted on the recommendation of the report and made a constitutional amendment to allow the re-introduction of legislation to create a federally operated unemployment insurance program. It was entirely based on the program that R.B. had created.
It is interesting to note that almost all of the concepts included in the 'New Deal' have been put into reality, over time, by either the federal or provincial governments.
After the 1935 election, R.B. continued to work diligently in parliament as the leader of the opposition. He was, however, slowing down. His health was deteriorating and he knew it. In the spring of 1937 R.B. traveled to England for the Coronation of King George VI. While in Europe he took the opportunity to consult a world-famous heart specialist in Germany. In early February 1938 R.B. assembled the caucus and in a closed door meeting he formally announced his resignation from parliament, effective immediately. In March of 1938 planning began for the second national Conservative convention. After most of the big decisions had been made, R.B. formally announced that he would resign as party leader. The reason he gave to the delegates was that he was resigning due to doctors orders following a diagnosis of a weakness in his heart.
Just as R.B. was making the final decision to resign, a personal tragedy struck. On May 11, 1938, Mildred died. She was 49 years old. She had taken ill just weeks before and was hurried to a hospital in New York City where she was treated for breast cancer. R.B. went to visit her and stayed for several days. She appeared to be recovering and everyone was assured that she would soon be discharged. R.B. returned to Ottawa and was there for only a few days when he received the telephone call. He wept openly when informed of his sister's death. Not only had he lost a sister, but his closest friend and confidante.
R.B. traveled again to England from late August to early November 1938. He had made the decision to retire there. His old friend, Max Aitken, now Lord Beaverbrook, hosted R.B. at his Surrey estate, Cherkley Court, near Leatherhead, while he looked for a new home. R.B. looked at several grand locations but decided to purchase Juniper Hill in Mickleham, Surrey, an estate close to Beaverbrook's, which had been suggested by Beaverbrook from the beginning.